Wal-Mart is getting ready to sow some Wild Oats.
According to the New York Times, Wal-Mart announced Thursday it will start selling organic products by Wild Oats. The prices will be 25 percent lower than average organic prices.
Wild Oats is a health brand owned by Yucaipa Companies. The exclusive contract between the two companies will offer a product line with items such as tomato paste and chicken broth.
“We’re removing the premium associated with organic groceries,” Jack L. Sinclair, executive vice president of Wal-Mart’s American grocery division, told reporters.
These competitive prices are likely to drive down prices. Especially since pricing will be similar to that of nonorganic name-brand products.
A majority of the products offered will be organic, with the rest meeting Wild Oats’ standards of ingredients and additives.
Research from Bentonville, Ark. revealed that 91 percent of that specific store’s customers would buy organic products from Wal-Mart if appropriately priced, according to Forbes.
However, Wal-Mart plans to only reveal the products to half of its stores to see how the product fares before offering the line to all locations.
“What we don’t want to do is launch it in 4,000 stores and then not be able to supply those 4,000 stores in the short term,” Sinclair said. “Certain commodities are challenging in terms of being able to access both the raw material and the processing capacity.”
Long term agreements have been made to ensure growth for the product line. It is estimated that the line will increase the price of organic ingredients within the next few years.
Target stores have replied with the claim that it will “expand organic presence,” according to the New York Times article.
According to Forbes, Wild Oats once had its own stores across 24 states as recently as 2007. The Colorado-based company was bought by Whole Foods in 2007 for $565 million.
Due to some antitrust discrepancies and pressure from the Federal Trade Commission, Whole Foods gave up possession of Wild Oats. Wild Oats was set aside and now has been brought back thanks to Wal-Mart.
Wild Oats CEO, Tom Casey, called the partnership “a movement” in which the company was “passing on scalable savings.”
Lynn Clarkson, founder of the Clarkson Grain, which processes and sells various organic and conventional grains, said grains demanded a huge premium because of their rarity.
“Right now, there is so much demand and competition for supplies that the price is very high, and I cannot imagine that changing anytime soon,” Clarkson told the New York Times.
Competitors have to wait and see if they will have to lower prices due to this move.