Back to the basics: Whole Foods

Whole Foods CEO talks about going back to roots - AP

By SARAH SKIDMORE (AP) –

AUSTIN, Texas — The chocolate fountain is a symbol for Whole Foods CEO John Mackey of how business has changed.

There's one in the store below his office at the company's Austin headquarters. Melted chocolate pours out of the machine, letting shoppers get any item fresh-dipped.

It's definitely not the healthiest offering at Whole Foods — the organic grocer that Mackey co-founded almost 30 years ago. But like many things indulgent, its heyday is ending.

Whole Foods is returning to its health-food roots, Mackey says, and he's determined to bring America along with it. Think fewer chocolate fountains and more salad bars with oil-free dressing.

"There have been these two dominant values driving our products over the years," Mackey said in an interview at the company's headquarters. "One is food as health and the other one is food as indulgence. Those have battled, you might say, for the soul of Whole Foods."

The chain spent the first half of its existence focused on food as the key to health. Then it shifted to food as indulgence, seizing on a gourmet revolution that put imported sea salts and truffle oil in many American pantries.

The cycle has shifted back, and Mackey says the timing couldn't be better.

Whole Foods' business suffered when the recession crimped spending and decadence fell out of fashion. The country is plagued by obesity. But there's also a growing cadre of aging baby boomers and young people interested in healthier living.

"All the arguments about health care is about who is going to pay for it," he said. "There is not any funding or strategy about how to make America healthier. I think Whole Foods is going to take that challenge up."

Whole Foods is spending this year preparing for the transition, which it will roll out in 2010.

It plans to increasingly push healthy eating and education — adding teams of employees, classes, books, DVDs and supper clubs dedicated to it.

The company isn't ditching its foodie fans, and its products won't change overnight. But gradually they will evolve, letting health become the dominant theme.

Whole Foods soon will be the first chain to provide nutrient-density labeling, showing the amount of nutrients per volume of an item. Eventually, the company will carry store-brand products for special diets and back nutrition research, which it will provide to consumers.

"Whole Foods has a megaphone that almost nobody else does," Mackey said.

The changes might make its business healthier too, retail experts said.

Consumers have limited appetite for expensive, indulgent goods, and while many chains carry organic food, no one company "owns" the health market, said Bill Bishop, a food retailing consultant at Willard Bishop Consulting.

"I think it's quite prescient and very perceptive," Bishop said.

Whole Foods has had to change. When the recession hit, it cut costs, tightened inventory, secured a major investor, increased its store brands and promoted lower-priced options. Last quarter, the company said business had finally turned a corner.

"They need to keep moving," said Ted Taft, managing director at Meridian Consulting.

Whole Foods is typically shoppers' second or third stop — less than 3 percent of Americans do regular grocery shopping there. So the company needs to provide value beyond a traditional supermarket, Taft said.

Cementing itself as the expert in health may even strengthen relations with foodies, who've become more focused on local and organic foods.

"The biggest risk is not hitting this one hard enough," Bishop said.

Whole Foods started with its employees, recently launching a program to take basic health measurements such as cholesterol and blood pressure. Employees with the worst scores were invited to voluntary immersion programs to improve their health; 85 accepted. Mackey said there were life-changing experiences, such as one store leader from Ohio dropped 40 pounds.

Soon the company plans to give bigger store discounts based on employees' health metrics. (Mackey, a vegan who has dropped his cholesterol from 199 to 138 in the past year after cutting oils and eating more nutrient-dense food, would get the top-tier discount.)

"Right now Whole Foods Market, we aren't much different than America. Our team member base — they smoke as much as or more as the population at large. Their weight is not thinner than the population at whole. We sell a lot of healthy food, but that doesn't necessarily mean the team members know how to eat healthy."

While it may seem unusual for a grocery chain to take on the nation's health, it's not unheard of for Mackey.

Mackey — who leans libertarian — caused a firestorm last summer with an opinion piece in the Wall Street Journal that dismissed the proposed health care overhaul and argued for changes with less government control and an emphasis on personal choices.

Critics said he was abandoning his liberal customer base; a few called for his dismissal. Some people said they were boycotting stores, while small-government conservatives came into stores for "buycots."

Mackey says he regrets the controversy it caused for the company, but says health care is a critical national conversation. And he believes as people see the government may not take care of them when they are ill, people will focus on how to keep themselves well.