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April 2006
Editorial: Grocery Store Wars
By Catherine Clyne

 

In 1991 Wal-Mart founder Sam Walton said, “In ten years, we’re going to be the biggest supermarket in the country.”

Guess what—he wasn’t messing around.

That might seem strange to people who don’t live anywhere near a Wal-Mart, but the world’s top corporation has catapulted into the position of number one grocery retailer in the country, providing its primarily low-income rural and suburban constituents with cheap food. Today, Wal-Mart holds an estimated 15 percent of the U.S. grocery market and roughly eight percent of the global grocery sector. And by next year, Wal-Mart is expected to dominate 35 percent of American grocery retail. Since it began selling food, roughly 10,000 supermarkets have closed their doors.

While the others on the list of the top five food retailers in the country—Kroger’s, Costco, Albertson’s and Safeway—still dominate in urban areas, Wal-Mart’s staggering growth has put everyone on alert. Grocery retail, one of the most cut-throat businesses in the world, is getting even more vicious with the rise of Wal-Mart, leaving everyone scrambling to hold on to their share of the market.

Part of Wal-Mart’s rocketing to supermarket stardom can be attributed to its selling up to one-third fewer items than its competitors, and not charging the usual ‘slotting fee,’ a price companies pay to get product space on store shelves. In the New York area, that can be $150,000 per product. As it does in the retail sector, Wal-Mart puts the onus onto its food producers, driving prices down. With everyone vying to be one of the 10,000 items sold in Wal-Mart, competition is fierce. And where does Wal-Mart go for the cheapest of cheap goods? China.

Wal-Mart has an extremely lucrative relationship with China, accounting for ten percent of the country’s exports to the U.S. That’s right: ten percent. Meaning approximately one in ten shipping containers leaving China with goods for the U.S. is bound for Wal-Mart. As the world’s top grower of apples and garlic, we can expect China to be growing even more food—to feed Wal-Mart shoppers. And those hanging in the balance are the ones who grow our food: our farmers.

Eye on Organics
For those who don’t shop at Wal-Mart and think their business practices don’t affect your food choices, you should think again. Even consumers of organic and natural foods have become an increasingly desirable target of multinational corporations.

That’s right. You’ll learn in our pages that many of the organic and natural brands we love, like Tom’s of Maine, Rice Dream, Boca Burgers, Knudsen juices, Gimme Lean, Yves, Silk and Jason’s cosmetics are all owned by multinational corporations, such as Hain Celestial Food Group (with principle stockholders like Heinz, Lockheed Martin, Monsanto and Pfizer), Kraft/Philip Morris, Dean Foods... You get the picture.

Getting in on the action, Wal-Mart has significantly upped its organic product sales and is now the nation’s top organic milk retailer. Early last month the company announced plans to double its organic product offerings within the next few weeks. At last year’s annual meeting CEO Lee Scott enthused he was “excited about organic food, the fastest growing category in all of food, and at Wal-Mart.” While he says Wal-Mart’s intention is to make organic food affordable, I’d take that idea with a grain of salt.

To be sure, Wal-Mart wouldn’t move into the organic sector unless there’s profit to be had. And with major corporations getting in on the ground floor, we can expect to see them use their corporate muscle to manipulate organic standards to suit their purposes, which will not be to maintain safe food. Nor will the corporate takeover of organics help out farmers. They will no doubt bear the brunt of this race to the bottom line.

Whole Foods or Whole-Mart?
If you shop for natural foods, increasingly your option is Whole Foods—and that’s it. Like with Starbucks and local coffee shops, once a Whole Foods lands in a neighborhood, independent natural/health food stores go out of business. Whole Foods CEO John Mackey has openly expressed his admiration of Starbucks. Last year, at an animal rights conference, Mackey confidently predicted that with their current growth rate, 10-15 years from now Whole Foods will be second to Wal-Mart. Second.

Many vegans and vegetarians welcome the expansion of Whole Foods. It conveniently provides a variety of products, where there used to be just a few in a local health food store. But sometimes unchecked growth is unsustainable and we have to realize when enough is actually a worthy goal. Is Whole Foods turning into Whole-Mart?

Where Does Your Food Come From?
It’s a simple question, but for most of us, the answer is rarely easy and often quite disparate.

It wasn’t until a few weeks ago that I really gave all of this much thought. As we delved into research for this issue, I kept thinking about the fact that the overwhelming majority of Americans don’t get their food from local farms—myself included. Generally, we don’t know the people who grow or sell our food, or where it comes from. Americans get their food from grocery retailers, anonymously packaged and ready to go. As I looked into it more and more I started to realize how our food “choices” are actually dictated by a small fraction of the retail sector, and that our choices are quickly dwindling.

Those most invisible and vulnerable in all of this expansion are the anonymous faces behind our food choices: small farmers. What will become of them as competing food retailers elbow each other to the top?


A great resource for understanding the growth of agribusiness and the food retail sector is the Agribusiness Accountability Initiative at www.agribusinessaccountability.org.

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