Walmart keeps milk prices low by integrating control over its dairy supply chain, enabling consistent pricing and avoiding traditional middleman markups. The retailer owns and operates milk processing plants — for example, it already runs a plant in Indiana and plans new facilities in Georgia and Texas — allowing it to bypass external processors and retain cost savings. These plants also help Walmart capture tax credits and incentives tied to farm processing infrastructure. By sourcing directly from regional dairies and managing distribution in-house, Walmart reduces transportation, packaging, and margin inefficiencies. The result: Walmart’s “Great Value” brand milk consistently undercuts competitors like Borden while maintaining acceptable margins.
Industry Insights
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Walmart’s vertical integration gives it competitive leverage—by owning processing capacity, it reduces dependence on third parties, enabling tighter cost control and stable pricing even when raw milk costs fluctuate.
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This model pressures regional dairy processors to either compete on efficiency or risk losing volume, especially in markets Walmart dominates.
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For India’s dairy sector, the lesson is clear: to maintain competitiveness, dairy cooperatives and processors must explore backward integration, direct farmer contracts, processing linkages, or strategic consolidation to mitigate margin leakages.
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Walmart’s pricing strategy underscores how scale, infrastructure control, and supply chain integration can override commodity pricing volatility—a potential blueprint for large dairy chains aiming to strengthen market hold.
Source : Dairynews7x7 Oct 1st 2025 Read full story here