It would appear at first glance to be a hurried announcement on a slow news day.
But the news that Walmart (NYSE: WMT) is investing equity in a Nebraska meat processor operated by a group of cattle producers has more to it than meets the eye. The action is only one of many the largest retailer in the world is taking to guarantee it has a sufficient supply of the correct products to offer clients.
A small portion of Sustainable Beef, which is owned by many local cattle ranchers, is being acquired by Walmart. Senior Vice President of Merchandising for Deli, Meat, and Seafood at Walmart, Tyler Lehr, stated: "We are committed to offering our consumers high-quality, inexpensive beef, and an investment in Sustainable Beef LLC will provide us even more access to these goods."
However, this is a part of a larger project that has been going on since 2019, when Walmart started making investments in its Angus beef supply chain. In 2020, 500 supermarkets in the Southeast will start sourcing meat thanks to a cooperation with Georgian cattle breeders.
How significant is having more meat available? Walmart's interest in (and financial support for) sustainable beef is consistent with a number of other self-sufficiency measures the business has undertaken to guarantee both its supply of goods and its ability to maintain cheap prices. The business opened a milk bottler in Indiana in 2018 that serves roughly 600 outlets.
Along with fresh items, the company sources its Great Value brand groceries directly from food processors rather than from national brands, whose manufacture is frequently outsourced in any case.
Walmart continues to rely on independent manufacturers it has little influence over, including Procter & Gamble, Fruit of the Loom, General Mills, and others. Since the retailer manufactures every item it sells, it is hardly working in a vacuum.
And that's a significant problem when your company, like Walmart, accounts for around 10% of all retail sales in the United States. Due to your size, you are not only unduly susceptible to the supply chain constraints we are now experiencing, but collaborations like the one with Sustainable Beef can also guarantee you have access to more affordable products than your rivals.