Wal-Mart signals move to natural packaging

The move comes as the company is also pushing its 60,000 suppliers to become more more environmentally and socially responsible. In a series of announcments over the past week Wal-Mart chiefexecutive officer Lee Scott said the retailer would become more involved in its suppliers' businesses and would make "a stronger stand over the next several months"​ to hold themaccountable.

Scott said the retailer will include reducing energy consumption at its stores and throughout its transportation fleet. It would also press its suppliers to make the same moves.

The announcements demonstrate the power the massive retailer has over its suppliers to push through changes and cut into their margins.

In one move Sam's Club, a Wal-Mart division, announced it would begin using NatureWorks' polylactic acid (PLA) packaging in fresh cut produce nationwide beginning in November 2005.

A sharp rise in demand for natural products and healthier food, without any synthetic chemical preservatives, have induced manufacturers to explore new food processing and preservation methods toexploit the demand. The trend has led to an increased demand for better food handling, processing and packaging.

US-based NatureWorks is banking on this trend to attract demand in the food industry -- and more importantly consumers -- for its environmentally friendly PLA, which is derived from corn.

Citing a combination of pricing, retail uptake and innovative packaging deals, the company believes its biodegradable natural polymer is in the takeoff stage, ready to challenge the marketdominance of polyethylene terephthalate (PET) and other plastic food and drink packaging .

Some primary food processors have already made the switch. Del Monte is using PLA packaging for its fresh-cut produce. In January last year Wild Oats Markets, an organic foods retailer, used PLA toreplace its traditional plastic deli containers. Naturally Iowa is using PLA for organic milk packaged in biodegradable bottles.

In an interview with FoodProductionDaily-USA.com, NatureWorks spokesperson Mary Rosenthal said she was unable to reveal how much business the Wal-Mart deal meant for the fledging Cargill unit.

Cargill, a private company, has put about $800m into developing the technology and bringing it to market. It makes PLA by fermenting out of sugars from corn and other plant crops. PLA is abio-based plastic that can be used for clear food trays and bottles for still liquids.

"It's a very significant piece of business for the growth of our company,"​ she said.

Sam's Club will start using the starting with fresh cut fruit, herbs, strawberries and Brussels sprouts. The conversion of packaging for the four items over the year's test period translates toabout 100 million containers.

"With this change to packaging made from corn we will save the equivalent of 800,000 gallons of gasoline and reduce more than 11 million lbs. of green house gas emissions from polluting ourenvironment,"​ stated Matt Kistler, Sam's Club' vice president for product development and private brands.

He cited NatureWorks's ability to provide a stable price for PLA in relation to the rising price of oil as a major incentive for the switch.

NatureWorks has been working to bring down the production price of its PLA to the same level as that of petroleum-based food packaging plastics. The recent jump in the oil price has helped itbecome competitive.

Wal-Mart plans to replacing existing packaging with PLA products in a series of phases through the supply chain. After the rollout with the first four items, Wal-Mart plans to package its cutvegetables in PLA containers. In phase three, PLA will be used for gift cards. The final phase will include the use of PLA in bread bags, donut boxes and select tomato packaging.

The company last year mandated that its top 100 suppliers must use RFID technology by next year.