Who is Rahodeb?

"Like Whole Foods itself, Mr. Mackey, a 53-year-old vegan, is somewhat unconventional."
- The Wall Street Journal

Turns out John Mackey, the CEO of Whole Foods, is like a lot of Internet trolls, posting for years on message boards under a pseudonym. Writing as Rahodeb (an anagram of his wife's name, Deborah) on Yahoo, he dissed Wild Oats, the company he's now trying to buy, and praised Whole Foods and even his own haircut.

His posting penchant was revealed in a document (pdf) unsealed by the Federal Trade Commission Tuesday night and reported in the Wall Street Journal ($), which googled his handle to find out what he wrote. Mackey explains on Whole Food's Web site:

I posted on Yahoo! under a pseudonym because I had fun doing it. Many people post on bulletin boards using pseudonyms.

I never intended any of those postings to be identified with me.

The views articulated by rahodeb sometimes represent what I actually believed and sometimes they didn't. Sometimes I simply played 'devil's advocate' for the sheer fun of arguing. Anyone who knows me realizes that I frequently do this in person, too.

The CEO-as-playful trickster is rather unusual in the annals of corporate America, but not at Whole Foods Market. The rivalry between WFM and Wild Oats was legion in the natural food business and was reflected in the comments Mackey made under the pseudonym. That Mackey thought Wild Oats was mismanaged and performing poorly was not a secret.

What was unusual is that Mackey felt compelled to state this opinion on a stock message board for "fun." CEOs aren't supposed to sound like day traders, but then Mackey has never followed the CEO's play book. He's a classic entrepreneur. He shoots from the hip. He sometimes misfires. So far, he hasn't had any fatal financial blow-ups (the biggest, in my estimation, was the company's failed foray into the Internet but no one remembers that).

As CEO transgressions go, this doesn't really rate with falsifying accounting books, managing quarterly earnings estimates, backdating stock options, lobbying Congress for tax breaks, seeking back-door regulatory relief, discriminating against women or minorities, or even sleeping with interns. It's more in the category of a stupid dog trick. CEOs usually pump up their companies and slam the competition with more circumspect language and Power Point presentations in front of Wall Street analysts.   

What these antics exemplify are aspects of Mackey's personality - that he is highly competitive and enjoys sparing with opponents, even if anonymously, and likes to promote the company he co-founded. This isn't very CEOish, but then he didn't learn his game at Harvard Business School. Which is one reason he lands in the media so often. Presumably, his competitive juices will be sated, at least somewhat, by this antitrust battle with the FTC.

- Samuel Fromartz

A Look Inside Whole Foods in London

The Financial Times had one of the more insightful reports on the new, 80,000 square foot Whole Foods store in London. Two things stand out: first, that such a large proportion of the store is devoted to casual restaurant dining, and secondly, that it is selling a lot of prepared food.

Whole Foods already sells a far higher proportion of perishables (meat, produce, dairy, prepared foods) than most supermarkets - a characteristic that led the FTC in part to deem it a monopoly. But now it is moving further into prepared and eat-in meals. Is the supermarket morphing into a restaurant? Not exactly, as the article points out. Rather, Whole Foods is finding that supermarket and dining sales complement each other. What the article doesn't mention is that perishables, prepared food and restaurant meals also have higher profit margins than grocery items.

You see this trend of eat-in dining in stores such as Wegmans in the East, which Whole Foods cites as a major competitor. Their profits on this business might also explain why Wegmans can offer good prices on their grocery items. I also witnessed the trend at work at a Whole Foods in Alexandria, south of Washington. The prepared foods section was the busiest in the store at 7 p.m., and customers were eating their dinners in the booths by the front of the store. Many people had kids with them. Why? Because it's a fast meal but not fast food. You could still get an enormous range of salads, grains, beans, tofu, veggies and fruit to go with your pizza, roast turkey or prime rib.

As for whether this approach makes Whole Foods a monopoly, the FT had this interesting quote:

“They are definitely going to up the ante for consumers,” said one (observer). “I think the major British supermarkets have become complacent over the past few years and have become takers rather than givers on the back of the growing interest in organic food. That approach is going to have to change now.”

In other words, innovation don't stifle competition in the supermarket industry, it enhances it ... and consumers win.

Organic Call To Action on Farm Bill

By Samuel Fromartz

Every so often, the broad coalition of organic food supporters – which include food companies, retailers, farmers, advocacy groups, and of course consumers – coalesce around one crucial issue.

