The People’s Grocery Store
The Portland Food Co-op stocks hope for the future
by Chris Busby
“The Italians have a proverb of unusual sagacity for that quick-witted people, namely: ‘They who go slowly go far.’ Co-operation has gone both slow and far. It has issued like the tortoise from its Lancashire home in England; it has traversed France, Germany, and even the frozen steppes of Russia; the bright-minded Bengalese are applying it, as is the soon-seeing and far-seeing American; and our own emigrant countrymen in Australia are endeavouring to naturalise it there. Like a good chronometer, Co-operation is unaffected by change of climate, and goes well in every land.”
— George Jacob Holyoake, from the 1893 preface to The History of the Rochdale Pioneers, 1844-1892
The seed from which the modern consumer-cooperative movement sprouted was a grungy little grocery store on Toad Lane in the English town of Rochdale, in the northwestern county of Lancashire. When this proto–food co-op opened, on the first night of winter in 1844, it had four items for sale: flour, sugar, butter and oatmeal. Its inventory was so meager that, according to chronicler George Jacob Holyoake, “one shopkeeper boasted that he could come with a wheelbarrow and wheel the whole stock away, which was quite true.”
Legend has it that the local gas company, doubtful that this unconventional enterprise could cover a bill, refused to deliver fuel for the shop’s lamps, so the co-op bought tallow candles in bulk and sold the extras, thereby adding a fifth item. However, by the following spring, Holyoake notes, the shop on Toad Lane had acquired a license to sell a more diverse selection of goods, “and in due time the husbands could get from the Store the solace of tobacco, and wives the solace of tea.”
Solace was in short supply in those days. Rochdale had been a renowned textile town for centuries, but in the early 1800s two economic forces familiar to blue-collar Americans today — mechanization and globalization — were putting the screws to Rochdale’s famous flannel weavers, prompting labor strikes that turned violent. During the Industrial Revolution and the Age of Sail, the culprits were the power loom (a machine that cost thousands of Lancashire handweavers their jobs) and international trade policies, like American tariffs, that reduced English exports.
The misery of the English working class was worsened by greedy retailers who sold adulterated food and shoddy merchandise for high prices, often cheating customers by literally tipping the scales against them. Many families also got trapped in debt incurred at stores that offered credit, at high interest rates, or accepted company scrip paid to workers in lieu of wages.
The Rochdale co-op established a reputation for selling wholesome, unadulterated foods in honest weights and at prices that were fair to both its consumers and its suppliers — a tradition that continues at co-ops today. The Toad Lane shop refused to sell on credit. Instead, its member-owners earned credit at the store based on the amount of “ready money” they spent there, and periodically got money back in the form of patronage refunds — another food co-op practice that’s withstood the test of time.
Legend also says that the shop’s founding organization, the Rochdale Society of Equitable Pioneers, was formed by a group of desperate flannel weavers after the mill owners refused to give them a raise and striking failed to convince the capitalists to share the wealth. That’s only partly true. In “The Meaning of Rochdale,” an academic paper published in 1994, researcher Brett Fairbairn points out that most of the original Pioneers were social and political activists who had a few pounds in their pockets to spare. They included followers of the Welsh philanthropist and reformer Robert Owen, an early promoter of utopian socialism; and Chartists, who strove, unsuccessfully, to wrest political power from moneyed elites by petitioning Parliament to grant the vote to commoners who didn’t own property. Co-ops of subsequent centuries have retained the belief that they should promote equality and other social values.
The Rochdale store wasn’t the first consumer co-op, but it was the basis of what became the most successful cooperative enterprise of its time. By the end of the 1850s there were six branch stores in Rochdale selling a wide variety of goods. The Pioneers used some of the capital generated by the stores to start other co-op businesses, including a flour mill, a textile mill, a construction firm and an insurance company. In 1863, they formed the Co-operative Wholesale Society (CWS) to supply a growing network of retail co-ops. Fairbairn notes that at the end of the 1870s there were about 1,200 cooperative societies in Britain, and nearly half of them were affiliated with the CWS. In 1940, cooperative societies associated with the CWS included over 8.7 million member-owners.
Inspired by the success of the Rochdale Pioneers, the co-op movement spread through Europe and took root in the United States. The Pioneers’ principles guided the development of the Grange farm movement in the 1870s. American farmers got together to open retail stores and pooled their resources to increase their buying power and market their goods more effectively. Farmers’ markets and community-supported agriculture (CSA) programs are examples of the Grange movement’s lasting impact.
