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Whole Foods: Supernatural Market?
Emily Gertz, 30 Oct 07

Over at Gristmill, Tom Philpott has written an excellent piece analyzing the potential impact of the merger of Whole Foods, the already-large U.S. retailer focused on natural and organic foods, with the chain Wild Oats. Whole Foods already operates 188 stores; once it has completed the merger and rebranding of Wild Oats stores, it will grow to 258. And according to one firm that observes the growth of organics and advises companies on getting in on the action, the company plans to run over 300 supermarkets by 2010.

On the one hand, the growth of the Whole Foods chain probably means that more people will have access to quality foods at a variety of price points (yes, it's nicknamed "Whole Paycheck" for a reason -- but Whole Foods also provides have a good selection of store-branded basics -- for instance, rBGH-free and organic dairy products, as well as organic breakfast cereals, peanut butter and other packaged foods).

But as Tom reports, Whole Foods is well on the way to being the pre-eminent natural and organic foods retailer, which means it's likely to "wield tremendous buying leverage" that will allow it to consolidate supply chains, potentially forcing smaller suppliers out of the picture and ultimately lessening the diversity of food and producer sources.

And as operations scale up to meet the needs of the megabuyers, we've already seen what happens on the ground. We get mega, monocropped "organic" vegetable farms supplying the processing giants; and abominations like Aurora Dairy, with its 4,000- to 8,000-head "organic" feedlot dairy operations.

I've generally believed that organic has to go mega if it's going to bring on a significantly large conversion of agriculture towards sustainable methods, as well as reach into a broader spectrum of the American population. But Tom raises some good concerns: this merger needs to be watched for its potential impacts on both consumers and suppliers.

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Comments

I'm not sure "mega" and "sustainable" can be conflated. The Organic industry had to make some serious concessions to get to where it is today, and it's really very industrialized in how monocropped and far away it is from local, sustainably grown (see Polyface Farms for the best example) agriculture. Still, this type of industrial organic is better than its industrial, chemical-laced big brother, and it may make sense if we can use it as a segueway to transition completely away from fake food to, at least, industrialized "real" food.


Posted by: Brad Bonham on 31 Oct 07

To clarify, see Polyface Farms (http://polyfacefarms.com/) as an example of truly sustainable farming that serves a large constituency in Virginia. I doubt truly sustainable farming could scale to the size we'd need to feed ourselves in America, so large-scale organic is probably our biggest short-to-mid term hope for a healthier food system, and Whole Foods is currently our best bet to get there assuming Wal-Mart doesn't get really crazy with the whole sustainability thing!


Posted by: Brad Bonham on 31 Oct 07

How it can be "mega" if Whole Foods buys produce from local farms?


Posted by: Victoria on 31 Oct 07

Running such a large operation, Whole Foods may opt to streamline some of its supply chains in order to realize greater efficiences of scale. In that process, smaller suppliers -- whether they are farms or distributors -- could get squeezed out. That is what I think Tom is saying, anyway.

I don't think the gourmet foodmakers have many worries here -- the specialty cheeses and olive oils and small scale organic animal farms and such -- but people producing more commodity level products (greens, common fruits and veggies) might be more vulnerable. As Wal-Mart has shown, having a dominant buyer position allows a company to wield a lot of power over its suppliers and what they charge.


Posted by: Emily Gertz on 1 Nov 07



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