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Wal-Mart pushes organics in food fight

Sandy Horrell, 59, of Crestwood, shops the organic aisle of the Shop n' Save produce section. ( David Carson/P-D)

Grocery chains worried about growing competition from Wal-Mart Stores Inc. are facing a new headache: The giant discounter is launching a 10-month marketing campaign to promote its food operations, starting with organics.

Industry experts see the move as part of Wal-Mart's effort to attract more affluent shoppers while polishing an image tarnished by criticism from labor and consumer groups over its operations and employment policies.

Wal-Mart is a particularly touchy subject among St. Louis-area groceries and union workers. A 2003 grocery strike and lockout was largely over concessions the three major chains said they needed to better compete with Wal-Mart. After a new contract was reached, both sides agreed to work together to keep Wal-Mart out of the St. Louis grocery business.

The three chains, Schnuck Markets Inc., Dierbergs Markets Inc. and Shop 'n Save Warehouse Foods Inc. all sell organic products. Advertisement

"We will stand on the strength of our offerings," said Lori Willis, Schnucks spokeswoman. "We will take whatever comes and rise to the challenge."

While organic food makes up a relatively small part of grocery chains' inventory, it is a steadily growing segment that particularly appeals to upscale shoppers. A survey earlier this year by the Organic Trade Association showed that organic foods sales grew 16.2 percent last year and accounted for $13.8 billion in consumer sales.

Willis said Schnucks has been competing with both big box and specialty stores when it comes to organics and "our selection rivals anyone's." She said Schnucks has 86 different organic products in the produce section alone.

Steve Duello, director of produce at Dierbergs, said he didn't think Wal-Mart's advertising would lure customers away from his chain and it might actually help by educating consumers about organics.

"It remains to be seen how successful they will be with" organic produce, he said. "It takes a lot of care to keep the quality standards where they need to be."

Shop 'n Save said in a statement that it carries about 75 to 80 organic produce items, depending on availability, and "an additional several hundred organic products throughout" its stores. The chain's intent is to make organics more affordable and accessible to its customers.

Although the chains want to keep Wal-Mart out of their backyards, the giant discounter continues to penetrate the area. In May, Wal-Mart opened a Supercenter in Wood River, and, in March, Wentzville aldermen approved Wal-Mart's plans to build a store with full-service grocery shopping, despite objections from union officials.

Wal-Mart also has Supercenters in Eureka, Festus, Lake Saint Louis, O'Fallon, Ill., and Waterloo.

With its some-2,000 Supercenters throughout the nation and lower prices, industry analysts say Wal-Mart could eventually surpass Whole Foods Market Inc., the country's largest organic foods supermarket.

"Competition is good for any company," said Kate Klotz, a Whole Foods spokeswoman. "In Whole Foods' case, it provides another reason to strive for excellence while increasing awareness of organic and natural foods."

The Wal-Mart organics television commercials started airing this week on network and national cable stations, including the Food Network and HGTV.

Three print ads will begin appearing on newsstands this month in such magazines as Real Simple, Parenting, Self and Cooking Light.

The food marketing campaign is designed by Bernstein-Rein of Kansas City, Missouri's largest advertising agency. The campaign will be Wal-Mart's largest summer advertising effort, said Neil Neumeyer, corporate communications manager at Bernstein-Rein.

The Wal-Mart ads will showcase the first "organics" Wal-Mart logo and the tag line "What will you bring to the table." The television spots also deliver the line "Introducing Organics at the Wal-Mart price."

Wal-Mart began offering organic products several years ago but has been expanding both food and apparel items throughout the year. In April, it said it was adding organic cotton baby clothing to its existing lines of organic infant formula and baby food.

The company has organic food products in all of its Supercenters and Neighborhood Markets, although the availability of certain items varies by store.

The retailer decided to start advertising organic food because many customers didn't realize it was available at Wal-Mart, said company spokeswoman Karen Burk.

"We want them to realize they can discover affordable organics," she said. "Where there is a demand, we are expanding in many of our stores."



What is organic?

Produced by farmers who use renewable resources, conserve soil, water

Animals given no antibiotics, growth hormones

No conventional pesticides, petroleum-based or sewage sludge-based fertilizers

No genetic engineering, radiation

Source: MCT; U.S. Agriculture Department, Organic Trade Association (U.S.)

 What's in a label?

Although organic foods have been sold in the United States since the 1940s, there have been no national

standards for labeling them until recently.

The labels:

100% Organic

All organic ingredients.

Label must list ingredients, if product contains more than one ingredient.

Can use USDA seal; must list certifying agent.

Organic

At least 95% organic ingredients.

Lists which ingredients are organic.

Can use USDA seal; must list certifying agent.

Made with organic ingredients

At least 70% organic ingredients.

Lists which ingredients are organic.

Cannot use USDA seal; must list certifying agent.

Some organic ingredients

Less than 70% organic ingredients.

Cannot use word "organic" on package but can list organic ingredients.

Cannot use USDA seal or certifying agent's seal.

Organic vs. natural

"Natural" does not mean "organic"; natural usually means product is minimally processed, contains no artificial ingredients, added color.

No national standards.

Source: MCT; U.S. Agriculture Department, Organic Trade Association (U.S.)