Small biz fearing chain’s big changes
When entrepreneur Lindsey Cunningham wanted to get her natural millet tots into Whole Foods’ freezers, she went to the store, tots in tow inside a Ziploc baggie, on which were written cooking instructions in neat, black Sharpie marker.
“Within three minutes, (the manager) said, ‘Yes, I want this product — figure out a way to get it to me,’ ” Cunningham recalled. “That was a year-and-a-half ago. They put it in 17 stores.”
Today, Rollin Greens products can be found in 800 stores nationwide, from national chains to mom-and-pop grocers. Whole Foods helped kick-start that growth for Cunningham and many others, but a series of changes within the company have small brands worried those days are over.
Whole Foods was acquired by Amazon for $13.7 billion in June. Two months later, The Wall Street Journal reported that the grocer would no longer allow local brand advocates in the store to do demonstrations or check on stocking and displays. Beginning this spring, local companies will have to pay to conduct demos: more than $100 for Whole Foods in-house team, or $10-$30 for the brands to continue doing demos themselves.
Since then, even more changes have been reported. The Washington Post earlier this month revealed that brands with more than $300,000 in sales would be required to discount their products by 3 to 5 percent. The story also quoted local suppliers whose shelf space was being reduced in favor of national brands.
Eater last week published a piece on inventory shortages nationwide, including complaints from customers who have noticed a dearth of local brands. And a Jan. 31 email from Whole Foods to suppliers, obtained by the newspaper, shows the retailer will not be holding a supplier summit or town hall at this year’s Expo West, the natural food industry’s biggest gathering.
“As you know, we are in the middle of implementing a lot of change in our operating model, particularly in the areas of in-store execution, education and product demonstrations,” the email reads. “We currently don’t have anything new to report or any
major updates to provide at this time … We anticipate we will have more to share in the fall.”
Locally, natural food companies say Whole Foods has dramatically reduced the number of products it considers each year to be added to stores, a process called category review.
“For frozen (foods), they’ve put a halt to all category reviews,” Cunningham said. And a RollinGreens product hat was approved last year hasn’t made its way into stores yet — Whole Foods has delayed the physical resetting of its shelves.
Why exactly the changes are happening is unclear. Whole Foods declined a request for comment. But they didn’t start with Amazon, according to industry insiders.
The Austin, Texas-based grocery has been moving toward a centralized model for a couple of years, said Max Goldberg, founder of industry publications Organic Insider and Living Maxwell, shifting purchasing power from local and regional buyers and to global headquarters.
“It’s an important change,” Goldberg said. “Whole Foods has become what it is today largely because it was a place that really grew and nurtured small brands. They were known for having innovative products, and those are generally coming from the smaller companies.
“It’s going to make it much harder for small brands to penetrate and thrive within Whole Foods, and if that’s the case, the selection is going to become a lot less innovative and interesting.”
Other retailers — which have already been eating up turf once held exclusively by Whole Foods — are stepping up further to fill those shoes. Cunninghams’ RollinGreens recently went national with Niwot-based Lucky’s, snagged a multistore deal with Wegmans and landed 123 King Soopers locations.
After being turned down by a Whole Foods buyer, Jim Lamancusa took his Boulder-based brand Cusa Tea to a supplier summit held by King Soopers, a subsidiary of Ohio’s Kroger. The buyers put Cusa into all King Soopers and City Market locations.
“I still think Whole Foods is a great partner, and I’d love to be in their stores,” Lamancusa said. But “because these other retailers are stepping up, I no longer feel like we need Whole Foods. It’s no longer the only path to success.”
Whole Foods has continued some of its commitments to local brands, including its local producer loan program. RollinGreens was a recent recipient, and Cunningham remains optimistic that Whole Foods will regain its place of prominence among natural brands — though she admits recent changes are concerning.
“My prediction is they’re going to innovate a new path for retail,” she said. “Whole Foods is a leader in this industry; they paved the path and now all the retailers are jumping on board.
“I feel like now with the Amazon merger, they are going to pave a new path and in five to 10 years, all the same retailers will jump on that path.”