Agriculture / Organic Farming, STAFF NEWS & ANALYSIS
Wal-Mart to Offer Healthier Food: Prepare for Confusion
By Staff News & Analysis - November 20, 2014

Wal-Mart Promises Organic Food for Everyone … Buoyed by the improving economy and Americans' belief that they can eat themselves healthy, sales of organic food are booming again. The growth in sales of organic products in the U.S., food and nonfood, had slowed to 4.6 percent in 2009 but has since rebounded. Sales rose 11.5 percent in 2013, to $35 billion, according to the Organic Trade Association. – BusinessWeek

Dominant Social Theme: Everyone deserves healthy food and Wal-Mart will provide it.

Free-Market Analysis: The "healthy food" meme keeps growing because it's a profitable one. But like many other things in the modern mercantilist environment, it's not entirely what it seems. We'll try to draw a distinction in this article that will allow us to examine this trend and its ramifications from both a marketing and investment standpoint.

We last covered the expanding "organic" phenomenon as it affected companies like Whole Food, which has made a great deal of money by emphasizing the wholesomeness of its offerings. You can see a Daily Bell article here:

Organic Trend Grows Despite Political Correctness

At the time, we pointed out that in continually expanding its offerings, Whole Foods was redefining what "healthy" was. The idea predictably was that the sector would grow to include food with a minimal "carbon" footprint. We quoted AP's reporting on the Whole Foods program, as follows:

Whole Foods to roll out rankings for produce… Whole Foods plans to start rolling out a system that ranks fruits and vegetables as "good," ''better" or "best" based on the supplier's farming practices … The rankings will also take into account factors such as water and energy use … The standards were developed by Whole Foods and are not an official government designation.

"Energy use" is in fact (at least partially) a code word for "carbon footprint" and this is confirmed in Whole Foods's own literature as well. From our standpoint it's controversial because one's carbon output probably doesn't have any impact on the actual wholesomeness of the food in question.

In any event, this is indeed a rapidly expanding trend. Like Whole Foods, we anticipate that sooner or later (probably sooner) Wal-Mart will begin defining "healthy" on its own terms. Here's more from the article:

Once sold primarily in musty natural foods shops, organics went wide after Whole Foods Market (WFM) took over the high end of the market, earning the nickname "Whole Paycheck" in the process …

Now the organics industry is bracing for its next big shakeup. Wal-Mart Stores (WMT), the nation's largest grocer, is expanding its selection of organic foods. And it's promising to sell the stuff at the same prices it sells nonorganic food.

Most organic food costs at least 25 percent more than regular fare. Wal-Mart says it will keep prices low by using Wild Oats, a well-known name in organics, as its supplier. The deal came together in 2011 after two organics industry veterans bought the Wild Oats name from Whole Foods, then recruited billionaire Ron Burkle's Yucaipa Cos. as the majority owner and operator of the company.

Anthony Zolezzi, who with Tim Luberski bought the name, said he visited Wal-Mart's Bentonville (Ark.) headquarters 13 times to sell the company on rebooting Wild Oats as a way to sell affordable organic foods. The idea was "to democratize organic to the masses," says Zolezzi. Wal-Mart now accounts for more than 90 percent of Wild Oats' business.

"Our new, specific effort with Wild Oats, launched earlier this year, is a natural progression as we meet customer demand," says John Forrest Ales, a Wal-Mart spokesman. "We are working to lower the price of organic pantry staples to be at parity with national brand nonorganic products."

All this sounds encouraging for those who are aware that many foodstuffs offered in the US contain considerable amounts of chemicals as a result of intensive farming with pesticides. Presumably the rise in cancer, diabetes, etc. can to some degree be attributed to the amount of processed, pesticide-heavy food US citizens are exposed to. (This is presumably the case in the West generally.)

The trend toward more wholesome food is also the result of the Internet, in our view. Just as the Internet era has begun to change political styles by exposing non-mainstream political ideologies, so there are other sociopolitical shifts that can be associated with increased information, including food preferences.

But this being corporate America, there is a downside having to do with the ubiquitous infection of mercantilism. We would anticipate – and this has already taken place – that the more corporations get involved with selling "healthy" (whole) food, the more the standards of such food will reflect a variety of characteristics that have nothing to do with quality of nutrition.

From a consumer perspective, such food may eventually depart somewhat or altogether from what actually constitutes such. Corporations will justify this shift, as they already are, by cooperating with regulators to generate redefinitions that will make it harder for smaller entities to properly advertise and market their own healthy offerings.

From an investment standpoint, the "healthy foods" sector will become more confusing. As standards shift, entities as various as McDonald's and other longtime food vendors and distributors will enter the fray. These entities will seek and perhaps receive a temporary boost in consumer approbation based on their efforts and marketing skills.

But ultimately, some of these campaigns may not work out so well as consumers begin to understand they are not receiving the quality they are seeking. Such consumers may find this quality in smaller, local vendors – thus leading to expansion of regional cuisine, freshly farmed and prepared. This would surely be the best outcome.

After Thoughts

In the meantime, as a consumer and as an investor, prepare for an era of confusing and even misleading labeling. It's already taking place, of course, and it will likely become more rather than less pervasive as corporate America discovers the advantages of offering or pretending to offer "organic" edibles.

