Natural Foods Merchandiser

Hass Hassan Takes Naturals From Hippie to High End

He was chief executive of a 12-store, $120 million natural foods empire, and now he runs a six-store, $25 million operation, but he shudders at the idea of being a businessman.

To S.M. "Hass" Hassan, a businessman is a guy who wears a suit and talks money all day. A businessman doesn't sift dirt through his fingers as he discusses organic carrots with a local farmer. A businessman doesn't paint houses on the weekends and stock grocery shelves at midnight. A businessman doesn't finance his new venture by inviting all his friends and colleagues to a huge, drunken bash and then waving around $5,000 stock certificates.

But for Hassan, a founder of the Boulder, Colo.-based natural foods chain Alfalfa's and the London-based Fresh & Wild stores, that's exactly how business is conducted. And his unique, creative way of looking at the natural foods business has contributed to the wide acceptance and availability of organic foods today.

Alfalfa's and the handful of small natural foods stores started around the country in the late 1970s and early '80s were the precursor to the naturals supermarkets now commonplace throughout the United States. Manufacturers such as Horizon Organic, White Wave, Allegro Coffee Co., Coleman Natural Products and Rudi's Organic Bakery owe much of their early success to Alfalfa's. Ex-Alfalfa's employees operate farms and public relations agencies, write cookbooks and lead expeditions up Mt. Everest. They hold executive positions at many of the big naturals companies, from Celestial Seasonings to Rapunzel Pure Organics.

"The industry owes an awful lot to those retailers who had this vision," says Barney Feinblum, a former Alfalfa's board member and a founding partner of Fresh & Wild. "The industry could not have succeeded without the retailers bringing customers into the store."

Marcus Christopher, a former Alfalfa's employee who is now director of human resources at Rudi's Organic Bakery in Boulder, says the idea behind Alfalfa's was "bringing a concept to the masses and making it mainstream in the sense of being approachable to people. Hass took the small mom-and-pop store and made the independent large food stores sit up and take notice. I don't think all of a sudden the people who ran those stores watched a PBS series on organic food or listened to NPR and said 'Oh, wow,' I think they went into stores like Alfalfa's and saw their success."

Feinblum, who is currently president of Boulder-based Organic Vintners and a former chief executive of both Celestial Seasonings and Horizon, points out that Hassan and other naturals retailers created a national infrastructure of small stores that allowed companies like Horizon to sell their products across the country well before the days of national chains such as Whole Foods Market Inc. and distributors like United Natural Foods Inc. "Without retail, none of the manufacturers would have succeeded," he says. "[Hassan and other '80s retailers'] legacy is the national retail structure, the national supermarkets and national distribution."

And many of them got their start simply because Hassan needed a place to shop for dinner.

From Tinfoil To Tuna Fish
Hassan, a vegetarian and self-described "old hippie," started his first store, Boulder's Pearl Street Market, in 1979 at age 30. "Nowhere in those days was there a place where you could just go and buy what you needed—one store where my friends and I could buy everything we needed, from produce to paper towels," he says.

Born in Kashmir, Pakistan, Hassan grew up in the London suburb of Wimbledon. He got into natural foods as a teenager because "it was just part of the vegetarian, hippie lifestyle of the '60s. I became a vegetarian for all those appropriate, pacifist reasons."

He left England and moved to Colorado in 1973 because his girlfriend lived there. He painted houses until his friend Mark Retzloff offered him a job at Rainbow Grocery, a Denver food co-op Retzloff managed and eventually bought. Hassan ran Rainbow's office, did the books, managed the store and got a lesson in natural foods merchandising. More than anything, he learned what not to do.

"The food co-op was super inefficient," he says. Customers would fill out an order form, then store employees collated the orders and made a shopping list, scoured local growers, supermarkets and small distributors for products, and delivered the orders to customers once a week.

Hassan began dreaming of a store that would combine the efficiency of a supermarket with the values of a natural foods shop.

"There's no reason because it's a natural foods store and because we're hippies it has to be really dirty, the change is always wrong and there are no cash register stands," he says.

