How Good Food Enterprises Are Thriving In The Covid-19 Era
There is plenty of bad news about the food industry lately. From profit-driven price inflation, to worker deaths from Covid-19, to widespread supply chain shortfalls, the last few years have been brutal to everyone who needs an efficient and sustainable food supply. But there is good news too, and stellar enterprises that prove that better food systems can be developed under the most competitive and chaotic circumstances.
Food retail is highly consolidated, enabling big chains to raise prices, pay low wages and glean huge profits without accountability. Over two-thirds of food retail dollars are spent in a handful of these national chains. Many bustling metropolitan areas, including Denver, Austin and South Florida, are dominated by 1 or 2 quasi-monopolies. Walmart has greater than 50% market share in hundreds of municipalities. Yet alternatives continue to sprout.
National Co+op Grocers (NCG) is a business services cooperative based in the Twin Cities. NCG enables community-owned grocery stores, or food cooperatives, to compete with some of the largest retail chains in the country. NCG does this by negotiating competitive pricing and product assortments with brands and wholesalers, as well as by providing operations, finance, human resources and store development support services for member cooperatives. Over 215 locations across 38 states cooperate through NCG, generating over $2.5 billion in annual sales and serving over 1.3 million member-owners.
Food cooperatives have a deep and rich history. According to historian John Curl, cooperatives were key to the development of the Labor and Populist movements. Cooperatives have also been crucial to developing self-sufficient and sustainable economies in Black communities, as scholars such as WEB Du Bois, Monica White and Jessica Gordon-Nembhard have rigorously documented.
Cooperatives are also an international phenomenon. There are thousands of cooperatives across the globe, with hundreds of millions of members. According to the International Cooperative Alliance, a cooperative is “an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise” and are guided by 7 unifying principles. Food cooperatives have even become market share leaders in some European countries. While lax enforcement of U.S. antitrust laws such as Robinson-Patman have enabled the dominance of corporate food conglomerates, retail food cooperatives have carved out a valuable niche.
NCG enables food cooperatives to stand out and build on these legacies. Food cooperatives have been leaders of the good food movement from the starting gate. They helped establish and continue to champion Organic standards and were key to building the local foods movement and the plant-based food industry. Over 40% of food cooperative sales are organic, well above the industry average of 5-10%, and rivaled only by chains such as Natural Grocers and Whole Foods. The average food cooperative sources 26% of their products locally and works with over 178 local farms and vendors, helping circulate millions of dollars back into local economies. Many food cooperatives pay living wages, making them an outlier in a grocery industry with widespread food insecurity and high turnover among clerks. Food cooperatives also sell higher percentages of ethically produced products than other grocery chains, including Fair Trade certified products.
Some of the densest regions for food cooperatives include Seattle, the Twin Cities and the Upper Midwest. But they can also be found from coastal Maine, to Austin, Texas to Ocean Beach, California, surviving and thriving among multi-billion dollar grocery oligopolies. Communities across the country continue to plan, open and develop food cooperatives, and are fortunate to have an organization like NCG in their corner.
The wholesale trade is among the most consolidated and invisible aspects of the food supply. On a good day, wholesalers are like mycorrhizae that link producers to retailers and restaurants, enabling greater access to markets. On a bad day, which has become more frequent, wholesaler out of stocks and SKU rationalization limit the choices of consumers. And wholesaler consolidation has reduced competition and enabled revenue grabs such as billbacks and deductions that bankrupt smaller producers. Wholesalers are quite literally the “middle man”, and all that implies.
The Common Market is an exciting supply chain innovation that is transforming the role of wholesalers. A non-profit that builds regional and regenerative food supply chains throughout the Mid-Atlantic, Southeast and Texas (and soon the Great Lakes), The Common Market partners with farmers to handle distribution of their harvests, ensuring that customers get some of the best and freshest foods. The Common Market distributed over 15 million healthy meals and 450,000 hand packed food boxes to school districts, hospitals, social service institutions and food access NGOs in 2021 alone, investing over $11 million in regional food purchases on $15 million in total revenue.
