Selling In

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).

Sustainable Food NewsPrivate equity firm to sell No. 2 organic baby food brand to multinational

Campbell 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.

E-Cycle 2013 - Rockville, Maryland - MOM's Organic Market

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.

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35 Responses to Selling In

  1. Catherine Turner says:

    Scott, you are the last bastion of honesty and wholesomeness in my world (vicinity of Mom’s CP.) Please please don’t change, and try to outlive me.
    Catherine Turner

    • Nancy says:

      Yes, please don’t change. If growth eventually becomes stunted, so what? What is already there is tremendous. MOM’s business is a giant service to humanity. What could be better than providing reasonably-priced healthy, ecologically-sound foods for humanity? And the ripple-effect of MOM’s presence in the market will keep the big for-profit businesses at least partially in line. The more they take control, the more “feel good” products will be untrustworthy. Keep up the great work, Scott, and from a loyal customer, a big thank you for caring!
      Nancy

  2. Ellen says:

    I agree – I feel so good when I go to Mom’s. I can trust what I am buying and that everything has been carefully thought about from top to bottom – You are providing not only wonderful fruits and vegetables and other amazing products to the public, but also recycling and help the consumer think outside the box when it comes to the environment and that there is just so much more we can do. We LOVE Mom’s.

  3. David La Voy says:

    I was thinking just yesterday that I would like to be able to invest in MOM’s. Surely it would be possible to structure the company so that those of us who shop there regularly could have an ownership interest in MOM’s, an interest that would be supportive of the efforts, the goals and the independence that Scott’s leadership has been responsible for. It should be possible for Scott to expand the reach and the influence of MOM’s with new capital while maintaining the control that has enabled the company to prosper. Going public need not mean selling out to those whose only interest is the bottom line; it can also mean expanding MOM’s influence by increasing the number of participants seeking to promote the values MOM’s represents.

  4. Ellen says:

    @David La Voy – but what happened to Ben & Jerry’s ? it all started out with good intentions and they ended up getting forced out if memory serves. If its not broken – …….

  5. Varun says:

    Scott, please do not sell MOM’s. If a cash infusion is needed, restructuring along the lines of a co-op may not be a bad idea; I suspect your customers (ourselves included) would be willing to invest in MOM’s to keep it going as an independent concern. Even if you were to increase prices 10-15 percent across the board, I suspect you’d still be more competitive than other chains out there. You could consider a hybrid model where co-op members receive a small discount – on the order of 2-3 percent – over a general 10-15 percent increase.

    The sad truth is that other than MOM’s, there are literally no other chains I trust in my part of VA. To paraphrase, “Let us help you Scott – you’re our only hope”.

  6. R Kelley says:

    Thank you for your thoughts and your willingness to protect MOM’s. I remember in the 1980′s, my 80 year-old, self-employed all his life horticulturist grandfather lamenting the demise of many “Mom and Pop” stores in his area. These were replaced with chain stores that didn’t have the service or quality he wanted.

    It still floors me that I can go to any town or city in the U.S. (and around the world) and could have no idea what city I’m in, because all the stores, and even the lineup at the shopping centers, are exactly the same. Boring!

    It’s been a joy to watch your company grow responsibly and in uniqueness since I discovered the Rockville store in 1997.

    Thanks for offering great quality, and great prices so that we can more easily afford to eat what truly nourishes us.

  7. Joan Daniels says:

    Thank you, Scott, for all the wonderful things you do for our communities through MOM’s. I’ve been a regular customer of the College Park store for many many years and I hope to enjoy many more years of patronizing My Organic Market. I just love it.

  8. Bill Samuel says:

    You note: The only way I could see us “selling out” is if we hit a ceiling in capital and talent and our growth becomes stunted

    I think this is what happened to some of those who sold out. Particularly I think capital was a big issue for some of them which prevented them from expanding as they would have liked.

    I’ve really been amazed at how you’ve been able to keep prices low, offer service that no one else does and still manage to finance the amazing expansion you have. You must have amazing business skills to pull this off.

    There are a fair number of independent organic businesses that operate with not many outlets on a pretty localized level – operations like Roots (and associated businesses) and David’s in our area. That’s probably healthy. I’m not sure if we really need a national MOM’s, and I don’t think you would succeed in going national without selling out. Bigger is not necessarily better.

    I think all these independent natural foods markets have made a real impact. For example, I’ve noticed the prices at Whole Foods have gone down a lot. You don’t hear people talking about “Whole Paycheck” anymore. I’m convinced this would not have happened if it had not been for the competitive pressure on them from MOM’s and many other local/regional natural foods stores across the country.

    But there are also real problems with being only local/regional. Whole Foods has managed to get exclusive deals to sell some really great products that I’m sure you’d like to sell. They have the economic power to do this. It’s a clear strategy of Whole Foods to get exclusive marketing agreements on products to provide them a competitive advantage over smaller operators like MOM’s.

