GMA WARY CUTS IN WIC MAY PUT BRANDS OUT

MARYELLEN LO BOSCO

WASHINGTON -- The Grocery Manufacturers of America here is concerned that pressure to cut costs in the Women, Infants and Children's program may lead to the elimination of national brands.

It has rallied government officials to study the issue before the Child Nutrition Reauthorization bill, which is slated to be marked up in both houses of Congress in the next few months, is approved, GMA spokeswoman Anna Matz told SN.

Phil Shanholtzer, spokesman for the Food & Nutrition Service of the U.S. Department of Agriculture, under which the WIC program is administered nationally, said that the study will assess whether the use of generic or store brands will interfere with food consumption or food acceptance by WIC participants.

"There have been a couple of hearings," said Matz. "GMA has testified on the House side about our concern over the pressure to reduce costs. Our concern, because so many of our members sell products into the WIC program, is that [the government] is eventually going to eliminate brands."

The WIC program was established in 1972 to provide a targeted supplemental feeding program for a vulnerable population of low-income women and children. Participants receive vouchers for key nutritional items -- including infant formula, cereal and juice -- which they can then redeem at food stores.

However,individual states administer the program and decide which products will be offered under the WIC program. For the most part, branded items have been earmarked.

The private-label industry has been working aggressively to get its own products included in the program, citing a significant cost savings that would result.

And government officials in some states, like Texas and Oklahoma, have listened. In 1992, Texas began adding store brands to its cereal list. Though national brands are also included, their numbers have been decreasing.

Beginning last year, Oklahoma went a step further, eliminating all national brands from the WIC cereal list and replacing them with private-label items.

At the federal level, the USDA commented at a Senate hearing in March of this year (on the 1999 budget for child nutrition programs) that it wishes to reduce the cost of the food package by 10% by the year 2002, and it is encouraging the use of store brands to save money.

"Our concern is that this is a trend and will eventually become a policy," Matz added.

Claire Regan, a GMA senior director of Science and Regulatory Affairs, testified at a hearing in March before the House Subcommittee on Early Childhood, Youth and Families that the program should be open to both national-brand and private-label products.

"GMA supports legislation that would guarantee WIC participants the opportunity to choose from a wide range of products -- both branded and nonbranded -- to meet the nutritional requirements of the program," Regan said in her testimony.

WIC serves 7 million people, including almost half of all newborns, according to the GMA. The GMA is concerned that WIC participants don't have access to supermarkets that sell private-label products, Matz further noted.

But the GMA's concern that some WIC families will not have access to generics or private label in some supermarkets was refuted by Wayne Anderson, director of the Oklahoma State Department of Health, WIC Services, vendor division.

Anderson said that seven wholesalers supply the supermarkets in Oklahoma, and the one with the least amount of private-label varieties of cereal still has five, while the other wholesalers carry all nine varieties of private-label now earmarked for WIC consumers. Anderson also rebuted the notion that WIC customers will not buy generics.

"If you've got private label on the shelf for two years, and then it is WIC approved and shipment goes from 30% to 400%, wouldn't you think that WIC customers are buying it?" he asked.

Oklahoma's WIC Services has been using "least-cost available" criteria for products that are included in the WIC program since 1990, said Anderson.

"In many cases, that drives customer selection to private label," he noted.

"There's nothing wrong with private label," he said. "You and I buy it every day."