This happened in 1997, when the first draft of organic regulations were released by the USDA and included such anti-organic practices as irradiation, genetically modified crops and sewage sludge fertilizer. The community sent an unprecedented number of comments to the USDA opposing the so-called "Big Three" and they were struck down in the final version of regulations.

In 2003, when a Georgia Congressman inserted a rider onto a bill in the dead of night and won passage for the right to use non-organic animal feed (sought by one of his chicken processors), the community rose up again. Led by opponents in Congress, the measure was rescinded in a subsequent bill.

Now, arguably, it's time again for the organic community to rise up again, spreading the word through advocacy groups, in email, on blogs and most potently, at the check-out counters of natural food stores and co-ops.

What's the issue this time around?

  The Farm Bill. Organic supporters have been pushing very hard in Congress to win a few crucial programs for organic farmers but the buzz is at a low level in Washington. Organic doesn't even win a mention as a worthwhile alternative (evident in this recent Washington Post editorial),  when the talk comes to reforming the farm bill.

What are supporters of organic farming seeking?

• Basic research funds. Currently organic farming research and education gets about $13 million from a patchwork of USDA programs. But only $3 million of those funds is specifically dedicated for organic farming. Supporters want to increase those targeted funds to $15 million annually in mandatory funding - this, out of a USDA research budget of about $2 billion.
• Certification cost share. Farmers can get up to $500 annually to offset up to 75 percent of the costs of organic certification. (This is the only "subsidy" specifically targeted to organic farmers and is meant for smaller farmers). But many states have run out of money and they won’t get any more until the new farm bill is approved. Supporters are looking to increase the cost share to $750 through $25 million in funding over five years.
• Crop insurance. Organic farmers must pay a 5 percent premium to receive crop insurance but their crop losses are compensated at the same rate as conventional growers (even though the organic crop is worth more). They want the USDA to correct this unfair practice.
• Transition Support. Transitioning farmers must follow organic methods for three years before they can sell their crops under the organic label. That means their costs are usually higher but they are still getting paid conventional prices for their crops. The lobby is looking for $50 million per year to help with the transition process, with the funds split between technical and financial assistance.
• Data Collection. Right now there is little reliable data on organic products, on the amount and sources of organic food imports, on the prices farmers get for their crops or the usual information available to conventional farmers. That discourages investment, skews crop insurance decisions and undermines the market. So supporters wants some dedicated funds for this type of research.  (For more detail on  these issues, see this PDF from the Organic Farming Research Foundation).

Although the House Agriculture Committee nodded in the direction of organic farming in the mark up of the farm bill, much of the funding under consideration would be discretionary – not mandatory. The programs will only get funded if money can be found, which is highly unlikely in this tight fiscal climate.

Why does organic farming need these funds?

Demand for organic food now exceeds supply, but US farmers are not converting fast enough to fill the gap. The costs of transition, the lack of knowledge about organic methods, and uncertainty about the market all play a role in inhibiting conventional farmers from making the switch. With American farmers lagging, production is increasingly shifting overseas – meaning U.S. farmers will lose out on a lucrative market. Consumers will see more organic products from Mexico, China, Chile, Brazil, India, Australia, Italy and Turkey, including fresh and frozen produce, soybeans, grass-fed meat, grains and beans. That's not a bad thing, in terms of agricultural practices and opportunities in those countries, but it won't do anything for farming in the US.

So what can we do?

The Environmental Working Group has launched a worthwhile site to generate 30,000 signatures to lawmakers by July 15. But for mass action, retailers and co-ops with direct access to consumers need to step up to the plate. They need to publicize this issue at the check-out counter, since most people don't even know about it. The message: Support organic farmers in the 2007 Farm Bill.

The point is to win baseline funding for organic agriculture, so that it can be increased in the next farm bill. If the baseline is near zero, it isn't going to move at all – not in the next bill, or the one after that and farmers will continue to sit on the sidelines.

When you wonder why so many organic products are originating overseas, you will have your answer: the modest government incentives and research U.S. farmers needed to pursue organic farming weren’t available. So they didn't bother to switch.

Legal Eagles Ponder WFM v. FTC

I'm not a lawyer, but my thinking comes awfully close to these two legal scholars blogging on the FTC's opposition to the Whole Foods/Wild Oats merger.

