The Whole Story

In August, Whole Foods Chairman and Chief Executive Officer John Mackey courted controversy with an opinion piece in the Wall Street Journal advocating a health care reform package that would include high-deductible plans, Medicare reform, tort reform, tax code reforms and a repeal of government mandates regarding procedures that insurance companies must cover. Editors at the WSJ titled the story

In August, Whole Foods Chairman and Chief Executive Officer John Mackey courted controversy with an opinion piece in the Wall Street Journal advocating a health care reform package that would include high-deductible plans, Medicare reform, tort reform, tax code reforms and a repeal of government mandates regarding procedures that insurance companies must cover. Editors at the WSJ titled the story “Whole Foods' Alternative to Obamacare.”

Some fans of Whole Foods were disappointed, to say the least, by the perceived dissonance between Mackey's opinion piece and his company's ostensibly progressive leanings. A boycott movement was launched against the chain last month, with a few small groups even protesting outside of stores.

But, the suggestions in the column should hardly surprise any followers of Mackey's career. During the 1990s and early 2000s, Mackey frequently described himself as a free-market libertarian, and never minced words when describing his distaste for unions.

It's hardly a political mind-set that most people would associate with a grocery chain known for selling organic produce, fair-trade coffee and yoga mats. But while Mackey's rhetoric has mellowed in recent years, his viewpoint has remained consistent. Basically, he has long argued that market-driven solutions to problems are generally better and more effective than government-driven solutions, but businesses owe it to their customers and to the world to strive for something more than just making profits.

During his 2008 commencement address at Bentley College in Waltham, Mass., Mackey told graduates that he believes business leaders must work to create a new type of capitalism for the 21st century.

“I believe that the 20th century will eventually be seen by historians as the great contest between capitalism and socialism with capitalism scoring a decisive victory,” he said. “Capitalism may have won the war, but it has not captured the hearts of the people. Most people don't love or trust corporations, who they often see as uncaring, greedy, selfish, dishonest and concerned only with maximizing profits.”

What is needed, he said, is a “conscious business” model, that has “a deeper purpose” beyond making profits. Citing Grameen Bank in Bangladesh, which pioneered micro-loans in an effort to fight Third World poverty, Mackey said that every business has the potential to aspire toward goals that recognize “the interdependency of all of the major stakeholder groups: customers, employees, investors, suppliers, communities and the environment.”

In 2005, for example, Whole Foods created the “Whole Planet Foundation,” a microfinance foundation that has partnered with organizations including Grameen Bank, Fundación Adelante and Pro Mujer to offer micro-credit loans to residents in and around the villages of Latin America, Africa and Asia that supply Whole Foods with products like tropical fruits, vegetables, tea, coffee and chocolate. These loans require no collateral, and usually consist of amounts of $200 or less, to help finance self-employment projects.

In 2007, seeking a way to expand Whole Foods' access to locally grown and locally produced foods and other products, the company launched a similar program in the United States, called the Local Producer Loan Program. This program offers low-interest loans ranging from $1,000 to $100,000 to independent farmers and small businesses planning to add acreage, purchase equipment or expand in other ways. Although the LPLP does not require recipients to maintain retail exclusivity with Whole Foods, these small, local suppliers often hear about the program through Whole Foods buyers, and working with the retailer to grow their business undoubtedly strengthens the relationship between the companies.

And, sourcing from local farms and small producers remains at the core of the company's mission.

“Of our top 150 suppliers/brokers in the produce category, 22% of our purchases are from large corporate farms and 78% are from independent and family farms (some of these smaller farms pool together under one brand name to help improve marketing and distribution),” Mackey said during a 2006 email exchange with author Michael Pollan. “[Sixty-percent] of these 150 suppliers grow organically, and/or represent growers who do so. In addition, Whole Foods Market is currently doing business with over 2,400 independent farms.”

While many food retailers have developed fairly loose standards for designating a product “local,” as the trend has caught on, Whole Foods maintains one of the strictest definitions among large retailers. Corporate policy maintains that only foods that take less than seven total hours to travel from the farm to the store can be given the “local” designation, and some of the company's stores have established even stricter guidelines.

From a retail standpoint, it is difficult to imagine what the national, mainstream market for organic produce, dairy and meat, or all-natural health and beauty care products would look like today if it weren't for Whole Foods. Co-ops and farmers' markets would have continued to grow independently, and many regional natural food retailers were doing very well for themselves before Whole Foods began buying them up in the mid-1990s. Wild Oats, in fact, briefly made its own bid for a national title before Whole Foods acquired it.

But, while many purists will continue to argue that supporting local co-ops or buying direct from farmers offers better support for food-activism causes, Whole Foods' strict humane animal treatment standards and its early adoption of sustainable seafood sourcing have helped spread awareness and shaped public opinion on these issues as well. They're the company that made thinking about where your food comes from seem important and even exciting for thousands of shoppers.

If there's a flaw inherent to Mackey's viewpoint — that businesses owe it to their customers to aspire to more than simply making money — it's that very few businesses are set up like Whole Foods. Buying local, buying organic, buying fair-trade; giving 5% of net sales from each store to local charities four times per year; offsetting every watt of their annual electrical consumption with wind energy credits; starting foundations to fight Third World poverty — these are things that their customers have grown to expect of them. Many of those shoppers believe that a slightly higher grocery bill is worth it to support causes like these. That is undoubtedly one of the reasons why Mackey's editorial came as such a shock to so many.

But, Mackey's view of capitalism as a tool to enact change, and his view of businesses as entities that have a real responsibility to the communities where they exist, is a refreshing voice to add to the debate, whether that debate concerns health care or sustainable commercial fishing. One may disagree with some of his solutions he offers to solve the nation's health care problem, but his current crop of detractors would be better served looking at the whole picture, rather than caricaturing Mackey with this single issue and attacking the company with a boycott.