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Attention shoppers: Wal-Mart plans to offer healthier foods

US First Lady Michelle Obama speaks as she joins business leaders from Walmart, an American public multinational corporation that runs a chain of large discount department stores and a chain of warehouse stores, for an announcement impacting food formulation, availability and affordability in Washington, DC, on January 20, 2011.

Mandel Ngan/AFP/Getty Images/Mandel Ngan/AFP/Getty Images

Wal-Mart has changed the way people shop, now it wants to change the way they eat.

The world's largest retailer announced a five-year plan on Thursday to cut prices on healthy food and press its suppliers to cut back on sodium, sugar and trans fats in their packaged products.

The announcement won the backing of Michelle Obama, who has been leading a White House initiative to combat child obesity. Wal-Mart's move had "the potential to transform the marketplace and help Americans put healthier foods on their tables every single day," Ms. Obama said during a news conference in Washington with Wal-Mart executives.

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There has been a trend toward healthier eating for years, but some experts say Wal-Mart's decision to take up the cause marks a kind of tipping point that could transform the way healthy food is sold and make it more affordable for huge portions of the population.

"The implications are very deep and wide," said Mari Gallagher, a Chicago consultant whose public health research in 2006 led to the concept of "food deserts," communities that don't have a grocery store but rely on fast food outlets and convenience stores.

"This will not only mean better food in Wal-Mart but it would mean better food at some of these fringe places … Wal-Mart is very powerful because it's so ubiquitous. It's in rural areas and suburban areas across the country. It's reaching a lot of different kinds of consumers. And many consumers are concerned about healthy food but also the price of food."

Ms. Gallagher and others say Wal-Mart is one of the few companies that has the power to alter eating habits. Over the past 20 years, the Arkansas-based retailer has moved away from its roots as a general merchant and has become a food behemoth. Sales of groceries accounted for more than half of Wal-Mart's roughly $260-billion revenue in the United States last year and the company sells almost twice as much food as the biggest U.S. supermarket chain.

In Canada, Wal-Mart doesn't have the same dominance in the grocery business but its market share is growing as it adds more food products. Wal-Mart Canada said Thursday it is not planning to follow its parent company's lead for now, but will focus instead on increasing its emphasis on locally-sourced produce.

Experts say if Wal-Mart is serious about selling healthy food, its impact will go beyond the grocery store aisles. Wal-Mart's buying power means it can force food companies such as Kraft, Campbell Soup and General Mills to produce healthier products at a lower cost. The ability of Wal-Mart to institute across-the-board changes to the nutrition of food products rivals that of the U.S. Food and Drug Administration, said Michael Jacobson, executive director of the Center for Science in the Public Interest, a Washington, D.C.-based consumer advocacy group.

"Wal-Mart's pressure on food manufacturers will absolutely have a ripple effect," Mr. Jacobson said. "When they snap their fingers, their suppliers jump because everybody wants Wal-Mart's business."

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Any move by Wal-Mart will also likely be matched by other retailers, many of whom have been reeling under pricing pressure from Wal-Mart. "I think this puts the onus on those stores to look at what they're serving and see if they need to make improvements," said Yoni Freedhoff, medical director of Ottawa's Bariatric Medical Institute and an outspoken advocate on nutrition issues.

But there are skeptics, including those who say Wal-Mart's announcement was more about public relations than healthy eating.

"I see this as, essentially Wal-Mart looking to get media and consumers attention by doing something that they have to do anyway," said Martin Gooch, director of the Value Chain Management Centre, a Guelph, Ont.-based food retail expert. Mr. Gooch added that changing consumer demands and government regulation have already forced food companies to move toward healthier offerings. Wal-Mart, he said, is simply catching up.

He said Wal-Mart is also trying to expand its customer base. The company has been facing growing competition from up-market rivals such as Target, which also sells groceries and is planning to expand into Canada. "Wal-Mart is still very much [focused]on the price issue, which does appeal to a certain segment of the market. But I think there's way more than price that appeals to the majority of the market," Mr. Gooch said.

Appealing to health issues has also helped Wal-Mart overcome opposition to its expansion plans in some communities. In Chicago for example city officials blocked Wal-Mart's expansion plans for years over concerns about low pay for its employees. But when Wal-Mart officials pointed out that new stores would bring groceries to "food deserts" and other poorly serviced areas, opposition quickly faded and the company won approval for several locations.

Wisconsin-based supermarket research analyst David Livingston said he's skeptical Wal-Mart's announcement will have an impact on the health of consumers because the company is not going to sacrifice sales by producing bland, unpalatable food. Wal-Mart may lower the amount of certain unhealthy ingredients in salty salad dressings, sugary fruit drinks or preservative-filled frozen dinners, but in the end, those products still can't be considered healthy.

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"The whole point is to sell food, not to make people healthy," Mr. Livingston said. "We're not going to become a continent of super healthy people just because Wal-Mart says they're going to change a few things around."

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