  9. Sam says:

    I am really disappointed by this. I was very much hoping that you would say you would never sell. The idea that MOM’s need to keep getting bigger in order to increase its impact is absolutely not true. Bigger is not better, and is, in fact, worse. Big means you can’t listen to actual individual customers anymore. Big means caring more about expansion than impact. Please reevaluated. Rather than being reassuring, this post was scary because it opened the door to both selling MOM’s and focusing on growth rather than impact.

    • Scott says:

      Hi Sam. I sure do appreciate your concern. Check out this earlier blog post I did a while back… http://scottscompostpile.com/2011/05/25/does-big-bad/

      I don’t think Big is inherently bad. I think there are good companies and bad companies- and the only thing size has to do with it is maybe bureaucracy. I actually think the more socially responsible a company is, the bigger I wish it would be. Wouldn’t it be great if the Fortune 500 was filled with only great companies?

  10. Diane Bria-W says:

    Scott- the bottom line – BIG BUSINESS wants to cave us all in- like others are saying- you have plenty of us to keep it private and we will keep you going – The real commitment to organic and cleaning up mother earth – starts here – The Real Deal-
    Thank you for who you are and the power of MOM’s- Integrity and Transformation

  11. Linda says:

    Thank you, Scott, for sharing your very thoughtful thoughts. Our world is so complicated! Sometimes I drift into reverie about the world I want to live in, inspired at turns by Gene Roddenberry, L. Frank Baum and Henry David Thoreau. I imagine that all humanity has basic needs provided for – clean air, clean water, healthy and wholesome food, viable shelter, and love and learning. None of these would be bought or sold.

    That’s…pretty much it. :-)

    We’re obviously a long way off, but I’m inspired every day when I see signs of us moving in good directions. MOMs bears these signs in bright lights, which is why I shop there – not just because of what you sell and the great people who work there, but because I feel there the collective energy of honesty and truth and hopefulness about the future. This doesn’t happen in ordinary stores, least of all the big gigunda ones where ethics are compromised if not done away with altogether.

    With our food system being systematically corrupted by ruthless and ignorant big guns, we need MOMs and more stores like it to continue to pave the way for change — supporting small farmers, supporting truly sustainable farming, demonstrating ethical work practices, helping workers earn a decent wage, and overall moving away from a purely capitalistic model to a more socially-supportive system. We need this acutely.

    Who are the leaders, and how can leadership be encouraged at every turn?

    Three cheers for MOMs.

  12. Matthew Von Hendy says:

    Hi Scott: Your work at Mom’s is an inspiration. BTW–can I come work for you? :) I do think you can expand and really manage to stay focused on being ‘green’ and locally-oriented. It requires both focusing on the long-term and careful planning.

  13. Jan says:

    Please, please, please open a MOM’s in San Antonio, Texas! I have been going through MOM’s withdrawals since leaving Maryland 2 years ago. I’m still on your mailing list and to this day tell people how wonderful MOM’s was when I used to shop there. San Antonio has 2 Whole Foods locations, an independent market that isn’t very good, Trader Joe’s, and a Central Market, which is a gourmet foods store owned by the major Texas supermarket chain, HEB. There is definitely room for a MOM’s here.

  14. E. Gooding says:

    Thank you for your commitment to those of us that rely on your wonderful stores. One of my concerns is that with all the sell outs, and perhaps the polluting of the foods they once offered, and the attacks on and weakening of the organic industry, is there a possibility you will not be able to find vendors and products to populate your shelves. I see so many new gluten free products, but very few are organic. I see more and more new products on the shelves that are not organic. I see more and more products with ingredients I don’t want (carrageenan, natural flavors, etc.) — the good news is these observations have led me down new paths like leaving the packaged goods on the shelves and making my own almond or rice milk, my own ice cream, my own crackers, etc. but I do have some concerns.

  15. Gladys Robinson says:

    Wonderful to read your inspiring words. Keep up the good work.
    Gladys

  16. I have been a Mom’s customer for the past eight years and I honestly don’t know what my life would be like without you “guys.” In fact, I am afraid thinking about that. Scott, I very much appreciate what you are doing, your authenticity, caring about the community (and your staff), and society at large. Thank you, thank you, thank you! Someone else asked already and I want to echo that question: what can we do to nurture you, Scott?

  17. Linn McChancy says:

    Scott We’ve have known you since the start when you wanted to do start home delivery’s. You have always been a huge help getting me clean food. You understood my severe chemical allergy’s. For this we’re so Blessed and grateful. I learned early on I couldn’t trust Whole Foods and what they said was organic. Please stay the same. I miss Steve in Frederick I heard they are doing well in San Diego.
    Much Love and Thanks
    Linn McChancy

  18. becky says:

    I have the fear. I love MOMs.