After several trips up the road to Boulder, Hassan was sure it was "the ideal place to do a natural foods store. It had a university and was an alternative, counter-culture-conscious town." Boulder already had a handful of natural foods stores, but none matched the supermarket concept Hassan envisioned. He was mystified that no one in the area had thought of the natural foods supermarket idea. "I couldn't believe how much money there was in America, but not much entrepreneurship—not that many people saying, 'Here, that's a great idea, let's do this.' "

Lyle Davis, an initial investor in Pearl Street Market and current owner of Pastures of Plenty Farm and Big Bang Catering in Longmont, Colo., says, "Hass envisioned his stores being more than just little health food stores. He early on saw markets ... and then supermarkets. He saw one-stop stores with access to a broad consumer base."

Hassan also wanted to recreate the community markets he grew up with in London. "You had the neighborhood high street where everyone shopped, a community center where you could meet your friends and neighbors," he says. "I wanted to create a place where people enjoy coming, where they could see their friends and neighbors and personally interact with people in the store.

"What's missing from most people's lives is that sense of belonging. It's what led to Starbucks and all the coffee shops."

Dale Kamibayashi, who worked at Pearl Street Market, was the first Alfalfa's store manager and is now director of marketing and sales at Rapunzel North America, says, "We were trying to get back to that market feel, where people shop two, three, four times a week, where they don't buy a bunch of stuff and throw it in the freezer."

Commitment And Values
Entrepreneurship runs in Hassan's blood. One of the motivating forces behind Pearl Street Market was that although he was married, had a child and had decided it was time to settle down and get a real job, he simply didn't want to work for anyone else. Entrepreneurship allowed him to be a businessman but not think of himself as one. "I still haven't gotten used to the idea of being in business," he says.

Quiet and humble, Hassan isn't the type to spout off about his belief system. But co-workers and competitors say his commitment to his values is one of the chief contributors to his business success.

"Hass kind of defines integrity. He was truer to the core values of sustainability and naturals than any other store at that time," says Terry Dalton, who owned the Unicorn Village natural foods market in Miami in the 1980s, and is now building Sublime, a vegan restaurant in Fort Lauderdale, Fla.

"Hass was playing with a full deck of cards on all the issues. I never saw him compromise on his mission and values," Dalton says. For instance, Hassan "took the lead on organic produce. He was the first store to really commit to that when it was easier to call [distributors] and have them drop [their produce] off, pesticides and all," Dalton says.

Rudi's Christopher says, "I wish there were more businesspeople like Hass in the world just because he makes business more humane. He's humble and can maintain his core values and beliefs while walking the tightrope between being sensitive to businesses and being sensitive to people."

"For Hass and me, business is just the channels or organizations where you use your skills to bring about the things that are important to you to manifest change in this world in a positive manner," says Retzloff, who is now chief executive officer of Rudi's Organic Bakery.

But in the late 1970s, Retzloff and Hassan hadn't reached that point. They were just trying to get their first store up and running.

Beginning Of A Supermarket
Hassan and Retzloff started Pearl Street Market with $10,000 each from 10 investors. "We didn't do any research, didn't have any business plans," Hassan says, as proven when they burned through the money and had to ask their landlord to contribute another $200,000 to finish the store.

Lyle Davis, general manager at Pearl Street, says finding stock for the 5,900-square-foot market was difficult. "We bought natural turkeys and talked to local fish farmers. We cultivated local growers. We found independent truckers who were willing to ship a couple palettes of produce from California. We got European cheese via air freight from the East Coast."

Pearl Street Market grossed about $1 million in its first year, Hassan says, and within four years, had outgrown its space. He and Retzloff found a 12,000-square-foot space in Boulder and decided to start another store. They named the new store Alfalfa's, and eventually sold Pearl Street Market to Mike Gilliland, founder of Wild Oats Markets.

Much of the initial financing for Alfalfa's came from a Small Business Administration loan and from friends and family. "We rented a ballroom at [a Boulder hotel] and invited everyone we knew," Hassan says. "It was a huge party with liberally spiked punch, and at the end of the night, Mark and I got up and were waving around $5,000 shares." They raised $400,000, and Alfalfa's was born in 1983.

Hassan calls Alfalfa's the "beginning of the supermarket concept. We added meat, seafood, a deli, a bakery and the first juice bar in the industry." Dalton adds, "The term cutting-edge is bogus, but Alfalfa's was always in many areas leading the pack." Retzloff goes even further: "In 1983, Alfalfa's was touted as the store of the future."

