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Is Whole Foods Losing Its Sustainable Luster?
Lost in the ear-splitting uproar over Whole Foods CEO John Mackey's controversial venture into the health care debate, is a bigger, though less subtle story.
It's a story about how a small, well-intentioned sustainable food company lost its way. It's a story of how that company went from a single natural foods store in Austin, Texas to industry juggernaut, with every intention of dominating the natural foods retail category, in the nearly-identical way its conventional competitors came to dominate their sectors, i.e., achieving massive scale through acquisitions, new stores and eliminating smaller competitors.
Along the way, that company, Whole Foods, traded in any sense of purpose it had regarding regional food systems to pursue increasingly larger financial objectives, e.g., $12.0 billion in sales by 2010, up from $8.0 billion in FY08 sales and maintaining its 30% CAGR in sales since '91 IPO. Today, Whole Foods, which publicly trades on the NASDAQ exchange (symbol: WFMI), owns the natural foods retail category, providing solid annual financial returns to its shareholders. Significant accomplishments considering Whole Foods' humble beginnings.
But alongside this growth, a company with great potential to fundamentally change sustainable food lost its luster. Although shareholders, who have earned handsome returns over the years -- 15% CAGR in stock price since IPO -- cannot complain, sustainable food advocates can. Here's why.
After acquiring 19 regional chains since 1991, beginning with New Orleans-based Whole Food Company and ending with its recent $565 million acquisition of Wild Oats (#2 national chain with 110 stores, compared to Whole Foods' 191 stores), the resulting natural foods landscape now resembles the highly concentrated, conventional food retail space more than it does the regional food systems that sustainable food advocates identify as key to improving the food we eat.
The problem with Whole Foods isn't necessarily its management or financial performance; it's that the company has morphed into what amounts to a "sustainable" version of Wal-Mart and Kroger and every other multi-billion dollar supermarket chain. As evidence, the original Whole Foods Market opened in 1980 at 10,500 square feet, quite large compared to other natural foods stores at that time. By 2008, its 276 stores averaged 36,000 square feet, and it plans to open 70 new stores through fiscal year 2013 at an average size of 47,300 square feet, slightly above the conventional food supermarket median average of 46,755 square feet. Taken together, these stores will occupy over 13 million square feet of retail space, stocked with tens of thousands of packaged, processed and perishable items, purchased almost entirely through large national distributors, much like any other large supermarket.
There's every indication that these massive Whole Foods "natural foods" stores will continue popping up in more regions, including smaller markets, e.g., Burlington, Vermont, a city of less than 40,000 citizens in a county barely breaking 150,000 people. Burlington is home to one of the more vibrant sustainable food communities in the country. There are no Whole Foods Markets or Trader Joes in this town. Instead, residents frequent food cooperatives, farmers markets and community supported agriculture (CSA) farms, purchasing above-average quantities of food from local farms and processors.
Whole Foods entering markets like Burlington begins the systematic weakening of the fabric of such vibrant regional food economies. Unintentional or not, Whole Foods' very presence in these markets undermines established relationships between regional food retailers and suppliers, including farmers, processors and related service providers.
When you consider Whole Foods in this light, you see yet another national, multi-billion dollar corporate giant entering regional markets, amassing market share through lower prices (leveraging economies of scale from its large-scale distribution partner, United Naturals Food Inc.), chronically injuring or killing off local and regional businesses, and exporting massive financial value out of each region. Do they care that regional farmers and food processors are stuck having to find new channels to market or entirely new markets? Difficult to say, but smaller suppliers don't work well within Whole Foods' centralized distribution system, which clearly favors large-scale sustainable food suppliers, many of which are now owned by the world's largest food processors, e.g., Stonyfield Yogurt, Kashi, Muir Glen (more).
The unfortunate part of all this is that most people associate Whole Foods with organic and sustainable food, which is deserved for the good work the company has done over the years, but less so when you consider the overall sustainability of the large-scale, nationally-controlled food system that Whole Foods is now part of. In my book, Whole Foods is only slightly better than Wal-Mart or Krogers, respectively the 1st and 2nd largest supermarkets in America, which is what the debate should really be focused on.
Perhaps there are reasons to "boycott" Whole Foods. One could protest its decision long ago to turn over its long-term objectives to shareholders, rather than considering all stakeholders, especially regional farmers and food processors; but that isn't going to change Whole Foods, since it can't undo what is done without certain financial ruin.
Rather than boycott, why not leverage Whole Foods' evolution into a Kroger, Safeway or Albertsons-style supermarket in more sustainable clothing? Tell your friends, family and coworkers that they can get anything they are accustomed to buying at conventional supermarkets at a Whole Foods instead. Tell them doing so is more sustainable than those alternatives, which is generally true.
