Walmart to bring milk processing in-house with Indiana plant

Walmart, the nation’s largest grocer, plans to establish a milk processing plant in Fort Wayne, Ind., for Great Value and Members Mark private label milk sold in more than 600 Walmart stores and Sam’s Club’s in Indiana, Michigan, Ohio and northern Kentucky.

The move to bring milk production in-house is not usual as traditional grocers such as Kroger, H-E-B and Publix own and operate milk production facilities.

Walmart recently made the announcement with the Indiana Gov. Mike Pence that the venture will create 200 jobs while also supporting Indiana farmers. Construction on the new milk production center is slated to begin this summer as the retailer plans to build a 250,000 square-foot plant, one of the largest in the industry. When it comes online in the summer of 2017, the plant will turn out white and chocolate milk branded as private label for the retail giant.

“By operating our own plant and working directly with the dairy supply chain in the Midwest, we’ll further reduce operating costs and pass those savings on to our customers so that they can save money,” said Tony Airoso, senior vice president of sourcing strategy for Walmart U.S. “This facility is an example of how we are always finding efficiencies within the supply chain to deliver everyday low prices and high quality groceries.”

The move toward regional sourcing is not new at Walmart, but Walmart U.S. CEO Greg Foran and his management group are aiming to drive more price separation between private label and branded products. Sourcing milk from local dairies in the Midwest, is one way Walmart can help meet the local food craze as well as drive better price control and oversee quality assurance o their private label milk.