Wal-Mart's Green Index

Wal-Mart's tracking adoption of certain "green" products among its customer base, showing which ones are leading and which states are further ahead. The adoption rate is the percentage sales of these products in the overall category.

Among the findings:

- CFLs (compact flourescent  lightbulbs) are at a 19.7 percent adoption rate.
- Organic milk, 1.58 percent.
- Eco-friendly cleaning products, 4.77 percent. Product launched in January.
- Organic baby food, 4.12 percent
- Extended-life paper products, 67.5 percent
- Sustainable coffee (fair trade certified, USDA organic, or rainforest alliance certified), 0.35 percent. Product launched in April.

The figures on CFLs were encouraging. Remember when Al Gore implored people to swap out their light bulbs at the end of "An Inconvenient Truth?" But other figures left me scratching my head.

I wondered what "extended life paper products" actually were. As it turns out, this does not mean they have recycled paper content. All it means is the roll is four-times larger than average. Why does that qualify as a green product? Because it saves on driving trips to the grocery store to pick up toilet paper and on packaging. By this logic, any supersize offering would qualify as green.

The figures, while up, also show how modest they are for categories like organic milk.

- Samuel Fromartz

Fifty million pounds of shrimp

That's how much Wal-Mart buys each year, 50 million pounds, and if it pays 2 cents more per pound a year, it can set operating standards for the farms -- something the retail giant is starting to do. That extra $1 million seems like a deal, if it will clean up this aquaculture industry.

This is a huge issue since shrimp is the number 1 seafood choice and Wal-Mart is the number 1 buyer. Seafood Watch advises avoiding the stuff, largely because of the mangrove forests destroyed by this activity. (The farms also use copious amounts of antibiotics). Wal-Mart's move in this area came out last week at the Monterey Bay Aquarium conference and was mentioned in a piece by Corie Brown in the LA Times. We'll see how well they follow through.   

Speaking of Wal-Mart, the company also agreed to post new signs on organic food products, according to an announcement by the USDA's National Organic Program. This will make sure that the products behind the signs are, in fact, organic rather than something else. Wal-Mart was taken to task over the signs by organic advocates and then state and federal regulators took a close look too. After months of denying there was a problem, Wal-Mart agreed to changes.

After Lapses, Wal-Mart Steps Up Organic Oversight

Wal-Mart agreed to step up oversight of its organic labeling, after the state of Wisconsin cited the company for numerous inaccuracies.

According to the Cornucopia Institute, which first raised the issue last year, the Wisconsin Department of Agriculture, Trade and Consumer Protection told Wal-Mart’s legal counsel that “use of the term ‘Wal-Mart Organics’ in combination with reference to a specific non-organic product may be considered to be a misrepresentation and therefore a violation” of Wisconsin state statutes. 

The AP reports that Wal-Mart "said Tuesday it has given updated guidelines to its employees." The story continues:

Wal-Mart said that green tags on their shelves, which identify food as organic, may have inadvertently or mistakenly been placed, or accidentally shifted in front of the wrong item.

"Our green organic signing is for additional consumer convenience to show that an organic alternative is available. It is not a label," the company said in a statement. "The USDA (U.S. Department of Agriculture) certification label is featured on the packaging of the organic selections we offer and consumers should always rely on this USDA certification label for proper organic verification."

That quote is an interesting bit of semantics, since it essentially says shoppers should understand the difference between a "label" and a "sign." We're not sure the USDA organic program would agree.

Wal-Mart said it is working with store associates to have the identifying tags checked periodically for accuracy.

James Rabbitt, director of the state Bureau of Consumer Protection, said that as long as Wal-Mart keeps in place additional measures to ensure that nonorganic products are not identified by shelf tags as being organic, his agency will not pursue the matter further, other than to monitor Wal-Mart's practices for compliance.

Wal-Mart Tinkers with Organic

It's not easy to maneuver a battleship to hit a floating cork, but that appears to be what Wal-Mart is doing in the organic market. On that score, I just came across this Reuters interview with a Wal-Mart executive about its experience in the organic market. It was published on Friday. (See what happens when I miss one day of reading Ethicurean's news digest?). Here are some choice bits from a chat with Ron McCormick, Wal-Mart vicepresident of produce and floral. He's talking about problems with getting supply:

"The growers were straining to meet our volume, which I think also pushes you into an unenviable position in produce," he said.

"Whenever growers are straining to meet your volume it means they're forced almost into selling you something that would not be their best crop because they're desperate to get you something to meet your demand."

McCormick said Wal-Mart continues to fiddle with its organic strategy, trying to figure out the premium that its shoppers will pay for organic produce. It is also focused on developing a consistent supply of products.

"We're now trying to build a network of good suppliers that will be able to grow with us and be consistent. Our ideal supplier is one that has a passion for what they're doing and also has the ability to grow as we grow, so you don't have thousands and thousands of suppliers," he said.

I found that last point particularly interesting, since it underscores the point that Wal-Mart will source from larger growers rather than "thousands of suppliers." That's not necessarily bad, since it means other competing retailers can differentiate by sourcing from smaller, local growers in the market - and succeed.

