Wal-Mart Canada eyeing $1B-plus organic foods market

Discount powerhouse Wal-Mart Canada, which is opening its first Canadian supercentres this fall, is preparing to shake up this country's billion-dollar organic grocery trade with the promise of sharper competition and lower prices.

But its move into that burgeoning market comes at a time when a rash of food scares has sparked skepticism among some consumers about the purported advantages of organic foods.

Wal-Mart has issued an open call to Canadian product suppliers especially vendors of fresh food and eco-friendly wares to help stock its existing 272 Canadian discount stores and seven planned Ontario supercentres, which will carry a full range of fresh produce, meats and bakery items in addition to general merchandise.

There is a growing appetite for organic foods in Canada and Wal-Mart Canada plans to court hundreds of potential suppliers in Toronto next month, said Jim Thompson, senior vice-president of the retailer's merchandise division.

"We see this as a huge opportunity," Thompson said. "We're trying to get ahead of the curve here in Canada and address the relevant customers and what they are asking for."

Organic foods are grown without pesticides, fertilizer, hormones, antibiotics or biotechnology. The sector is booming with growth estimated to be between 15 and 20 per cent per year.

For its part, Wal-Mart is planning to offer a wide array of organic products including fresh produce, dairy, meats, frozen foods, snack foods, bread, chips and baby products.

"I think we can play a leadership role in Canada in growing the organic market," Thompson said. "We sell for less, so we will be competitively priced on all organics, whether it is fresh produce or light bulbs."

To achieve this, Wal-Mart plans to use its massive buying scale to leverage down logistic, packaging and transportation costs with suppliers, while passing those savings on to consumers.

And with about one million Canadians shopping at a Wal-Mart store on any given day, the retailer certainly has the potential to revolutionize the sector through critical mass.

Safety concerns

But despite their growing popularity, critics cite growing safety concerns about organic foods which are currently certified by a mishmash of authorities across Canada.

"There is no national standard for that type of food," said Bruce Cran, president of the Consumers' Association of Canada.

"And with what we've just been through with spinach, lettuce and carrot juice, it draws attention to the potential for a huge problem where we don't have any regulatory standards."

Canada imports between 80 and 90 per cent of the organic foods consumed domestically and the federal government is under increasing pressure to introduce national standards to regulate and certify products.

Last month, the Canadian Food Inspection Agency issued proposed regulations that are now up for discussion. The CFIA does not plan to certify those products itself, but would accredit and regulate existing bodies which would carry out the approval process.

Laura Telford, executive director of Canadian Organic Growers, said the deadly E. coli outbreak that affected California spinach was linked to a nearby cattle ranch making it a case of water contamination from conventional agriculture rather than an organic issue.

"Many people who eat organic foods are sophisticated consumers," she said. "They can see through that."

She conceded, however, that organic foods are generally just as susceptible to infection from bacteria and toxinsas regular foods.

When asked if Wal-Mart is concerned about any long-term fallout from the recalls, Thompson said: "Wal-Mart has some of the highest product testing in retail. And all our products, whether it's organic or any type of product, is put through all kinds of testing before we'll take receipt of it."