Walmart Stores Inc. is phasing out its Wild Oats organic food brand, according to people familiar with the matter, dropping a line of products introduced two years ago to bring inexpensive organics to the masses.
The world's largest retailer has unwound a complicated deal with private-equity firm Yucaipa Cos. that allowed it to sell Wild Oats pasta sauces, cereals and other shelf-stable products, the people said. The products will disappear from Walmart shelves in coming months, they added.
Two years ago, Walmart turned to Yucaipa as a faster way to get more organic products on shelves as competitors such as Kroger and Costco reported skyrocketing sales of their own natural and organic store brands. Yucaipa, which is run by billionaire Ron Burkle, bought the Wild Oats brand after the Boulder-based grocery chain was sold to rival Whole Foods Market Inc.
Now Walmart is switching tactics, hoping to add organic products to shelves in other ways, including selling more fresh produce and going it alone by adding more organic food to its existing store brand, Great Value, these people say.
Spokespeople for Walmart and Yucaipa declined to comment.
Most grocers use organic food to lure shoppers to stores, especially desirable higher-income customers. Sales of food labeled organic rose 16.7 percent to $13.4 billion for the year ended April 2, according to data from Nielsen. Sales of all food rose 1.6 percent to $468 billion during that time.
Walmart is the country's largest grocer but has been slow to become an organic powerhouse on the same scale, stymied by the food's often higher production costs and unique supply chain, clashing with the retailer's low-price model. Overall, Walmart has been battling slow-growing sales and a shift to online shopping. It recently closed more than 150 U.S. stores.
In recent months, Walmart executives have said they are making a renewed push to increase organic food sales. Adding food perceived as healthier like organic is "not our affluent- customer strategy, its broad-based strategy, but it's a key piece to being relevant with that customer base," Walmart chief merchandising officer Steve Bratspies said in an interview in November. Walmart is adding more organic fresh produce and small organic brands to shelves, executives say.
Some Wild Oats products sold well at Walmart, especially staples like jars of pasta sauce priced at about $2, the same as nonorganic brands like Prego and Ragu, the people familiar with the matter said. But the brand didn't grow as quickly as some at Walmart hoped, in part because the products weren't in every store and weren't called out on Walmart's shelves at the time, say these people.
Late last year, Walmart started adding purple sign s to shelves to help shoppers notice organic items, Bratspies said in November. "That is one thing I would say we haven't done a good enough job on," generally, he said.
Wild Oats started out as a chain of natural food markets and was purchased by Whole Foods in 2007. After a challenge from antitrust authorities and long court battle, Whole Foods agreed to sell of dozens of Wild Oats stores and the rights to the born-in-Boulder brand name.
Burkle's Los Angeles-based Yucaipa bought the brand around 2012, licensing it to Walmart.
When Wild Oats hit Walmart shelves in 2014, the retailer touted it as a watershed moment that created a new price position for organic food, about 25 percent lower than national brands, making the food accessible to all. It mirrored a similar statement the retailer made in 2006.