Walmart moves ahead with plans for second milk processing plant

Is your supply chain giving you trouble? Try building one yourself. That’s what Walmart is doing; it plans to break ground later this year on a $350 million milk processing and bottling facility in Valdosta, Georgia, which will serve 750+ Walmart stores and Sam’s Clubs.

This is Walmart’s second major foray into the dairy business. The company opened its first owned-and-operated processing plant in Fort Wayne, Indiana, back in 2018.

The 250,000-square-foot facility was controversial at the time. Some critics questioned whether Americans wanted a giant corporation “milking its cows.” To be fair, Walmart still isn’t in the business of milking cows. Both facilities are processing plants, not dairy farms, but concerns around market concentration remain.

• For example, a major milk supplier, Dean Foods, struggled in the wake of the Indiana plant opening, citing a rise in competition.
• This played out against the backdrop of other grocery chains, such as Kroger and Albertsons, opening their own milk processing plants in recent years.

According to Walmart, the move is designed to make its supply chain more transparent and ensure the availability of a key grocery staple. “It will bolster our capacity to meet the demand for high-quality milk, while making our supply chain more resilient, and building even more transparency around sourcing,” the company said in a blog post.

This kind of investment is sometimes called “backward integration” and usually involves a company owning and operating a part of its supply chain that it previously left to business partners. Walmart did something similar with beef last summer.

The company acquired a minority stake in a newly formed rancher-owned company called Sustainable Beef LLC. It said the investment was designed to help secure a steady supply of “top-quality angus beef.”

Tyler Lehr, SVP of merchandising for deli services, meat, and seafood at Walmart US, said at the time that the deal would give the company “even more access to these products.”

Walmart also plans to open a beef processing and packaging facility in Olathe, Kansas, by 2025 as part of its ambition to “create an end-to-end supply chain for Angus beef.”