grocery game changer: wal-mart enters the organic market

Wal-mart announced last week that it would partner with Wild Oats to offer a low-cost line of organic products. Wild Oats was one of the first health food stores on the scene in the 1980s and was subsequently bought out by Whole Foods, who later dropped the line. 

The Wal-mart Wild Oats line intends to be at least 25% cheaper than other national organic brands and will be rolled out first in about half of Wal-mart stores. Most public health advocates and business analysts are hailing this announcement as a really good thing, since Wal-mart is the largest grocery chain in the country and as such has real power over influencing national food trends. It will give a new segment of Americans access to organic food at prices they can more realistically afford, and it’s thought that long-term, this can drive down the prices of organic raw materials for these pantry products. 

Many people believe this will push producers to commit long-term to organic farming practices in order to be a supplier for Wal-mart/Wild Oats. That’s a good thing for America’s land too, since more of it will be farmed with organic practices than what’s being currently done.

Because it takes three years for USDA organic certification, in order to have enough product to meet the demand that carrying these products in 2,000 Wal-mart stores (half of their American footprint) will create, people have speculated that they have been working on this behind the scenes since 2011. Wal-mart certainly will need absolute control over its supply chain in order to meet the demand and offer the “rock bottom prices.” Many analysts are speculating that that supply chain will extend more and more overseas, which they won’t have to disclose. 

I’m all for more land being farmed organically and certainly for more people having access to organic food – both physical and financial access. But I’m cautious about my excitement, since typically when Wal-mart enters a game, the rules change. It’s got tremendous market power and influence, which often means smaller, local producers are shut out, something Wal-mart is well known for.

In a situation where demand for organic foods in this country already is much higher than the supply, I have a feeling that the definition of “organic” is about to be up for debate soon. There will be great pressure to weaken federal standards for organic products, which companies are constantly lobbying for in the first place. Wal-mart will now have a vested profit interest in weakening the definition of “organic.” A vested profit interest by Wal-mart has never been really good news for anyone, so it will be interesting to see when the first wave of backlash comes from this.