Health Care Stirs Up Whole Foods CEO John Mackey, Customers Boycott Organic Grocery Store
Branding Experts Say CEOs Should Stay Quiet When It Comes to Politics
By EMILY FRIEDMAN
Aug. 14, 2009 —
Joshua has been taking the bus to his local Whole Foods in New York City every five days for the past two years. This week, he said he'll go elsewhere to fulfill his fresh vegetable and organic produce needs.
"I will never shop there again," vowed Joshua, a 45-year-old blogger, who asked that his last name not be published.
Like many of his fellow health food fanatics, Joshua said he will no longer patronize the store after learning about Whole Foods Market Inc.'s CEO John Mackey's views on health care reform, which were made public this week in an op-ed piece he wrote for The Wall Street Journal.
Michael Lent, another Whole Foods enthusiast in Long Beach, Calif., told ABCNews.com that he, too, will turn to other organic groceries for his weekly shopping list.
"I'm boycotting [Whole Foods] because all Americans need health care," said Lent, 33, who used to visit his local Whole Foods "several times a week."
"While Mackey is worried about health care and stimulus spending, he doesn't seem too worried about expensive wars and tax breaks for the wealthy and big businesses such as his own that contribute to the deficit," said Lent.
In his op-ed, "The Whole Foods Alternative to ObamaCare," published Tuesday, Mackey criticized President Barack Obama's health care plan.
Mackey provided eight "reforms" he argued the U.S. can do to improve health care without increasing the deficit. He suggested that tax forms be revised to "make it easier for individuals to make a voluntary, tax-deductible donation to help the millions of people who have no insurance."
Mackey also called for a move toward "less government control and more individual empowerment" instead of "a massive new health care entitlement that will create hundreds of billions of dollars of new unfunded deficits."
He added that many of the country's health care problems are "self-inflicted" and are preventable through "proper diet, exercise, not smoking, minimal alcohol consumption and other healthy lifestyle choices."
In the op-ed, Mackey outlines Whole Foods' employee health insurance policy. According to Mackey, Whole Foods pays 100 percent of the premiums for all employees who work 30 hours or more per week -- about 89 percent of his workforce.
Additionally, the company gives each employee $1,800 per year in "health-care dollars," says Mackey, that they can use at their own discretion for health and wellness expenses. This money can be put toward the $2,500 annual deductible that must be covered before Mackey says the company's "insurance plan kicks in."
Whole Foods Shoppers Weigh In
The op-ed piece, which begins with a Margaret Thatcher quote, "The problem with socialism is that eventually you run out of other people's money," has left some Whole Foods loyalists enraged. Many say Mackey was out of line to opine against the liberal base that has made his fortune possible.
Christine Taylor, a 34-year-old New Jersey shopper, vowed never to step foot in another Whole Foods again.
"I will no longer be shopping at Whole Foods," Taylor told ABCNews.com. "I think a CEO should take care that if he speaks about politics, that his beliefs reflect at least the majority of his clients."
Countless Whole Foods shoppers have taken their gripes with Mackey's op-ed to the Internet, where people on the social networking sites Twitter and Facebook are calling for a boycott of the store.
A commenter on the Whole Foods forum, identified only by his handle, "PracticePreach," wrote, "It is an absolute slap in the face to the millions of progressive-minded consumers that have made [Whole Foods] what it is today."
"You should know who butters your hearth-baked bread, John," wrote the commenter. "Last time I checked it wasn't the insurance industry conservatives who made you a millionaire a hundred times over."
While Mackey reduced his annual salary to one dollar in 2007, after explaining to employees he was "no longer interested in working for money," Mackey is still the head of the 10th largest food and drug store in the U.S.
Whole Foods Market Inc. reported that sales for the last quarter rose by 2 percent to $1.878 billion. It is consistently ranked a Fortune 500 company.
And not all Whole Foods customers were upset by Mackey's op-ed.
Many posted online that they agreed with his message and would try to shop at the chain more often.
Frank Federer wrote ABCNews.com, expressing fatigue with the knee-jerk reaction of other shoppers.
"You can count me as one vote FOR Whole Foods' CEO," wrote Federer. "At a time when most folks are more inclined toward rancor than discussion of facts, I applaud John Mackey."
Despite his financial success, this is not the first time Mackey has become fodder for criticism. In 2007, it was discovered that Mackey had been using a pseudonym to post blogs lambasting Whole Foods' competitor, Wild Oats Market, and questioning the worth of the company's stock.
The postings were made public when Mackey announced his desire to buy Wild Oats Market, and a lawsuit was filed by the Federal Trade Commission over concerns that the purchase would violate antitrust laws.
The FTC eventually let the sale go through, provided that Mackey sold 31 of the Wild Oats stores, and the Securities and Exchange Commission, which had launched an investigation into the online postings, did not press charges.
Libba Letton, a Whole Foods spokeswoman, told ABCNews.com that Mackey was unavailable for an interview and said that the op-ed "stands on its own." Letton offered no further comment regarding customers' threats to boycott the store.
When a CEO Speaks Out...
According to Robert Passikoff, the founder of Brand Keys, a N.Y.-based consulting firm, what a CEO says or does can often have a direct impact on consumers' pocketbooks.
"You can have a tremendous effect as a CEO, but it's a double-edge sword in that you'll have people who will support your position and feel better about your brand because of what you say," said Passikoff. "But equally so, you'll have people who think you're crazy and because they can't take it out on you, the CEO, they'll take it out on the company."
It is the risk of losing customers, said Passikoff, which more often than not leads CEOs to keep their mouths shut, at least when it comes to polarizing issues such as health care.
Tom Monaghan, the founder of Domino's Pizza who was outspoken in the pro-life movement, ostracized many of his consumers who weren't sure how much of the money he earned making pizza was then going to support the pro-life movement.
Lynn Upshaw, a brand marketing consultant at Upshaw Brand Consulting in Kentfield, Calif., said that more often it is the actions of an entire company, and not just of a CEO, that lead to boycotting by consumers.
For example, Upshaw remembers when, in the late 1970s, Nestle angered consumers with a baby formula product it claimed to be a healthy alternative to breast-feeding.
"It's relatively unusual for a CEO to be as outspoken as Mackey has been," said Upshaw. "Because any time you weigh in to something political, you're bound to have loyal customers who will question [your] point of view, and that can have a very negative effect."
Upshaw added that Mackey's op-ed may have done more harm than might be typical because of the unique makeup of his clientele.
"You have more activist consumers going to Whole Foods than other stores," said Upshaw. "They're not just simply expressing an opinion, they do something about it.
"These are people who have already gone out of the way to find a place that is more expensive to buy certain types of food," he said. "So in theory, they might be more willing to take the action to go somewhere else if they don't agree with Mackey."