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Founded in Austin in 1980 by vegan-hippie John Mackey as a natural and organic supermarket (one of fewer than half a dozen in the nation at the time) with a staff of 19, Whole Foods has grown to encompass 181 stores in 30 states, the District of Columbia, Canada and Britain, with 40,000 employees and 64 more stores in development. Annual sales reached $4.7 billion in 2004, and the company aims to arrive at $12 billion by 2010. Its stock price has shot up 62% in the past year, and same-store sales have increased 13% for three years in a row, a rate of growth, analysts say, that not even Starbucks can match.
"Over the past decade, Whole Foods has defined and reshaped the industry," says Edward Aaron, analyst at RBC Capital Markets. "They have pronounced the traditional health-food-store format dead and put together a higher-end specialty experience while attracting a much broader customer base."
Part of Whole Foods' success is timing. Aging baby boomers are more health conscious than ever, twentysomething "echo boomers" are in a group hug with everything that promotes health and the environment, and the population at large is becoming more educated about all things sustainable.
While much has been made of its high prices (the company has been dubbed Whole Paycheck), Whole Foods serves up the best quality and most affordable organic products in the nation. Fresh organic foods, its best sellers, are supplemented by two lines of packaged goods: the affordable 365 brand, which includes organic and nonorganic (cheese puffs, canola oil); and the higher-end Whole Kitchen line, including Whole Treats and Whole Kids.
"There is a quality standard that applies to every product in the store," explains A.C. Gallo, the other half of the co-president, co-COO team. That means no artificial colors, additives or preservatives. For meat, it means no antibiotics, hormones and animal by-products in the feeds, including in deli meats. For fish, it means no antibiotics, mercury or PCBS. (Whole Foods owns a seafood supplier on each coast.)
Broader sustainability extends to every corner of the corporation, from the floor tiles (which are made of 50% postconsumer waste) to the company's composting efforts to its four solar stores (and one all-sustainable store, which received the rigorous LEED—Leadership in Energy and Environmental Design—certification from the U.S. Green Building Council) to a Green Mission Team, which provides input on every new store.
"When we started, we were so fringe," Robb says. "Now people start asking questions if things are not sustainable, if things are not health giving. It's like, 'Why?'"
Still, "Whole Foods is not for everybody. Hey, we get that," Robb admits. When site searching for a new store, Whole Foods limits itself to areas with college-educated inhabitants, which translates to wealthier neighborhoods and university towns. "People who understand why they might not want to eat food with pesticide or why organic might cost more, or who are aware that 90% of American beef contains hormones and what that means," Robb explains.