Wal-Mart to Stock Healthier, More Affordable Foods

Wal-Mart Stores Inc., the world’s largest retailer, said it is joining first lady Michelle Obama’s anti-obesity campaign by stocking healthier foods.

The company said it will reformulate thousands of packaged food items by 2015, reducing the salt content by 25 percent and sugar content by 10 percent, and will remove all remaining industrially produced trans fats and partially hydrogenated oils.

“No family should have to choose between food that is healthier for them and food they can afford,” Bill Simon, chief executive officer of U.S. stores for Bentonville, Arkansas-based Wal-Mart, said in a statement.

With more than 140 million customer visits each week, Wal- Mart “is uniquely positioned to make a difference” by making healthy foods more affordable, said Simon, who joined Mrs. Obama for an event today in Washington.

The first lady said Wal-Mart’s initiative is a victory for parents and children that will give families more information and more opportunities to eat more healthy foods. She said that because of company’s size, the move “has the potential to transform the marketplace.”

Wal-Mart said it plans to reduce prices to save customers about $1 billion a year on fresh fruits and vegetables. The company said it would develop “strong criteria” for simple front-of-package seals that would help consumers identify healthier foods, including whole-grain cereals, whole-wheat pastas or unsweetened canned fruit.

Supply Chain

Andrea Thomas, Wal-Mart’s senior vice president of sustainability, said lower costs will come in part from planned efforts to make the entire supply chain more efficient, including steps to stock more produce from local farmers to reduce shipping costs.

“Let’s call it what it is -- an expense cutting program,” said Brian Sozzi, an analyst at Wall Street Strategies in New York who recommends selling the shares. “I am not trying to discount what they are doing here, but 51 percent of their sales are tied to grocery, and inflation is climbing in the category. If they can reduce costs here and drive higher volume through share gains, it’s a nice formula.”

Wal-Mart rose 96 cents to $55.99 in New York Stock Exchange composite trading. The shares have gained 3.8 percent so far this year.

Public Relations Benefit

Wal-Mart’s announcement also provides a public relations benefit, said Colin McGranahan, analyst at Sanford C. Bernstein in New York.

“It’s largely a big PR effort and part of the larger strategy to win over the hearts and minds of regulators, politicians and others that oppose Wal-Mart’s efforts to grow their store base in urban markets,” said McGranahan, who rates the shares “market perform.”

Wal-Mart said in October it would open 30 to 40 smaller- format stores in the year ending January 2012, including outlets in urban areas. In November, the retailer said it will open four locations in Washington, D.C., in 2012. This month, Wal-Mart launched a website and advertising campaign to gain support for putting its first store to New York City, where it faces opposition from politicians and labor unions.

Wal-Mart’s changes bolster the first lady’s “Let’s Move” campaign, which has set a goal of eliminating childhood obesity through exercise, better nutrition, diets and reductions in calorie consumption.

First Lady’s Campaign

Leslie Dach, Wal-Mart’s executive vice president for corporate affairs, said the first lady was the “catalyst” for the initiative. Michelle Obama said the real power driving the change came from consumers who are demanding healthier foods in stores.

Parents are changing “how the entire food industry does business,” the first lady said.

Dan Binder, an analyst at Jefferies & Co. in New York who recommends buying the shares, said the grocery plan “is great marketing for the company as it continues to reshape its image.”

During the 2008 presidential campaign, then-Illinois Senator Barack Obama was critical of Wal-Mart’s labor practices and spoke at events organized by a union-funded group that was pressuring the retailer to increase wages and benefits for its workers.

White House press secretary Robert Gibbs said today that “lots has happened since” the campaign. The first lady “is proud and happy to stand with any company” that makes a similar commitment regarding nutrition, he said.

Mrs. Obama has won pledges from companies including General Mills Inc., Kraft Foods Inc. and PepsiCo Inc. to reduce calories by changing recipes or cutting portion sizes.

Obama last month signed into law a measure to make federal school meal programs healthier and available to more children in an effort to combat childhood hunger and obesity. Obesity is linked to high blood pressure and Type-2 diabetes, and students who have poor nutrition don’t do as well in school, the president said.

Wal-Mart faces increasing competition from big-box rivals such as Target Corp. and discounters such as Dollar General Corp.

The company said it will increase charitable giving for nutrition programs aimed at helping educate consumers about healthier food choices.

To contact the reporters on this story: Roger Runningen in Washington at rrunningen@bloomberg.net; Matthew Boyle in New York at Mboyle20@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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