Then, knowing that your personal defection from Whole Foods will have little impact, start shopping at a local food store or regional chain offering produce, meats and other regionally-produced foods. Your challenge will be finding such businesses since they were likely acquired or put out of business by Whole Foods years ago.
In time, a new generation of Pro Food ventures will show up to fill this void, region by region. Until then, you might want to start a garden.
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23 Comments so far
Show AllUncontrolled growth is another name for cancer.
Very interesting point to add re: uncontrolled growth. Curious if you are referring to the unchecked growth of industrial food or global population. My response differs significantly depending on your intent.
If this were the first sociopathetic activity we had seen from JM it would be bad enough. Unfortunately, JM prides himself on his legacy of sleazy business practices and sleazy politics.
Whole Foods has long been rotten to core, as its' putative founder, John Mackey, is one of the USA's prime corporate douche bags.
Switching over to more sustainable food systems will not happen overnight, and likely not in our lifetime, so we must find ways to recognize and reward good behaviors when we see them.
In Whole Foods case, they have been a galvanizing force for natural, sustainable and organic foods, more so than any other major food retailer. That is good, and I strongly encourage people shopping at conventional supermarkets (e.g., Wal-Mart, Kroger, Safeway) to switch to Whole Foods in the absence of better options, regardless of Mackey's actions.
Having said that, what Whole Foods hasn't done is enrich and strengthen regional food economies, which is what myself and others working on sustainable food systems are trying to make happen sooner than later. They have likely had the opposite impact.
You've got to be kidding!
In what way has WF been "any" force for "natural, sustainable and organic foods?" Since the first IPO of WFMI they have done nothing but lobby for legislation to undermine the determination of organic standards for the USDA Organic label and have succeeded!
All this company, which started off well in Austin, has accomplished is to become the Wal-Mart of retail grocers. They have been quite successful with the model of assimilation, and it has helped no one...zero people, except WF stockholders.
John MacKey's actions and thoughts are important as it is a harbinger of where, and just how far WF will go to make people think they are good, and have the public's interest at heart....impossible...they have no heart, which should be what determines personhood when giving priorities over people or corporations!!!
You've got to be kidding!
In what way has WF been "any" force for "natural, sustainable and organic foods?" Since the first IPO of WFMI they have done nothing but lobby for legislation to undermine the determination of organic standards for the USDA Organic label and have succeeded!
All this company, which started off well in Austin, has accomplished is to become the Wal-Mart of retail grocers. They have been quite successful with the model of assimilation, and it has helped no one...zero people, except WF stockholders.
John MacKey's actions and thoughts are important as it is a harbinger of where, and just how far WF will go to make people think they are good, and have the public's interest at heart....impossible...they have no heart, which should be what determines personhood when giving priorities over people or corporations!!!
Thanks for that perspective.
Not kidding. My point is that there are no magic wands to making our food system sustainable. It will require a lot of effort on everyone's part.
Regarding Whole Foods, we are in agreement that they now resemble any other conventional supermarket in terms of size, breadth and depth of products, centralized distribution, etc., all of which I point out in my post.
The primary place where they differ is in the mix of actual products that they carry. In other words, buying products from Whole Foods is better for "natural, sustainable and organic foods" than buying equivalent products stocked on Wal-Mart shelves.
Beyond that, I'm not a fan of Whole Foods, but without viable food retail options, preferably ones strengthening regional food economies, what do you suggest someone do?
"Regarding Whole Foods, we are in agreement that they now resemble any other conventional supermarket in terms of size, breadth and depth of products, centralized distribution, etc., all of which I point out in my post."
Actually, I can get anything that's available at the local Whole Foods (in Atlanta) at my local Kroger, which has greatly increased its organic and non-conventional offerings.
"Beyond that, I'm not a fan of Whole Foods, but without viable food retail options, preferably ones strengthening regional food economies, what do you suggest someone do?"
Wherever there are farmers, there are farmers' markets.
q
I won't argue with your suggestion to "put Whole Foods out of business," except that what fills the void is critical.
Farmers markets, farm stands and CSA farms will never get beyond a very small niche presence.
What I proposed in my article are viable region-scale models that integrate sustainably grown, raised and processed foods from within and without region. And there needs to be an emphasis on more in-home food preparation, since that will drive more demand for environmentally and physiologically-friendly whole foods.
Do you have others ideas we should consider?
I personally have been able to make the switch in the space of about a year from mostly eating out at restaurants, to mostly eating quick-prep and otherwise instant meals, to cooking more actual food for myself, to now, where I am getting about half of my food from local farmer's markets, and eventually plan to either get everything from the market, aside from basic processed foods like peanut butter, breakfast cereal and other grains and whatever comfort food I feel like, which I can get from a co-op up here (I think, I haven't been to it yet).
