Organic, Inc.: Natural Foods and How They Grew

Organic, Inc. tells how an $11 billion industry arose out of an alternative food movement, bringing backwoods idealists into the age of the organic tortilla chip. A juggernaut in the otherwise sluggish food industry, organic food is now a consumer phenomenon growing at 20 percent a year.
Organic, Inc.: Natural Foods and How They Grew
By Samuel Fromartz
Published by Harcourt
April 2006; $25.00US; 0-15-101130-3

Who would have thought that a natural food supermarket could have offered a financial refuge from the dot-com bust? But it had. Sales of organic food had shot up about 20 percent per year since 1990, reaching $11 billion by 2003 . . . Whole Foods managed to sidestep that fray by focusing on, well, people like me.

Organic food has become a juggernaut in an otherwise sluggish food industry, growing at 20 percent a year as products like organic ketchup and corn chips vie for shelf space with conventional comestibles. But what is organic food? Is it really better for you? Where did it come from, and why are so many of us buying it?

Business writer Samuel Fromartz set out to get the story behind this surprising success after he noticed that his own food choices were changing with the times. In Organic, Inc., Fromartz traces organic food back to its anti-industrial origins more than a century ago. Then he follows it forward again, casting a spotlight on the innovators who created an alternative way of producing food that took root and grew beyond their wildest expectations. In the process he captures how the industry came to risk betraying the very ideals that drove its success, in a classically complex case of free-market triumph.

Reviews
"In Organic, Inc., Samuel Fromartz gives us a uniquely American story -- the emergence of Big Organics from humble origins in small, counterculture farms. Fromartz writes with the passion of an organic partisan, but his account of the pros and cons of Organics, Big and Small, is unusually balanced, honest, and compelling." 
--Marion Nestle, author of Food Politics 

"Sam Fromartz has the ability to transform an important subject into an interesting one, as he does with this vivid, vital book, Organic, Inc. No, it's not a new wave or diet book. It's a book that will alter the way we think about what we eat and the business forces that shape what we eat." 
--Ken Auletta

"With one eye on organic food's past and one eye cast on its future, Samuel Fromartz has a comprehensive vision of an industry at a crossroads. Here is a voice that reminds us of our power as consumers. Anyone reading Organic, Inc., will be inspired to put his money where his mouth is." 
-Dan Barber, chef/owner of Blue Hill and Blue Hill at Stone Barns 

Excerpt
The following is an excerpt from the book Organic Inc.: Natural Foods and How They Grew

Introduction

When I was single in New York, with a work schedule that regularly stretched into the evening, I’d eaten a lot of takeout and restaurant food and limited my cooking mostly to the weekend, much as I enjoyed it. Now, in a more domestic setting, with a paltry choice of decent places to dine nearby, I lost my appetite for eating out. "I could make this better at home!" I’d say, when faced with a subpar restaurant meal.

It was inevitable that this outlook would one day bring me to Whole Foods Market, already a fast-growing mecca for foodies in Washington. The first thing that grabbed me -- just as it was designed to do -- was the veritable garden of fresh fruits and vegetables that greeted me as I walked into the store. Containers of beautiful strawberries were piled next to raspberries from South America. Deep-red hothouse tomatoes from Holland, cherry tomatoes from Maryland, grape tomatoes from Baja, heirloom tomatoes from Pennsylvania. There was Lacinata kale, red and green Swiss chard, bok choy and baby bok choy, Napa cabbage, baby Asian greens, daikon radish, broccoli rabe, red-leaf, green-leaf, and romaine lettuce along with bulk spring mix. Organic peaches were available in the summer, apples and pears year-round. Not all of the produce was organic, but much of it was, and I began buying it, figuring the lack of pesticides was a bonus for freshness and taste. Then I would move around the perimeter of the store, trying my best not to dump fresh seafood and meat and dairy on top of the produce. It would have made more sense to pick up the veggies last, so that they would be on top, but the hard facts of consumer enticement had dictated the layout of the store: the gorgeous array of fresh fruits and vegetable were the gateway to this consumer paradise. They had certainly hooked me. Without kids, I didn’t think much about cost. Quality was all.

