Thursday, January 20, 2011

Walmart Joins Let's Move! With Five-Year Plan

America's biggest grocer creates groundbreaking "Nutrition Charter" to meet First Lady's goals; Senior Policy Adviser For Healthy Food Initiatives Sam Kass goes on the record about the impact
Walmart's stock value rose by 1.74% in early trading on Thursday after word got out that First Lady Michelle Obama would join company executives to announce an ambitious five-point, five-year Nutrition Charter, which mirrors key components of the Let's Move! campaign. From a stage filled with crates of vegetables in the auditorium of a community center in the Anacostia neighborhood of Washington, DC, Mrs. Obama said today that the project has "the potential to transform the marketplace and help Americans put healthier foods on their tables every single day." (Above: Mrs. Obama today during her remarks)

The First Lady is not exaggerating. Janney Capital Markets estimates that Walmart controls about 33% of the grocery market, with its closest competitors, Kroger, Safeway and Supervalu, each holding between 4% to 9%.

"I believe this Charter is a huge victory for folks all across this country," Mrs. Obama said. "It’s a victory for parents. It’s a victory for families. But most of all, it’s a victory for our children."

The company already sells its products at a low price point, but today pledged to reduce prices on healthier fresh fruit and vegetables, as well as make healthy processed foods more affordable. By 2015, it will revamp hundreds of its own private-label processed foods, from salad dressings to frozen offerings, dropping sodium content by 25%, sugar by 10%, and eliminating industrially produced trans-fats. Walmart will build more supermarkets in underserved areas, to combat what the Obama Administration identifies as food deserts, and it will develop easy-to-read front-of package nutrition labeling. There's also plans for an aggressive public education campaign about nutrition.

"Efforts like this show us that yes, we can improve how we make and sell food in this country – and what we feed our kids," Mrs. Obama said.

The auditorium was filled with nutrition and health advocates, as well as uniform-clad students from a local girls' school, and Mrs. Obama, as well as the Walmart execs, were frequently interrupted by cheers and applause as they spoke.

"We have enormous respect for the First Lady's leadership," said Leslie Dach, Walmart’s executive vice president for corporate affairs. "She was the catalyst that made this possible."

As the Let's Move! campaign approaches its one-year anniversary in February, Walmart is the only food corporation that the First Lady has come out to publicly support, even though other companies have made commitments to the campaign. Last year, 16 major food companies pledged to join Let's Move!, and reformulate their processed foods to make these healthier, as well as remove trillions of calories from the food chain. These included Kraft, PepsiCo, Coca Cola, Campbell Soups, Kellogg's, ConAgra, and Sara Lee, which Mrs. Obama said last year collectively create about 25 percent of America's food supply. But Walmart's effort is the most sweeping program yet.

"The truth is, back when we first decided to take on the issue of childhood obesity, in the back of my mind, I wondered to myself whether we would really be able to make a difference," Mrs. Obama said this morning. "But today, when I see a company like Walmart launch an initiative like this, I feel more hopeful than ever before that the answer to these questions is yes."

Walmart is based in Bentonville, Arkansas. In 2009, a study from the Robert Wood Johnson Foundation ranked the state as the second highest in the nation for obese and overweight children, with a prevalence rate of 37.5%; for adults, the state placed tenth, with a rate of 28.6%.

A sea change for food corporations?
With their partnership, Mrs. Obama and Walmart could inspire a sea change in how America's food corporations approach their products. Company executives said today that Walmart will be encouraging corporations from which it purchases products to follow through with their own healthier reformulations, or it will eventually stop selling their wares. About 16% of US sales of Kraft products are at Walmart stores, and PepsiCo admits to about 10%, according to the New York Times. (Above: Walmart's private label "Great Value" foods are sold alongside America's most popular food brands)

"When 140 million people a week are shopping at Walmart, then day by day, and meal by meal, all these small changes can start to make a big difference for our children’s health," Mrs. Obama said. "We are seeing a fundamental shift in our national conversation about how we make and sell food."

Last year, after the global giant launched its sustainability index, it became the "gold standard" in the supply chain, and the company's new project could well have the same impact. Of course, Walmart is hoping that the new healthy food initiative will be profitable, too.

“We hope this will provide greater reason and opportunity for customers to come to our stores,” Dach said. “We are very eager to bring Walmart to food deserts. We’ll work closely with neighborhoods and cities and elected officials."

During a 2010 speech to the Grocery Manufacturers Association, Mrs. Obama told food makers that if they would create healthier food offerings, she'd make it her mission to ensure that they'd have health-conscious parents ready to purchase the products. Thus her appearance today.

Dach, when questioned, said that Walmart won't be using Mrs. Obama's image in the marketing campaign for the new initiative, but the First Lady's appearance at the news conference caused national headlines today.

Sam Kass (l) Mrs. Obama's Senior Policy Adviser for Healthy Food Initiatives, told ObFo that the Walmart project has been in development for more than a year, with company officials working with Mrs. Obama's East Wing team to frame the project.

