Cross Posted as Dean Foods, Horizon, Silk and Greenwashing at Earth Friendly Shopping
It is a fairly familiar story in business. Someone has an idea, a passion. He or she builds a spectacular small business around that idea, builds a reputation for creating something really unique, and people love the business.
Then, the owner sells the company to a large corporation.
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Now there are lots of reasons why an owner might sell out. Maybe he/she faces cash flow problems and couldn't keep the doors open otherwise. Maybe the owner is getting ready to retire. Often, the company has grown too large for the original management team to handle.
Unfortunately, the events after the buyout follow a predictable pattern. At first, the acquiring company leaves everything alone. After all, the company they bought was usually profitable, growing, and had a loyal customer base. Why mess with success? Usually, all that happens is the top manager, or some members of the management team, travel to the corporate offices a few times a year, and explain what is going on. Often, the big company will give support, like buying new equipment. For a while, everyone is happy. But then, something happens. Maybe the acquired company misses profit targets, maybe some members of the original management team leave, and the big company starts to exert its control. They start to send consultants, there is a lot of talk about "synergy", "integration" and "efficiencies". Often, the first executives to arrive from corporate are HR and Finance.
Gradually, everyone who shared the vision of the founder leaves, and the ethic of the parent company starts to take over. For most large, publicly traded that means focusing on squeezing another penny per share earnings out at any cost, using cheaper ingredients, scrimping on customer service, and soon, whatever made the company special in the first place is gone.
When this happens in the organic market, we find it particularly disturbing since many people with an interest in natural and organic foods rely on the reputation of the manufacturer. When companies start to cut corners, many people won't even notice, relying on the reputation of the old company.
Many people who buy organic and natural products are particularly interested in supporting small companies, and family farms. They want to feel connected to their food, and know that they companies producing it feel the same way. Knowing this, many large companies hide the fact that they own many of the top organic brands. The Organic Consumer's Association has a great chart called "Who Owns What" that shows a lot of the connections. For example you might not know that General Mills owns Cascadian Farms and Muir Glen. They certainly don't go out of their way to tell you! AlterNet describes the situation in"Why Silk Soy Milk's Parent Company Is Throwing American Farmers and Consumers Under the Bus
A recent USDA report, "Emerging Issues in the U.S. Organic Industry," points out two notable trends in American food: Conventional food corporations are taking over successful independent organic companies, and the corporations are becoming increasingly dependent on imported ingredients.
Let's take a deeper look at some examples:
Over at Daily Kos, WereBear laments what has happened to his once beloved Ben and Jerry's since they acquired by industrial giant Unilever
But we read labels. And, slowly, the ingredients list got longer and less pronounceable.
Look at a recent ingredient list, and I bolded what used to NOT be in there: Cream, Skim Milk, Liquid Sugar, Water, Cherries, Egg Yolks, Sugar, Corn Syrup, Coconut Oil, High Fructose Corn Syrup, Cocoa (Processed With Alkali), Cocoa, Natural Flavors, Concentrated Lemon Juice, Caramel And Red Cabbage Juice Extract (For Color), Guar Gum, Milkfat, Soya Lecithin, Carrageenan
Sad, sad, sad.
And that incredible, vast range of flavors? Shrinking since 2000. I was told that the shops get half the flavors they once had. The final straw was this weekend, when I opened a pint of Dave's Magic Brownie; and the ice cream was no longer vanilla with real raspberry stripes. It was purple ice cream with soggy, bitter, brownie chunks.
A travesty.
We agree
Then there was the acquisition of Dagoba by Hershey's. While we have not noticed any decrease in the quality of Dagoba's product, but there are small things that concern us. Before the acquisition, the list of ingredients on Dagoba bars ended with "and of course, love" We notice that on new labels, the love was missing. Oh well, we suppose love is a little much to ask from Hershey.
A slightly more serious issue are the changes we have seen to their website. For example, take a look at the cultural thoughts on their site in January 2004
Countries are being stripped of their natural resources to feed Consumerism, leaving an unstable and devoid ecosystem. Consumerology?
Why must millions of Monarch Butterflies die because of genetically engineered corn?
Why must we, citizens of the Earth, be subject to foods grown with chemical additives, pesticides, herbicides, fungicides and the countless other unsayable chemical compounds found in our artificial food chain? Why must we be subject to this?
Why must the Frogs and Bumble Bees be subject to this?
Or consider this page, again from January 2004,advocating protection of the rainforests and the indigenous people living there
Throughout the rainforest, forest-dwelling peoples whose age-old traditions allow them to live in and off the forest without destroying it are losing out to cattle ranching, logging, hydroelectric projects, large-scale farms, mining, and colonization schemes. About half of the original Amazonian Tribes have already been completely destroyed. The greatest threat to Brazil's remaining tribal people, most of whom live in the Amazon Rainforest, is the invasion of their territory by these ranchers, miners, land speculators and the conflicts which follow. In Amazonia, thousands of peasants, rubber tappers, and Indigenous Tribes have been killed in the past decade in violent conflicts over forest resources and land.
As their homelands continue to be invaded and destroyed, rainforest people and their cultures are disappearing. When these Indigenous Peoples are lost forever, gone too is their empirical knowledge representing centuries of accumulated knowledge of the medicinal value of rainforest plant and animal species. Very few tribes have been subjected to a complete ethnobotanical analysis of their plant knowledge and most medicine men and shamans remaining in the rainforests today are 70 years old or more. When a medicine man dies without passing his arts on to the next generation, the tribe and the world loses thousands of years of irreplaceable knowledge about medicinal plants. Each time a Rainforest medicine man dies, it is as if a library has burned down.
