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Wal-Mart jumps into milk processing

From Alberta Farm Express

Wal-Mart said it will build a dairy processing plant in Indiana to supply private-label milk to about 600 stores, curtailing business with some suppliers in the retailer’s sole foray into food processing in the U.S.

The move comes with Wal-Mart’s profits weighed down by costs to increase wages and invest in its e-commerce operations. The retailer is also facing tough competition from Kroger and other national and regional grocery chains and has recently ratcheted up pressure on suppliers to help it lower costs.

Wal-Mart said it would build a more than 250,000 square foot milk processing plant in Fort Wayne, Ind., creating more than 200 jobs. Due to come online in the summer of 2017, the plant will supply milk to stores in Indiana, Illinois, Michigan, Ohio and northern Kentucky, the company said.

Eliminating intermediary suppliers would likely give Wal-Mart greater control over input costs and more closely align it with other grocery chains like Kroger and Texas-based H-E-B that have already set up their own milk processing plants. The shift also dovetails with Wal-Mart’s strategy of boosting its private-brand offerings as a way to better compete on price, though the company said it didn’t have any plans for additional milk or food processing plants.

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