An insider's guide to the "health food" industry

Julie's Health Club blog shared an article questioning whether Whole Foods is selling out by offering products from Coke and Pepsi (Odwalla and Fuelosophy, respectively). The post sparked a spirited discussion, and as offen happens, I found myself sort of agreeing with everyone, despite the fact that they were disagreeing with each other.

So I called my dear friend Danny Warshay, who has as good a pedigree in the natural foods business world as anyone I know. He's a serial entrepreneur, has an MBA from Harvard, years in brand management at Procter & Gamble, and five years as a founding partner of Health Business Partners, a natural foods investment and mergers and acquisions consultancy. He's now the managing director of DEW Ventures, whose portfolio includes Culinova, a "functional foods" company that seeks to put healthy and tasty in the same foods. He's met the CEOs and founders of many of the companies that product the "health foods" we see on our supermarket shelves, and helped to midwife dozens of acquisitions of these little "mission-driven" companies by much larger ones.

I recorded the call, which you can listen to online or right-click the "Download mp3" link to download to your computer or iPod:


MP3 File

I had to cut the call short so I could drive my daughter to the pet store to get Hamster bedding, but I'm planning on a second conversation soon. Specifically, I found myself wanting to "attack" the natural foods industry and being disarmed again and again by Danny - by his common sense, his experience, and his marketing expertise.

As I listened again, I had two thoughts that I wasn't quick-witted enough to raise live:

Is it a bad thing that processed foods are so heavily branded and advertised as "healthy," when in fact fresh produce is much healthier, and what we should be eating?
Wouldn't you rather do business with a company that says, "Here's what we do, here's our mission, if you value it, buy from us" than a big company like Pepsi or Unilever or General Mills that says, "We'll be whatever you want us to be and sell you whatever you want to buy"?

If you're interested in finding out about the "health foods" industry from the inside, this conversation will be very enlightening. Also, I'd appreciate your thoughts shared to Comments below - I'll put them to Danny when we meet for "Round Two."

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December 2, 2006

Mike :

There are many things that Danny has to say around branding that I agree with. In some ways, I think the anti-marketing, anti-brand perspective is really about the fact that consumers are often more motivated by branding than by other, "real" concerns like nutrition, environmental impact, etc. So from that perspective, the average consumer has drastically misplaced priorities, preferring to buy products that evoke their own childhood memories over a product that seeks to avoid contributing to child poverty in the world. But that same perspective also seeks to be inclusive, non-judgmental and pluralistic, so criticizing these misplaced priorities is taboo, but criticizing large, impersonal companies and their marketing departments that "exploit" those priorities is not.

But that doesn't mean that companies are completely blameless. One impact that I don't think is often discussed is the fact that a) marketing is expensive and b) a homogeneous consumer culture is easier and cheaper to market to than a heterogeneous culture. So companies, especially larger companies, have strong economic incentives to rely on a very narrow palette of cultural cues for their brand values; the ones that are most widely held across the population — for example, Duncan Hines using images of motherhood and childhood nostalgia. But in using those images, they also reinforce and recreate normative expectations around those values. For example, if most marketers use images of mothers' baking, that creates and reinforces the belief that baking, the kitchen and household work is the proper domain of women. Other "positive" family-oriented brand values may harm single-parent households or same-sex couples with children or mixed race families by focusing on one set of "family values" at the expense of others.

I am not at all trying to say that we ought to censor brands that are not politically correct enough, but to point out that, once a brand has been established that is tied to particular values, the company that owns that brand now has a financial incentive to protect that value. If I have tied my brand to the values around a particular definition of family, its in my interest to make sure that that definition remains dominant in the culture, especially if I have positioned my brand as the definitive family brand.

The fact is that deviating from mainstream values — in parenting, nutrition, ethical concerns or any other value — makes you very expensive to market to. It can even put you beyond the reach of most major brands. So the major brands respond by creating fearful messages of social ostracism, mockery and marginalization around the concepts of deviation from mainstream values. I believe that this idea is strongly embedded in the fabric of mainstream cultural artifacts such as movies and sitcoms, and is sometimes even present in advertising. Right around the time that "Fast Food Nation" came out, there was a McDonald's commercial that portrayed a "normal" young person passively going through his day, blissfully ignoring his "crazy, deviant" friend who expressed ethical and nutritional concerns about the product.

Some people complain about consumer culture co-opting counter culture, but I actually think this is the solution to the problem. We want advertisers to present a wider range of co-existent social roles and values, not fewer, even if those values are less pure or even dumbed-down, neutralized versions of their authentic expression — at least they are no longer being actively marginalized.

In summary, I think Danny is absolutely to correct that the criticism that branding focuses on the "wrong" values is misguided, but I think that there's a legitimate point to be made that mass advertising presents us with an overly narrow set of values and may have an incentive to keep it that way. So those are just a couple of thoughts that I would like to contribute.

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