Fortune has a puff piece out on Whole Foods Market (WFM, a stock in which I have no interest and no intended interest), the up-scale purveyor of excellent prepared food, overpriced groceries with multiple claimed but unsubstantiated benefits, phony health remedies, and the oxymoronic concept of “healthy indulgence.” It made its reputation by pushing healthier living and selling food that doesn’t contain the pesticides and additives that are often staples of “regular” food.
The Whole Foods approach has worked in that its share price is up about 12-fold since its November 2008 recession-era low versus 130 percent for the S&P 500 index. “Great brands impose a view on you,” WFM consultant Kevin Kelley says, and Whole Foods is no exception. “One of the faults that traditional groceries have is they believe the customer is always right.” Today, Whole Foods has a list of 78 banned ingredients, ranging from aspartame to foie gras to high-fructose corn syrup. You may want a Coke, but you can’t get one at Whole Foods.
However, when I took a look at the ingredients that provided Whole Foods its success, the whole thing became far less appetizing. The Whole Foods emphasis on “natural” foods is obviously silly. There is no such thing as non-natural food. Moreover, at least in the United States, it has no consistent meaning. Indeed, the federal Food and Drug Administration explicitly discourages the food industry from using the term. But that doesn’t stop Whole Foods. After all, it’s working.
Oh that a bit of silliness were the only problem. Despite broad scientific consensus that genetically modified food poses no greater health risks than other types of food, Whole Foods says it will require all its vendors to label products with GMOs by 2018 and suggests (at least by inference) that such food isn’t really good for you. Whole Foods would also have you believe that organic produce (which is, not so coincidentally, much more expensive than “regular” produce) will help you stay healthier, even though a major study published in the Annals of Internal Medicine (nicely summarized here) examining hundreds of scientific studies over many years found no evidence of health benefits from organic foods. “There’s a definite lack of evidence,” emphasizes Crystal Smith-Spangler of the Stanford University School of Medicine and an author of the study.
But these issues aren’t all that much to be really upset about. If people want to overpay for something they think will make them healthier, the fact that it doesn’t isn’t too big of a deal. Nobody’s getting hurt and people are stupid all the time. However, the Whole Foods story gets still worse – much worse.
As reported by Michael Schulson in The Daily Beast, Whole Foods pitches homeopathic remedies (such as homeopathic remedies for allergies, homeopathic remedies for colds and flu, Boiron homeopathic medicines and even cures for cancer) as well as other foods and “drugs” that make medical claims that are simply false. Homeopathy is, after all, pure quackery. Whole Foods also sells probiotics — live bacteria given to (allegedly) treat and prevent disease – but it’s a total scam: “If you are a normal human, with a normal diet, save your money. Probiotics have nothing to offer but an increased cost.”
Phony claims such as these are far more damaging than simply pushing “natural” and organic foods. That’s because such fake remedies often cause people to forego substantive medical care that might actually help. For example, such an approach may well have cost Steve Jobs his life, to his obvious regret.
Sadly, it isn’t just customers who have fallen for the Whole Foods hype. “They’re a leading national authority on health and nutrition,” says BB&T Capital Markets analyst Andrew Wolf, “and unequivocally the leading retailer on the link between food and health.” As if.
My friend Josh Brown even fell for the WFM nonsense: “There’s a lesson in the Whole Foods brand that I think carries a great example for my organization and possibly yours as well: The customers are not always right and, more importantly, they sometimes wants [sic] to be told what’s best for them and to have harmful options taken away from within their grasp.” Unfortunately, what customers are told is all too frequently in error and obviously bad for them, as Whole Foods so aptly demonstrates.
Happily, I have every confidence that Josh is doing right by his clients. And I completely agree with Josh’s conclusion: “Zealous advocacy is not fascism, and steering a customer away from something they don’t need or shouldn’t want is just as important as the actual suggestions you are making.” But Whole Foods is far from a good example of “doing [what] is superior and in the clients’ best interest.” In fact, Whole Foods should be a cautionary tale rather than an exemplar.
Maybe there really is a sucker born every minute and Whole Foods will continue to survive and even thrive despite its bogus marketing. But I’d like to think that truth will out, at least eventually.