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Wal-Mart said on Thursday that it had made a deal with Wild Oats and would be selling their branded organic foods at the price of non-organic foods. The deal is expected to revive Wal-Mart’s dominance over the grocery market and also strengthen the Wild Oats brand. The move by Wal-Mart can start a pricing war in organic foods and put pressure on other food sellers like Campbell Soup and ConAgra Foods Inc.
Even though organic foods account for a meager 4 percent of total U.S. food sales in 2012, the sector has experienced outstanding growth for years with more and more people becoming interested in food prepared from ingredients that are natural.
Usually, organic foods cost more than other similar mainstream food products and few low-income shoppers go for organic foods. However, the entry of a national retail chain of the magnitude of Wal-Mart can rapidly change the scenario.
Wal-Mart has already said that it would be selling Wild Oats products at prices at least 25 percent below other branded organic foods. The Wild Oats range would also include mainstream organic items like canned black beans, organic olive oil, organic tomato paste, and salsa.
Jack Sinclair, executive vice president of grocery at Walmart U.S. said the retailer’s own research shows that 91 percent of its shoppers were willing to buy organic products if available at same prices as that of other mainstream products.
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Sinclair said, “If we can make that price premium disappear, we think it will grow much, much faster,” referring to the sales of organic food.
Walmart already sells more than 1600 organic products and would not be removing the premium prices from those items despite the introduction of new items under the Wild Oats brand. The retailer expects to introduce at least 100 types of Wild Oats packaged organic foods in the coming months across its network of 4000 stores in the country.
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