  19. Jade Lau says:

    Thank you for sharing your thoughts and glad to hear your decision!!

    I really think MOM is a very unique chain stores and I always enjoy shopping there!

    Please keep us the wonderful work, Scott!

    Jade Lau

  20. Jim Coleman says:

    If you expand products and services in locations, there will be less need for outside money also. Think Zingerman’s not Whole Foods. You guys are smarter than the idea of limitless expansion. Integrity can’t be bought for any price.

  21. Love your store! says:

    Mom’s—you are the only grocery store I rely on to find the food and the products I need, in addition to a safe-food “date night” with my hubs. As a cancer survivor, finding you was a tremendous blessing for me. It got to the point where I could not find what I needed at Whole Foods, and that we could no longer “eat out” there, as the food was not organic, nor did it accommodate food allergies. We are now regulars at your Merrifield, Va, location, and love the food/juice bar there. I could never see myself going back to Whole Foods, Trader Joe’s or Earth Fare while in the South. Please don’t ever change; your integrity makes such a huge difference to me, and I am sure to countless others! These “little things” truly are BIG! Thank you!

  22. Doug Percival says:

    Hey Scott,

    I can’t comment impartially on this — I have a vested interest in MOM’s staying just like it is! Namely, GREAT.

    Doug

  23. Anne S says:

    Oh my gosh, reading this brings tears to my eyes, I’m so happy. (And I may have an unhealthy dependence on/love for MOM’s). ;)
    Seriously, I’ve been worried about how you’d handle these offers I’ve been sure you’re receiving. THANK YOU THANK YOU THANK YOU for not being willing to sell out!!!!
    And I really wonder if I should be working for MOM’s instead of as an architect. Hey! Do you want an in-house architect??
    This is such great news.
    One of your loyal and faithful shoppers.

  24. Maria says:

    Love MOM’s! I talk about it with everyone and the people who work there are fantastic. I love the employees at MOM’s Waldorf , I also love whomever runs the MOM’s twitter. Always there to answer any question or favorite and thank for being a consumer. I drive almost 40 mins to this store and don’t mind it at all. Success will always be in your future.

  25. mw says:

    thank you very much. I have loved shopping at this store and now with the expansions i can organize my trip so that I can swing by one if I have to. MOMs is my first choice when I have other options. All the best. I spoke with a person working at the store in College Park, my impression is that your org fosters the development of individuals who want to develop in the food industry. I think that is great. Thank you so much. You are choice.

  26. Lorrie says:

    We love shopping at MOMs! Started in Rockville 15 years ago and then when we moved you were kind enough to open another store a couple months later within minutes of my house (better for the environment than my longer drive to Rockville was, lol!). We do almost all of our shopping at MOMs, but do deal with some local farmers for ordering meat in quarters or halves. Since we can’t yet do that via MOMs (hint, hint).

  27. mosprott says:

    Hey Scott – please keep on doing what you’re doing. As long as you love it, keep it close and continue to hire and grow your terrific team. We’re all the better for it. [I get jazzed every time I go to the Alexandria store!]

  28. Please keep doing what you do! I made a choice in November to finally be healthier, give up mass produced, over processed food and started seeking local products. In this pursuit I was left scratching my head as to the difference between Whole Foods, Mrs. Green’s, The Fresh Market and Mom’s – What’s the differentiator and how could there be so many so close together. The differentiator is Mom’s Hands Down! Locally owned, true local product and purveyors and Mom’s is the the one I want to see survive and thrive with true local products from the local farmers! Others say “local” but don’t list the farms and when they do, they tend to be out of state and larger , mass producers to support their conglomerate – they lost the view and mission of local and fresh. Please keep up the great work and don’t sell out. Grow, but in the right direction with the same principles.

  29. Mike T. says:

    Scott, man, I’m going to stay informal and brief; wind power is an energy source that cannot physically be changed, or depleted. As long as there is a sun, and as long as there is an atmosphere, there will be wind, by the simple fact that light is heat is motion, on an atomic to sub-atomic level. Your pioneering of bringing large-scale investment to creating a zero-impact, sustainable future through private business investment needs to be a nationally renowned model for use of capital in accomplishment of good, for each independent individual around. I can not only see Mom’s gaining momentum through the coming decade, but I can also see your dreams of building a lasting tomorrow, also gaining energy. Just as the way that atmosphere gains motion, in what we know as wind; a product of the sun heating the ocean, the land, and the sky.
    Keep on keepin’ on, and keep fighting the good fight, through leading by example.
    -mike troy

  30. Pingback: Why MOM’s Sells Eden’s | MOM's Organic Market

  31. Osvaldo says:

    I was recommended this blog by my cousin. I am not sure whether this post is written by
    him as no one else know such detailed about my trouble.

    You’re wonderful! Thanks!

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