[Vision2020] Wal-Mart goes after COOP

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Wal-Mart to double its organic food selection
Retail giant continues its aggressive expansion into grocery market.

By Kate Miller Morton
AUSTIN AMERICAN-STATESMAN STAFF
Wednesday, March 08, 2006

Wal-Mart Stores Inc. will double its organic product selection in the next
few weeks as the company continues an aggressive expansion into the grocery
market and tries to lure more upscale shoppers to its stores.

Wal-Mart already sells some organic products in its Supercenters and
Neighborhood Markets, including baby food, juice and produce. The company
will expand its organic produce and dairy selections as well as dry goods
such as pasta and peanut butter.

"We are seeing that the majority of consumers today are interested in
organics in one form or another, and we want to help them find those organic
selections at the best value," Wal-Mart spokeswoman Karen Burk said. "You
will see this expansion begin in our Texas stores in the upcoming weeks."

Wal-Mart has been aggressively expanding its share of the Central Texas
grocery sector, adding eight Supercenters in three years for a total of 14.
The company now has slightly more than 20 percent of the Central Texas
grocery market, compared with just 4.5 percent in 2000, placing it second
only to H.E. Butt Grocery Co., which has 55 percent, according to market
research firm Trade Dimensions.

Organic food sales are one of the fastest growing segments of the
hyper-competitive grocery industry.

Increased demand has lured more mainstream grocery stores into a product
area once reserved for fringe specialty stores such as Austin-based Whole
Foods Markets Inc.

Last year, H-E-B launched an organic private label brand called Central
Market Organic and All-Natural in its Central Market and H-E-B stores. The
product line includes all-natural items ranging from commodities such as
milk and eggs to fruit juices, popcorn, coffee, mustard, cereal, mayonnaise,
pasta and pasta sauce.

H-E-B now carries more than 421 organic and natural items and plans to add
198 additional products this year, including organic beef.

Randalls recently launched a 150-item private label organics line that
includes a wide variety of products, such as cereal, eggs, juice, milk and
bottled teas.

"It's a consumer-driven industry, driven by consumer demands and
preferences, and obviously a lot of consumers are getting turned on to
organics and seeking those products," said Todd Hultquist, spokesman for the
Food Marketing Institute, a trade association.

"At the same time, the supply of organic products has grown dramatically.
With an increased supply, prices have gone down, and that was always a
barrier to people who wanted to go organic but didn't want to increase their
household budget on food," Hultquist said.

Whole Foods spokeswoman Kate Lowery put a positive spin on potential
competition from Wal-Mart, saying she expects Wal-Mart's organic expansion
to ultimately benefit Whole Foods by exposing more consumers to organic
products.

"I think it will have a positive impact because once they discover those
products in those conventional supermarkets, then they will find their way
to us," Lowery said. "(With the) few products they find there, they will be
turned on to a larger variety of products in our stores."



Find this article at:
http://www.statesman.com/business/content/business/stories/other/03/8organic
s.html