Natural Foods Merchandiser

Barney Feinblum: Keeping green companies in the black

by Shara Rutberg

Barney Feinblum, CEO of Horizon Organic, found himself kneeling in the muck, rubber boots squelching in the mud. It smelled like a thousand cows.

He looked up at the solid ton of bovine before him. Bessie slowly turned her head, her big brown eyes meeting his smaller ones. All around them in the Idaho dairy, hundreds of cows lowed, like a herd of impatient foghorns. Then, the Brooklyn-born executive, who knew bull markets inside out but hardly which end of a cow to milk, took a deep breath, reached up with both hands and went to work.

Milk flowed. Bessie sighed. And, beneath his strawberry blond mustache, Feinblum grinned like a kid who's just blown out all the candles on his birthday cake. "I opened my mouth once too often in front of too many people," he says, recalling the experience. He was visiting Horizon's Idaho dairy as it transitioned to organic. "I kept saying: ‘What do I know? I've never milked a cow in my life.' They finally said, ‘Here you go, Barney.'"

Barney Feinblum's not afraid to open his mouth. He's also not afraid to dive in—no matter how messy the situation—and get his hands dirty with the details. Though he's much better at finance than the finer points of milking, Feinblum knows how to make the metaphorical milk flow. And how to find the cream—and market it to millions. He's built an extraordinary career out of opening his mouth and digging in with a wickedly sharp mind and an enthusiasm that could knock over a herd of heifers. The natural products industry has become a better place for it.

"In life and in business, there are people who, when things get tough, they duck," says Celestial Seasonings founder Mo Siegel. "Then there are other people, who, when things get tough, they just get better. Barney gets better." Siegel should know. Like a David in Levi's with a Long Island twang, Feinblum reached into the jaws of Velveeta behemoth Kraft and pulled Celestial out with a leveraged buyout and a lot of chutzpah. Then he led the company as it continued its transformation into a national power brand during a time when there were no national natural power brands. He had similar success as CEO at Horizon Organic, slicing through manure piles of management and logistic challenges with vision and his ever-present HP Business Analyst calculator something many view as simply a battery-powered extension of Barney's brain. And Feinblum didn't rest after Horizon.

Barnet "Barney" Feinblum was born in 1947 in Crown Heights, Brooklyn. When he was 3, his family headed for the newly minted suburb-a-topia of Levittown, Long Island. His father sold plumbing supplies. His mother was a homemaker who instilled a love of the outdoors in her offspring with frequent trips to Jones Beach, where the crash of the Atlantic and the scream of seagulls seared themselves onto her son's psyche.

He earned his undergraduate degree in engineering at Cornell University, then headed west to Battle Creek, Mich., to work for the same Levitt that created his neighborhood, building prefab houses. A friend studying Buddhism in Boulder, Colo., tempted him out of the Midwest in 1972. While living in Denver, Feinblum worked for several manufactured-housing companies, using his engineering background.

Around this time, Feinblum came home one afternoon to find a beautiful blonde sleeping on his stoop. After hitchhiking up from Denver to visit a friend who lived in his building, Julie Miller was exhausted, but her friend wasn't home yet. Sleeping Beauty woke up to find her prince charming in fringed cutoff jeans. Shortly afterward, she moved in with her friend in the apartment next door.

"I traveled 2,000 miles to marry the girl next door," says Feinblum, and a beatific smile takes over his face, eyes brightening, as they do whenever he mentions Jules. "I couldn't have done any of this," he says, talking about his career, "without her. She's undoubtedly my better half."

"He's a little fireball and I'm his balance," says Jules, whose clear blue eyes and smoky voice have cooled Feinblum's temper for 36 years. She taught him how to camp and fish, reconnecting him with the open spaces and water that his mother first showed him. Fishing became a passion the two still share. A storage room in their Boulder home has a wall rack securing 17 fishing rods. Well-used, with clear lines taut from tip to rod, they're lined up like the bows of instruments ready for an outboard orchestra. The couple blisses out watching football on TV, loading line onto reels.

"People don't believe there's a quiet side to Barney," says Jules. "There is, but you just have to get him out in the middle of nowhere."

In addition to being the yin to his yang, Jules Feinblum did something else in those early days that changed Barney's life and shaped his future: She taught him how to eat.

