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[April 10, 2014]
Walmart plans new challenge to Whole Foods in organic market [Austin American-Statesman :: ]
(Austin American-Statesman (TX) Via Acquire Media NewsEdge) April 10--In a new challenge for Austin-based Whole Foods Market, retail giant Walmart said Thursday it has reached a deal to sell products by Wild Oats -- the brand once rivaled and then briefly owned by the local grocer -- in a move that could shake up pricing in the organic foods industry.
Bentonville, Ark.-based Walmart said Wild Oats will relaunch this month in 2,000 U.S. stores in an "effort to drive down organic food prices" on products ranging from salsa to pasta sauce to quinoa to chicken broth.
Walmart's deal seemed to be taking direct aim at Whole Foods, but officials with the Austin-based retailer seemed unfazed Thursday, saying the move was an affirmation of organic and natural foods entering the mainstream.
"They are an excellent competitor," co-CEO Walter Robb acknowledged in an interview with CNBC after news broke of the partnership. But "I will say historically of all the competitors in the market, their customers overlap the least with ours." Robb said Whole Foods expects to remain a leader in the organic food industry projected to grow to $225 billion by 2018. The retailer, featured in Fortune Magazine this month, is in the midst of moving into nontraditional markets such as Detroit and growing its lower-priced 365 store brand.
"We are the leaders in that space and I hope we will continue to be," Robb said. "Last number of years we have been making organic choices affordable and available to customers and the growth of that line suggests we are doing that fairly successfully." Whole Foods is also busy scooping up smaller retailers to expand its reach, including the acquisition last month of four New Frontiers Natural Marketplace stores in Arizona and California.
As part of its new push into organics, Walmart said it will introduce nearly 100 Wild Oats products in U.S. cities such as Dallas. However, Austin won't be part of the initial roll out, a spokeswoman said.
Walmart estimates it will save customers 25 percent or more on organic products when compared to other national brands. For example, a 6-ounce can of organic tomato paste will sell for 58 cents compared to 98 cents for a similar item.
"We know our customers are interested in purchasing organic products and, traditionally, those customers have had to pay more," said Jack Sinclair, executive vice president of grocery at Walmart U.S. "We are changing that and creating a new price position for organic groceries that increases access." Wild Oats Markets Inc. was originally introduced in 1987 in of Boulder, Co., and grew to 110 stores by the time Whole Foods acquired the rival company in 2007.
The move sparked a battle between Whole Foods and the U.S. Federal Trade Commission, who said the acquisition would hurt competition. By 2009, Whole Foods moved to sell off its Wild Oats interests.
On Thursday, Wild Oats CEO Tom Casey lauded the Walmart news.
"Our availability at Walmart will allow us to finally pass along scalable savings directly to consumers," Casey said.
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