Dagoba's current web site does discuss their commitment tofull circle sustainability, and founder Frederick Schilling is still with the company. As far as we can tell, the ingredients haven't changed, and they are still all organic. We do notice that nowhere on the site is there any mention of Hershey's. They note (at the very bottom of the site, in faint lettering and with no links, that they are an "Artisan Confections Company" but nowhere is there a mention that "Artisan Confections" is a division of Hersheys.
And this brings us to Dean Foods. Dean Foods is a $12B a year producer of dairy and related products. 78% of Dean's revenue comes from conventional milk products, sold under a wide variety of local, regional, and private brands.
The rest of their revenue comes from their White-Wave/Morningstar division. This division owns Horizon Organic Milk, and Silk Soy Milk, along with several other brands.
Silk SoyMilk was one of the first organic products to go mainstream, I teach marketing, and I have used Silk as an example of how to create a market from micro niches, including Organic.
The Cornocopiea Institute, in their excellent report, Behind the Bean, describe what happened to Silk
In his book, Organic Inc., author Sam Fromartz provides an excellent account of WhiteWave’s transformation from a small,
values-driven company to a subsidiary of the corporate giant Dean Foods. When Steve Demos, the founder of WhiteWave,
started manufacturing soymilk and tofu, he "wanted to prove to the profit-makers that [he] had a better model, based on
values."58 After Dean Foods bought WhiteWave in 2002, the company’s quest to increase profitability for shareholders
would soon clash with WhiteWave’s values. Our own research, including conversations with organic farmers, adds to this
story.
Oren Holle is an organic farmer in Kansas who is also the president of the Organic Farmers’ Agency for Relationship Marketing (OFARM), an organic farmers’ marketing cooperative. After Dean Foods bought WhiteWave and sought to increase
production of its organic soymilk, Holle, along with representatives of the Kansas Organic Producers Association, met
with WhiteWave representatives to explore a possible partnership between WhiteWave and organic farmers. He recalls,
"We proposed to work diligently within the Kansas Organic Producers cooperative and partner with several other OFARM
member cooperatives to supply superior quality beans with guarantees of being U.S. grown through the established organic
audit trail process. While they ‘talked the talk’ about purchasing the beans from U.S. producers, when the pricing structure
was proposed to make the venture modestly profitable for the U.S. growers, the bottom line answer was that if we weren’t
willing to provide the beans at a price equal to or less than the cost of available beans from China our proposal couldn’t be
considered further. End of negotiation."
Merle Kramer, a marketer for the Midwestern Organic Farmers Cooperative, observes, "Companies like White Wave had
the opportunity to push organic and sustainable agriculture to incredible heights of production by working with North
American farmers and traders to get more land in organic production, but what they did was pit cheap foreign soybeans
against the U.S. organic farmer, taking away any attraction for conventional farmers to make the move into sustainable
agriculture."
Today, WhiteWave is moving away from using organic soybeans altogether, claiming that there is an organic soybean shortage
in the United States. It is clear, however, that WhiteWave is not an innocent victim of this shortage. Years ago, the
company had the opportunity to work with American farmers to convert farm acres to organic soybean production, but they
chose instead to source from China.
So, Silk, which used to be a values oriented company - dedicated to organic, sustainable farming, moved from locally sourcing Organic soy, to Chinese Organic soy, to conventionally grown soy, processed with Hexane. Yuch. Even worse, Dean made these switches in the sneakiest way. They just dropped the organic off the label, but made no other changes. Customer who had gotten used to Organic Silk might not notice the difference.
Just as bad or perhaps worse, Dean's other brand, Horizon, which had previously been known for organic milk and organic prouducts, is planning to introduce a new line of "natural" milk. According to the Organic Consumers Association
"When the first Horizon natural products are introduced-a yogurt aimed at children and single-serve milk-they will promote them as being without growth hormones. But Dean Foods will not be able to mention that the products are produced without pesticides, herbicides, antibiotics and other drugs, and genetically modified feed crops, or that the cows are required to graze in pastures rather than confined to factory farm feedlots. These are all factors that truly differentiate organic production from natural/conventional agricultural and livestock production," explained Kastel.
Horizon has long been criticized for using Confined Animal Feed operations, or factory farm methods to produce milk with the organic label. From a Cornucopia Press release
We have been interested in these confined animal feeding operations, or CAFOs, for some time," said Mark Kastel, Senior Farm Policy Analyst, at the Wisconsin-based Cornucopia Institute. As demand for organic milk has skyrocketed, investors have built large industrial farms mimicking what has become the standard paradigm in the conventional dairy industry. "It is our contention that you cannot milk 2000–6000 cows and offer them true access to pasture as required by the Organic Foods Production Act of 1990, the law that governs all domestic organic farming and food processing," said Kastel.
In filing their latest complaints with the USDA, The Cornucopia Institute relied upon a number of published interviews with the owners and management of these farms and over a dozen independent interviews with dairy experts who had visited the farms and examined farm records including; a veterinarian, consultants, suppliers and other dairy farmers. The group has also reviewed independent photographic evidence.
According to reports, both the Idaho and California operations differ little from conventional confinement dairies other than having their high-producing cows fed certified organic feed," said Kastel. "Real organic farms have made great financial investments in converting to pasture-based production – enhancing the nutritional properties of the milk and for enhancing animal health – while it appears that these large corporate-dominated enterprises are happy just to pay lip service to required organic ethics."
For those of us concerned about our food, and our food supply, the only answer is that we need to stay vigilant, continue to read labels, and stay on top of manufacturers.