Hassan credits other natural food pioneers, such as Mrs. Gooch's Natural Foods Market in California, Bread & Circus in Massachusetts, Whole Foods in Texas, Wellspring in North Carolina and Unicorn in Florida, as contributors to Alfalfa's success. "We were all kind of developing the concepts together. It wasn't like any one person had this brilliant idea and did it alone. One person in isolation is probably not going to create a whole as well as a lot of people doing it together."

As members of the Natural Food Network, Hassan and other store owners across the country got together three or four times a year to party, but also to share resources, ideas, suppliers and financial statements. "When we opened the second Alfalfa's in Denver, everyone came out and critiqued it. The competition kept us on our toes because we wanted to impress everyone, but nobody at the time had national aspirations. There was an understanding that we weren't going to approach [Whole Foods' co-founder] John [Mackey's] produce guy and get him to leave Whole Foods," Hassan says.

As the first store to add a meat counter, Alfalfa's took a lot of flack, says Paul Gingerich, the store's first meat manager. "At that time, putting any kind of meat in a natural foods market was so unusual. For the first six months, we scrubbed anti-meat graffiti off the front of the store."

Alfalfa's was one of the first to introduce Colorado-bred Coleman Natural Beef to the natural foods industry. Gingerich, now vice president of meat and seafood for Wild Oats, says Hassan was so concerned that Alfalfa's meat met the store's high product standards that "even though he was a pretty hard-core vegetarian, he would sample meat products to convince himself we had the best."

Products were pricey, so Hassan, Davis and their staff "had to be very good at presenting and standing up for those products, explaining why natural beef was so much more expensive than conventional meat," Davis says. That was the beginning of Pearl Street/Alfalfa's credo of educating and empowering staff to work with customers. "It couldn't just be Hass or myself or a handful of department managers alone explaining why nonchemical food costs 60 percent more," Davis says.

That hands-on approach distinguished Hassan from other retailers, his employees believed. "There was no job he wasn't willing to pitch in and help with. He was a great merchant in the most positive way," says Sylvia Tawse, Alfalfa's food manager and now owner of The Fresh Ideas Group public relations firm in Boulder. It wasn't unusual to walk into Alfalfa's and see Hassan behind the cash register or trimming a piece of steak, she says.

Rapunzel Organics' Kamibayashi says Hassan's strength is that he is a "very good operations man. He's very organized. He has a knack for intricacies, of how things should look, how they should run. He has a good mind for aesthetics, the environment and feel of a store. He's got a good vision of food, a good overall viewpoint of what consumers like, and it's shown in what he's touched."

Barry Perzow, former owner of the Canadian natural foods store Capers and now chief executive of Pharmaca Integrative Pharmacy, says Hassan's "keen sensitivity and passion for food" made him a pioneer in "taking natural foods and showing how wonderfully appetizing they can be."

Gingerich says Hassan's eye for design was apparent everywhere in the store. "I remember I made a fajita mix display with green peppers, and Hass came by and said, 'Paul, mix some red and yellow peppers in and you'll have a much, much prettier display.' "

Hassan was so committed to Alfalfa's image that he and his employees took field trips to gourmet food stores such as Zabar's, Dean & DeLuca and Balducci's in New York and to farmer's markets and fish markets in Seattle to study product presentation. "We wanted to combine the look of a specialty market with a gourmet food venue," Kamibayashi says. "We had beautiful produce displays and florals. It was like walking into a live environment where—boom—there were colors, dynamic displays, and you felt good about going in there."

One Big Family
Others may praise Hassan's artistic sensibilities, but what he's happiest about is the team he created at Alfalfa's.

"What I feel best about, what I'm proudest about is the culture of people, customers and employees that is Alfalfa's legacy. We were very community and customer oriented," he says. "I know we weren't the most aggressive, the best at making money, the tightest business, but we had the best culture and customer service."

Initially, Hassan says he "only hired people I wanted to be around, because I figured these are the people I'm going to spend most of my time with." He looked for employees who mirrored his values of hard work, trustworthiness and treating others with respect. And even though by the mid-1990s Alfalfa's had a couple thousand employees, Hassan believed he had a solid team. "We built the nucleus and then like attracts like and the team grows organically, so to speak," he says.