Jules' mother was a farmer's daughter. Growing up in Dayton, Ohio, Jules wasn't allowed snack foods or soda, while pastrami on rye flavored Feinblum's childhood. In college and afterward, he ate what was on the menu for many Americans: Twinkies and Coke. Jules ate organic produce. Slowly, she transformed his diet. With each bite of organic brown rice and broccoli, he bit into the organic philosophy. And, as people who know Barney know, once Feinblum sinks his teeth into a belief, he doesn't let go.

From baggage to tea bags
Sporting a hard hat, tie and coveralls, Feinblum stood with a clipboard among miles of chugging conveyer belts transporting suitcases, carry-ons and briefcases through the cavernous Samsonite factory in Denver.

He had completed an MBA in finance at the University of Colorado and had a solid job with a company that showed no signs of going under. It was 1976. He was a foreman. He was moving up in the company. "He was miserable," says Jules. "He just hated it."

Then Feinblum learned about an opening at Celestial Seasonings, a Boulder, Colo., company he had heard of only because Jules used its little hand-stamped tea bags.

Dressed sharply in a coat and tie, briefcase in hand, Feinblum was met at his Celestial interview by a barefoot secretary in flowing tie-dye who lived in a tepee. She walked him over to the personnel director, who was wearing shorts and a T-shirt.

"They had just bought their first tea-bagging machine and needed someone to run the factory," he recalls. He sensed he was more Celestial than Samsonite, and he took the $225 a week, two-thirds of what he was making supervising suitcases. His New York family thought he was nuts.

"It was the smartest decision I've ever made," he says. He wanted to work for a company that shared his values.

"I think I was the first person Celestial hired into management who wasn't a friend or relation, and definitely the only one who had had a ‘real job' before. At the ripe old age of 28, I became the serious old fart."

Feinblum was like a strong cup of coffee at a tea party.

The funky little company had a freewheeling culture: bare feet, volleyball and hot lunches for employees. "I tried to put in some things like, well, production standards," Feinblum recalls. "Like, you know, ‘How many cases of tea did we make last night?' "—revolutionary concepts in Celestial's universe. Feinblum recalls one morning coming in to see there was no production at all recorded for the previous night's shift. He asked the supervisor why. "He told me, matter-of-factly, that it was a full moon and they had to take their moon break," Feinblum says.

"Barney joined us in a fun era, where we were going from being a cute, little company to facing extreme pressure from competition," Siegel says. "We needed to get our act together. We needed to get our machines working, we needed manufacturing processes. We needed to count things.

"Barney's a guy who was just born smart and business-capable. He came in and fit the funky culture we had, and when it was time to change, Barney stepped up."

After having trouble meeting working-capital demands, the company was on the brink of being sold to General Mills in 1979.

Feinblum had other ideas. He convinced Siegel to promote him to vice president of finance and let him explore financing alternatives. He created a leveraged employee-stock-ownership plan, or ESOP, to purchase part of Chairman John Hay's stock. Hay had been eager to sell. It was a cutting-edge idea.

General Mills went away. The health food industry, and Celestial, grew. When Feinblum joined the company in '76, its annual sales were about $3 million. By 1983, the company had $27 million in revenue.

"Barney was like my left brain," Siegel says. "I couldn't have done it without him. He was Mr. Math: King of dueling calculators. He'd just spit out numbers. He was a constant reality check."

Feinblum's reality checks and critical thinking allowed management to weed through the ideas to see which were best and safeguard the company, Siegel says. "Barney can smell a dead rat in a closet in Kansas City three weeks before it gets sick." His instincts about what can go right and wrong are stellar.

Kraft crashes the tea party

Business was booming at Celestial's home on Sleepytime Drive. The time seemed right for a public offering, a decision that led to what Feinblum views as the worst mistake of his career when he selected Goldman Sachs as underwriters. Celestial was too small a company to garner Goldman's full attention, he says. Still, he counts the day he stood on Goldman's trading floor in Manhattan, watching Celestial Seasonings roll across the ticker, as one of best days of his life.

However, as Feinblum was in Manhattan, the wife of an ethnobotanist in Tennessee was sipping a brew of what was the equivalent of 16 bags of Celestial Seasonings comfrey tea. Her husband felt the medicinal dose of the comfrey would help knit the bones in her broken hip. Her vision blurred. So did Celestial's IPO.

