Half of Wal-Mart's Groceries Are Banned by Whole Foods

Why Half of Wal-Mart's Groceries Are Banned by Whole Foods

By Isaac Pino, CPA | More Articles
February 21, 2014 | Comments (48)

Ben Blatt of Slate magazine conducted an interesting and in-depth study recently to determine how many of the grocery products on a Wal-Mart (NYSE: WMT  )  shelf are outright banned from the more upscale retailer Whole Foods Market  (NASDAQ: WFM  ) . The results might surprise you.
According to Blatt's research, Whole Foods bans roughly 54% of Wal-Mart's fare due to the presence, in its words, of "unacceptable ingredients for foods." These 78 banned ingredients include everything from recognizable sweeteners like high-fructose corn syrup to the tongue-tying dimethylpolysiloxane.

For example, it's no surprise that shoppers would be hard-pressed to find a liter of Coke or bag of Doritos at Whole Foods, but Blatt discovers that even household brands ranging from Minute Maid lemonade to Cracker Barrel cheese are deemed unworthy for Whole Foods' choosy clientele. Whole Foods claims these foods fall short of "safety, necessity, manufacturing methods and compatibility with our overall core values."
While the art of stocking retail shelves might seem quite mundane, the contrast presents two starkly different approaches to running a grocery store. Consider the following statistics:

• 97% of the soft drinks sold at Wal-Mart contain ingredients that Whole Foods considers "unacceptable." If you ever wondered why a Whole Foods drink aisle makes you feel like you're in a foreign country, well, there's your explanation.

• Wal-Mart's "Great Value 100% Whole Wheat Bread" contains seven ingredients that Whole Foods scoffs at, including everything from high-fructose corn syrup to calcium propionate. Not one or two "unacceptable" items, but seven. All in a staple product that you have to imagine just flies off the shelves. We're not talking about an obscure frozen dinner here; we're talking about sandwich bread.

• More than 80% of the candy sold at Wal-Mart would never be found at Whole Foods due to artificial flavors, while 31% of the bacon and sausage products have been blacklisted due to monosodium glutamate, or MSG.

The list goes on and on. Beyond the statistics, however, Blatt attempts to answer the intriguing question for customers and investors alike: Why does Whole Foods limit consumer choice?

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For Whole Foods, it's as much of a push from the grocer as it is a pull from the consumer to accommodate healthier food options. Mackey believes this makes sense because his grocers study everything from food to organisms to the environment and therefore have a deep understanding that customers might lack.
At the end of the day, it's always a dialogue between the two, but Mackey says a relationship built on trust has led customers to "increasingly look to Whole Foods Market to be their 'editors,' as we carefully examine and evaluate the products we sell." Or, to use another analogy, Whole Foods aims to maximize healthy outcomes for customers like a good mechanic would optimize the performance of an automobile.
As Whole Foods nudges the consumer to make better eating choices, it's in turn expanding that demographic. Their motto might as well be "Educate and they will come."