In an interview with the WSJ, Whole Foods CEO John Mackey unveiled a new health emphasis at the company, saying the company is going back to its roots and away from its 15-year emphasis as a foodie Mecca. (Frank Talk From Whole Foods' John Mackey - WSJ.com.)
Mackey: The biggest thing that is going to happen is beginning in the fall. We're going to begin a Healthy Eating Education initiative. We've just added a seventh core value (to the company's mission), which is Healthy Eating. Basically, we used to think it was enough just to sell healthy food, but we know it is not enough. We sell all kinds of candy. We sell a bunch of junk. There will be someone in a kiosk to answer questions, they'll have cookbooks and health books, there will be some cooking classes. It will be about how to select food, because people don't know."
WSJ: Will you get rid of the unhealthy items? You have aisle after aisle of absolutely delicious looking candies and chocolates and fudge and cakes and then you'll have someone up front at a kiosk looking through cookbooks?
Mr. Mackey: "Customers, we hope, are going to vote them out. You're just seeing the most tentative efforts at this point because the details are not ready for public release. You need to be fair. I've got to plan the revolution."
The key statement -- "customers, we hope, are going to vote them out." It's clear in the current recession that people are holding back from the more expensive food items, but my question is whether they will actually shift towards the whole foods and bulk bins that Mackey notes were a key component in the company's early days. Now those foods represent just 1% of sales and he recognizes that people aren't cooking -- hence, the plethora of prepared foods that the company also sells. In a nearby store in Virginia, for example, the prepared foods section now takes up perhaps 20% of the store, far bigger than it had until a renovation in the past year. Will bulk foods now be given more store real estate and be easier to navigate? Will the company reduce the number of packaged goods?
To push this initiative, Whole Foods will also have to become more transparent on the contents of its prepared food items (like providing calorie labeling in addition to an ingredient list at its salad bar and prepared foods counter). That seems like an easy fix, with more information steering people towards healthier choices.
As Mackey says, "Americans are sick of being sick and fat." That's true but whether this sentiment will prompt them to cook -- as Michael Pollan advocated in his Times piece this Sunday -- and thus lose weight is another issue altogether. I, for one, hope so, and will be curious to see how Whole Foods fares with this new strategy.
So here’s what happened to the original 109 Wild Oats stores bought by Whole Foods in February 2007 for $565 million.
- 14 stores were closed and 6 were relocated. - 35 stores were sold to Apollo Management in June 2007.
That left 54 stores, 12 of which are now for sale (plus one additional Whole Foods Market store) under the deal. If the stores don’t sell in one year, then Whole Foods gets to keep them. If they do sell, then Whole Foods ends up with 42 of the original 109 stores it bought.
In addition, the closed stores -- which total 19 if you include those shuttered by Wild Oats before the deal -- will be sold, along with Wild Oats trademarks. Presumably those shuttered stores were already on the auction block.
The FTC said:
The consent order will restore competition in 17 geographic markets that were impacted by the acquisition. In addition to requiring the transfer or divestiture of all rights to 32 stores, Whole Foods also is required to divest related Wild Oats intellectual property, including unrestricted rights to the “Wild Oats” brand, which retains significant name recognition and loyalty among consumers. These assets will allow one or more Commission-approved buyers to re-establish competition with Whole Foods in the majority of the markets in which the agency alleged the acquisition would reduce competition and harm consumers through higher prices and reduced quality and services.
But the way I see it, this battle costing untold millions came down to 12 operating Wild Oats stores -- or 11% of the total Whole Foods acquired. Those stores created a monopoly? Go figure.
I'm quoted noting that organic consumers who believe strongly in organics will stick with it, but they will seek out value. They key for Whole Foods is how well they execute in value categories and shift their image. (They are succeeding beyond expectations in organic milk, their private label supplier tells me). My overall point was perhaps missed: organic consumers in this climate are shopping value, wherever it is, which is why Whole Foods is emphasizing the segment with products and even tips from its shoppers.
When the commodity boom and rising food prices took hold last year, optimists argued that this might cause people to switch to organic and sustainable foods, because the premium was no longer so high compared with mass market fare.
I was skeptical of the argument then, and even more so now. There are ample signs that consumers are cutting back in the face of a slumping economy and if anything, downsizing to discount retailers that skew towards cheaper food. Sales of Spam are growing. The more committed organic food shoppers will always be there, but much larger number of dabblers are scaling back, unable to see the real value above the cost.
At Whole Foods, which has built a business on sustainable, organic and high quality perishable foods, sales growth is at a historic low, leading the company to cut back on new store openings and eliminate its quarterly dividend. Executives are emphasizing its value products, many sold under the 365 store brand, and trying to shake its Whole Paycheck image.
I can see why they are concerned. I was shopping in the Whole Foods store in Denver last Sunday in the middle of the day, before heading up to the mountains with the family. Last year, when I was in the same store in Cherry Creek on the exact same weekend, I recall it was bustling. This year, there were fewer shoppers, the aisles sparse.
The U.S. Court of Appeals for the District of Columbia Tuesday
reversed a lower court decision that allowed the world's largest
organic and natural foods grocery chain, Whole Foods Market, to
buy its rival Wild Oats Markets.
In a 2-1 split, the appeals court ruled that that a lower court
made an error when it gave Whole Foods approval last summer to go
ahead with the merger, despite the request by the Federal Trade
Commission (FTC) for an injunction to block the deal.
The decision sends the lawsuit back to the U.S. District Court for
the District of Columbia, where Judge Paul Friedman had presided over
the case before being appealed. Although the lower court was instructed to give further consideration to the case, the ruling does not undo the merger.
To date, Whole Foods has sold almost 40 Wild Oats stores, closed a dozen and converted many more to Whole Foods stores.
In a recent interview with ChewsWise, Whole Foods CEO John Mackey said: "We paid all the shareholders, we sold off the Henry stores, we
integrated Wild Oats into our system, we’ve shut down several stores,
changed the name of many of the stores – so the eggs are scrambled and
The question now is whether the court will try to unscramble the digested eggs.
The Wall Street Journal opines: "The ruling ... may give the FTC a shot at forcing Whole Foods to sell some
operations to meet competitive concerns raised by the merger."
“We await the U.S. District Court’s response so this issue can be
resolved,” Whole Foods said in a statement. “Meanwhile, it is business
If you’re thinking of grilling this weekend, you might take a look at this recent report, Finding Animal Friendly Food, from the World Society for the Protection of Animals. It surveyed 23 supermarket companies and rated them on humane meat -- the latest in surveys of this type.
Whole Foods Market rated the highest, with twice as many humane meat offerings as the number 2 ranked supermarket in the list, Wegmans, a northeastern chain. Stores within larger chains, such as H.E. Butt’s Central Market and HEB Plus! stores, and Kroger’s City Market stores, also scored high. Wal-Mart ranked near the bottom.
What the survey did not include, however, were smaller stores and co-ops, which may have good choices as well.