Walmart Pushing Food Industry in Healthy Direction
Walmart is looking to make America healthier while saving
its citizens money in the process.
Yesterday, the retailing giant announced it
was putting its clout behind First Lady Michelle Obama’s “Let’s Move” anti-obesity
campaign by committing to reduce salt by 25 percent and sugar by 10 percent
in its own brand products by 2015. It also pledged to remove all trans fats
from its private label. Walmart said it would encourage brand suppliers to
follow its lead and improve the nutritional value of their products, as well.
these reductions in its products, Walmart also committed to making it easier
for consumers to buy fruits, vegetables and other more nutritious foods. The
company announced a goal of saving its shoppers approximately $1 billion per
year on fresh fruits and vegetables as a result of improving a variety of supply
chain functions that drive up costs.
“No family should have to choose between food that is healthier for
them and food they can afford,” said Bill Simon, president and CEO of
Walmart U.S., in a statement. “We are committed to working with suppliers,
government and non-governmental organizations to provide solutions that help
Americans eat healthier and live a better life.”
Walmart also said it
would work to reduce or eliminate premiums consumers pay to purchase better-for-you
“Our customers often ask us why whole wheat pasta sometimes costs more
than regular pasta made by the same manufacturer,” said Andrea Thomas,
senior vice president of sustainability at Walmart. “Customers should
be able to choose knowing the biggest difference in these products is not the
price, but rather that one is better for you.”
Brian Sozzi, an analyst
with Wall Street Strategies, wrote in a research note, “Walmart
is attacking the problem by employing a structural technique. Basically, it
centers on using scale to press suppliers to remove excess commodities …
lower the cost base of Campbell Soup or a Coca-Cola and, in turn, driver harder
bargains on product costs.”
Mr. Sozzi added, “Grocery represents 51 percent
of Walmart U.S. sales and 39 percent at Sam’s Club. Wal-Mart must be
thinking that by lowering the cost component, and then promoting a lower price,
it will lead to share gain in the largest component of its overall business.”
McGranahan, an analyst at Sanford C. Bernstein, told Bloomberg News, “It’s
largely a big PR effort and part of the larger strategy to win over the hearts
and minds of regulators, politicians and others that oppose Wal-Mart’s
efforts to grow their store base in urban markets.”
“This is a game-changer,” Michael Hicks, an associate professor of
economics at Ball State University, told The Associated Press. “If
Wal-Mart could reduce the prices on healthy food and provide access to them
in more places, you could have a measurable effect on incidences of diabetes
and heart-related ailments.”
“Walmart is in a position almost like the Food and Drug Administration.
I think it really pushes the food industry in the right direction,” Michael
Jacobson, executive director of the Center for Science in the Public Interest,
told The New York Times.
- Walmart Launches Major Initiative to Make Food Healthier and
Healthier Food More Affordable – Wal-Mart Stores, Inc.
- Wal-Mart to Stock Healthier, More Affordable Foods to Help Fight Obesity
- Wal-Mart takes healthful tack – The Associated Press/The Charlotte Observer
- Wal-Mart Shifts Strategy to Promote Healthy Foods – The New York Times
Discussion Questions: How optimistic or pessimistic are you that Walmart will be able to ring the types of costs out of the food supply chain it projects in light of current inflationary pressures? If all goes as planned, what will Walmart’s announcement mean for the chain, its competitors, suppliers and shoppers?