"This has been a mutual collaboration from the beginning," Kass said. "It really has."

Kass pointed out that everything Walmart has proposed can be verified in an open, transparent manner. Partnership For A Healthier America, the non-profit that was created to support and monitor the Let's Move! campaign, will be tracking the the success or failure of Walmart's efforts. Jim Gavin, chairman of the Partnership, sat on the stage behind the First Lady as she spoke.

"All the information, everything Walmart does is available to the public because they're a publicly held company," Kass said. "It's very easy to track."

Asked if the five-year time frame for changing product formulations is "too long," Kass said no.

"This is a significant step in the direction that we need around reducing the amount of sodium we take in," Kass said. "But it's critical that we do this over the course of time so that our palates adjust to the new formulations."

Kass also said removing sugar and trans fats from foods is crucial for health, too.

"It's removing a harmful fat, but it's also just removing fat, and that's a big deal," Kass said.

The 10% sugar reduction goal, Kass said, is a target that Walmart worked with their suppliers to identify as attainable.

"That doesn't mean it's the limit," Kass said. "I think they're going to be looking for anywhere they can to identify extra sugars to take out of foods. It may be more."

"But none of this is going to happen overnight," Kass added. "It's a process."

Dr. Marion Nestle, the Paulette Goddard Professor in the Department of Nutrition, Food Studies, and Public Health at New York University, both lauded Walmart and remained skeptical about the Nutrition Charter.

"Walmart can get whatever it wants from suppliers—and even get Mrs. Obama to endorse its actions," Nestle said. "That’s power. Whether these initiatives will do anything for health remains to be seen."

She said she thought the most important part of the Nutrition Charter is the effort to make fresh fruit and vegetables more affordable.

"That could make a real difference," Nestle said.

But she also warned that the impact on small, local farmers might be negative, since Walmart will attempt to pay growers bottom dollar in order to charge its own customers less.

Walmart's Andrea Thomas, senior vice president, private brands, said that the company will attempt to trim $1 billion in costs from its own supply chain when procuring fresh produce, and pass this savings to consumers in the form of lower fruit and vegetable prices. But executives at the news conference were hazy on how exactly this will be enacted.

Nestle said she was also concerned that Walmart's efforts to create their own front-of-pack nutrition labels, what the company deems a "healthy seal" would just confuse consumers.

"They are doing this just when the Institute of Medicine and FDA are trying to establish research-based criteria for front-of-package labels," Nestle said. "So here is one more company trying to preempt FDA regulations."

Kass said that even if Walmart still had to work out all its details, the fact that a grocery superpower has joined the White House is what is important for parents and families.

"What matters here is that this is America's largest corporation and largest retailer, and they're taking a deep look at their corporate practices and trying to find all the ways they can help bring healthier options in a more affordable way to their consumers," Kass said. "If they follow through and meet their goals, we could see a real impact on the health of people who shop there."

As Mrs. Obama noted during her remarks, almost half the population of the US shops at Walmart each week. Kass said the White House is hopeful that other food corporations will follow Walmart's lead, and join the First Lady's campaign.

"It sets a great example for the rest of the industry," Kass said. "It's an enormous first step."

By the end of the day, Walmart's early stock gain had held steady in New York Stock Exchange composite trading. Coincidence? Unlikely. Mrs. Obama's multi-million dollar impact on the sales of the clothing designers she wears is now well documented.

Mrs. Obama worked the rope line after her remarks, hugging the excited school girls in the front row. Then she went back to the White House where she surprised visitors by showing up in the middle of their tour, as part of the celebration of the two-year anniversary of the President's inauguration.

Over the next five years, Walmart pledges specifically that they will meet their partnership goals through:

1. Reformulating thousands of everyday packaged food items by 2015 by reducing sodium 25 percent and added sugars 10 percent, and by removing all remaining industrially produced trans fats. The company will work with suppliers to improve the nutritional quality of national food brands and its Great Value private brand in key product categories to complete the reformulations;

2. Making healthier choices more affordable, saving customers approximately $1 billion per year on fresh fruits and vegetables through a variety of sourcing, pricing, and transportation and logistics initiatives that will drive unnecessary costs out of the supply chain. Walmart will also dramatically reduce or eliminate the price premium on key “better-for-you” items, such as reduced sodium, sugar or fat products;

3. Developing strong criteria for a simple front-of-package seal that will help consumers instantly identify truly healthier food options such as whole grain cereal, whole wheat pasta or unsweetened canned fruit;

4. Providing solutions to address food deserts by building stores in underserved communities that are in need of fresh and affordable groceries; and

5. Increasing charitable support for nutrition programs that help educate consumers about healthier food solutions and choices.

Read the full transcript of Mrs. Obama's remarks. The White House press release about the announcement is here.

*Photos by EGK/ObamaFoodorama