Big food companies trying to snatch up organic labels

Consumers can be unaware of corporate name behind product

? For years, Michael Potter has gotten regular offers to buy his organic foods company near Ann Arbor, Mich., although now, he said, he gets three or four every week.

“Every food company you have ever heard of has tried to buy this company,” said the founder, chairman and president of Eden Foods, Inc. “Not most of them. Every one of them.”

Venture capitalists have tried to woo Potter as well, he said. But Potter has refused to sell, or even to take on investment capital that would allow him to expand, earning ridicule from peers who say he is missing what he calls the “big payoff” and bucking a trend of consolidation in an industry that last year rang up $24 billion in sales.

“What I do is meaningful. It needs to be done,” said Potter. “And it’s fun.”

For Potter, selling to a big corporation, or joining forces with venture capitalists, would mean selling out the very essence of organic: small, alternative and individualistic.

Definitely not like the processed food firms that manufacture most of what we see in grocery store aisles.

Potter fears for consumers who believe they are supporting the local, pastoral ethic at the heart of organics but who in reality are boosting sales of the huge conglomerates they tend to view warily.

Not that growth is always bad, or that big food companies cannot produce top-notch organic products. The economies of scale those companies can introduce allows them to deliver organic products to more people, in mainstream supermarkets, sometimes at lower prices. The fact is, corporate ownership has helped fuel the industry’s dramatic growth.

Today, the big players in organic foods include such companies as Dean Foods and General Mills, Kellogg’s and Cargill, although you might not see their names on the labels.

Consider: Cascadian Farm, the maker of organic frozen fruits and breakfast cereals, was snapped up by General Mills when it bought a company called Small Planet Foods. But shoppers will not find General Mills’ name or logo on a box of Cascadian Farm cereal. They’ll find Small Planet Foods.

Nor will you find the Kellogg’s name on a package of Bear Naked’s granola, even though Kellogg’s acquired Bear Naked when its Kashi division purchased the company. Indeed, Bear Naked’s Web site provides reams of detail about the company’s history, worldview and its commitment to the environment. Its timeline, though, omits the November 2007 buyout.

“The large companies go to great lengths to hide that they’re the owners,” Potter said from his company’s headquarters in Clinton, Ill. “There’s a great deal of effort that goes into shielding that from the public. There’s smoke and mirrors in the marketing of organic foods.”

What’s more, some companies import their ingredients, undercutting the organic ideal that the food is grown close to home and making it more difficult to ensure that organic practices are followed — a crucial issue for those consumers who see buying organic as a social movement. Cascadian Farm, for instance, uses vegetables from Mexico in some products. Woodstock Farms, owned by the large distributor United Natural Foods Inc., uses some vegetables from China.

“When consumers are buying a half-gallon of milk, they’re not just buying the milk. They’re buying the story behind the milk,” said Mark Kastel of The Cornucopia Institute, an organic advocacy group. “The problem is that, when you look behind the facade, the story doesn’t fit the organic ethic.”

A Bear Naked official said the company has remained true to its organic roots.

“Bear Naked maintains its original spirit and passion for great-tasting, nutritious food that supports active lifestyles,” Ryan Therriault, a senior brand manager for marketing and innovation at Bear Naked, who was with the company before it was purchased, said in a statement.

A General Mills spokeswoman declined comment. Woodstock Farms did not respond to written questions.

Philip Howard has studied the organic industry’s consolidation, and is dismayed. A professor at Michigan State University, Howard designed a chart that has become an oft-used reference tool on the issue. He said that consumers frequently are unaware of the corporate name behind an organic product — what he has come to call “stealth ownership.”

Though some companies have increased their commitment to organic principles, Howard worries that some firms are working to cut costs by merging operations and using fewer organic ingredients; those tend to be more expensive than their non-organic counterparts.

“If all you’re interested in is eating foods grown without pesticides or synthetics, then going mainstream has been great,” he said. “But if you’re interested in the values of sustainability and things like that, it’s been a mixed blessing.”