Thomas Lambert of the University of Missouri law school writes of the FTC complaint: "This is bad news for consumers. If the FTC successfully blocks this merger, it will thwart consumer-friendly productive efficiencies without procuring any benefits in terms of constrained market power."

Geoffrey Manne at Lewis & Clark Law School writes at Truth on the Market:

The FTC argues that Whole Foods and Wild Oats compete for market share.  I have no doubt that’s true.  The question, left unanswered in this complaint, is whether, in a business notorious for razor thin margins, shifting market share injures anyone at all other than the losing competitor.  Likewise, other than John Mackey’s belief to the contrary, the question remains what evidence supports the seemingly crazy contention that this battle for market share is fought by these two merging companies alone, to the exclusion of practically everyone else.

This is similar to my point: the FTC is punishing Whole Foods for the way it markets natural and organic foods, finding that this creates a distinct industry. This has nothing to do with the actual products it sells, of which it would have combined 15 percent market share.

Mackey Comes Out Swinging at FTC

Whole Foods CEO John Mackey published an extraordinary blog post in his battle with the Federal Trade Commission, which has opposed its $670 million merger with Wild Oats. In the annals of corporate literature, it's unusual in the details it provides about the deal, and in Mackey's aggrieved personal take on the FTC. The only thing that comes close to this type of public venting is Warren Buffet's annual letters to shareholders. The lawyers must have been sweating.

I highly recommend the section  explaining the deal and detailing Whole Food's competition, which is primarily Trader Joe's. The juicy part comes further down when CEO John Mackey says what he really feels about the FTC, leading him to conclude that Whole Foods will never pursue another merger that needs government approval.

He also argues that Whole Foods prices have never been determined by competition with Wild Oats, but with other competitors like Trader Joe's. (In DC, Whole Foods has actually gone so far as displaying check-out receipts from Trader Joe's and Whole Foods side-by-side to show customers it is competitive, even cheaper, on a basket of products. Presumably, the FTC never visited the "P" St. Whole Foods store across town - as I regularly do - to witness this evidence of competition).

Curiously, the FTC never asked for any pricing information, despite requesting 20 million documents, Mackey says. Still, the FTC has claimed prices will rise.

If you're interested in the organic and natural food marketplace, this makes for extremely interesting reading.

- Samuel Fromartz

Reading the FTC Leaves

By Samuel Fromartz

The Federal Trade Commission's complaint against Whole Food's merger with Wild Oats is getting hammered from all directions. The Wall Street Journal editorial page weighed in today, wondering why the FTC took on the case.

The FTC argued (pdf) the merger should be blocked because it would get rid of the only competitor in a "distinct" industry, leading to higher prices and crappier stores. I've blogged on the weakness of this argument before but the Journal – whose editorial page I don't often agree with, let alone quote - puts it nicely:

But this is where the FTC's story gets weird. It wants to argue both that the quality, selection and "experience" make Whole Foods unique among supermarkets and that without competition from Wild Oats (in the few markets in which they overlap), Whole Foods' quality, selection and experience will worsen. Which means, we guess, that Whole Foods would look more like an "ordinary" supermarket. Which would mean, more competition for Whole Foods. Or something. We admit the FTC lost us when it started arguing that Whole Foods' evil plan is to undermine the very uniqueness on which the FTC is basing its antitrust case.

Using the FTC's definition of uniqueness, you could argue that Nike was unique in the 1990s because it had Michael Jordon as its spokesman. There was only one Jordon, only one Nike swoosh logo, and therefore it had a monopoly. (Or was it just selling sneakers in a smart way?) Or you could argue that Apple Computer is a monopoly because it sells premium computers that are distinct from the mass market and appeals to certain customers. (But it only has 4.8 percent share of PC sales).

As the Journal points out:

The FTC is again playing 'pick your market' to justify a dubious antitrust action …The public-policy principle at work here is that if you define a market narrowly enough, you can find an industry monopolist anywhere.

The Hartman Group, a market research firm, also weighs in:

This is like suggesting that Starbucks must be monitored because they currently dominate the market in the "sophisticated" or "specialty" coffee experience, as if this were somehow an inherent right guaranteed to all. Never mind that Dunkin' Donuts sells a heck of a lot of coffee, should Starbucks ever offer to buy out Tulley's we can presume what the FTC's answer would be.

Let's consider another argument that escapes the FTC.