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Posted in Agriculture / Organic Farming, STAFF NEWS & ANALYSIS
  • mudpuppy

    good article

  • The DNA genetic code is much like Fortran, where it is not just content, but context that governs output. While it is technically possible to extract the wicked Nicotine DNA, a ‘natural’ pesticide with some degree of purity, it is virtually impossible to use a gene gun and inject this toxic agent into the same gene placement. Therefore thousands of mutant strains can develop, with NO testing on these various derivatives. The GMO monopolists, like Mon-Satan-O have limited all of their testing to time frames that do not show the true side effects of their poison. See

    Professor Seralini on “GMO, Global Alert”

    • john cummins

      I am personal friends with the inventor of the gene gun and will check on the validity of your statements.

  • I soon will be able to buy “organic” at the same price? Mercantalism consists of telling the customer what they want to hear and then selling what you have under the new mantra. Organic at the same price, and with a tiny carbon footprint too??? Bullocks.

  • john cummins

    I would say presumably on the pesticides issue while on the preservative, food additive issue, most assuredly! Most of the pesticides applied on plants are gone relatively fast the same is not true of the trash the “food industry” adds to products. Most of the products nowadays, besides the weird chemicals, contain loads of soy, corn or et al. but especially the first two.

  • Friend of John Galt

    In my former California neighborhood one of the “better” markets (but not a Whole Foods) sold “organic” spinach and other greens at prices competitive with their similarly packaged non-organic versions. Indeed, sometimes the larger size “organic” vegetable was cheaper than a smaller size non-organic competitor. Essentially, the package size (and thus the amount of packaging and handling for any given quantity) cost outweighed the cost of the primary food product (e.g. spinach) when both were given similar processing after harvest (trimming, washing, packaging at standard weights, etc. Perhaps another store might have carried a non-organic that was competitive — but hardly worth driving a further distance, etc., based on the few cents in savings potential.

    Where “organic” has more impact is in the more heavily processed foods. Those are the ones that are filled with high fructose corn syrup, and a variety of other “texturizers,” “extenders,” and “other additives” designed to make food more marketable. It remains to be seen how the “organic” idea affects these products. I have my doubts… Campbell Soup instituted a policy of “less salt” (the level of salt in processed foods being a major complaint from the food police for many years). It should be noted, that once implemented, Campbell’s sales of the affected lines collapsed. Now the labels read “better tasting” as much of the salt has been added back into the products. (I rarely eat canned soups, though in cold weather or while traveling in my RV (where a lunch break can be quickly handled by a microwaved “bowl-sized” ready-to-eat soup) I do occasionally have a meal of these products … and in all honesty, after the salt was removed, most became inedible unless significant salt was added at the dining table.

    While the variety of pre-washed vegetables now available offer a convenient time savings, they do come at a price. Indeed, when comparing the “best price” of pre-washed packaged vegetables with those that are sold in a lower state of processing, the price difference does become self-evident (and the cost of organic vs. non-organic also becomes more obvious). Consumers, however, mostly prefer the convenience (though perhaps not the higher price) of the pre-washed vegetables.

    I doubt that either food processors or consumers will be willing to go back to the pre-TV Dinner era where meals were mostly prepared from basic, unprocessed (or lightly processed) ingredients. When a product as simple as orange juice ends up being processed by separating it into its separate components, concentrated, and frozen. Then re-processed into a variety of “fresh” products: juice (no pulp), juice with pulp, and the other variations visible on store shelves, it seems like we are a long way for really accepting “organic” food. (Indeed, there are “organic” versions of orange juice that goes through this massive processing. I doubt that there are few today who would even think of going through the process I watched my mother perform during breakfast preparation throughout my childhood: Taking a measuring cup, placing a ‘juicer/strainer’ over the top, then hand squeezing (by pressing down and twisting) individual fresh oranges that had been washed in the sink, then cut in half. You got your serving, pulp, occasional seeds, and all the nutrients available from the truly fresh product.

  • People: start patronizing, networking and befriending your neighborhood family farmer during this “good times” because when the sh it hits the fan, probably in 2015, you will wish you had years of great relationship with your neighborhood family farmer.

    Whole Foods sold its soul for profit. It’s not Wholefoods but Whole Foods!

  • Avoid buying “baby” spinach and carrots! Just a marketing gimmick.

  • gringott

    If they would just stop putting HFCs in almost every item in the store, it might be a step forward.

  • Greg Jaxon

    Private, industrial farming practices coupled to public-sector food safety controls amplify the risk inherent in any food production chain. The two are mismatched and incapable of scaling in tandem. Either the world should (foolishly) de-industrialize and/or nationalize all food production (a horrible thought), or it should privatize the business of food quality control, and let market forces re-scale our BIg Food industry.
    The individual practices (GMO, pesticide protocols, handling protocols,….) are each well-motivated, but loaded with scientific and cultural nuances that the practitioners cannot fully resolve without both clinical trials (such as they exist) and market feedback from the early adopters. To have government agencies occupy that choke point in the information flow isn’t an efficient arrangement.
    By putting the quality controls under political forms of governance, instead of consumer-choice governance, we’ve gotten the absurd situation where way-over-scale Big Food is hated by their ill-served customer base, and scientifically blind government agents are hailed for enforcing policy dicta that have bubbled up from some inscrutable witches’ brew of regulatory capture, liberal outrage, and fear of poisons.