Who’s behind the organic label?For years, Michael Potter has gotten regular offers to buy his organic foods company near Ann Arbor, Mich., although now, he said, he gets three or four every week. “Every food company you have ever heard of has tried to buy this company,” said the founder, chairman and president of Eden Foods, Inc. “Not most of them. Every one of them.”
By: By Steve Mills, Chicago Tribune
CHICAGO — For years, Michael Potter has gotten regular offers to buy his organic foods company near Ann Arbor, Mich., although now, he said, he gets three or four every week.
“Every food company you have ever heard of has tried to buy this company,” said the founder, chairman and president of Eden Foods, Inc. “Not most of them. Every one of them.”
Venture capitalists have tried to woo Potter as well, he said. But Potter has refused to sell, or even to take on investment capital that would allow him to expand, earning ridicule from peers who say he is missing what he calls the “big payoff” and bucking a trend of consolidation in an industry that last year rang up $24 billion in sales.
“What I do is meaningful. It needs to be done,” said Potter. “And it’s fun.”
For Potter, selling to a big corporation, or joining forces with venture capitalists, would mean selling out the very essence of organic: small, alternative and individualistic.
Definitely not like the processed food firms that manufacture most of what we see in grocery store aisles.
Potter fears for consumers who believe they are supporting the local, pastoral ethic at the heart of organics but who in reality are boosting sales of the huge conglomerates they tend to view warily.
Not that growth is always bad, or that big food companies cannot produce top-notch organic products. The economies of scale those companies can introduce allows them to deliver organic products to more people, in mainstream supermarkets, sometimes at lower prices. The fact is, corporate ownership has helped fuel the industry’s dramatic growth.
Today, the big players in organic foods include such companies as Dean Foods and General Mills, Kellogg’s and Cargill, although you might not see their names on the labels.
Consider: Cascadian Farm, the maker of organic frozen fruits and breakfast cereals, was snapped up by General Mills when it bought a company called Small Planet Foods. But shoppers will not find General Mills’ name or logo on a box of Cascadian Farm cereal. They’ll find Small Planet Foods.
Nor will you find the Kellogg’s name on a package of Bear Naked’s granola, even though Kellogg’s acquired Bear Naked when its Kashi division purchased the company. Indeed, Bear Naked’s Web site provides reams of detail about the company’s history, worldview and its commitment to the environment. Its timeline, though, omits the November 2007 buyout.
“The large companies go to great lengths to hide that they’re the owners,” Potter said from his company’s headquarters in Clinton, Ill. “There’s a great deal of effort that goes into shielding that from the public. There’s smoke and mirrors in the marketing of organic foods.”
What’s more, some companies import their ingredients, undercutting the organic ideal that the food is grown close to home and making it more difficult to ensure that organic practices are followed — a crucial issue for those consumers who see buying organic as a social movement. Cascadian Farm, for instance, uses vegetables from Mexico in some products. Woodstock Farms, owned by the large distributor United Natural Foods Inc., uses some vegetables from China.
“When consumers are buying a half-gallon of milk, they’re not just buying the milk. They’re buying the story behind the milk,” said Mark Kastel of The Cornucopia Institute, an organic advocacy group. “The problem is that, when you look behind the facade, the story doesn’t fit the organic ethic.”
A Bear Naked official said the company has remained true to its organic and natural roots, and said that its products represent a healthy alternative to most mainstream brands.
“Bear Naked maintains its original spirit and passion for great-tasting, nutritious food that supports active lifestyles,” Ryan Therriault, a senior brand manager for marketing and innovation at Bear Naked, who was with the company before it was purchased, said in a statement.
Philip Howard has studied the organic industry’s consolidation, and is dismayed. A professor at Michigan State University, Howard designed a chart that has become an oft-used reference tool on the issue. He said that consumers frequently are unaware of the corporate name behind an organic product — what he has come to call “stealth ownership.”
Though some companies have increased their commitment to organic principles, Howard worries that some firms are working to cut costs by merging operations and using fewer organic ingredients; those tend to be more expensive than their non-organic counterparts.
“If all you’re interested in is eating foods grown without pesticides or synthetics, then going mainstream has been great,” he said. “But if you’re interested in the values of sustainability and things like that, it’s been a mixed blessing.”
Like Eden Foods’ Potter, Arran Stephens, the founder and chief executive officer of Nature’s Path, has refused repeated offers to sell the organic cereals company he started in 1985. The contact page of the company’s Web site even forewarns potential buyers that Stephens is not interested:
“ ... if you’re contacting us about buying the company, sorry! We’re not for sale.”
Not that Nature’s Path is small. With nearly 400 employees, the British Columbia-based company has grown 20 percent to 30 percent a year, and Stephens says its outlook is bright.
But he said he feels a keen duty to the ideals that set him on an organic pathway, as well as responsibility to the farmers, suppliers and others who rely on Nature’s Path. That has made him unwilling to sell, even though on the day he spoke with the Chicago Tribune he said he got two messages from investment bankers.
“If everybody wants to consolidate and sell out, that’s fine. But some people believe all the soul gets gutted out of the company,” said Stephens, who has brought his children into Nature’s Path. “We don’t want that to happen. We have our own agenda, our own strategy.”