From: Reuters
Published April 1, 2008 01:08 AM

Wal-Mart rolls out line of private label coffee

By Nicole Maestri

NEW YORK (Reuters) - Wal-Mart Stores Inc <WMT.N>, looking to capitalize on consumers' growing interest in sustainable coffees, is rolling out its own line of organic, Rainforest Alliance and fair trade certified coffees.

This month, the world's largest retailer will begin selling six coffees under the Sam's Choice brand in all of its U.S. stores.

The line includes Sam's Choice Fair Trade certified coffee, Sam's Choice Rainforest Alliance certified coffee, and Sam's Choice USDA organic decaffeinated coffee.

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Wal-Mart also said the six coffees are certified as "carbon neutral" because Cafe Bom Dia, its Brazil-based coffee roaster, has cut its net carbon emissions to zero.

"The socially conscious consumer is a growing area we're marketing to, and certainly this coffee fills that void ... in our line," said Matt Kistler, senior vice president of sustainability at Wal-Mart, in an interview.

Increased consumer awareness about environmental issues and farmers' standard of living have created a growing market for products deemed sustainable.

As consumers show greater interest in where and how their coffee is produced, coffee chains like Starbucks Corp <SBUX.O> and Dunkin' Donuts have started purchasing "fair trade" beans to make their drinks.

Fair trade certification requires specified economic, social and environmental standards be met, and farmer groups receive a guaranteed minimum floor price for their coffee.

Coffee purchased through the Rainforest Alliance program must also pass specific environmental, social and economic criteria that target long-term sustainability.

But Wal-Mart is also introducing the new coffee line as its shoppers, squeezed by a housing downturn, higher fuel costs and a weakening job market, are also confronting higher grocery prices as commodity costs soar.

The coffee futures market, along with other agricultural commodities, recently rallied. The benchmark May arabica coffee futures contract trading on ICE Futures U.S. jumped to a 10-year high at $1.719 per lb at the end of February.

Major U.S. roasters reacted by raising the list prices for well-known brands including Maxwell House, Folgers and Chock full o'Nuts. The market subsequently fell to a 3-1/2-month low and roasters lowered some of their prices by late March.

Wal-Mart said the Sam's Choice coffee will be priced at $5.88 for 10- to 12-ounce bag.

By comparison, an 11-ounce bag of O Organics Aztec blend medium ground coffee is listed at $9.19 on Safeway's Web site, while a 12-ounce bag of Seattle's Best organic decaffeinated ground coffee is listed at $6.99.

"Certainly, with the financial environment the way it is today, our shoppers are being stretched," Kistler said

But he said the retailer tested the new coffee line in select stores before deciding to roll it out nationwide.

"We would not have done it if we would not have seen the demand from our shoppers," he said.

(Additional reporting by Marcy Nicholson; Editing by Brian Moss)

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