If Whole Foods and Wild Oats are so distinct why are supermarket companies rushing to sell organic and natural food in reformatted stores that look awfully similar to Whole Foods and Wild Oats? These supermarkets are getting into the segment for the same reason every other major food company is – because they are losing food sales to the new competition.

Despite the best efforts of food companies to simply get us to buy more food and get fat, we have limits. If we start buying a new product it usually means we are buying less of something else. Supermarkets know they can't just quit selling the slow-growing old line products, because a lot of people like them. But they would surely like to get a piece of fast-growing organic and natural food sales. They know if they don't get a piece of those sales, they will lose them to places like Whole Foods and Wild Oats. That's also the same reason Kraft, Kellogg, General Mills and all the rest of the mainstream food companies are selling organic food. It is a growth market.

Jon Ogg at Blogging Stocks writes:

Kroger used to be just another one of the many grocery stores out there. After years, the food retailer has finally figured out that not only could it carry many of the same organic and natural foods that Whole Foods does, but that it could also do it at a lower cost. To top it off, Kroger also figured out that the profit margins were better than the ones on other packaged goods of lower quality and price.

Over the last year, the Kroger closest to my house has expanded its offering of organic and natural foods, not just in selection, but in shelf space as well … it looks like a 300 percent jump.

John Mackey, Whole Food's CEO, is quoted in the FTC complaint as telling his board: "By buying [Wild Oats] … we eliminate forever the possibility of Kroger, Super Value or Safeway using their brand equity to launch a competing natural/organic food chain to rival us. … [Wild Oats] is the only existing company that has the brand and number of stores to be a meaningful springboard for another player to get into this space. Eliminating them means eliminating this threat forever, or almost forever."

Mackey's worry was that if another company bought Wild Oats, then Whole Foods would face stiffer and well-capitalized competition. Now other companies will have to build competition from the ground up, as they have been doing. The merger, in other words, was a defensive move that would put Whole Foods one step ahead of its competitors who want to take back a share of food sales they lost to an upstart. Will it keep them out of the natural and organic food business entirely?

Not a chance.

Whole Foods Isn't a Supermarket?

By Samuel Fromartz

A supermarket is a supermarket except when it's not, the Federal Trade Commission said this week.

The commission threw down the gauntlet and opposed the combination of Whole Foods and Wild Oats, because their merger would create a monopoly in that protected enclave, the natural foods business. This would lead to higher natural and organic food prices and store quality would go down. Whole Foods already gets slammed for its prices. Now they would move higher? And the stores are going to look like crap? This is a recipe for business success?

I find this view, at the very least, myopic and want to send the staff copies of my book. (Anybody willing to put up the chump change for this action?) Considering that every other supermarket chain has launched a surprising array of organic food products and that leading products, such as organic bagged lettuce, are sold in three out of every four grocery stores in the nation, the idea of a separate natural foods business is something of a fantasy. According to the Times:

Neil Currie, an analyst at UBS Investment Research, said in a note to investors that the F.T.C.’s actions were “somewhat at odds” with the recent blurring of lines between stores like Whole Foods and Trader Joe’s and more conventional chains like Publix and Wegmans. He said that 74 percent of natural and organic foods were now sold through mass-market channels like conventional supermarkets.

Yesterday, Natural Food Merchandiser came out with its survey which pegged the retail natural foods business at $46 billion. The share held by conventional grocery stores: 50 percent, or $23 billion. Whole Foods does not have the remaining 50 percent. In fact, its sales last year were $6 billion. Wild Oats annual sales were a little over $1 billion, which gives them a combined 15 percent of natural food sales.

Whole Foods also decided to pursue this merger with a very old nemesis once it became clear that  competition was arising from new entrants, such as traditional grocery stores. Even Wal-Mart, the biggest supermarket in the nation, whose sales are bigger than the next-six biggest chains, is selling organic food. In other words, this merger was a defensive strategy by Whole Foods to protect against new competitors, not to get a lock on the market. That's impossible, now that natural and organic foods have gone mainstream.

Maybe if Whole Foods sold Coca-Cola, or other products with a lot of high-fructose corn syrup and artificial flavors and colors, the merger would go through. After all, then it would be just be another supermarket. But it doesn't, so it's not.

Advice to Whole Foods CEO John Mackey: Call Bill Gates and get the number for his lawyer. Microsoft's a true monopoly and through many legal actions they are still doing just fine.

