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The business of bananas: Very big

U.S.-based banana purveyor Chiquita Brands is merging with Ireland's Fyffes plc.

Fyffes plc may not be a familiar name in to U.S. consumers, but it means “bananas” in Europe, and the company is the world’s fourth-largest purveyor of the fruit.  

And despite the impending bananapocalypse, as discussed on our show last week, U.S.-based Chiquita Brands has purchased the company, creating a $4.6 billion empire (which also includes pineapples, melons, and other fruits).  

The companies say they expect to save $40 million by the end of 2016, a number that sounds low to Brett Hundley, a senior equity analyst who watches agribusiness for BB&T Capital Markets.  He thinks consolidation will give the new company more leverage with both suppliers and with supermarkets.

“It will provide them more power at the negotiating table each year,” he says.

That’s been a problem for companies like Chiquita in recent years, says Edward Evans, an economist at the Center for Tropical Agriculture at the University of Florida.  As supermarket firms consolidated, he says, “They were able to say, ‘Well, we’re going to pay you less for the bananas.'” 

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