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I have to give a couple of disclosures. Because if you read any of the history of the natural food business, natural food stores. That almost all of them started as counterculture hippies in the 70s. And some of us were working. So I’m second generation. And the other thing that I think is important is that just before I start, about kind of a little history of the Natural. Is that our company produces about 250 million pounds of organic products a year. It can be sustainable and it can be done in a manner that meets all the criteria that we’ve heard about so far. But I think to begin with really, if you look back at Natural Foods.
It was really something that started in the mid 70s. And so we came about 10 years into it. And Natural Foods at that point was, you know, a collection of small stores with whole grains and tofu and seitan. And you’d go into a Natural Food store and it was kind of creaky wooden floors. They were typically and really cheap places because they couldn’t afford anything else. And it was a very eclectic group of people. And they were all in, you know, there was very little direct competition. There were very few direct competitors. There were no natural food brands that were national. And this whole thing was developed as kind of a counterculture.
And it was, as we talk about our customer in 1987, it was a third of the people were counterculture from the 60s. You know, Michigan, Boulder, Los Angeles. A third of the people were seventh-day Adventists. You know, seventh-day Adventists actually had the foundation of most natural food companies in this country because they were vegetarians. And then there were the people that had children with allergies. And so the only place you could find a product that could meet your child’s needs or your needs for that matter for allergies was to go to a Natural Food store. But it was a very fragmented industry. And I think, but they were fun. I mean you know, going to the Natural Food shows were a lot of fun. They were an eclectic group and I fit right in, even though I look like this.
But I think one of the important things is that, you know, kind of taking a step back. If we look at in the late 70s, early 80s, the industry was effectively self-regulated. You know, there was a grocery store chain in Los Angeles called Mrs. Gooch’s. And Mrs. Gooch wasn’t a counterculture. She was somebody that had been ill. And had gone to natural foods or pure foods to solve some off her medical issues. And she opened kind of the first natural food store in Los Angeles. And it’s hard to see from this. But if you blew this up, you’d see all the things, no antibiotics, no hydrogenated fats.
You know, being socially responsible, being responsible for animal welfare, being responsible to the environment. These were all founding premises. But the important thing I think is this was 30 years ago. This wasn’t 1920. I mean this whole thing has happened over the last 30 years. And it was primarily natural because there wasn’t any organics. If you went into a Natural Food store and bought an apple that looked perfect, they thought you were cheating. You know, somebody would say, “This can’t be organic because it’s got a blemish.” Or doesn’t have a blemish, excuse me. And so you know, it was kind of, so the standard of the industry is what you’d do as a manufacturer is you’d make the product that you were going to have. You would then formulate it.
You would do the nutrition, which you know your Natural Food had nutritional labeling 10-15 years before the government required it. On any other packaging, you know, the whole life of our company we’ve had nutritional labeling on our packaging. And you’d call up Mrs. Gooch’s and you’d say, “I’ve got this product, I’m sending it down, will you look at it?” And then you’d call back and say, “Will you buy it?” And if they took it in her store then if you went to Al Papa’s in Boulder, Colorado, the first thing they would ask you are, “Are you selling Mrs. Gooch’s? Are you selling there?” And the industry, the stores, the distributors, the manufacturers and the consumers demanded that you meet these standards. And they were pretty high standards. In fact when the National Organic Standards came into effect, it dumbed down the whole organic industry. And the interesting thing was that this was self-regulating.
And we actually developed in 1989, the first fat-free mayonnaise. And we were selling it to Berkeley Co-Op, which was one of the original Co-Ops in the country. And it was exploding on the shelves. And so they called us up and they said, “Your mayonnaise is exploding.” And we said, “Yeah, we’ve noticed that.” And they said, “Is it safe?” And we said, “Yeah. It’s actually a non-harmful, you know, gas-forming bacteria, just kind of like acidophilus.” They said, “Oh!” And they said, “Well, we’re going to take it off the shelf because it really creates a mess when it blows up. But we’re going to keep serving it in our deli because everybody loves it.” And you know, if that happened today, I couldn’t tell you what we would go through. With dealing with the FDA, the USDA, the Stage Agencies, the recalls, all that.
But the industry regulated itself because the consumer that they were dealing with demanded that. And in the 90s when a lot of this nonsense with the cereal started, we looked at the whole thing. We said, “Well, we need to differentiate ourself.” Because it used to be that people considered your products natural if they were just in a Natural Food store because nobody else bought this stuff. And so, you know, you didn’t have to explain who you were. You didn’t have to put it on the package. And we had some kind of an epiphany. And we thought, well, let’s call ourself Pacific Natural Foods. And so we started doing that as a way to say our product is different. We’re reaching a different consumer than just somebody saying, “This is natural balance or this is whatever.” The marketing plans, that our products were different than just, in how they were put together than the big marketing companies.
We did that for about four years. And then one day we said, “Well, maybe that doesn’t mean anything.” And we asked some of our consumers. And they basically said, “Well, we don’t even notice it.” And we took it off, we took it off the label. We took it off all our marketing things. We took everything out of our products that wasn’t food. And took all the, even natural flavors out, powders out. We reduced salt levels. And what we had done is we had underestimated the intelligence of our consumer. That we were trying to solve a problem that they didn’t even see as a problem.
You know, our consumer was looking at our product, they had trusted us. They built, over the years we built such a trust with them in what we were doing. That we didn’t have to go back to them and do some kind of a marketing thing to explain to them what we weren’t doing. And I think the lesson to us was we took it off. We had a lot of discussions about what’s going to happen. And you know, basically what happened was nothing. Because the consumer that cares about their food and is being educated about their food will make that decision on their own. They’ll decide and they’ll vote with their dollars.
And I think what we came away from the whole experience of Natural. Even though it’s hard to kind of exit the whole natural world we live in, it’s not quite as easy as portrayed. Is that we learned that what we have to be with our consumer is transparent. That’s what they wanted. They want to know where are the products coming from that you’re using. What is the standard that you’re complying to? And by the way, who is doing that standard? There’s a big difference between Animal Welfare and Fred’s Animal Certification program. And I think what we learned is the more transparent we can be with our consumer, because we’re a consumer of our own products.
That the more we can ask the questions and anticipate the questions and not insult our customers by assuming that we have to explain something to them. Or to provide a marketing program to them that that isn’t going to tell the truth about the product. And so we’ve developed a really simple philosophy of just being as transparent as we can be. Saying, “Here’s where we get this stuff. Here’s who we have certify it. Here’s why we have it certified.”
And I think what we’ve learned is that if you don’t underestimate the intelligence of the consumer you’re selling to, that you’re fine. And we recently had a product that we were going to do that we were going to put signature classics on it to differentiate it. And we talked to some of our consumers and they said, “Why? Just put your name on it. You don’t need to try to explain it.”
And I think it gets back to just the simplicity of transparency. And I think what we’ve learned is everyone can make a difference. You know, with labeling, with GMOs, with everything, if people vote with their shopping dollars, that we can change the way people eat. And I think when you think of the natural foods industry from the store level. You know, the whole phenomena of whole foods and all these, the growth of the industry has happened over 30 years. You know, that’s not very long and it wouldn’t take that much longer to get back to the core principles that we should all be dealing with in being socially responsible and responsible for animals and responsible for the foods we eat. Thank you.
Video Length: 00:10:47