In an effort to leverage buying power and increase information exchange, an overwhelming majority of independent natural foods co-ops have voted to restructure their national organization to become a direct-membership cooperative.
Under the new structure, nine loosely united regional associations will be merged into a stronger National Cooperative Grocers Association, with its headquarters in Iowa City, Iowa.
Formed in 1999, the NCGA consists of 94 independent natural foods co-ops with 111 retail locations, representing $626 million in annual sales. Individual store sales range from $350,000 to $75 million per year. Same-store sales were up 12 percent in 2002 compared with 2001, NCGA reported.
After 10 months of discussion, NCGA member co-ops voted by mail beginning in March. Of the 91 ballots returned, 89 were in support of reorganization. Results were announced April 26.
The nine regional units, basically clusters of co-ops in contiguous states, will carry on with the current combined staff level of 16 to 18 jobs, according to Robynn Shrader, executive director of the NCGA. "They will discontinue their individual operations but continue operating the same services and programs through the single national entity," Shrader said.
"We have offered positions to all of the existing staff. What we have done is cut out the administration. We cut out having 11 organizations for 94 food co-ops to having one for the existing 94 members of the NCGA, [giving us] more capacity to expand our services to a broader number of food co-ops," Shrader said.
Staff members will continue to work out of regional offices across the country, but with the national headquarters in Iowa City.
The restructuring is expected to give co-ops added buying power against the natural foods chains, such as Whole Foods and Wild Oats, and the mainstream stores that are selling organics.
"When you go from being a single store to being an aggregated buying group, and you are a customer that's 10 to 20 times that size, you are able to negotiate better prices," Shrader said.
Gail Graham, general manager of the Mississippi Market Natural Foods Co-op in St. Paul, Minn., said she supports reorganization. "I believe in the vision of a more unified, national organization for our cooperatives," she said. "It will allow us to move forward together in a lot of ways.
"We have been working for years to find ways to leverage our similarities. So we have regional co-op grocers associations. The next logical step was a national organization. It's a Wal-Mart kind of world, and volume means a lot."
Among the practical matters under discussion is a purchasing agreement with national food wholesalers such as United National Foods Inc., Graham said.
The main obstacle to forging the national restructuring was the presence of a number of effective regional groups, Graham said. "It's hard to want to let go of those. For some it has been working very well. But you are going to have to let go if you are going to form a national organization."
Like Graham, Paul Cultrera, general manager of the Sacramento Natural Foods Cooperative in Sacramento, Calif., thinks joining forces is a good business move. "I see it linking our arms to get the benefits that a large chain like Whole Foods has. It's the next natural step in the evolution. There's a whole lot more power with 100 stores together than 10 stores."
The move to centralization was driven in part by the 2002 buyouts of wholesalers Blooming Prairie Cooperative and Northeast Cooperatives. As a result of the buyouts, UNFI became the dominant wholesaler to the co-op sector. "[The co-op community] saw the possibility of a buying contract with UNFI. People were just ready for it," Cultrera said.
Victoria Gits is a Denver freelance writer and editor.
Natural Foods Merchandiser volume XXV/number 6/p. 18, 20