The Supply Side: Wal-Mart says its culinary center is a game changer

The Wal-Mart Culinary and Innovation Center in Bentonville has been open one year. In that time, the retailer says hundreds of food and beverage products have been reformulated, and hundreds more innovations have led to new food and beverage items sold in Wal-Mart’s more than 4,600 U.S. stores.

Charles Redfield, head of Walmart’s U.S. food division, said the center brings a number of operations under one roof that previously were in separate facilities.

“We go deep in this facility, looking for quality and always the right price,” Redfield recently said during a media tour of the facility. “We look at texture, trends, dietary needs. And we spend a lot of time on packaging. This is the place that we do this work. Since we opened a year ago it’s been very, very busy.”

Redfield told Talk Business & Politics-Northwest Arkansas Business Journal, “On our own turf, we can go deep down into the product ingredients and better control the process of dead net cost. And the result of that is that we can become better food experts. It’s an education facility for us and our suppliers. As we can go through the process, we will be able to give our suppliers specific feedback about how the products are liked and disliked by customers. It could be intense for suppliers, but in the end they will like it because it addresses issues they might not otherwise know about.”

Jack Pestello runs private brands for Wal-Mart’s U.S. food business. Pestello and his team are responsible for what happens in the culinary center.

“We are very passionate about the product and food in general,” Pestello said during the media tour. “This culinary center changes the game for us because it allows us to step up to define what we want, refine the products that we are making and do fast iteration with our suppliers and food partners, as well as our own food developers, to figure out where we are going.”

He said there is not a single food item on Wal-Mart shelves that hasn’t faced culinary center scrutiny. The sensory lab takes every food product sold at Wal-Mart and evaluates it. Customers and Wal-Mart employees participate in tests to evaluate product quality. The products are evaluated on taste, texture and appearance. Pestello said the facility uses the data to reformulate products when necessary and perfect new products prior to their launch.

The lab does more than evaluate the food products. He said in the case of macaroni and cheese, the lab will ensure it tastes like mac and cheese, but will also look at the cooking instructions, packaging format and the clean ingredients. Then it’s cooked in one of the center’s six kitchens for a real world test.

“We have gas and electric ranges, microwaves and refrigerators, so we can try to make the product just like our customers would do at home,’” Pestello said. “Everything we do here is about ‘How does our customer look at us?’”

PREMIUM BEVERAGES
Al Dominguez, senior vice president of snack and beverages at Wal-Mart, said the retailer uses the culinary center for branded and private label products. He said that this year, Wal-Mart is focusing on its quality branded wines in an effort to change consumer perception.

“I don’t think anyone really thinks of Wal-Mart as a destination for fine wine, but we want to change that perception,” Dominguez said. “One of the things we are doing is really leaning into quality wines this year. One great, fast-growing wine in our collection going forward is Pinot Noir. It’s in virtually every store where we sell wine in today, and sales are up triple digits over the past several months. It’s the fastest growing wine in our stores.”

Dominguez said the majority of wine sales growth is coming from premium brands, and Wal-Mart wants to play in that space. Another product consumers can find in stores for a limited time is a blast from the past in Zima, which was discontinued by MillerCoors in 2009.

He said Wal-Mart talked to MillerCoors about bringing back a novelty brand for the summer, and the supplier agreed to relaunch Zima for a limited time. With this relaunch, he said customers can reconnect with the product, and if there is enough interest it could become a permanent offering. Sales demand will dictate how long Zima is available.

INDULGENT CEREAL
Product innovation is also an important part of what Wal-Mart said it’s doing in the culinary center. The chocolatey cereal Oreo O’s was discontinued in 2005, but it remained somewhat a cult classic on social media, as people kept talking about it.

Wal-Mart said its cereal buyer saw a new trend where adults were looking for indulgent cereals for a late-night snack. The buyer went to Mondelez International — who makes Oreos and Post, who makes cereal for Wal-Mart — and got the two together to produce the new version of Oreo O’s, which was reformulated in the culinary center to pass the indulgent test. The product launched this past week and it will be exclusive to Wal-Mart for 90 days.

Wal-Mart said sometimes it works with suppliers as far as three years out to ensure it has a constant supply of innovative products on its shelves for customers, and everybody wins if the customers love it.

ICE CREAM INNOVATION
Wal-Mart also said it continues to revamp its variety of Great Value ice cream, which now includes 49 different flavors. Two new secret flavors were evaluated by 2,500 Wal-Mart employees who were in Northwest Arkansas for the shareholders’ week. The most popular flavor chosen by the employees will hit stores next year.

Wal-Mart recently showcased three of its new premium ice cream flavors which included Hashtag Chocolate, developed to take advantage of the sea salt caramel craze. Hashtag Chocolate is a sea salt caramel chocolate ice cream with a chocolate and caramel ribbon that runs through it, and contains honey-crunch candy pieces coated with chocolate.

Another new flavor is Mint Cookies & Cream, which took a while to perfect. Wal-Mart said it worked hard to get the mint flavor right so it wasn’t like mouthwash. Through the sensory lab, Minty Cookies & Cream scored the highest marks of any other flavor. It scored an 8.1 out of 9. It is a mint ice cream with a fudge ribbon through it, and it contains chocolate creme sandwich cookies.

Wal-Mart’s ice cream team scratched their heads to come up with the new Sour Pucker Punch flavor. After all the bases had been covered on the core flavors, the retailer wanted to have something fun and different. Wal-Mart said it looked at different desserts and what it could do with candy — like consumers do at yogurt stores putting gummy bears and sour worms in their yogurt.

The retailer came up with a raspberry sherbet with ground up sour gummy candy ribbon running through it. Wal-Mart said it’s the only flavor like it in the marketplace, and it was a good example of innovating based on trends, which takes place every day at the Wal-Mart Culinary and Innovation Center.
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Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.