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Wal-Mart Targets to Sell Cage-Free Eggs Only, Sets Deadline

The largest global retailer Wal-Mart Stores Inc. WMT has joined the league of companies shifting to 100% cage-free eggs. It intends to implement the change in its North American operations by 2025, per media reports.

We note that the Bentonville, Arkansas-based company has been selling cage-free eggs since 2001, though not exclusively. Wal-Mart and its Sam’s Club warehouse chain will make it mandatory for its egg suppliers to adopt United Egg Producers rules or an equivalent set of standards. Last year too, Wal-Mart has urged thousands of U.S. suppliers to curb the use of antibiotics in farm animals.

We note that the food industry is under pressure from animal rights groups to improve animal welfare practices. With growing awareness of the nutritional value of food products, responsible and sustainable sourcing of raw materials has become an important issue for food companies. The importance of using real ingredients and minimal processing in packaged food products is also being emphasized increasingly.

Moreover, cage-free eggs are healthier and have better nutritional values. Cage-free hens are never kept in cages and thus their eggs are better than eggs from caged hens as the diet and health of free hens is better than the ones placed in small cages, with no space to move.

As a result, a large number of companies in the food industry are switching or have already switched to the use of cage-free eggs. These companies have been working for years to create a supply chain with sustainable and responsible sourcing.

Going cage-free is an increasingly popular trend in the food production industry. Many retailers like Supervalu, Inc. SVU, McDonald’s Corp. MCD, Dunkin' Brands Group, Inc. (DNKN), The Kroger Company (KR), Mondelez International, Inc. (MDLZ) and General Mills Inc. GIS are following the trend.

Wal-Mart’s decision to sell cage-fee eggs will influence the industry all the more to switch to cage-free eggs, as it sells more groceries than anyone else in the U.S.

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

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