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| Source: | LOHAS Weekly Newsletter |
| Published: | Wednesday, December 01, 1999 |
It seems a safe word to describe an industry that has gone from a decidedly fringe effort some 30 years ago to one with billion-
dollar companies and a cadre of Wall Street analysts making careers out of picking which natural products company stocks will be winners.
But Mackey, who founded the first Whole Foods Market in 1980, built it to a 100-supermarket chain with more than $1.6 billion in sales in 1999, and has never worked outside the industry, also has never been accused of playing it safe. And he doesn’t use the word “evolving” to avoid controversy. Indeed, Mackey says evolution will cause what he calls “the philosophy of the natural” to become at risk—specifically from genetic engineering—as it hurtles into the next millennium.
In an interview with Natural Business, Mackey takes a good-natured ramble through how and why he thinks the industry/movement is in for its biggest challenge yet.
Natural Business: Since we’re talking about the state of the industry at the end of the
century, can you discuss some
of its benchmarks over the last 20 or 30 years?
Mackey: In my opinion, the biggest benchmark in this industry was the creation of the publication Natural Foods Merchandiser. It united a group of entrepreneurs that grew this industry.
NB: What do you think the next benchmark will be?
Mackey: Without question, it will be the outcomes generated by biotechnology.
If technological innovation through biotechnology results in greater health and greater longevity—the markers of healthiness and healthy living—and doesn’t lead to disaster, we may be at a fork in the road for people who are philosophically tied to the idea that natural is good and messing with it is bad. It could very well be that biotech is going to result in disasters. But if it doesn’t, in fact if technologists, through various genetic therapies and life extension drugs, end up extending health, and if the mysteries surrounding diseases like cancer are solved through genetic therapies, then the natural industry as we know it will be changed.
For the last 25 or 30 years, there has been an alliance between the natural products industry and the healthy living movement. Biotechnology threatens to split that alliance if it rubs out diseases and results in greater health and well-being. It’s not that the natural belief system will cease to exist, it just will cease to capture mind share.
I’m not saying the natural philosophy will lose. I eat organic products whenever I can. I am a believer. But that doesn’t mean I have to suspend my intellectual curiosity. It’s a quest for truth, not a religious ideal with me.
NB: What about the Internet?
Mackey: There is no question that in 10 years practically everyone will be on broadband connections to the Internet. We’ll be able to access the Internet from cell phones, TVs, even from our cars.
The Internet eliminates distance. Retail has always been about finding the right location (where people live, where traffic flows). Location now becomes less important because we’re fundamentally connected to any products or services we’re interested in 24 hours a day. Traditional retailing as it has evolved won’t be able to compete. They won’t be able to compete on selection or convenience and potentially not even on price. In 10 years there will also be readily available voice recognition technology. When that kind of convenience occurs, it’s going to change retail-shopping patterns. That’s why I think bricks-and-mortar shopping has to become more intensely
pleasurable.
Retail formats in the natural foods industry will become more like our 50,000-sq.-ft. Seattle store. It has its own coffee roaster, expanded prepared foods and more. We’re trying to make the shopping experience interactive theater; we’re trying to make it fun. Retail food stores are going to become like restaurants; they’re going to become more theme oriented; they’re going to become experiential entertainment.
In 10 years we’ll probably see somewhere between 10% and 50% of all natural products bought online. You’ve got to understand, I’m just making up these figures, but we’re at a takeoff point where voice recognition and miniaturization will create a steady increase in migration [to the Internet].
NB: You’ve said business pragmatism has replaced idealism as the powerful driver in this industry. Does this bode well or ill? Or is it simply the natural, so to speak, progression of things?
Mackey: It’s a very natural thing—a sign of maturation.
The way I see it, we had major technological interventions into our food supply beginning with more mechanized farming in the 20th century. Then we had the pesticide revolution, which really took off after World War II.
When I was growing up, my mother was fascinated with TV dinners. That generation was intoxicated with convenience. They didn’t ask questions about the manipulation of food or whether it created health and well-being. The first thing that got me excited about food was going into a co-op and seeing food in bulk bins. That was the intoxicating idea for me—that food didn’t have to come in packages.
My generation had a healthy rebellion against mindless technological intervention into the food supply. It was a reaction to the progress our parents’ generation had made. The natural products industry had a contained explosion because it had a philosophical basis to drive it.
At the same time, we were just becoming aware we were polluting the environment. I’ve always thought of the natural products industry as occurring as a subset of a larger environmental movement. Organic really has caught the essence of the natural products movement. It hasn’t fulfilled itself. The idea is still playing itself out. But, as I said, it’s already being challenged as the result of the ability to manipulate genes. If genetic engineering does end up creating better health and longevity, then the natural products industry will lose momentum.
NB: In that same vein, what is your opinion about the impact of the entry into natural products retailing of senior management from the conventional food industry?
Mackey: If reform is successful, and this one has been, it becomes part of the mainstream, and idealism moves on to the next cause.
Management coming into the natural products industry from the mainstream is a sign of success. Take Jim Lee coming from Ralph’s to be president of Wild Oats Markets (OATS); 10 years ago that wouldn’t have happened. The industry was perceived as too risky, too kooky, too weird. Now Wild Oats is just another [career] opportunity. It’s natural that mainstream food people have moved into it because the industry has become mainstream. It’s a sign of success; it’s not undermining the industry at all.
NB: Finally, a quick take on the future?
Mackey: The natural products industry is going to continue to boom for a long time—at least another 30 to 40 years. But it’s going to be more and more competitive. The trend toward more ethnic diversity in the U.S. doesn’t change anything. It’s not just a bunch of white-bread people who are interested in health and well-being.
I don’t know if there really is a natural products industry. I don’t know if that’s even really important. The philosophical beliefs that have animated this industry are still powerful.
The industry used to be a club. It has always seemed to think of itself as special. That’s pretty natural. But I think that’s changing; it’s not a special club anymore. And that’s not necessarily bad. Whole foods are for everybody, not just the elite. That doesn’t mean we can’t find a sense of community with it, it just means we aren’t the chosen ones. I think the industry has to give up its specialness.