Walmart to Purchase Potatoes with PepsiCo

Published in the December 2010 Issue Published online: Dec 09, 2010

Giant retailer Walmart is attempting to team with soda and snack maker PepsiCo to buy potatoes jointly for a lower price than either company can get on its own. That would allow both to earn more money on the chips and potatoes

So far, Pepsi isn't playing along. But with sales slowing in the U.S. and the price of sugar, meat and wheat on the rise, the world's largest retailer is jointly purchasing a growing share of raw ingredients with manufacturers of food and household products sold in its stores. Products already being purchased with suppliers include sugar, which goes into the company's store-brand soda and 5-pound bags, and paper, used in Walmart's back-office printers.

This is just the company's latest attempt at slowing expense growth. Walmart is already consolidating its roster of suppliers, eliminating distribution middlemen in nations such as Japan, and taking over the U.S. trucking operations from some of its suppliers in a bid to haul goods more cheaply. International chief

Doug McMillon says the company is saving hundreds of millions of dollars a year from such changes-and wants savings of over a billion dollars eventually.

Source, Businessweek

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