real pickles: the story of a co-operative conversion

Real Pickles: The Story of a Co-operative Conversion

Kristin Howard NOFA Summer Conference 2016 Real Pickles [email protected]

MISSION We are committed to promoting

human and ecological health by providing people with

delicious, nourishing food and by working toward a regional,

organic food system.

We aim to produce the highest quality, traditional pickled

foods available, using natural fermentation.

We buy our vegetables only from Northeast family farms

and sell our products only within the Northeast.

Our ingredients are 100% organic.

EARLY DAYS

Hain Celestial

#82

ShariAnn's

M&M Mars

#10

Mondelez(spinoff from #4 Kraft in

2012)

Coca-Cola#11

General Mills

#8

Cargill#15

Dean#7

ConAgra#14

Kellogg#12

Walnut Acres

Millina's Finest

Frutti di Bosco

Muir Glen

Celestial Seasonings

Imagine/Rice Dream/Soy

Dream

Little Bear

Arrowhead Mills

Bearitos

Spectrum Organics

Lightlife

The Organic Cow of

Vermont

BreadshopAlta Dena

Westbrae

Mountain Sun

DeBole's

Earth's Best

Nile Spice

Health Valley

Westsoy

Cascadian Farm

Garden of Eatin'

Casbah

Horizon

Odwalla

White Wave/Silk

Organic Industry Structure:

Acquisitions & Alliances, Top 100 Food Processors in

North America

October 2001

$181 M

July 199813% Equity;

January 2004100% Equity

$216 M

Morningstar Farms/Natural

Touch

November 1999$307 M

Organic Brand

Acquisitions

# Numbers refer to rank in North American food & beverage sales

according to Food Processing,

August 2012

October1997

$23.5 M

June2003October 2001

June 2001September 1999

From Heinz

March 2000$390 M December

2002

April 1999$80 M

April 1998$80 M

December 1998Back to Nature

Boca Foods

French Meadow

Seeds of Change

1997 July2000

December1999

March1998

May 2002$189 M

May 2013Spinoff, 0% Equity

May 1999

April 1999

June2000

September 2003100% Equity;August 2012

majority stake sold to Brynwood

Partners

Kashi

August 2005$33 M

August 2003, alliance to developnutritionally enhanced ingredients

February 2000

Food Processors

#

HersheyFoods

#20

Dagoba

October2006

TofuTown

June 2007From Dean

May 2002, alliance to developnutritionally enhanced ingredients

Naked Juice

Pepsi#1

November 2006

Green & Black's

January 2010

Alexia Foods

July 2007

Wholesome & Hearty

BearNaked

November 2007

$122 M

July2006

Nestle#3

Tribe Mediterranean

Foods

September 2008$57M

via Israeli subsidiary Osem Group

(50.1% Equity)

LaraBar

HonestTea

May 2013

February 200840% Equity

$43 M;March 2011100% Equity

June 2008

MaraNatha SunSpireMarch2008

Rich Products

Corp.#42 Post

Foods(spinoff from #25 Ralcorp in 2012)

Golden Temple

Peace Cereal

Willamette Valley

Granola

Food Should Taste GoodFebruary 2012Campbell

Soup Co.#30

Bolthouse Farms

July 2012$1.55 B

Phil Howard, Associate ProfessorMichigan State University

Hillshire Brands

(formerly #28 Sara Lee)

Aidell's Sausage

May 2011$87 M

Sweet Leaf Tea

May 2011

Stonyfield

Brown Cow

J.M. Smucker

#23

R.W. Knudsen

Santa Cruz Organic

Snyder's-Lance

#61Late July

BluePrintNovember

2012

May2013

Ella's Kitchen

Happy Family

May 201392% Equity

AB InBev#5

Goose Island

March 2011$38.8 M

Ralcorp#25

(private label organic foods)

Bloomfield Bakers

Lovin Oven

March 2007$140 M

November 2012

$6.8 B

MillstoneNovember 2008

1984 1989

December 2007minority stake

February 2003

October 200140% Equity;

January 200485% Equity

May 2013$158 M

May 2010$71 M

Miller-Coors

#17Crispin

February 2012

Fox Barrel

January 2010 Maple

Leaf Foods

#24 Olafson's Baking Co.