If someone like me, who got to the weight of over 400 lbs from a longtime diet of pizza, chicken fingers, and burgers can switch to a sustainable diet, there's no reason many, many other Americans can't, as long as there are farmers nearby that will grow for the local community.
"..lobby for legislation to undermine the determination of organic standards for the USDA Organic label and have succeeded"
Citation please.
Not a word in this article about the history of WF's union busting techniques, and their fight against EFCA.
Check out:
http://www.counterpunch.org/sharon05082009.html
WF is also very expensive. My local Coop is much cheaper for organic produce. There are alternatives. As a rule, it's always better to shop local
Thanks for adding information on some of Whole Foods' other practices. My article was not focused on these particular topics, but I am glad you have raised them, since they represent WF values that consumers should consider.
And I agree that shoppers should look for local whenever possible, but the fact is that many of the options they had 10-20 years ago are going and/or disappearing. We need to support the survivors and any new regional food retailers that pop up, which will increasingly put pressure on the conventional, centralized food system that dominates today's market.
The best thing that we can do for regional organic farmers is to put Whole Foods out of business.
q
food grows, or at least it grows in the present world...let it...rip out your lawn and landscaping, and plant food...buy from local farmers, yes, but become one, too...
Whole Foods became so big, it failed.
I don't support corporations that greenwash themselves as 'organic' but fail to be a sustainable and fair party. Whole Foods policies are predatory and they are profit driven, so don't make the mistake of saying that they are just like any other local organic store.
And Safeway is selling organic food as well.
But best it go to your local organic stores, and farmer's market. Where I live there is an organic farmer's market and you talk to the farmer and realize that he/she isn't doing it to make a killing, he/she is doing it because 'organics' is a value that they live by.
Plant a fruit tree. Or an organic garden in your backyard, front porch, next to your bathtub.
Eat organic dairy (Horizon doesn't count).
so it goes
WAY TO GO ZMANN! IT SURE DOES TASTE GOOD DOESN'T IT? all these
years of fast food has been a blight on american's. WE were
propagandazized by fast food corps. as for wf lets be careful
on how we treat them as a lot of low income earners are
sweating it out there now. with 14 mil. folks out of jobs
here we need to put organized pressure and union organ
izing pressure on them as well. maybe then stockholders
will act in a responsible fashion and force mackey's
sorry ass out. i wonder how many folks who post here
are share holders who love those dividend checks every
quarter but talk smack here. i'm not by any means condoning
that douche nozzles behavior but lets just look at the
bigger picture. we don't want to throw out the baby with the
bath water. many jobs hard -to come by jobs hang in the balance!
Thanks, and yeah, it's great. I never knew what I was missing, all those years of eating salty shit. My next step is making some of my own food from scratch...bread, pasta sauce, and salsa. I think that'll have to wait till I have a higher salary though, so I can get the necessary equipment.
Where I live in Marin County - north of San Francisco - we have several branches of Whole Foods scattered around the middle of the County - essentially up the 101 corridor - and a HUGE, vibrant, thriving culture of Farmers' Markets. We have 3 in San Rafael weekly, one in Corte Madera, one in Novato, one in Fairfax, and there may be another of which I'm just not aware. And this doesn't count the Markets across in the East Bay or the huge Market at the Ferry Building in San Francisco ... or the ones in San Mateo, etc.
I think it's possible for Whole Foods to co-exist with a "local" farming community and its local supply chain, but your point is extremely well taken - that requires that "conscious" consumers use Whole Foods instead of supermarket chains for their "staples," their "out of season produce which they just have to have," and the perishables that don't do well outdoors in the sun - i.e. icecream, etc.
What building and sustaining a hybrid culture of access to healthy food really takes is serious dedication on the part of consumers to supporting their local farmers, and a willingness to eat seasonally as our bodies evolved to do. So consumer education - thank you for a good piece that does exactly that - is the key. And also taking a moment, from time to time, to remind Whole Foods and its CEO - that we're watching. I'm not joining a wholescale boycott just yet, but I am trying to buy as little as possible from Whole Foods and as much as possible from the 2 Farmers' Markets I attend weekly.
swkidder, Thanks so much for the highly informative comment regarding Marin County. While Vermont doesn't have the growing season you do, we also have a highly vibrant and committed community with regard to local and regional food.
I'm not convinced Whole Foods can coexist in smaller urban centers like Burlington without significant economic impact on the existing regional food economy. Perhaps in more populated areas. Regardless, most regions will not have the ability to keep them out, e.g., Santa Cruz, so we need to figure out ways to "coexist".