I see headlines like this all the time, carrying news that another independently owned and operated organic company has either sold to a private equity (PE) investment group (think Bain Capital) or to a large corporation like Campbell Soup (in this case, Plum Organics has done both- private equity in 2010 and Campbell Soup in 2013).
Private equity firm to sell No. 2 organic baby food brand to multinationalCampbell Soup spent $600,000 to fight GE food labeling efforts, now buys Plum Organics seeking to ‘shift center of gravity.’
About 2 weeks ago, Earthbound Farm was purchased by White Wave, which is owned by Dean Foods.
Independently-owned companies are becoming fewer, and stick out among the crowd. The only large company in the natural foods industry that is still independently owned that I can think of is Trader Joe’s (around $8 billion, and I barely consider them a member of the natural foods industry, let alone the organic industry). The founders (the Albrecht family) also own conventional discount grocer Aldi’s. I get the feeling that the smaller, independent, family-owned companies have the ultimate goal of cashing in and are just waiting to get big enough. This seems to be the trend.
I was at the Organic Trade Association’s annual gala in September (I am an OTA board member). Each year, we give awards to industry pioneers. This year’s winners included Arran and Ratana Stephens, who founded Nature’s Path. Arran specifically said (before launching into song, btw!), “to my friends in the investment community, we are not for sale and we never will be.” He was asked who he admires in the industry. He paused and said, “Most of the people whom I’ve admired have sold out, sometimes much to their own regret.” This really stood out to me, as Nature’s Path is now a $100 million company. The Stephens would get a lot of money if they sold.
In the retail sector, there is a well-run substantial co-op chain ($250M in annual sales) on the west coast called PCC Markets. Being a co-op, they are obviously not owned by a private-equity group or a big corporation, but they’re not really independently owned either. I think Jimbo’s on the west coast is still owned by Jimbo, so there’s one.
Whole Foods, Earth Fare, Sunflower Farmers Markets, Sprouts, Natural Grocers/Vitamin Cottage, Mrs. Green’s- none of these companies are independently owned and operated anymore. Whole Foods has purchased independent Mrs. Gooch’s, Bread and Circus, Wild Oats, Harry’s Farmer’s Markets, Wellspring, and Food For Thought.
Even local companies like Sweetgreen and Honest Tea are now partially owned by a PE group or owned by a large corporation, respectively.
With MOM’s rather rapid expansion, the PE groups are starting to call. About a year ago, I received a call from the former CEO of 7-Eleven (and Blockbuster Video), who now represents Ron Burkle’s Yucaipa investment group. He asked me to “seriously consider selling MOM’s” to them. After listening to their plans, I suggested that the concept they are trying to launch is similar to what Tesco was doing with Fresh and Easy on the west coast- and I expressed concern that it wouldn’t work. I never heard back from them but, a year later (this past fall), they purchased about 200 defunct Fresh and Easy locations from Tesco.
Earlier this year, I received a call from yet another PE group, this time represented by the former CEO of Borders Books. I told them that I appreciate and am flattered by their interest, but that I’m not interested. The PE groups insist that we need their money, talent, and Rolodex to take advantage of opportunity before competitors enter the market and MOM’s becomes obsolete.
My Leadership Team works and communicates so well together- and they’re so good at identifying problems and finding solutions. I think we’re capable, more capable than most of the advisors at PE firms actually, of growing MOM’s regionally/nationally and of further accomplishing our Purpose to protect and restore the environment.
If I were ever to sell MOM’s, I’d have to have a plan to do fulfilling work in the aftermath- and to do good with the proceeds. I could see taking on projects like building a wind farm or cleaning up the Chesapeake watershed, but the wonderful thing about MOM’s is that I can retain ownership and control and we can still accomplish such goals.
And what about the wonderful community and culture we’ve built here at MOM’s? Regardless of my ambitions, I’d feel responsible for keeping that intact, which would be left to chance if I weren’t running the company.
Here’s the thing: I love running MOM’s. It’s challenging and it’s work I love doing. The community here is amazing. I enjoy my co-workers. Our customers are fantastic. The people we buy from are truly partners. And my work has purpose.
Regardless, the temptation to sell is real. Some people sell and never have to work again. While we’re told by society throughout our lives that this is the ultimate goal, my gut is telling me that I wouldn’t be happy- and I think many people who chase the big payout find the experience anticlimactic at best, depressing at worst.
I believe the bigger MOM’s is, the better for the world (Does Big = Bad?). If MOM’s becomes a national company, then we’ll be able to have an even greater positive impact on the environment. The only way I could see us “selling out” is if we hit a ceiling in capital and talent and our growth becomes stunted, but so far MOM’s is doing great without outside help- and I don’t see that changing anytime soon, if ever.