140 Million people shop at Wal-mart every week. It is the largest grocery chain in the US, with almost 30% of sales, according to some sources. 10% of PepsiCo’s products are sold at Wal-Mart, and 16% of Kraft’s.

That’s why when Wal-Mart announces a new Nutrition Initiative everybody listens. And that’s why they can get the First Lady onstage at their press event.

So what exactly did Wal-Mart announce yesterday in Washington DC? Here is the formal press release. And to sum it up, here are the five main points:

1. Wal-Mart will be reformulating thousands of everyday packaged food items by 2015, reducing sodium, sugar, and trans-fat.
2. Making healthier choices more affordable – especially fresh produce.
3. Developing strong criteria for a simple front-of-package seal.
4. Providing solutions to address food deserts by building stores in urban areas.
5. Increasing charitable support for nutrition programs.

“No family should have to choose between food that is healthier for them and food they can afford,” said Bill Simon, president and CEO of Walmart U.S

We agree. But will Wal-Mart’s initiative really help families make smarter choices?

What you need to know:

Let’s analyze each of Wal-mart’s points from the press conference:

1. Product reformulation – this is a good first step. We definitely need less sugar, sodium, and definitely no trans-fats in our diet. But a crappy processed product with less sugar will still be a crappy processed product.

What Wal-Mart should do: kill off the worst 10% of the products it sells, and instead introduce totally new products with short, comprehendable ingredient lists and truly high nutrition. For example, they can start by adding an aisle of bulk items such as beans and grains, and then teach consumers how to prepare these foods by doing in-store demos.

2. Affordable produce – According to Wal-Mart’s press kit, they will be saving consumers $1 billion annually by eliminating inefficiencies and “unnecessary costs” in the produce supply chain. Excellent.

Int the Q&A, Wal-Mart was asked how is this going to play into the company’s effort to source more produce locally – if they’re trying to put more money in the local economy and driving down prices, how is that going to work?

Walmart’s VP of sustainability, Andrea Thomas’ Answer: “There’s a lot of things through the supply chain that add costs. If you have fruits and vegetables traveling long distances that actually adds costs. With local farmers, we can supply [directly] great products to our stores, the quality is great and they don’t have to travel as far so we save money.”

But Wal-mart is already squeezing its suppliers t the max, and many local farmers that want to work with Wal-Mart are required to sign exclusive agreements. When the giant then asks for further reductions in price, some will go out of business.

What Wal-Mart should do: use its might to help change the upcoming farm bill. Subsidies for Corn and Soy should be shifted to fresh produce. That way, there is a true economic incentive to move to fresh produce, for all parties involved.

3. Front of Package Seal – Oh no. Last time the industry tired to tell consumers what’s healthy using front of pack labels, we got Froot Loops as a “Smart Choice”. Not again.

What Wal-Mart should do: the grocery behemoth should set an example and be the first to accept the IOM’s recommendations for front of pack labeling. But those only emphasize reasons not to buy a food (salt and bad fats), so chances are slim this info will be made easily available on front of pack.

4. More stores in food deserts: this is a tricky issue. On one hand, some urban areas don’t have decent food options for miles. On the other hand, studies have shown that whenever Wal-Mart opens a new store, the surrounding area becomes more obese. So how will this new move help?

Incidentally, Wal-Mart is pushing hard to get into the NYC area, so far without success. Will anything change now?

5. Charity – Please understand that this is more of a PR move than anything of substance. The few millions of dollars spent on these programs are a tiny sliver of Wal-Mart’s revenues. But each time another $10,000 is spent in a local community for some program, the company gets tons of great local press. Let’s just call this additional marketing spend, nothing more. This is the first thing you learn to do in corporate marketing 101 class.

What Wal-Mart should do: Wal-Mart should spend the money on improving wages and terms for its own employees, many who could use the higher salaries to be able to afford the very fresh produce Wal-Mart plans to offer at low prices.

BOTTOM LINE: The modern food industry is structured in a way that causes us to be sick and fat. People buy cheap and convenient food, not healthy food. As long as cheap food continues to be unhealthy, we’ll be seeing more of the same. Wal-Mart is a part of the modern food industry.

BUT. if it puts all its weight behind some REALLY IMPACTFUL initiatives, such as changes to the farm bill, or the removal of all soft drinks from its stores, that could have much more effect than anything that was announced by the company this week.

What to do at the supermarket:

If you buy your groceries at Wal-Mart, you can still shop smart by avoiding certain aisles, such as soft drinks and snacks. Spend the saved money on unprocessed foods such as produce, whole grains, fresh cuts of meat, and low fat dairy.

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