Wal-Mart to Heighten Poultry Safety Measures to Curb Risks - Analyst Blog

In order to protect consumers against foodborne diseases, Wal-Mart Stores Inc. (WMT) has decided to strengthen its poultry safety measures for its suppliers so as to reduce potential contamination levels at a preliminary level.

Wal-Mart already had a food safety program that required poultry suppliers to earn a prevention-based certification against one of the Global Food Safety Initiative (GFSI) internationally recognized standards. But this time, Wal-Mart took a step further by partnering up with the Centers for Disease Control and Prevention (CDC) to protect its consumers' health.

According to the CDC and Wal-Mart, reducing Salmonella and other pathogen contamination in poultry products is top priority in order to protect consumers from foodborne illnesses.

The new guidelines require Wal-Mart and Sam's Club U.S. poultry suppliers to check contamination levels through all the stages of production. Suppliers also need to pass specialized testing to ensure that their chicken and other poultry products are safe for consumption. Wal-Mart has instructed all poultry suppliers to comply with the new rules by Jun 2016.

However, in the past, Arkansas-based Wal-Mart has been dealing with food safety scandals for a long time. In China, Wal-Mart was charged in the Jan 2014 scandal where traces of fox meat were found in donkey meat. (Read: Walmart Recalls Meat Items from China). After the scandal, Wal-Mart had to move its China manager to the U.S. (Read: Walmart Moves its China Manager). The company had reportedly encountered similar issues in China earlier as well, one of which involved mislabeling pork in 2011.

The company is making efforts to maintain high food safety standards in China and has cut down on its Chinese pork suppliers in a bid to increase the efficiency of its distribution system and tighten quality control. Wal-Mart has also decided to increase its investment in food safety measures in the country to 300 million yuan ($48.32 million) over three years through 2015, up from 100 million yuan in the prior-year period.

Apart from meat products, Wal-Mart is focused on improving its grocery offerings as customers face much difficulty to get quality fresh food and meat products at affordable prices. Last month, a New York Times report started that Wal-Mart issued a memo instructing store managers to provide fresh dairy and meat products in all its departments across the country. In addition, the stores were instructed to rotate dairy products and eggs, to dispose expired products and maintaining fresh products at all times. (Read: Wal-Mart Working to Improve Grocery Offerings).

It is encouraging to see that the retailer has been vigorously working on ensuring quality foods in order to revive sluggish sales and regain consumers' confidence.

Wal-Mart has a Zacks Rank #3 (Hold).

Some better-ranked retailers include Ingles Markets, Incorporated (IMKTA), Safeway, Inc. (SWY) and The Kroger Co. (KR). While Ingles Markets sports a Zacks Rank #1 (Strong Buy), Safeway and Kroger carry a Zacks Rank #2 (Buy).