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Wal-Mart takes giant step toward healthier food

Wal-Mart Stores Inc unveiled a plan to promote healthier and more affordable foods at its stores, a move that was eagerly endorsed by first lady Michelle Obama.
Image: Michelle Obama
First lady Michelle Obama takes part in Wal-Mart's announcement of a comprehensive effort to provide healthier and more affordable food choices to their customers.Cliff Owen / FR170079 AP
/ Source: Reuters

Wal-Mart Stores Inc. unveiled a plan to promote healthier and more affordable foods at its stores, a move that was eagerly endorsed by the U.S. first lady and one that could push food companies to overhaul products.

The initiative comes as the world's largest retailer tries to overcome political and union opposition to its expansion in urban areas like New York City, Chicago and Washington, D.C., by touting its ability to bring lower-priced fruits, vegetables and other healthy foods to "food deserts" in cities and rural areas that lack traditional grocery chains.

Michelle Obama leads an administration initiative to combat child obesity and has already pushed food makers to quickly reformulate food to make it healthier.

The first lady joined Wal-Mart executives as they announced the plan in Washington Thursday and said she was "thrilled about Wal-Mart's new nutrition charter."

"To say I'm excited is probably an understatement because we're really gaining some momentum on this issue," Mrs. Obama said, speaking in front of crates packed with fruits and vegetables. "We are seeing a fundamental shift in our national conversation about how we make and sell food. That's something that wasn't happening just a year ago."

Wider impact

Wal-Mart is the largest seller of food in the United States, so any move it makes can have a ripple effect on the food supply chain. It has the potential to affect everyone from farmers to grocery stores, drugstores and even dollar stores, which have been beefing up their food offerings.

Wal-Mart plans to reduce the amount of sodium and added sugars in its packaged foods, and to remove all remaining industrially produced trans fats from those goods, by 2015.

The company said it would work with suppliers to improve the nutritional quality of its own Great Value brand as well as national food brands. It also said it could save shoppers about $1 billion per year on fresh fruits and vegetables by cutting costs out of sourcing, transportation and logistics, through changes such as buying more produce from local farms.

The retailer is developing a seal to help shoppers identify healthier food options, such as whole grain cereals and unsweetened canned fruit. The seal will be added to Wal-Mart's own products later this year and be offered to suppliers for products that meet its criteria.

The efforts should not eat into Wal-Mart's profits, the company said.

"The initiative that we're launching today will hopefully be additive but most definitely won't be dilutive to any of the earnings projections that we've talked about earlier," said Bill Simon, president and chief executive officer of Wal-Mart's U.S. business.

Latest step

Thursday's announcement comes three months after Wal-Mart announced plans to double the sales of fresh produce from local farms in its U.S. stores by the end of 2015. That move was part of a broader strategy to revamp its global produce supply chain.

Companies that reformulate their products to meet Wal-Mart's criteria would likely sell those foods in other outlets as well. That could improve their image and bolster efforts smaller chains have taken to show that they, too, want to improve the nutrition of the foods they sell.

Wal-Mart said its package seal would complement the front-of-package nutrition labeling system already being discussed by the food industry.

The battle for food spending was heating up even before Wal-Mart's new initiative. Nontraditional food sellers such as Target Corp, Family Dollar Stores Inc , Walgreen Co and others have dedicated more space to food in their stores to lure shoppers, even as grocery stores face soaring costs.

Changes that Wal-Mart spearheads spread much further than its store doors. Starting in 2007, detergent makers such as Procter & Gamble Co quickly reformulated their products to remove water and reduce package sizes after Wal-Mart pushed suppliers for more environmentally-friendly products. The manufacturers absorbed millions of dollars in costs to meet the changes Wal-Mart was seeking.