Whole Foods boss investigated over blogs

Somewhere in America, word gets out that the country’s top natural foods grocer is setting up shop. Soon property prices start to rocket. Once it’s built, the Croc-wearing, Audi-driving “soccer moms” arrive, happy to pay over the odds for organically produced food.

It’s a fair bet that many of the customers are also Democrat supporters, the sort of Americans who want to do something positive for the environment. We know this because John Mackey, the chief executive of the world’s largest natural food chain, puts enormous effort into understanding what motivates the people who buy his organic carrots. And Whole Food stores, found in such Democratic bastions as Austin, Berkeley, Boston, New York and Washington DC, are all extremely profitable.

But the company is also at the receiving end of what many see as a politically motivated investigation by the Federal Trade Commission, which is trying to halt Whole Foods’ proposed purchase of a loss-making competitor, Wild Oats.

The commission revealed this week that Mr Mackey has been posting “voluminously” in online market discussion forums under the pseudonym Rahodeb, which is an anagram of his wife’s first name, Deborah.

So far there is no allegation of wrongdoing on Mr. Mackey’s part, and it is widely assumed that the chief executive of a publicly traded company would not be stupid enough to leak insider information on a stock discussion board, or make statements to pump up Whole Foods stock price.

But the commission is eager to show that Whole Foods is anti-competitive, and allowing it to buy out a rival health food chain would lead to monopolistic practices. The blocking of the merger with Wild Oats comes as Wal-Mart begins to move into the organic food business, sensing the enormous profits to be made. Wal-Mart, the number one grocer in the US, could quickly come to dominate the small organic food sector.

Mr Mackey’s anonymous blogging is but the latest of his eccentricities. He is a vegan, a libertarian and a fiercely successful capitalist who hates trade unions. He is worth an estimated $40m and, unlike so many of America’s mega-wealthy, thinks that’s enough. Last November, he slashed his salary from $1m to $1.

He dropped out of university in 1978 aged 25, to co-found his first vegetarian establishment in Austin, Texas, a vegetarian wholefood store with the ironic name Safer Way. Soon he was living in the store, using the commercial-sized dishwasher as a shower. When the store was flooded, loyal customers helped to clean up.

The company quickly expanded, becoming what the Financial Times called “the fastest-growing mass retailer in the US”. Last year, Whole Foods’ total revenue was more than $5bn and its gross profit was more than $1.6bn. The company has 181 supermarkets. It has also arrived in the UK, opening the world’s largest Whole Foods store in the centre of town.

Mr Mackey remains the driving force behind Whole Foods, and unlike other companies such as Ben & Jerry’s Ice Cream, which sold out to a corporation, he shows no signs of selling up. Instead he is increasingly focused on animal welfare. He has banned the sale of live lobsters in most of his stores and has developed a five-star rating for all meats sold.

“What he’s doing is educating Americans about food and sustainability,” said Bryan Meehan, who sold his company Fresh and Wild to Whole Foods. “He is intensely competitive in a positive way, but also deeply caring about the world.”

by Leonard Doyle in Washington, DC for The Independent, UK

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This was posted on Saturday, July 14th, 2007 at 12:12 am by Ysanne Spevack. To link here, use the permalink. You can follow any responses to this post through the RSS 2.0 feed.