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Competition Fosters Success of Organic Food Industry

Whole Foods, which opened in 1978 as a single organic grocery store, has expanded to 200 stores and over $9 billion in yearly sales. NewsHour economics correspondent Paul Solman reports on the company's success, the growing competition and the organic food industry.

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  • JOHN MACKEY, CEO, Whole Foods:

    We seduce the customer with produce…

  • PAUL SOLMAN, NewsHour Economics Correspondent:

    Fifty-three-year-old college dropout John Mackey, CEO of Whole Foods Market.

  • JOHN MACKEY:

    Well, people buy food first with their eyes. I mean, we're visual, tactile people.

  • PAUL SOLMAN:

    What began as a single, organic grocery in Austin, Texas, in 1978 is now a national chain, with nearly 200 stores, $9 billion a year in sales. Vegetable seduction is how the Whole Foods experience begins.

  • JOHN MACKEY:

    Beauty is a very important part of pleasure and how we interpret a food experience will be. So, yes, beauty is very important. Here we've got California artichokes, Mexican red peppers…

  • PAUL SOLMAN:

    Handsome, fresh, natural, often organic food has made the chain highly profitable, helped spawn a $15 billion industry. Yet Whole Foods is so socially responsible, it won't sell live lobsters unless they're treated humanely. This one's from a competitor.

  • JOHN MACKEY:

    Based on our research, lobsters have pain receptors and they're capable of pain.

  • PAUL SOLMAN:

    In short, Whole Foods sees itself as an alternative model. Its stock, publicly traded; its loyalty to its stakeholders, customers, community and employees, instead of just the shareholders who invest.

    First, the customers. Why shop here?

  • WHOLE FOODS SHOPPER:

    Because it has a lot of organic products. And, obviously, I'm pregnant.

  • PAUL SOLMAN:

    So you are.

  • WHOLE FOODS SHOPPER:

    Yes.

  • WHOLE FOODS SHOPPER:

    It has a large selection of organic foods and, like, meat and dairy that are not treated with antibiotics or hormones. And I want to try to get pure food for my baby.

  • PAUL SOLMAN:

    Then there's the community outside these walls, to which Whole Foods donates fully 5 percent of its profits. As for the employees, around here, they're team members.

  • WHOLE FOODS EMPLOYEE:

    So staffing is good for this evening…

  • PAUL SOLMAN:

    Average pay of more than $15 an hour, full health benefits, and a say in running things. New flavors at the gelato stand, for example.

  • JOHN MACKEY:

    Pineapple and basil?

  • WHOLE FOODS EMPLOYEE:

    Yes.

  • JOHN MACKEY:

    How do you come up with these unique kind of recipes?

  • PAUL SOLMAN:

    It seems to work. Though Whole Foods is America's second-largest non-union retailer, it ranks fifth among Fortune magazine's best 100 firms to work for.

  • JOHN MACKEY:

    Every one of our produce items is organized by type of growing method.

  • PAUL SOLMAN:

    Whole Foods executives have their salaries capped at 19 times the worker average. The CEO's pay?

  • JOHN MACKEY:

    I just cut my pay to one dollar a year.

  • PAUL SOLMAN:

    And why exactly?

  • JOHN MACKEY:

    That's kind of hard to explain in a way that is able to — it's the appropriate thing for me to do at this time in my life. I have enough money. I have enough money.

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