In New York, you have to understand, I didn’t do supermarkets because they were impossible, nasty, and crowded. I relied on old-fashioned neighborhood and specialty stores like the Staubitz butcher shop on Court Street in Brooklyn, and Sahadi’s on Atlantic Avenue, where I stocked up on spices, dried fruit, hummus, thick Middle Eastern yogurt, and olive oil. In Greenwich Village, there was Murray’s Cheese Shop, where the long wait was exceeded only by the number of exotic cheeses in stock, and Faicco’s Pork Store across the street, with unequaled Italian sausage. You got fresh pasta at Raffetto’s on Houston Street and fresh mozzarella scooped by hand from the vat in the back of Joe’s Dairy on Sullivan Street. Then I would bike down to Chinatown for bargain seafood and vegetables or visit Russ & Daughters on the Lower East Side for smoked salmon and pickled herring, as my elderly father kibitzed with the staff.

But in Washington, I discovered that Whole Foods had brought many of these specialty foods into one convenient, upscale setting. Even the lighting was spectacular -- it was designed, a marketing consultant told me, to make people look better, feel better, and thus want to buy more. The quality of the goods themselves wasn’t always up to the stuff I bought in New York, but it was high, the produce especially.

I began to notice something else, too. The store was getting more and more crowded and competition for parking had become fierce. Soon, Whole Foods offered valet parking -- at a supermarket! -- but it was free, so I took advantage of it. My business instincts kicked in, no doubt influenced by the awareness of how much money we were spending at Whole Foods each week -- and by implication, how much others must be spending, too.

I decided to get a piece of the action. Following the dictum of stock market guru Peter Lynch, who quaintly advised investing in what you knew, in companies you liked, I bought Whole Foods stock. This time, at least, it worked. Moreover, owning the stock justified whatever superfluous purchases struck my fancy -- French soaps, organic orange juice, a pricey T-bone, sushi-quality tuna, Venezuelan chocolate, Italian ricotta. If they swelled Whole Foods’ bottom line, they also swelled mine.

The more I spent at the store, the more I made on the stock, give or take a few swoons along the way, such as the company’s ill-advised launch of a natural-food dot-com. Luckily, though, it always returned to what it knew best -- selling good food in a pleasant atmosphere. And it grew steadily, even as the economy dipped into a brief recession. Overall, I earned a return in excess of 130 percent by the time I sold the stock, over a period ending in mid-2002, when I began this book project (thus cutting my sole financial connection to the organic food industry). Ellen and I had, in effect, eaten for free at Whole Foods for two and a half years. Had I continued to own the stock, it would now be up more than sixfold.

Who would have thought that a natural-food supermarket could have offered a financial refuge from the dot-com bust? But it had. Sales of organic food had shot up about 20 percent per year since 1990, reaching $11 billion by 2003, and had garnered outsized attention in the $460 billion supermarket industry. Whole Foods had grown in lockstep with the organic sector, which was no mean feat. Greater sales meant greater profits. With 172 stores in the United States, Canada, and Britain, where it had purchased the Fresh & Wild chain, it had become a growth company boasting $4 billion in sales in a stagnant industry littered with casualties, thanks to Wal-Mart’s strategy of "everyday low prices." Whole Foods managed to sidestep that fray by focusing on, well, people like me. And it had done so without many noticeable marketing expenditures, like the insert ads or double coupons that supermarkets routinely offer to keep customers shopping.

Something besides advertising was driving this market and Whole Foods had tapped into it.

Copyright © 2006 Samuel Fromartz

Author:
Samuel Fromartz is a business journalist who has written for Fortune, Business Week, and Inc. This is his first book. He lives in Washington, D.C.

For more information, please visit www.fromartz.com

By Buzzle Staff and Agencies
Published: 4/14/2006
 
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