The ethnobotanist tested the tea and claimed he found belladonna in the comfrey leaf. Celestial's tests didn't have the same results but, "in an effort to do the right thing," says Feinblum, Celestial recalled the product. Goldman and Celestial withdrew the offering. "That's when I got my unlisted phone number," he remembers.

Feinblum says the aborted IPO was like a fly in the organic soup of the young industry. Natural products distributor Tree of Life had been waiting in the wings to make an IPO of its own. When Celestial's failed, Tree withdrew. "Cash didn't flow to this industry for almost a decade," Feinblum says glumly.

After months of courting, Kraft Foods bought Celestial in 1984 for an estimated $40 million, including $4 million of ESOP stock. The international giant wanted to widen Celestial's universe.

Feinblum hadn't wanted to sell to Kraft. "He was really the only one of management who was flaming against it, yet he's the one who stayed," Siegel says. Why? "Because he loved the company," Siegel says.

Siegel left after two years, and Feinblum became CEO in 1986. Feinblum, whose face turns the color of Kraft Catalina dressing when he gets angry, is not one to be micromanaged, Siegel says. One of the first things Kraft did was send in a posse of vice presidents from headquarters, complete with their own calculators. The marriage between the funky little tea company and the Velveeta giant was more Lemon Zinger than Blueberry Breeze.

In 1987, Kraft began investigating rumors of drug use at Celestial. "They sent people in undercover. Spies," Feinblum says. They demanded mandatory drug testing. Feinblum refused. It was ugly. He began hunting for investment bankers and made Kraft an offer to buy back the company. They told him it wasn't for sale. "But they didn't fire me," he says. "Usually, when you make an offer to buy the company they either say ‘yes,' or ‘you're fired.'" The reason would become clear early Sunday morning, Dec. 6, when a 7 a.m. call from his boss at Kraft summoned Feinblum to a Boulder hotel to meet the president of Lipton, the company, he was informed, that had just bought Celestial.

The deal hit an antitrust snag. In January 1988, the Federal Trade Commission requested documents from Lipton seeking to determine whether the sale violated antitrust laws. The ruling took months.

Meanwhile, Feinblum hadn't given up on his dream of buying back the company. He and Celestial Planning Director Caryn Ellison, whom he calls "my partner in crime," went to work. They were referred to Vestar Capital Partners, which then had one office in New York. He and Ellison flew to Manhattan. The door to the Vestar offices was marked with a handwritten paper sign. "I said, ‘Right, Car, these guys are going to give us 50 million bucks?'" But they went in and pitched.

What happened next could only have occurred during the perfect storm of capitalism and chutzpah. Feinblum's drive, guts and financial savvy were perfect weapons in a business climate described by titles like

Barbarians at the Gate and Predators' Ball. He was a mustachioed tempest in an herbal teapot.

To buy Celestial, Feinblum and Ellison had to match about a $60 million price tag, the above-market value that Lipton was about to pay to put a competitor out of business. They were hopeful as they buckled their seatbelts on the plane back to Denver until they opened the newspapers and read that the government approved the Celestial sale.

But in May 1988, David and Eunice Bigelow of R.C. Bigelow tea company in Norwalk, Conn., filed a lawsuit to block the sale, claiming that the Celestial-Lipton merger would give Lipton a monopoly in herbal tea.

Celestial was in limbo. The court case dragged on. And then an odd thing happened. Big brown envelopes containing sealed court documents from the trial began arriving at Feinblum's office. "There was a mole," he says. "In these documents I discovered the purchase price was $55 million. And I discovered that Lipton intended to shut down the factory after 12 months. And I can't say anything about this," says Feinblum, who never discovered the mole's identity. Even more motivated for a buyout, he kept talking to Vestar.

A couple days before Labor Day, Eric Stroble, Feinblum's boss at Kraft, told him: "If you can get us a deal, we'll sign, but in the meantime, if the courts rule in our favor, we'll close with Lipton. And this conversation never took place,'" Feinblum recalls. He called Vestar.

In a weeklong financing frenzy, Feinblum and company hammered out a deal. Sunday night before the courts could open Monday morning and possibly issue a ruling to Kraft--they entered into an agreement to buy the company back for $55 million, plus fees.