Wal-Mart Organic Push Fizzling

I have been saying for quite some time that it was questionable whether Wal-Mart's push into organics was really working. Business Week  now points out that it is not.

A number of organic farmers across the country say that Wal-Mart hasbacked off of aggressive plans to offer more organic foods. After placing large orders for organic apples and juices last year, the retailer is cutting back or stopping orders altogether.

So maybe the worries about Wal-Mart corrupting organics were overblown?

Mainstream Cooling on Organics

I've been contending for awhile that the push of organic food into the mainstream was not a slam dunk.

A lot of commentators last year worried about the impact of Wal-Mart getting into the organic market - both on standards and on supplies. But no one really considered what would happen if Wal-Mart's move into organics did not work out. That's a question to consider now, especially with a large potential ramp up in supplies. There are shortages now as products come on line but what happens if the "mainstream" customers don't show up? Will farmers get stuck with a lot of excess organic acreage ... and milk?

Choice quotes of mainstream food execs in a Reuters story:

"Wal-Mart asked everyone for organic (food). At the end of the day consumers buy benefits and it's not exactly clear what the benefits are from organic. They might end up being niche propositions."
- Alan Jope, Global Food Group Vice President at Unilever Plc

"It's not as rapid as Wal-Mart might have liked or as any of us might have liked, but it is definitely growing."
- Cindy Hennessy, senior vice president of innovation at Cadbury Americas beverages.

"We believe the natural market is the larger opportunity."
- Hormel CEO Jeffrey Ettinger

Note that "natural," as a term, is largely undefined by the USDA (applying only to "minimally processed" meat without artificial additives).

This story will continue to unfold in the coming months, as large companies adjust their expectations and demand, potentially, eases a bit.

- Samuel Fromartz

Whole Foods Eats Oats

Whole Foods decided to have Wild Oats for its latest meal, gobbling up its distant rival in a bid to stave off competition from the Safeways, Giants and Wal-Marts of the world.

Short story: Organics and natural foods are hot, Wild Oats has been adrfit, and another player could have swallowed it up and created more formidible competition for Whole Foods.

What none of the news stories note, however, is that there was a traditional antipathy between these two companies, more than a competitive rivalry and something closer to extreme distaste. One could imagine that this very smart merger could have happened years earlier, without it.

The October 2006 exit of former Wild Oats CEO Perry Odak (who came from Ben & Jerry's in 2001) cleared the way for Whole Foods to make a merger overture - something that was aided by Wild Oats continued inability to gain significant traction.

Although Wild Oats had remodled stores and opened new ones - including, finally, a large store to compete with Whole Foods in its home turf of Boulder, Colorado - growth never really kicked the way it had at Whole Foods. It was always a distant second.

Wild Oats's sales per square foot - a typical industry measurement - are only 49 percent of Whole Food's. That means the typical customers visiting Whole Foods are buying twice as much stuff.

Downsides? Merging the culture of two companies who have a history of bad blood. But then again, "it's just bizness" and I imagine the Oaties will get along fine in Whole Foods.

Wal-Mart Unmoved

Wal-Mart has issued a response to the Cornucopia complaint about its labeling practices. "Wal-Mart officials say that the company has done nothing wrong," according to Business Week.

The company notes it has has more than 2,000 locations that offer up to 200 organic selections, in addition to thousands of nonorganic offerings. It called the mislabeling an "isolated incident."

But many retailers sell far more than 200 organic offerings but seem to get the labeling right. Why doesn't Wal-Mart simply admit it made a mistake and plege to correct it? Instead, they are facing two potential investigations on mislabeling by the state of Wisconsin and the USDA.

Hello USDA? Check Up on Wal-Mart

The Cornucopia Instiute, a small farm advocacy group, has filed a complaint charging that Wal-Mart is passing off non organic food as organic. At the very least, the retailing giant may be causing consumer confusion if you take a look at the pictures Cornucopia has posted on its web site.

So what's the big deal?

Well, one of the reasons organic regulations were written was to make sure that consumers got what they were paying for. There's a whole system of inspections, certifications and labeling requirements that each producer and retailer must meet in order to sell organic food. Now, a retailer doesn't have to be certified to sell organic food, but they are required by law to label the stuff correctly (among other things). You want the fine print, check it out on the USDA web site here. The bottom line: mislabeling can lead to a $10,000 fine per incident.

Although Cornucopia complained to the USDA several weeks ago, the USDA apparently took no action. Nor did Wal-Mart, although Cornucopia also fired off a letter to Bentonville about the labeling issue. With everyone apparently asleep, Cornucopia - pitbulls that they are - racheted up the action by filing legal action.

Now, it would be easy to cry fraud. More accurately, it's probably a case of ignorant stocking clerks and managers slapping the organic signage on any and all products. Not too keen - but hey, that's what you get in the absence of adequate training about the organic marketplace.

So two things needs to happen. The USDA needs to check this out. And Wal-Mart needs to take some corrective action. They might be able to change the world by embracing sustainability, but first, they've got to get it right.

No wonder some organic types are likening the company's entry in the market as the arrival of Wal-Martians.