According to a history compiled by Karen Zimbelman of the business-services organization National Co+Op Grocers, there were 2,600 consumer co-ops in the U.S. in 1920, nearly all of them general stores in small towns. The privations of the Great Depression generated another wave of co-op formation, but the movement stalled in the decades following World War II. Postwar prosperity sapped the movement of its economic impetus, the Red Scare sabotaged its political appeal, and the growing dominance of big corporations rolled over most of what was left.
But none of those forces could kill the idea. In the late ’60s, food co-ops and informal buying clubs experienced a revival for two reasons. One was the growing consciousness of the benefits of organic food — decades before corporate supermarkets got on the bandwagon. The other was class consciousness, including an awareness of the racial causes of poverty. In an article about co-ops last March in the San Francisco Chronicle, reporter Jonathan Kauffman noted: “Civil rights leaders like Stokely Carmichael and Bob Moses particularly embraced the idea, promoting [food co-ops] as a way to give African American communities more economic independence.”
In Maine, the co-op revival was led by (mostly white) adherents of the back-to-the-land agrarian movement. The Good Day Market opened in Portland in 1970, and the Belfast Co-op opened its doors in 1976. The Good Day Market was in business for over 25 years. It set up shop in the People’s Building, a brick structure on Brackett Street, in the West End, owned by a non-profit community group. (The family-owned market and butcher shop Fresh Approach does business there these days.) The Good Day Market was “the only venue for organic produce from local farms, such as it was in those days,” according to Dan Porta, one of the co-op’s board members.
In 1995, the Good Day Market relocated to a larger building, with more parking, on Middle Street, but expenses associated with the relocation strained the co-op’s operating budget, and it closed in 1997. Ill-considered business decisions were factors in the demise of many co-ops of that era — founded and overseen, as they typically were, by idealists with an aversion to the cutthroat demands of capitalism.
Portland was without a food co-op for almost two decades after the Good Day Market closed. Ironically, it was the cutthroat practices of corporate natural-foods chains that ultimately inspired the birth of its successor: the Portland Food Co-op.
Organic food fight
“Socialist advocates, whatever faults they else might have, had at least done one service to employers: they had taught workmen to reason upon their condition; they had shown them that commerce was a system, and that masters were slaves of it as well as men. The masters’ chains were perhaps of silver, while the workmen’s were of copper, but masters could not always do quite as they would any more than their servants. And if the men became masters tomorrow, they would be found doing pretty much as masters now do.”
— Holyoake, The History of the Rochdale Pioneers, 1844-1892
The Good Day Market closed just as the national market for organic food was entering a period of unprecedented growth that continues to this day. In fact, several Good Day Market alums went on, separately, to open their own natural food stores in the Portland area, including Dan Porta and his wife, Lois Porta, a manager at Good Day, who opened Lois’ Natural Marketplace, in Scarborough, in the ’90s (and, more recently, a second location on India Street, in Portland); and Ruth Finch, founder of Royal River Natural Foods, in Freeport.
Absent the Good Day co-op, Portlanders’ primary outlet for organic produce and products was The Whole Grocer, a privately owned business that had opened on Munjoy Hill in the mid-1980s. In 1998, prompted by growing demand, Whole Grocer owner Chandrika Sanyal moved the store to a larger location on Marginal Way. Business was groovy at the Grocer for the next five years, but in 2003 the corporate sharks arrived, and the water got bloody in a hurry.
The frenzy began, in early 2003, when one of the country’s biggest natural foods chains, Wild Oats, moved into a building right across the parking lot from The Whole Grocer, at the corner of Marginal Way and Preble Street. The audacity of the chain’s encroachment onto the turf of a homegrown institution sparked an outcry from The Whole Grocer’s socially conscious customers and suppliers. A group of 17 Maine farmers organized an advertising campaign that implicitly dissed Wild Oats by leaving it off a list of local stores and restaurants that support the state’s farming community.
Sanyal wasn’t shy about sharing her concerns, either, but after the initial hoopla that accompanied Wild Oats’ opening died down, she acknowledged that there was room for both businesses on Marginal Way — most of The Whole Grocer’s customers either remained loyal to the store or shopped at both businesses. Then, in 2005, another big national chain, Whole Foods, announced its intention to open a location in Bayside, a couple blocks away from The Whole Grocer and Wild Oats. At 46,000 square feet, the new Whole Foods would be twice as large as Wild Oats’ Portland store, and more than five times the size of The Whole Grocer.
Rather than compete with The Whole Grocer, Whole Foods bought Sanyal’s store in January of 2006 and operated there until its supermarket on Somerset Street was completed the following year. In February of 2007, Whole Foods also bought Wild Oats. The Federal Trade Commission, ruling that the takeover would violate antitrust laws and unfairly stifle competition, blocked the merger, but a federal court reversed that decision in 2008. (In 2009, Whole Foods sold Wild Oats, which no longer operates as a retail chain.)