"This was the go-go ‘80s," Feinblum says. "We paid $55 million and borrowed $56 million to do it ($1 million to cover the fees). You can't do deals like that anymore. It was kind of amazing."

When the deal closed, he sent Eunice Bigelow two dozen roses.

From Celestial to the milky way

"The fact that Barney stayed during that time, when a lot of people would have walked out the door, he stayed and put together that buyout, was a real credit to his capabilities, his thinking, his endurance. He didn't give up," Siegel says. "The debt was staggering. But Barney had the courage to do [the buyout]. And it turned out to be a very smart thing. He had the insight at a time when most people, including me, would have walked away."

Feinblum's next venture turned out to be a little bit too ahead of its time. After 17 years, he left Celestial as president in 1991, but stayed on the board of directors until the company went public again in 1993. Feinblum then founded Natural Venture Partners with industry veteran Anthony Harnett and Vincent Fontegrossi, creating a venture-capital firm to reinvest in the natural products industry. But they had difficulty breaking into the "financial club," Feinblum says. The company disbanded after a few years.

Feinblum could have ridden off into the sunset of retirement. Instead, he rode off into the Horizon. In 1991, Mark Retzloff and Paul Repetto created Horizon, a Boulder-based organic yogurt manufacturer. Once they added organic milk in 1993, business tripled. Bovine growth hormone hit the fields and the papers, creating even more interest in Horizon's hormone-free products. "We knew we would continually be seeking financing, working capital. We needed someone to drive the financial engine of what was going on," Retzloff says. "We asked Barney if he wanted to get back in the saddle." In 1995, Feinblum became Horizon's CEO.

"Weirdly enough, it wasn't until after he joined us at Horizon that we discovered he not only didn't like yogurt, he never ate it. But it didn't prevent him from doing a terrific job," Repetto says.

Horizon was in the midst of its grand Idaho dairy experiment: transforming 1,000 cows and a large facility to organic. "It all starts with the way the cows are treated," says Feinblum, who is able to ramble on about best organic dairy practices and cow husbandry in surprising detail. When he talks about them, his face takes on the shadow of a city kid marveling amid the alien herds at, say, the Colorado State Fair. "When those 1,000 cows became organic in 1995, it probably doubled the number of organic cows in America. My guess is that today, there are between 150,000 and 200,000.

"It was big investment for us at the time," he says. "Horizon was a brand. We didn't really want to own cows, but we owned cows because we couldn't get enough organic milk. "What I saw Horizon accomplish in Idaho is the most amazing thing I've ever seen in my 32 years in the natural products industry. We took a large conventional dairy and converted it into an entirely organic operation. Forty acres of compost. A $100,000 machine to turn that compost. We converted about 6,000 acres to organic on our own farm to grow organic hay, not to mention the rest of that Idaho valley that also converted to organic to supply Horizon hay."

Not everyone was as enthusiastic about the scale of the conversion. The Cornucopia Institute, a Wisconsin-based farm-policy research group, raised an alarm about the dangers of "big" organic.

"The Cornucopia Institute wants to say that big is bad by definition. That kind of thinking is going to have the effect of making organic food only available to the rich. And I don't think that's what we're trying to do. I think we're winning when we convert more and more acres to organic," Feinblum says. He turns that Kraft Catalina color when he talks about Cornucopia and an even darker shade when he starts on "Monsatan," what he calls Monsanto, which develops genetically modified seed and has produced bovine growth hormone.

"Barney has integrity when it comes to organic," says Sylvia Tawes, president of Boulder-based communications firm The Fresh Ideas Group and a long-time friend of Feinblum's. "While he's a fiercely skillful businessman, he also has compassion. When at the helm at Horizon, he insisted on all calves being born on the dairy rather than buying from outside dairies."

Of all the work he's done in more than three decades in the industry, Feinblum's most proud of his efforts at Horizon. "Most people don't know, but Horizon's now the leading brand of milk in America, and as a result, has converted I don't know how many acres to organic. It was an amazing logistical challenge to overcome. Seeing the importance of organic milk to kids and families today, when 15 years ago there was no such thing, there was no branded milk, just a regional dairy name and maybe pictures of lost kids on the cartons. Now the fact that I can get organic milk in almost any place in America is mind-boggling. That we were able to pull that off is amazing."

