Whole Foods deal excites small businesses
Companies eager to see how Amazon can boost their biz
Jennifer Constantine, founder and CEO of JC’s Pie Pops, surprised a group of industry executives at the Natural Products Expo East show last month with her enthusiastic reaction to Amazon’s purchase of Whole Foods.
“One gentleman said, ‘A lot of the young brands your size are terrified, and they think they are going to get erased.’ But I think that’s the wrong way to look at it,” said Constantine. “If you’re a little brand and you’re not really making it happen, it’s going to hurt. But if you sell, then you’ve got a much bigger platform now.”
JC’S Pie Pops, based in Los Angeles, was formed in 2013 after Constantine, a songwriter by trade, accidentally froze her homemade panna cotta, an Italian dessert meant only to be chilled. Whole Foods helped Constantine break into the specialty foods market by selling her prod-
uct in a handful of stores. With $5.3 million in sales last year, JC’s products are now at dozens of chains including Publix, Giant, Sprouts and H-E-B.
For entrepreneurs in the natural food and products industry like Constantine, Whole Foods has served as a launchpad of sorts for companies looking to get on mainstream store shelves. Companies and local farmers often would get into one or two locations and grow from there if their products took off.
Like the big supermarkets and food manufacturers who are nervous about Amazon’s size and power, many small suppliers can see benefits of the combination, but are also concerned what it could mean for them.
“I’m a little nervous because we’re a smaller player, but as an entrepreneur, I’m excited about the distribution potential,” says Anupy Singla, owner of Chicagobased Indian as Apple Pie and author of three cookbooks. She started selling spices in 2015 at her local Whole Foods and now has products in about a dozen stores. Amazon “may mean I can actually reach more consumers now. That’s really what we’re talking about on one level, for entrepreneurs,” she said, “even though there’s uncertainty.”
Whole Foods has been important for start-ups because it brings credibility through rigorous requirements in organic and natural categories, says Natalie Shmulik, a consultant at The Hatchery, a food business incubator in Chicago that provides entrepreneurs kitchen space, consulting and classes.
Change was already afoot at Whole Foods prior to Amazon swooping in. The chain was already streamlining its purchasing process before the Amazon deal closed in August, shifting to regional buyers and more approval through its Austin headquarters rather than individual stores or regions, according to business owners, venture capitalists and others in the industry. Previously, small-business owners often dealt with the buying manager for an individual store or region, which could make it cumbersome to expand.
Denver-based Birch Benders broke into Whole Foods through a single store in Boulder, Colo., after the company formed in 2011 and worked its way into the region. Now it’s available in 7,000 stores in different chains nationally, says CEO and co-founder Matt LeCasse.
“We’re Whole Foods’ No. 1 pancake brand,” said LeCasse. “What’s been really exciting for all of us is that ... our goal of getting better food into every American household is working.”