The wave of corporate consolidation was a wake-up call for food-conscious Portlanders, like David Siegfried, who also knew a thing or two about economics and food security. In 2007, Siegfried joined a group of eight to ten people who’d been meeting since the previous year to plot a course of action in the wake of The Whole Grocer’s demise. When Whole Foods ate The Whole Grocer and then gobbled up Wild Oats, Siegfried said he realized “there was going to be only one corporate game in town for buying organic and natural foods.”
“I’ve always felt that when individuals take ownership and control of basic needs … it serves them better when they have a stake in it,” said Siegfried, who’d been involved with food co-ops in the 1980s and ’90s. “Corporate control of food doesn’t always serve individual and community needs.”
“It wasn’t until [Sanyal] sold out to Whole Foods that people realized a private natural food store is not the same as a co-op,” said Rachelle Curran Apse, another pioneer of the effort to open the Portland Food Co-op. “That’s the only way you have a voice and decision-making in your local business.”
This is a key point: the Portland Food Co-op wasn’t started in response to a lack of organic products in its area, like most of its predecessors were. In 2005, organic food was a $13 billion industry in this country. In addition to natural foods giants like Wild Oats and Whole Foods, conventional grocery stores were getting in the crunchy-munchy game, and retail behemoths like Walmart and Target weren’t far behind.
The impetus for the co-op was the nature of natural food retailers like Whole Foods — corporate chains in which all the significant decisions are made by distant board members and executives who are driven by one supreme and overriding imperative: increasing profits for Wall Street investors and themselves.
Corporations like Whole Foods spend millions of your hard-earned grocery dollars every year on marketing efforts to convince you that their priorities are more noble than base profiteering, that they genuinely care about your health, or the environment, or family farms. But the news in the business press tells a very different story.
As you read this, a shareholder battle is raging at Whole Foods. Jana Partners, a so-called “activist” hedge fund founded by billionaire Barry Rosenstein, recently bought a sizeable chunk of Whole Foods’ stock and is waging a Wall Street proxy war to “shake up the board, overhaul operations — and possibly push for a sale” to conventional grocery giant Kroger next year, according to the trade publication European Supermarket Magazine. Whole Foods’ same-store sales figures have, on average, declined for six straight quarters, so heads must roll. News last month that Jana Partners is trying to take control of Whole Foods away from its iconic (and controversial) founder and CEO, John Mackey, “sent the shares up 10 percent, their biggest rally in more than two years,” the trade magazine observed.
Feeling nauseous yet? While we’re on the subject, let’s share a few fun facts about two of the other big food retailers in the Portland area: Hannaford and Shaw’s. Both began as mom-and-pop grocers in Portland. Shaw’s opened on Middle Street in 1860 and carried “100 items, most of which were not available from local farmers,” its website boasts. Hannaford got its start in 1883 as a “one-horse produce cart” selling “high-quality fruits & vegetables” on the waterfront, according to its corporate lore.
After over a century of mergers and takeovers, both grocers are now relatively minor holdings in the portfolios of much larger entities controlled by faceless executives who, to be frank, don’t give a damn what you want or think or eat, so long as you keep stuffing their registers with cash or running your card through their credit machines.
In 2013, the parent company of Shaw’s, Minnesota-based Supervalu Inc., sold Shaw’s and several other chains to an affiliate of Cerberus Capital Management, a private equity firm that specializes in “distressed investing.” How distressed was Supervalu when it decided to sell your neighborhood supermarket? Of the $3.3 billion value of the buyout, $3.2 billion was debt that Cerberus agreed to take off Supervalu’s books; only $100 million was cash paid to Supervalu for all its grocery chains. So the next time you’re short a few bucks in the Shaw’s checkout line, don’t feel so bad — you’re hardly the only one living beyond their means. [Note: The day after this story went to press, news broke that Cerberus Capital Management is also interested in acquiring Whole Foods.]
Hannaford is now part of the Dutch mega-global-retailer Ahold Delhaize. Before Ahold and Delhaize merged last summer, each company’s board was engaged in the profligate corporate practice known as the “stock buyback,” whereby companies use profits (in this case, your grocery money) to buy mass quantities of their own stock in order to prop up the shares’ value. This is typically done when corporate boards give top executives stock options as part of their compensation package. The issuance of these new options to the executives would ordinarily water down the value of the rest of the shares — the ones investors actually bought — so the corporation itself buys its stock to prevent that devaluation (at least in the short term, which is really all that matters to these people).
