Wal-Mart's Wild Oats ploy may affect supplies little

05/06/2014 03:27:00 PM
Tom Burfield

Wal-Mart Stores Inc.’s April announcement that Wild Oats-branded organic food items are coming to Wal-Mart could be a shot in the arm for the organic category and probably won’t have a significant impact on availability for the fresh category, grower-shippers and industry experts say.

Bentonville, Ark.-based Wal-Mart said Wild Oats was relaunching its brand, offering “a more affordable price point” on products covering a broad variety of categories — from salsa and pasta sauce to quinoa and chicken broth.

Shoppers will save 25% or more when they buy Wild Oats products rather than national brand organic products, Wal-Mart spokesmen said.

“We know our customers are interested in purchasing organic products and, traditionally, those customers have had to pay more,” Jack Sinclair, Wal-Mart’s executive vice president of grocery, said in a news release. “We are changing that and creating a new price position for organic groceries that increases access.”

“Our availability at Wal-Mart will allow us to finally pass along scalable savings directly to consumers,” Wild Oats chief executive officer Tom Casey said in the release.

The line will include nearly 100 products, including, for example, Wild Oats Marketplace Organic tomato paste selling at 58 cents for 6 ounces versus a comparable retail price of 98 cents — a difference of 41%.

 

Signal to producers

Wal-Mart’s decision to join other retailers in the organic marketplace “is good news for shoppers whose appetite for healthy organic food is stronger than ever,” said Cathy Calfo, executive director and chief executive officer of Santa Cruz-based California Certified Organic Farmers.

“It is also a signal to agricultural policy makers that we need to be serious about scaling up organic production to meet growing demand,” she said.

Industry members say it will be up to growers to determine how they will meet any increased demand for organic produce.

“It places increased demand on an already limited market,” said Kevin Weaver, director of sales and new business development for Global Organics, Sarasota, Fla.

Although Wal-Mart’s decision will boost demand for organic products for processing, there still is “incredible demand for fresh product,” he said.

“Growers will look to see where they can get the most bang for their buck.”

 

More mainstream

Wal-Mart’s organic push is a statement about the “strong movement afoot” as organics continue to become more and more mainstream, said Matt Seeley, vice president of marketing for The Nunes Co., Salinas, Calif.

“You can’t get more mainstream than Wal-Mart,” he said.

The move raises some questions, said Bill McCoy, owner of Better Life Produce Inc., Los Angeles.

Organic products are more expensive than conventional ones, he said.

“Does (Wal-Mart) have the market for those items? Will it be affordable to their clientele?” he asked. “That will be the key.”

 

No big effect

McCoy doesn’t think Wal-Mart’s push on the packaged or processed side will affect availability for fresh market product נat least for the near future.

“I don’t see too much of a problem at this point with it really affecting it in a big way,” he said. “Maybe in a couple of years from now if it grows to a huge proportion.”

McCoy believes growers will continue to maintain a diversified customer base and won’t put all their eggs in Wal-Mart’s basket.

Wal-Mart’s plan could give growers who are debating whether they should get into organics an incentive to take the plunge, said Earl Herrick, owner, president and founder of Earl’s Organic Produce, San Francisco.

He’s not too concerned that increased demand for organics from Wal-Mart will affect his company or the fresh market.

“Supply challenges are short lived,” he said. “The industry responds very quickly.”

Besides, he said, his company has longstanding relationships with suppliers, and he expects those relationships to continue.

Wal-Mart’s new direction could provide a new outlet for process-grade organic produce, said Dina Izzo, founder of Bludog Organic Produce Services, Ben Lomond, Calif.

“Tomato plants produce so much fruit, but only so much of it can go to the premium market,” he said. “The rest of it has to go somewhere.”

“It’s up to the farmer to figure out if it’s economically viable to sell into the process market,” he said. “Generally it is.”



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