A Bay Area Bargain: The Farmers Market

Local and organic foods usually get slammed for being more expensive, the luxuries of rich people, elitist, and so on. I demolished the assumptions about organic consumers in my book, citing a body of consumer market research that has shown income has no bearing on an organic purchase. In short, people earning $150,000 a year are just as likely as those earning $50,000 a year to buy organic food. The Hartman Group, which studies such things, has found income one of the least useful indicators in targeting this market.

Now to the farmers' market, which also feeds such perceptions. Ethicurean points to Becks and Posh, written by Sam Breach, who actually took the time to compare farmers' market prices with Safeway supermarket.  This was just not any farmers' market, but the San Francisco Ferry Plaza market, which has a reputation for being the most elitist in the nation. What did she find? On a fixed list of items, she spent 29 percent less  at the farmers' market.

As for the elitist argument, we have thriving farmers' markets in wealthy and lower-income sections of Washington, DC. Actually, the latter, in Anacostia, operated by the Capital Area Food Bank and opening for the season next week, does well because it has no competition. The neighborhood has had no supermarket since 1998 so the only food sources have been high-priced convenience stores and a lot of fast food joints that don't tend to offer fresh produce. In other words, fresh food could not be had at any price before this farmers' market opened.

On this score, Whole Foods has been complaining for some time that people perceive it as pricey, when it's actually quite competitive compared with Trader Joe's and other supermarkets across the same items. In Washington DC, I've found they are the price leader on organic milk but have not done an in-depth comparison on other products. We encourage any shopper out there to do the comparison (so we don't have to).

- Samuel Fromartz

Eastern Market: After the Burning

By Samuel Fromartz

In the pre-dawn hours of Monday morning, Eastern Market, the 134-year-old food market just blocks from my home in Washington, D.C., burned down. No one was hurt but lost in the embers of the three-alarm fire were neighborhood businesses - several butchers, a fish monger, two vegetable stands, a cheese vendor, a pasta maker, a bakery and a market lunch counter – 14 market stands in all. Together they made up the heart of a community, a place where you could step out of the frenzied politics of Washington and eat a decent crab cake sandwich. You would  run into friends and neighbors at the market during the weekend, or find yourself rushing there in the evening to grab homemade ravioli, a few bratwurst, or a pleasant conversation with the vendors. It's hard to put a value on the place, but you certainly realize it when it's gone.

Built in 1873, Eastern Market reeked of character, with huge steel beams in the high vaulted ceiling, tall glass windows, and old freezer cases where the vender's goods were displayed. Down on one end of the hall, you could buy sweet, chewy, rugelach, or roast chicken on a spit, and down the other end, crab cakes, fried fish and oysters, and French fries. On weekend mornings, the breakfast line at the Market Lunch counter wound out the creaky wooden doorways and down the block. The line was nearly as long at lunch - the slowest fast-food in Washington.

These weren't high-end gourmet retailers selling rare artisan foods, nor were they local food purveyors pushing a 100-mile diet. But they were the antithesis of the bland suburban shopping mall, with longstanding relationships with neighbors on Capitol Hill. The small businesses worked in a very traditional way: they bought from wholesalers and resold the food in the market, with a smile and a free banana thrown in your bag. I've been to a few other old markets that had a same feel, whether the Soulard Market in St. Louis (built in 1843), the Reading Terminal Market in Philadelphia (1892) or Pike Place Market in Seattle (1907), which was the most touristy of the lot. Although Eastern Market attracted tourists, it was primarily a working market and the soul of Capitol Hill.

Outside, on the weekend, a mishmash of produce sellers lined the street under the permanent steel awning (which was just reconstructed in the last year or so). There was the old woman in the lawn chair sitting next to her portable heater who has been there for eons, offering goods from the wholesale market. But there were local growers, too, who made a point to show up, with tomatoes, peppers, asparagus and greens. Then there were specialty food sellers like Uncle Brutha, with his superlative hot sauce, who recently expanded into a nearby store. On Sunday, the craft vendors took over, selling jewelry, paintings, furniture, hats and assorted bric-a-brac. Lately, the market seemed to be more vibrant, but that may have reflected the general upswing in the neighborhood, which has been seeing a renaissance, especially among businesses.