Ironically, Feinblum always wanted to be a cowboy. "Well, I got the cows," he says. But he did more for Horizon than just round up cattle. He also played a key role in the company's acquisitions.

"Barney's not afraid to do things that are a little out of the ordinary," Retzloff says. "He's not afraid to make things happen. And Barney likes to win." When Retzloff brought U.K. company Rachel's Yogurt before the board as Horizon's first potential international acquisition, Feinblum was the first on board. "He's not afraid to take risks. And he believed in what we were doing," Retzloff says. In fact, over the years, a few times Retzloff had to check Feinblum's ambition when it came to buying more companies. "I told him: ‘Barney, you know, we don't have to catch every fish in the water. We can go home.' " When Feinblum joined Horizon in 1995, the company had about $3.5 million in annual sales. When he left in '99, sales were close to $90 million.

Investing in naturals

In 1998, Feinblum became one of the three original investors in the chain of Fresh & Wild organic grocery stores in the United Kingdom, the idea of long-term friend S.M. "Hass" Hassan. Hassan hired Irishman Bryan Meehan to run Fresh & Wild, which was eventually bought by Whole Foods in 2004. "Barney was the most enthusiastic and committed board member I've ever seen," Meehan says. Not only would he read every single page of the board packet, but he would fly to England days earlier than the meetings and immerse himself in the stores. "He's totally committed to the value of the natural products industry. He was doing it because he loved it, not to make money. Barney follows his heart. Every decision he makes is based on his values, which happen to be the values of the industry," Meehan says. "He's a real visionary and committed to the future of this industry." To help shape that future, Feinblum—and Meehan—joined Greenmont Capital Partners, a natural-products-industry investment firm they co-founded in 2004 with Retzloff, Hassan, Repetto, Steve Demos and John Shields.

"Barney believes in the natural products industry," says Amy Barr, co-founder of Colorado-based Marr Barr communications, who worked as vice president of communications at Horizon while Feinblum was at the company. "Some people in the industry today are all about money, but Barney's a true believer."

Recycling knowledge

Feinblum's voice can be heard outside the walls of Greenmont's Walnut Street offices in Boulder, housed in a renovated 1898 home.

He's throwing things.

"You can't recycle this shit!" he yells, tossing a food-caked container he's pulled out of one of the recycling bins in Greenmont's kitchen. "What's the matter with you people?" (Crash!) "What kind of green company is this?"

Converted by wife Jules into a recycling pro, Feinblum also recycles knowledge to the entrepreneurs he helps through Greenmont. (He and Jules are also responsible for the Feinblum Recycling Center at the University of Colorado. "They offered us all these fancy boardrooms, but if our names had to go on something, Barney wanted it to be the recycling bins," Jules says. A commemorative picture of the bins and the sign hangs in his home office, not far from pictures of his sons, Josh, 29, and Danny, 25.)

Feinblum and Hassan are the co-managing directors for Greenmont 1, a $20 million private-equity fund with 10 portfolio investments. Its success enabled the creation of Greenmont 2 in 2008. "Our mission is to invest in the early stages of companies we think are developing the [lifestyles of health and sustainability] community market," Feinblum says. "Where our strength is primarily natural and organic food and retailing, we consider our real strength in understanding who the LOHAS consumer is and the products and services that they'll be interested in purchasing."

Joking that he used to call firms like Greenmont "vulture capitalists," Feinblum says, "Now I am one." Greenmont companies include IZZE Beverage, Mary's Gone Crackers, OZO car, a Manhattan company providing limo service with Toyota Priuses, and Eco Timber green flooring.

"We understand the industry and understand how people come into it. We value the passion of the entrepreneurs and understand their egomaniac issues," says Feinblum, laughing. "We've seen so many bad ideas; we see so many plans and people who are passionate but they don't understand the harsh financial realities of life. And we can help people with that. It's rare that people get the experience we have."

Looking back on his career, he says he was never a founder or a visionary. "I was the kind of glue that helps those entrepreneurial founders succeed in the harsh financial realities of life," he says. "It's great to have these wonderful visions and ideas, but you can't get anywhere if you don't succeed in the cruel world of money and understanding what money costs and how to get it. And that's the kind of role I've served."

