- MARKET INSIGHTS
January 20/Springdale, Ark./The International Herald Tribune -- Wal-Mart, one of the world's largest retailers, announced a five-year plan to make thousands of its packaged foods lower in unhealthful salts, fats and sugars, and to drop its prices for fruits and vegetables.
The initiative followed discussions the company has been having with Michelle Obama, the first lady, who attended the announcement in Washington, according to a Wal-Mart press release, and who has made healthful eating and reducing childhood obesity the centerpiece of her agenda. Aides say it is the first time Obama has thrown her support behind the work of a single company.
The plan, similar to efforts by other companies and to public health initiatives in places like New York, sets specific targets for lowering sodium, trans fats and added sugars in a broad array of foods -- including rice, soups, canned beans, salad dressings and snacks like potato chips -- packaged under the company's house brand, Great Value.
In interviews previewing the announcement, Wal-Mart and White House officials said the company was also pledging to press its major food suppliers, like Kraft, to follow its example.
Wal-Mart does not disclose how much of its sales come from its house brand, but Kraft says about 16% of its global sales are through Wal-Mart.
In addition, Wal-Mart will work to eliminate any extra cost to customers for healthful foods made with whole grains, said Leslie Dach, Wal-Mart's executive vice president for corporate affairs. Wal-Mart says that lowering prices on fresh fruits and vegetables will cut into its own profits but that it hopes to make up for that in sales volume. ''This is not about asking the farmers to accept less for their crops,'' Dach said.
The changes will be introduced slowly, over a period of five years, to give the company time to overcome technical hurdles and to give consumers time to adjust to foods' new taste, Dach said. ''It doesn't do you any good to have healthy food if people don't eat it.''
Wal-Mart is hardly the first company to take such steps; ConAgra Foods, for example, has promised to reduce sodium content in its foods 20% by 2015.
However, because Wal-Mart sells more groceries than any other company in the U.S. and because it is such a large purchaser of foods produced by national suppliers, nutrition experts say, the changes could have a big effect on the affordability of healthful food and the health of families and children.
Some say the company has almost as much power in the U.S. as national regulators to shape the marketplace.
''A number of companies have said they are going to make voluntary reductions in sodium over the next several years, and numerous companies have said they are going to try to get trans fat out of their food,'' said Michael Jacobson, executive director of Center for Science in the Public Interest. ''But Wal-Mart is in a position almost like the Food and Drug Administration. I think it really pushes the food industry in the right direction.''
Still, Wal-Mart is pushing only so far. The company's proposed sugar reductions are ''much less aggressive'' than they could be, Jacobson said, noting that Wal-Mart was not proposing to tackle the problem of added sugars in soft drinks, which experts regard as a major contributor to childhood obesity. In addition, he said it would be ''nice if Wal-Mart's timeline were speedier'' than five years.
Wal-Mart said it has been planning the initiative for more than a year. The effort was in its early stages when Obama joined it. The first lady's appearance with Dach and other Wal-Mart executives when they made the announcement at a community center in Washington is out of the ordinary and a prominent effort by the administration to encourage further moves toward more healthful food.
''We're not just aligning ourselves with one company; we're aligning ourselves with people who are stepping up as leaders to take this country to a healthier place,'' said Sam Kass, the White House chef who doubles as Mrs. Obama's top adviser on matters of nutrition.
''There's no qualms about that,'' Kass said. ''The only question that we have is, do we think this is a significant step in that direction, and do we think there is a method in place to track progress, and do we think this will have the impact we are pushing for.''
Over the past year, Kass and other aides to the first lady noted they have spent countless hours in meetings with company executives; both Kass and Dach said Mrs. Obama had pushed the company to hold itself accountable by issuing public progress reports. The Partnership for a Healthier America, a nonprofit organization that works with Obama on her Let's Move initiative to reduce childhood obesity, will monitor the company's progress.
Wal-Mart is pledging to reduce sodium by 25%, eliminate industrially added trans fats and reduce added sugars by 10% by 2015. Its other plans are less specific. In addition to proposing to lower prices on healthful foods, Wal-Mart is planning to develop criteria, and ultimately a seal, that will go on truly healthier foods, as measured by their content of sodium, fat and sugar.
The company said it would also address the problem of ''food deserts'' -- a dearth of grocery stores selling fresh produce in rural and underserved urban areas -- by building more stores.
Also, it will increase charitable contributions for nutrition programs. A range of studies has shown that low-income people, especially those who receive food stamps, face special dietary challenges because healthful food costs more and is harder to get in their neighborhoods. James D. Weill, president of Food Research and Action Center, an organization that says it has been pressing Wal-Mart to help tackle this problem, said the company seemed to have recognized ''how much hunger and food insecurity there is in the country.''
Dach said the lower prices and food reformulations had been motivated by the demands of Wal-Mart's own customers. He said the company believed that, if it were successful, the price reductions would save Americans who shopped at Wal-Mart about $1 billion a year on fresh fruits and vegetables.
''Our customers have always told us, 'We don't understand why whole wheat macaroni and cheese costs more than regular macaroni and cheese,''' he said, adding, ''We've always said that we don't think the Wal-Mart shopper should have to choose between a product that is healthier for them and what they can afford.''
Jacobson said that reducing sodium would be the trickiest of the food reformulation challenges. Sodium is in every food category, and it is more difficult to replace than the partly hydrogenated oil that composes trans fats, or than sugars, because there are easy substitutes for oils and sugars. Sodium, which contributes to hypertension and raises the risk of heart disease, must simply be reduced, and doing so can greatly alter taste, he explained.
Dach said the company had yet to conquer its reformulation challenges and described the goals as both aspirational and realistic. ''We think it's a realistic target, but it's aspirational in the sense that we can't tell you today how it's all going to get done,'' he said.
From the January 24, 2011, Prepared Foods E-dition