Prominent critics of corporate mismanagement, like Robert A. G. Monks of Cape Elizabeth, point out that stock buybacks are an enormous waste of good money that could otherwise be put to productive use by, say, investing in new buildings, or developing new products, or — perish the thought — giving the employees who actually do the nitty-gritty work of running the business a better salary or benefits.
“I think you have to put the stock buyback into … two contexts,” Monks told Ralph Nader during a November 2015 interview on the Ralph Nader Radio Hour. “One is the pattern of American industry in the last thirty years to be less concerned about making products and to be more concerned about making money. And the second category is the incredible pattern of executives in companies increasing their compensation. … [T]he failure of managers to be able to find a [productive] use for money is the clearest example of a lack of imagination.”
Ahold has blown through over 4.5 billion euros to buy back its own stock since 2010, according to the corporation’s public disclosures. Delhaize wasted a mere 188.2 million euros in this fashion from 2006 to 2016, but that sum is akin to pissing away every dollar spent in an entire year at a busy Hannaford like the one by Back Cove — more food for thought while you’re in the checkout line.
Now imagine what the Portland Food Co-op would do with $188.2 million in annual revenue. Actually, you don’t have to use your imagination — the Co-op publishes its finances in an annual report that’s available to the public. Last year, the largest share of its revenue (65 percent) was spent to purchase the goods it sells. Forty percent of the products on the shelves are grown or made in Maine, according to general manager John Crane — a much higher percentage than Hannaford, Shaw’s, or even Whole Foods. Over 280 Maine farmers and producers sell their goods through the Co-op. If the Co-op did the amount of business a store like the Back Cove Hannaford does, that would put almost $49 million back into the Maine economy in a single year.
The next-largest expenditure is payroll, which gets 22 percent of all revenue, and 70 percent of the Co-op’s gross profit — figures that are also significantly higher than the Co-op’s corporate competitors, which typically devote about 15 percent of revenue to their workers. The Co-op presently employs nearly 30 people, most of whom work full-time and receive benefits. The starting wage is $12.32/hour.
The Co-op’s volunteer board is elected by its member-owners. Unlike a corporation, in which voting power is proportional to the number of shares investors own, each member-owner gets one vote. That system dates back to the Rochdale days. (It’s also worth noting that the Rochdale Pioneers gave women the right to vote in board elections, eight decades before political suffrage was extended to all adult women in England.)
In accordance with cooperative principles (most of which also date back to Rochdale) and the Co-op’s bylaws (which are also subject to approval by member-owners), the board “interprets the mission of the Co-op and sets the vision for the future,” said Crane. The board hired Crane, and he and the other managers put the Co-op’s principles into practice.
The importance of maintaining and empowering a professional management team is one of the lessons that the older (and the defunct) co-ops learned the hard way. “We all work for the membership, so gathering as much feedback about [operational decisions] is really important,” Crane said. But if a co-op is subject to the demands of every member-owner, chaos will ensue and business will suffer.
Crane had to make some hard choices during the Portland Food Co-op’s first year of operation as a retail store. There were many products in stock that embodied the Co-op’s values — local, organic, produced by fellow cooperatives, etc. — but that just weren’t moving off the shelves fast enough. Roughly a quarter of the Co-op’s inventory was marked down for quick sale and then discontinued in 2015, and some of that stock was replaced with less expensive or less eco-friendly alternatives. But as Crane noted during the Co-op’s annual meeting last month, “it is in our mission that we should be accessible and open to all members of our community, and our community is East Bayside, Portland.”
In other words, give the people what they want at a price they can afford. That doesn’t mean stocking the store with Twinkies and Natty Daddys (you can buy that junk at the Rite Aid next door). It does mean managing the inventory with sustainable products that will also enable the Co-op to sustain itself.
The People’s Grocery Store
The mere existence of the Portland Food Co-op is a powerful testament to the community’s desire for a locally and democratically controlled alternative to Big Grocery. The Co-op’s impressive growth since the storefront opened in December 2014 is a reason to believe there’s hope for the community’s future.
Daniel Ungier, a former Co-op board member who joined the planning effort early on in the process, said one of the most inspiring things about the store is that “those of us that started this really didn’t know what we were doing.” He could have added that throughout the eight years it took to finally open the retail location, none of the organizers took a dime in pay or expected to receive any financial compensation once the Co-op was open.
