Natural Foods Merchandiser

Wal-Mart: 800-pound organic gorilla?

The rising tide, it seems, does lift all boats—including even the largest ship, Wal-Mart Stores Inc. At the Reuters Food Summit in March, Wal-Mart announced plans to double its organic SKUs and become the "mass-market provider of organic food," the news agency reported.

"Mass" market is an understatement for retailing's 800-pound gorilla. With $312.4 billion in sales in 2006, Wal-Mart is the world's largest retailer. It employs 1.6 million associates worldwide, operates more than 3,800 retail facilities in the United States, nearly 2,400 more around the globe and serves more than 138 million customers per week.

Compare that to naturals' largest simian, Whole Foods, at $4.7 billion in 2006 sales and 181 stores in North America and the United Kingdom. Its competitor, Wild Oats, posted 2006 sales of more than $1 billion and 113 stores in the United States and Canada.

According to Bob Scowcroft, president of the Organic Farming Research Foundation, the reason for Wal-Mart's expanded organic presence is simple. "Clearly, consumer demand is being reflected in almost all corners of the conventional food system."

Holly Givens, spokeswoman for the Organic Trade Association, was upbeat about that demand. "Anytime that retailers want to sell more organic food or fiber, OTA is encouraged by that." But she also sounded a note of caution. "It would be important that any time a retailer plans a major expansion, to do it in a way that's sustainable for the supply available."

Elaine Lipson, organic program director for New Hope Natural Media, parent company of The Natural Foods Merchandiser, echoed that concern. "Wal-Mart has tremendous economic power, and I hope within the organic realm they'll use that power to uphold the integrity of the organic standards and to help educate consumers about the meaning and benefits of organic farming."

However, Wal-Mart's history of low-cost overseas sourcing leads to questions of just how closely they'll adhere to that organic integrity. Scowcroft says that not all boats will rise "if they're buying organic raw materials at half price overseas. What does that say to the producers in North America? Will they have to lower prices or are they going to grow [organic food] at all?"

On the other hand, said Scowcroft, "For the eagle flying over China, [organic production there] makes things cleaner—and that makes us happy too."

But Scowcroft also said that overseas production might not be necessary in the short term. "The big growers could probably meet that new demand pretty quickly, and if we can get more people eating fresh fruits and veggies, that bodes well for farmers."

Looking into the future, Lipson agreed that there is reason to be optimistic. "In the long run, I hope that Wal-Mart's decision means that many more consumers will learn more about how their food is grown and produced, and will make choices accordingly, and that more farmers will be able to find the funding, research and market support to make the transition to organic."

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