Since their founding in 2008, The Common Market has invested over $100 million in their host communities and sourced from over 144 family farms annually. Their hyper-local sourcing means that 50% of their suppliers are within 100 miles of their warehouses and 90% of their suppliers are within 300 miles, saving food miles and reducing fuel costs and potential supply chain hiccups. This enables The Common Market to grow local economies and create jobs while circulating and amplifying revenue flow within communities. Their purchasing standards are transparent and developed in partnership with some of the country’s leading agricultural scientists and sustainability experts, and focus on four areas: local economies, community health, animal welfare, and environmental sustainability. The Common Market also partners with city agencies and institutions enrolled in the Center for Good Food Purchasing’s Good Food Purchasing Program, a collaborative framework that provides criteria and resources for developing ethical supply chains.
"The Common Markets offers a common sense model — securing markets for family farmers and producers who produce clean, nutritious, locally grown food within institutions that are responsible for feeding communities," says Haile Johnston, the nonprofit's co-founder, based in Philadelphia, PA. "The persistent challenges presented by COVID-19, rising costs, and supply chain issues puts well-deserved attention on resilient local food systems. These food systems offer accessibility and traceability of fresh, wholesome food, and most importantly: place people at the forefront, in and out of crisis. We are proud to help lead the way, to offer our farmer partners fair prices, to offer our communities food they can rely on, to create significant systems changes in our food ecosystems."
According to one of their institutional customers, Abigail Pierce of Jackson County Public Schools in Alabama, “We are grateful for the relationships that the Common Market creates, the delicious produce it offers our students, and the community resilience that it supports.”
Consumer packaged goods (CPG) is the most visible sector of the food industry. From your favorite cereals and soft drinks, to whatever pasta and sauce you need to whip up a quick meal for the kids, CPG dominates family pantries and fridge space. Yet the CPG sector at retail is highly consolidated, with less than 4 companies dominating the majority of shelf space in over 75 different categories. And launching a new CPG brand may seem cool and fun, but the failure rates for food entrepreneurs are astronomical and the industry is brutally competitive for emerging brands.
Yet there are still CPG renegades out there. Dr. Bronner’s Magic Soaps is an iconic brand and manufacturer in the grocery industry with over $200 million in annual revenue. Famous for the surreal labels on their popular soap bottles, the company has expanded into organic coconut oil, toothpaste, hand sanitizer, and most recently, chocolate bars sourced from regenerative organic farms. But the family-owned company, whose favorites catch phrase is “We’re All One or None”, lives its values by taking care of employees, farmers and their communities in a myriad of ways, detailed in a recent book by Gero Leson, the brand’s longtime head of supply chain.
The company sourced over $23 million in fair trade ingredients and converted over 1000 farmers to organic agriculture, with over 124,000 organic acres under cultivation. 74% of their raw materials are fair trade and 76% are organic, including historically exploitative ingredients such as palm oil, coconut oil and cocoa. Dr. Bronner’s employs over 260 workers, a third of whom are under 35. More than two thirds of employees are non-white, with over 54% identifying as Hispanic or Latinx. Their starting wage is over $20 an hour, 60% higher than the California minimum wage, and the company has an executive pay cap of 5 times the lowest paid employee. For context, the average CEO pay is 320 times that of the average worker; the CEO of Kroger is paid nearly 1000 times the average employee’s wage. The Dr. Bronner’s supply chain philosophy ensures that profits and wealth are shared by all, enabling workers and farmers to live well and thrive, but also engendering loyalty and commitment.
Dr. Bronner’s is also setting an example in areas not usually prioritized by consumer packaged product brands, including landfill-free manufacturing and use of post-consumer recycled materials. The company, in particular CEO David Bronner, has been an outspoken advocate of psychedelic therapy and has supported ballot initiatives to decriminalize and legalize marijuana. The company donated over $16 million last year to dozens of NGOs working on a wide variety of issues, including criminal justice reform, fair trade, animal rights and plant based foods, civil liberties and regenerative agriculture. Along with Patagonia and the Rodale Institute, Dr. Bronner’s has co-founded and helped guide the Regenerative Organic Alliance, which is elevating organic production by including stricter animal welfare, social justice, climate change mitigation and soil health considerations in supply chains and is among the fastest growing and most promising recent food trends.
The food industry continues to be a hotbed of exploitation and supply chain issues. But as Mariame Kaba writes, “Hope is a discipline.” Building enterprises that are sustainable, ethical and beloved by customers is not only possible. It’s the only real choice.