I rode my bike by the market both Monday and Tuesday. The street was still cordoned off, fire trucks present. You could see inside the battered windows at the charred and twisted remnants of the place, though the brick shell was intact. The roof had collapsed in a few places, and vendors were standing outside being interviewed by the media. Most put on a stoic face, though neighbors wondered aloud how a public building, owned by the city, could have been allowed to operate without a basic sprinkler system. Considering the hundreds if not thousands who made their way into the market each weekend, the city was lucky the fire occurred in the off hours. Plus, everyone was worried about the loss of this landmark. A row house across from the market hung a banner outside, "We love our vendors."   

The fear now is that the center of the neighborhood will be gone, or rather is gone, up in smoke. The mayor has promised to rebuild the place, but that will take up to $30 million and 18-24 months before it is finished. Our non-voting representative in Congress, Eleanor Holmes Norton, is seeking federal funds for the project. The neighborhood has rallied and within 24 hours was collecting money for the businesses and employees whose entire livelihood was based on the market, the great fear being they will move on before the place is rebuilt.

Hopefully, they will not. Hopefully, Eastern Market will be rebuilt in a timely fashion and in a way that keeps true to its hardscrabble and neighborly character and not become just another culinary destination for the well-heeled. At the same time, I would acknowledge that its character had some costs, since the building was clearly wanting of a paint job and a deep cleaning; it also apparently needed workable electrical wiring (the likely culprit in the fire). So perhaps this will present an opportunity for the landlord to renovate the place without losing what was once there, so that it could become once again the vibrant heart of a neighborhood that is now sorely feeling its loss.

Mainstream Cooling on Organics

I've been contending for awhile that the push of organic food into the mainstream was not a slam dunk.

A lot of commentators last year worried about the impact of Wal-Mart getting into the organic market - both on standards and on supplies. But no one really considered what would happen if Wal-Mart's move into organics did not work out. That's a question to consider now, especially with a large potential ramp up in supplies. There are shortages now as products come on line but what happens if the "mainstream" customers don't show up? Will farmers get stuck with a lot of excess organic acreage ... and milk?

Choice quotes of mainstream food execs in a Reuters story:

"Wal-Mart asked everyone for organic (food). At the end of the day consumers buy benefits and it's not exactly clear what the benefits are from organic. They might end up being niche propositions."
- Alan Jope, Global Food Group Vice President at Unilever Plc

"It's not as rapid as Wal-Mart might have liked or as any of us might have liked, but it is definitely growing."
- Cindy Hennessy, senior vice president of innovation at Cadbury Americas beverages.

"We believe the natural market is the larger opportunity."
- Hormel CEO Jeffrey Ettinger

Note that "natural," as a term, is largely undefined by the USDA (applying only to "minimally processed" meat without artificial additives).

This story will continue to unfold in the coming months, as large companies adjust their expectations and demand, potentially, eases a bit.

- Samuel Fromartz

A Local Foods Boom: A Few Facts

Whole Foods local produce sales in 2006: $163 million (1)

Percentage of WF's total produce sales that were local in 2006: 16.8 percent (1)

Percentage of WF's total produce sales that will be local in 2007: 20 percent (1)

Percentage of WF's total produce sales that will be local in 2010: 25 percent (1)

WF's total produce sales in 2006: $970 million (2)

Percentage of WF's total produce sales that were organic in 2006: 50 percent (3)

WF's total organic produce sales in 2006: $485 million (2)

Percentage of WF's sales that are fresh produce: 17 percent (2)

WF's total sales 2006: $5.6 billion (4)

WF's expected sales in 2010: $12 billion (1)

Estimated local produce sales at WF in 2010: $510 million (2)*

Estimated annual growth rate in WF's local produce sales until 2010: 33 percent

(1) Comments by CEO John Mackey at 2007 annual meeting, March 5, 2007
(2) My estimates extrapolating from Whole Foods data and projections
(3) Comments by Mackey
(4) Annual Report
*Assuming that $12 billion in sales will be reached, produce remains 17 percent of total sales, and local is 25 percent of all produce sales.

Mackey-Pollan Smackdown Turns Love Fest

By Carmel Wroth

AMUSE-BOUCHE: Local, of course

The pre-event reception to the Michael Pollan-John Mackey discussion drew quite a crowd.

Hungry (and penniless) graduate students rubbed shoulders with well-heeled foodies, including superstar chef Alice Waters of Chez Panisse, nutritionist and best-selling author Marion Nestle, and Bill Niman, co-founder of Niman Ranch meats.

