Walmart plans to announce that it is putting its muscle behind Wild Oats organic products, offering
the label at prices that will undercut brand-name organic competitors by at least 25 percent. The
move by Walmart, the nation’s largest retailer and grocer, is likely to send shock waves through the
organic market, in which an increasing number of food companies and retailers are seeking a toehold.
“We’re removing the premium associated with organic groceries,” said Jack L. Sinclair, executive vice
president of Walmart U.S.’s grocery division. The Wild Oats organic products will be priced the same
as similar nonorganic brand-name goods.For now, Walmart will carry the Wild Oats label, which is
owned by the Yucaipa Companies, a private investment firm, only in its pantry section, with items like
tomato paste, chicken broth and cinnamon applesauce cup. Over 90 percent of its offerings at Walmart
will be organic, while the rest will adhere to company standards about ingredients and additives, a Wild
Oats executive said, but not to any government regulations. Walmart will introduce Wild Oats products in
2,000 stores in the coming months.Instead of hitting the entire national market at once, Walmart will first
introduce Wild Oats at 2,000 stores in the coming months, only half of its national footprint, and then roll it
out to the rest of the country. Mr. Sinclair said that concerns about supply kept the retailer from introducing
the brand in all its stores at once.Over at least the next few years, Walmart’s move is likely to raise prices
for organic ingredients, which are already going up because of fast-growing consumer demand. Organic
food accounted for $29 billion in United States sales in 2012, according to the most recent data, the Organic
Trade Association said. Ten years earlier, its sales were $8 billion. Eager to tap into that demand, Target,
one of Walmart’s primary competitors, said that it would expand the presence of organic products in its stores.
While organically produced grains do not necessarily cost more to grow than other types, Lynn Clarkson,
founder of the Clarkson Grain, which processes and sells organic and conventional wheat, soy, corn and
other grains, said they commanded a huge premium because they were scarce.
He estimated that farmers in the US were producing about six million bushels of organic soybeans,
for example, when some 20 million bushels are needed to meet current needs. Organic soy is selling
for $25 to $30 a bushel, Mr. Clarkson said, or about twice the price of regular soy beans. The amount of
land devoted to organic farming has grown, according to the Agriculture Department, but not nearly
enough to address growing consumer demand.
Ultimately, however, Walmart’s move could increase the supply, and eventually bring prices down.
An increasing number of farmers he dealt with were considering switching at least a portion of their
conventional production to organic, attracted by the premiums. But even if a farmer decided to turn to
organic production today, various restrictions mean that it would be three years before any crop could
receive the federally approved organic seal.
Source: NY Times
the label at prices that will undercut brand-name organic competitors by at least 25 percent. The
move by Walmart, the nation’s largest retailer and grocer, is likely to send shock waves through the
organic market, in which an increasing number of food companies and retailers are seeking a toehold.
“We’re removing the premium associated with organic groceries,” said Jack L. Sinclair, executive vice
president of Walmart U.S.’s grocery division. The Wild Oats organic products will be priced the same
as similar nonorganic brand-name goods.For now, Walmart will carry the Wild Oats label, which is
owned by the Yucaipa Companies, a private investment firm, only in its pantry section, with items like
tomato paste, chicken broth and cinnamon applesauce cup. Over 90 percent of its offerings at Walmart
will be organic, while the rest will adhere to company standards about ingredients and additives, a Wild
Oats executive said, but not to any government regulations. Walmart will introduce Wild Oats products in
2,000 stores in the coming months.Instead of hitting the entire national market at once, Walmart will first
introduce Wild Oats at 2,000 stores in the coming months, only half of its national footprint, and then roll it
out to the rest of the country. Mr. Sinclair said that concerns about supply kept the retailer from introducing
the brand in all its stores at once.Over at least the next few years, Walmart’s move is likely to raise prices
for organic ingredients, which are already going up because of fast-growing consumer demand. Organic
food accounted for $29 billion in United States sales in 2012, according to the most recent data, the Organic
Trade Association said. Ten years earlier, its sales were $8 billion. Eager to tap into that demand, Target,
one of Walmart’s primary competitors, said that it would expand the presence of organic products in its stores.
While organically produced grains do not necessarily cost more to grow than other types, Lynn Clarkson,
founder of the Clarkson Grain, which processes and sells organic and conventional wheat, soy, corn and
other grains, said they commanded a huge premium because they were scarce.
He estimated that farmers in the US were producing about six million bushels of organic soybeans,
for example, when some 20 million bushels are needed to meet current needs. Organic soy is selling
for $25 to $30 a bushel, Mr. Clarkson said, or about twice the price of regular soy beans. The amount of
land devoted to organic farming has grown, according to the Agriculture Department, but not nearly
enough to address growing consumer demand.
Ultimately, however, Walmart’s move could increase the supply, and eventually bring prices down.
An increasing number of farmers he dealt with were considering switching at least a portion of their
conventional production to organic, attracted by the premiums. But even if a farmer decided to turn to
organic production today, various restrictions mean that it would be three years before any crop could
receive the federally approved organic seal.
Source: NY Times