90% Equity

July 2002

Perdue Farms

#27

Coleman Natural

May 2011

Hans

August 2003

August 2007

Draper Valley Farms

Petaluma/Rosie

January 2002

Tea Forte

January 2012

JAB/D.E. Master

Blenders(formerly #28

Sara Lee)

Wolfgang Puck

July 2008

Foster Farms

#46

Humboldt Creamery

August 2009$19.5 M

CROPP(Organic Valley)

#93

Canada Bread Co.

#63

TreeHouse Foods

#50 Sturm Foods

December 2009$660 M

Naturally Fresh

March 2012$25 M

Hearthside Foods (cereal

division)#89Meyer Natural

Foods

December 2010

Diamond Foods

#88

Kettle

February 2010$615 M

J&J Snack Foods

#92

Kim & Scott's

June 2012$7.9 M

John B. Sanfilippo

& Son#98

Orchard Valley

Harvest

May 2010$29.5 M

June 2010; joint marketing agreement

November 2009, Stonyfield

brand licensed to CROPP for fluid milk

Danone(Dannon)

#66

Dakota Beef

Peet's Coffee &

Tea

August 2012$1 B

New Morning

December 2012

Erewhon

Plum Organics

May 2013

• Business owned and democratically controlled by members - the people who use the co-op’s services or buy its goods. • Board is elected by the membership and may be

composed of members as well as non-member representatives. • Return surplus revenues to members proportionate

to their use of the cooperative. • Exist not to maximize profit but to meet their

members’ needs, goals and aspirations.

WHAT IS A CO-OP?

Naturally Fermented & RawREAL PICKLES

• Who is interested? Do staff want to own the business? • What do we want Real Pickles to look like in 10-20

years? Do we have a common vision? • Do Dan and Addie want to sell? Do they think a co-op

could run Real Pickles effectively? •  Learning more about what a co-op could look like •  Practice working together

“Transition” means create a new entity incorporated under Mass co-op law and buy Real Pickles

August 2012 DECISION – YES, we want to own it! 5 potential co-op members sign memo of understanding

THE PROCESS - PART 1

• Governance – Who would run it? How do we want to be structured? • Writing by-laws – What is important to us? •  Business valuation – What is Real Pickles worth and

how do you measure it? • How to pay for it?

THE PROCESS - PART 2


•  Each of the five members bought a $6,000 member share for a total of $30,000

•  Co-op Fund of New England loan $69,000 •  Line of credit from our local bank $150,000 •  Community investments (DPO) $500,000 •  Family, friends, stores, food co-ops, allied

organizations •  Minimum investment of $2500 •  Limited return - target dividend of 4% •  Non-voting

HOW TO PAY FOR IT


• Successful transition • Owners stayed on as members • More worker became members • Shared mission and vision • Continued staff education • Continued business success

THREE YEARS LATER


• Maintain strong social mission • Meaningful jobs • Keep local businesses local • Preserve economic infrastructure • Support community minded owners • Ensure long-term viability beyond founders

WHY CO-OP SUCCESSION?


•  Started with a thriving business •  Supportive founders committed to long-term success •  Critical mass of engaged and skilled staff willing to

commit and do the work •  It was the right moment •  Governance clarity •  Staff education and training •  Had a communication plan, especially for capital

campaign •  Engaged outside expertise •  Strong network

WHY IT WORKED (IN OUR OPINION)


MAY 9, 2013 CO-‐OP!

•  Communities Involved in Sustaining Agriculture (CISA) - Case Study of Real Pickles DPO •  Co-op Fund of New England (CFNE) • Valley Alliance of Worker Co-ops (VAWC) •  Project Equity - Case Study of Real Pickles

Conversion and Case Study of Real Pickles Financing •  Cutting Edge Capital

RESOURCES