Of course you’re wondering what there was to eat.

Guests munched on goat cheese fritata, artisanal salami, and crostini, decked with green olive tapenade, warm hedgehog mushroom spread with fresh grated romano, and duck liver pate.

All locally sourced, naturally!

Conversation buzzed—everyone was excited to see the two food luminaries talk. Or maybe they were just pleased they had scored tickets (people were soliciting them on Craig’s List before the event.)

Whole Foods employees had come from far and wide to see their boss.

“John Mackey is cool,” said Elizabeth Wade, a team leader at the Petaluma, California, store.

David Evans, Marin Sun Farms’ owner, who sells his grass-fed meat locally (and not in Whole Foods), said he hoped the Pollan-Mackey conversation would shed light on how “small farms can access a bigger market without sacrificing integrity.”

Yes, indeed, the question of the night.

FIRST COURSE: History Lesson

To start things off, John Mackey - co-founder and CEO of Whole Foods - gave the crowd of nearly 2000 people a 45-minute food history lesson, complete with colorful Powerpoint slides.

He walked us through the entire history of food procurement and production. Six discreet stages of food history from hunting and gathering to Whole Foods Market!

Okay, that’s not entirely fair. Mackey believes that a new era of food is emerging to replace industrial agriculture--what he calls ecological agriculture--and naturally it’s bigger than Whole Foods.

He seems to think his company is the heart of the movement (it may well be), and he clearly articulated a vision for a sustainable alternative to industrial food.

He also broke some news (as he seems to do every time he appears with Pollan). Whole Foods has established a $30 million venture capital fund to make equity investments in artisanal food companies. This presumably comes on top of a $10 million fund set up for farmers last year.

Secondly, the company is launching a “Whole Trade Guarantee” fo the company’s commitment to source certified ethically traded products.

How can you be cynical about this man?

SECOND COURSE: Smack-down Letdown

As the dialogue got under way, there was a rustling of expectation in the audience. The provocative debate was about to begin, right?

After all, these were the two men who disagreed so strongly about whether the organic food business was lapsing into industrialism that they conducted a heated, months-long online argument. (See our previous post for links on the debate)

In person, though, they were almost painfully gentle with one another. They sparred, a little, I guess, but it was more like couple's counseling than a duel.

For starters, there were admissions of mutual gratitude and admiration. Mackey had learned from Pollan. Pollan appreciated Mackey.

The denouement came when Pollan asked Mackey if he blamed the company’s recent stock devaluation on his less than flattering chapter on the Whole Foods. It went like this:

“Well you probably cost us about $2 billion,” said the natural foods tycoon. “Easy come, easy go.”

(Audience laughs)

“Seriously???” (Culinary poet laureate grimaces painfully).

Mackey described how a flurry of unflattering press followed the book, including frequent comparisons to Wal-Mart.

Pollan looked contrite.

Mackey melted: “Aw, I’m just pulling your chain a little bit, Michael!”

What are righteous eco-consumers to make of this not-so-spirited interchange? If you want to see a debate, as one audience member suggested, invite people who are really on opposing sides of an issue.

Pollan and Mackey originally did have their differences, but when Pollan came up with his eloquent critique, Mackey moved rapidly to turn Whole Foods' sustainable battleship in line with Pollan’s vision—or to emphasize the ways it already was already doing so (sourcing more local foods in stores and moving forward with supporting domestic grass-fed meat, for example).

Pollan, for his part, politely closed ranks with perhaps the most influential man in organic and natural food circles, which is, you'll recall, the alternative to 98 percent of the food supply.

Mackey had his own criticism of Pollan, saying “big organic” is not as big and bad as the author claimed.

“You exaggerated the extent of industrialization of organic,” he said, even adding his most contentious comment, “you’ve done some damage!”

Pollan said he “didn’t intend to demonize” big organic. Organic Coca-Cola would be fine by him. (Say what?)

Which leads us back to a fundamental question raised by the evening's discussion, can organic scale up without selling out? Is there a way to produce and distribute enough organic food to reach the vast majority of the population, or will organic food remain in its gilded 2 percent niche?

DESSERT: A challenge

With all these weighty issues on our minds, Mackey asked one last question.

“What is your contribution going to be? What are you going to do to support ecological agriculture?”

Other than shopping at Whole Foods and the farmers' market? We're still pondering that one.

(The Webcast of the event is archived here)