In addition, Feinblum serves on the boards of naturals companies such as Gaiam and Seventh Generation.

Vintage ideas

In 2000, Barney and Jules sat in a London hotel room, looking down suspiciously into the contents of two hotel glasses. While in town for a Fresh & Wild board meeting, Barney wandered the store to find more than 20 feet of organic wine, beer and spirits. The organic wines he'd tasted before were "pretty awful." But the Europeans were pretty picky. And there were lots of bottles on the shelf. "What the hell?" he figured.

"Well, I know it's going to taste awful," he told his wife, raising his glass in a toast. "But here goes."

"It was wonderful!" says Feinblum, voice rising in excitement, "It was wine!" I couldn't believe it!" Jules soaked the label off the bottle in the bathtub to bring back to show friends.

"We didn't think they'd believe us," she says.

"I thought, ‘Whoa! There's a whole world of organic wines out there!'" Feinblum says. In typical Feinblum full-speed-ahead fashion, a few months later, he founded Organic Vintners. He partnered with the Fresh & Wild supplier, a London company called Vintage Roots, that had been distributing organic wine, beer and spirits from all over the world for 15 years. "People look at entrepreneurs as risk takers. I don't think that's true at all," he says. "Entrepreneurs see the world differently. In their minds, they're not taking any risk. The rest of the world may think they're crazy. But in the minds of the entrepreneurs, they know it's going to work. And that was my kind of observation about organic wine. I am disappointed it's taken so long. I thought, ‘Why wouldn't everyone want organic wine in America? You wouldn't feed your kids conventional milk—why aren't you drinking organic wine?'"

But there were two major issues to overcome: Americans still believe organic wine tastes bad, and the U.S. organic laws require Organic Vintners' labels to say "made with organic grapes." Unlike in Europe, "organic" wine in America cannot have added sulfites. This is a topic that turns Feinblum as red as Monsatan. These limitations, in addition to state-by-state distribution headaches, have made the business a challenge. But recent success, like this summer's purchase of Organic Vintners' largest Florida distributor by Tree of Life, may prove that Feinblum is, once again, on target.

If Feinblum were a bottle of wine, he would be a San-Emilion Grand Cru, agree Organic Vintners President Paolo Mario Bonetti and Marketing Manager Colleen McCafferty. "It's got a lot of structure. It can be firm when it's young, but with age, the tannins fade. Drinking it is really an experience like no other," McCafferty says. "Plus, it's the wine that got Barney started with Organic Vintners. As soon as you taste it, you know its quality," Bonetti says. "But it has a very understated, refined label."

Feinblum's temper is one thing he wishes he'd refined earlier in his career. "I lost my cool sometimes. It hurts people. I'm pretty demanding; while I do appreciate people, I've been a pretty harsh taskmaster. I probably could have been a little kinder," he says with a guilty grin.

"His twin virtues are passion and integrity," Repetto says. "When he is excited, which is often, he is loud, a true sign that he cares." If he were a tea, says Celestial's Siegel, Barney Feinblum would be Morning Thunder.

"Barney is passionate and that means, yes, emotional, about those things he really cares about," says Tawse of The Fresh Ideas Group. "In the early years of Organic Vintners, it was more commonplace than not that a wine writer would ‘totally screw up' the definitions for organic wine in the U.S. Barney would get completely infuriated but would funnel his ire into educating each journalist."

In fact, Feinblum is banned for life from one wine store after taking aside store personnel and educating them on all the ways their signage for organic wine was incorrect and how they could improve it.

Solid legacy

Tea. Milk. Wine. For a guy who's worked for a lot of years in liquids, what Feinblum's brought to the industry is solid: brains, dedication, vision and guts. "Barney's worked to bring innovative businesses into the mainstream, not as the public figure, but more of the reserved visionary that attended to the necessary details," says industry veteran Bob Scowcroft, executive director of the Organic Farming Research Foundation. "You can stand on the podium and wave your arms, but unless you've got backing to implement that vision, what remains is someone standing on the podium waving their arms. Barney brings experience and reality to everything he does."

And, judging from his track record and his current work, he'll continue doing so until the cows come home.

Natural Foods Merchandiser volume XXVIII/number 10/p. 42,44,46,48,50

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