Organic Food: Follow the Money

The Omnivore’s Dilemma by Michael Pollan has been very stimulating reading. Pollan discusses the realities of organic food. There is a public demand for organic food going back to the
Alar Episode of 1989. In my most recent post  I noted that big corporations were buying out the smaller, successful natural products companies. They are buying the brands that have made their mark in natural foods, often starting as what Mr. Pollan calls “artisan” businesses. A significant portion of the population wants clean food; wants to believe it wasn’t produced in a factory setting. Pollan points out that one of the reasons we like to shop at our local food Co-op or Whole Foods is for the warm, fuzzy stories we find on the organic packaging. We visualize the idyllic little farms with happy cows making milk, free range chickens laying eggs; blissed out hippies growing vegies. We pay extra for the stories. Most of these stories were probably true at some point. For example, I’ve purchased Fantastic Foods products for a long time.   Here’s Fantastic Foods’ nice litte  story:
“Fantastic Foods was founded in 1975 by Jim and Joan Rosen, starting as a small, vegetarian restaurant in Mill Valley, CA. Jim Rosen, with a degree in philosophy and Montessori teaching experience, wanted to achieve two goals: provide healthy, vegetarian food while creating a socially conscious business. He aimed for quality and flavor, and soon the Rosens began selling their healthy and nourishing vegetarian specialties to stores and distributors with increasing success. Rosen later sold the restaurant and devoted himself to manufacturing the prepackaged soups and mixes that make up today's Fantastic Foods' family of products.”
I actually know Jim Rosen and he’s a very nice guy. A good guy. He’s also a rich guy. Jim sold Fantastic Foods in 2000 for a big number (I heard $80 million). He sold to an outfit called HomeGrown Natural Foods. HomeGrown also acquired the Consorzio brand and Annie’s, who make that good mac and cheese ( Annie has a nice story too).
So who is HomeGrown Naturals?  Sounds benign enough: “HomeGrown Natural Foods, Inc. was founded in 1999 as a platform to purchase, consolidate and grow high-quality, branded companies in the natural foods industry. The company is engaged in acquiring, consolidating and building high-quality brands under the HomeGrown umbrella.”
Founded as a platform? That sounds suspicious. Who owns HomeGrown? Turns out its a venture capital firm called Solera Capital located on Madison Ave in New York, NY. They get their money from public and private pension funds. Solera, it turns out, is an interesting company. It’s a group of women. The CEO, Molly Ashby is a  a well-connected player in business having been a J.P. Morgan VP for fifteen years prior to starting her own company.  The Solera ladies had a good idea—a couple good ideas, actually. One was to get into the natural foods business. Molly Ashby received a 2005 Girls, Inc.  Vision Award. The citation  reads in part: “Solera owns a majority interest in ...Homegrown Naturals, a leading multi-brand natural and organic company that consists of the Annie's Homegrown, Fantastic Foods, and Consorzio brands. Among Solera's core values is diversity, evident at all levels of its organization and in the network it has formed to help identify potential transactions and provide entry into industries it has targeted for investment. “
The other good ideas was buying Latina Media Ventures, (publisher of Latina Magazine).
It’s a bit hard to make the connection between a magazine catering to the Hispanic community, on one hand, and the natural foods industry on the other. Perhaps a brief interview
with Solera CEO Molly Ashby could explain it:  "We were talking (to Molly Ashby: )about the intellectual process of identifying a market niche and then seeing if a company she might buy can fill it. That process, she explained, required “courage, creativity, discipline.” What about competition? Her first response is that competition is self-generated: “We never do it exactly right, because we always aspire to do it better.” Then she turned to the larger reality. “Do I keep score? Oh, yes. You get contrasted with funds in your peer group. So I look at those numbers all day long.”
Courage, creativity, discipline, but not committment to the quality of the food. Solera’s committment is, I suspect, to the quality of the return on investment.
Hispanics are an up and coming business opportunity. Natural Foods is a promising market niche. Fantastic Foods fit in the niche. Molly and her colleagues bought it, Jimmy Rosen got his money. We still get the soup.
Is it the same soup it used to be? Maybe. But, it’s not the same story. I’ll buy the story of Jimmy making his soup in that little vegie restaurant and turning it into a business. But I don’t want to buy the story about Solera Investments of NY, NY making my organic soup. There’s a difference in the quality of the story which affects the taste of the soup.
If Molly was my kid would I be proud as hell of her financial acumen and accomplishments? No doubt yes. She’s playing the American game of growing money through acquisition, leverage and marketing. She’s obviously good at it. But I don’t have to worry about Molly. She’s hangin'
with Oprah, Katie, Condi and Queen Noor.  
So, how many stories that we read on the milk cartons, cheese boxes, cracker packages, etc. in our natural food stores are spun by the big boys (or girls)? How many of these stories are being told from New York by the big money folks who probably are not committed to growing clean food as much as they are committed to growing money?
Fantastic Foods “Big Soup” may taste the same; it just isn’t the same.