Even more remarkable is the fact that the organizers pulled this off while simultaneously operating a natural-food buying club on a volunteer basis. Ten years ago, the buy-in to take part in the club was $15. Deliveries were made every two weeks at whatever donated space could be arranged. The Meg Perry Center, on Congress Street, and the tiny community building atop Munjoy Hill were early locations for pick-up. About seven years ago, the group got access to an old tobacco warehouse on Hampshire Street, right across from the Co-op’s current location. That space was essentially donated by S. Donald Sussman, the hedge fund manager, political mega-donor and philanthropist whose less admirable exploits as a landlord in Portland have been documented by this publication in the past [see “Donald Sussman’s Dumps,” January 2010].
Crane, the Co-op’s general manager, recalled the way the buying club operated years ago. “You placed your sort of ‘wish list’ for what you wanted to order, but as a buying club we had to order everything in cases or fifty pound bags, or whatever the bulk amount was, so there was this whole [informal system] of communication that would go on, like, ‘We have 10 cans of this that people want, but will someone buy the other two so we can make a case?’ You could either buy the full case yourself or you could buy part of it and see if you could get other people to go in with you.”
Even with the Hampshire Street building, the buying club maintained no storage space, because the building wasn’t climate controlled. Everything that arrived before dawn on delivery day had to be gone by the end of the pick-up session hours later. Mary Alice Scott, the Co-op’s community engagement manager, recalled that the volunteers would even unplug the refrigerators and freezers in the building after each delivery to save energy and money.
About five years ago, the group paid for a professional feasibility study and business plan for the Co-op store with funds it had accrued over the preceding years by adding a modest mark-up to the buying-club orders. Crucial seed money for the Co-op was provided by the Cooperative Fund of New England, a community development organization that specializes in helping co-ops get financing. The Fund provided the Co-op with a loan for $330,000. Then the community stepped up — big time. Curran Apse, the board member and early organizer, said that in less than a year the group raised $860,000 in loans from over 300 individuals. The average loan amount was $3,000 — most loaned the Co-op a grand or two (there was a $1,000 minimum); no loan exceeded $50,000.
Curran Apse, who personally met with over 100 people who provided loans, said the two primary reasons people cited for their investment were the cooperative structure of the enterprise and its ability to help support local farmers and producers by providing a place to sell their goods to the public seven days a week, 12 hours a day (the Co-op is open daily from 8 a.m. to 8 p.m.). “Literally hundreds of people were saying we need more places outside of the farmers’ market” to buy local produce, Curran Apse recalled. “A lot of stores would highlight a few local products. Our goal is to get as many as we possibly can that are sustainable.”
Crane explained that the lenders were given some latitude to set the terms of their loan, including the time period when it would be paid back (five to ten years) and the interest rate (0 to 3 percent). “A lot of people chose zero” interest, Crane said, because they just wanted to support the Co-op.
In addition to the loans, the Co-op’s books are buoyed by the one-time investments of its member-owners. The investment to become a member is $100, which can be paid in four installments of $25; low-income families can join for $10. Anyone can shop at the Co-op, but member-owners get discounts on many items and can take advantage of promotions like the quarterly Member-Owner Appreciation Week, when they get 10 percent off one transaction. The Co-op recently surpassed the mark of attracting over 4,000 member-owners, far exceeding what some of the early organizers dreamed was possible.
At the annual meeting last month, held in the St. Peter Parish Hall behind the Co-op’s Congress Street storefront, Crane announced that the Co-op just finished its first profitable quarter of operations and is projected to make a modest profit this year roughly equal to what its operating loss was in 2016: about $87,000. Sales last year totaled over $3.7 million. After all the start-up loans are repaid in the coming years, patronage dividends will begin to be paid to the member-owners based on the amount they spend at the Co-op.
A couple hundred member-owners gathered at the meeting to socialize, partake of a generous spread of Co-op food, and listen to Crane give an update on their Co-op’s finances. The atmosphere was friendly and ebullient.
Crane discussed a host of goals for the coming year, including increasing participation in Maine Harvest Bucks, a program that gives SNAP/EBT (formerly food stamp) users a $5 voucher for local fruits and vegetables for every $10 they spend on local food.
“I know I’m in the right co-op to do all of this,” Crane said from the stage. “Just seeing the momentum that has happened in the last two years and what continues right now, I have no doubt that we will cross this next hurdle to better affordability and being more open to all of the folks in our immediate neighborhood. We’ll keep growing our sales. When I’m back here next year, it’s going to be four million dollars [in annual revenue] and it’s going to be full profitability.” The crowd clapped enthusiastically. “So, for all of you who loaned the Co-op money, I wanted you to sleep easy tonight,” Crane added, eliciting chuckles from the crowd.
When the presentation was over, the member-owners pitched in to put all the chairs away and lined up for paper cups of Gorgeous Gelato. Then the band took the stage and, in true co-op fashion, the contradance commenced.