Ex-Alfalfaites talk about the in-store parties, the cooking demonstrations, the dog washes for the humane society, "the whole lively atmosphere, fun and frivolity," as Kamibayashi puts it. Hassan would close down the Alfalfa's parking lot, put up tents, bring in music and entertainment and pass out free food to anyone who walked by. One New Year's Eve, the store hosted a gourmet tailgate party complete with limousine, candelabras at the cash registers and tuxedo-clad waiters on roller blades. For several years, Alfalfa's was selected by a local publication as "the best place in Boulder to meet your soul mate."

Everything wasn't all fun and games, however. Kamibayashi recalls: "We did research on preservatives, chemicals and food colorings. We interacted with the customer base through monthly and quarterly panels where they could see new products. Our employees got out of the box—they were well educated and cross-trained, and we got a lot of people to trust us. Our customers trusted our people more than they trusted their doctors to give food advice.

"It was a feeding ground there for a while, helping people grow their ideas and dreams."

Tawse says Alfalfa's was "like a circus, and Hass was a great circus master. He was great about listening to totally crazy, really stupid ideas. He'd say, 'I think it's crazy, but if you think it's good, go for it.' " Some of those ideas resulted in an espresso bar with trained barristas, the first Ben & Jerry's ice cream bar in a natural foods store, one of the first salad bars and the growth of expensive, prepared deli entrées. "Hass has always been among the first to try new concepts. He's comfortable with that," Tawse says.

End Of An Era
In 1990, Retzloff left Alfalfa's to start Horizon Organic. He had handled financing, fund raising and marketing and was the store's public face while Hassan ran the day-to-day operations. With Retzloff gone, those tasks fell to Hassan.

"When I left, there was a void; he tried to take on [my duties], and it was too much," Retzloff says.

Lyle Davis says by that time, "Alfalfa's was bigger than any of its players. It had taken on a life of its own." In order to expand to 12 stores in Colorado, New Mexico, Seattle and Vancouver, B.C., Alfalfa's had crawled into bed with bankers and venture capitalists. It had a board of investors Hassan had to answer to.

"None of us had dealt with the kind of money boys and the element and feel they were bringing," Davis says. "They were supermarket guys, and we thought we could learn from their expertise without eroding our philosophy and spiritual core. That was an illusion."

To deal with the business's financial aspect, Hassan figuratively divided himself into two people: the money man and the operations man. It was the only way he could handle the financial pressures of a $120 million business. "As chairman of the board, I was dealing with the investors and I hated it, but I could still be rooted in retail, this great thing that I love," he says.

Hassan learned some hard lessons. "It was starting to be this dilemma—you believe in what you believe in, but you're trying to run a $120 million business. You're naive at best and fooling yourself if you don't recognize that at a certain size of a business, priorities shift."

By 1996, when Boulder-based Wild Oats Markets came knocking with a merger opportunity, Hassan was ready. He had various reasons for approving the deal: "Consolidation was where the industry was going; there was pressure from investors to make money; and personally, I was just tired of it. I didn't think I wanted to be a CEO of a business like that all my life. Plus, I was getting a little bored." In addition, John Payne, the man who took over the chief operating officer job after Retzloff left and Hassan became chief executive, died of cancer in 1993. "We clicked so well, and I was never able to put it together after that. I never quite recovered from his death," Hassan says.

The merger between Wild Oats and Alfalfa's resulted in a $260 million company, big enough to go public. Hassan stayed nine months after the Wild Oats' initial public offering, serving as president of the combined company. Wild Oats founder Mike Gilliland was chief executive. From the beginning, the Hassan-Gilliland combination "didn't work on a business and a personal level. We had different philosophies, different business cultures," Hassan says. Others say Hassan wanted to emphasize customer service and good merchandising practices, but Gilliland was more interested in acquiring real estate and building stores. Gilliland didn't return a call asking him to comment on his relationship with Hassan.

Hassan resigned from Wild Oats in 1997. "I prided myself on building a business and doing something I love. I told myself if I ever reach a point where I don't have that feeling, I'm not going for the paycheck," he says.

He had also concluded that for a privately held natural foods company, money can be a secondary consideration, but that's not true with a publicly traded company. "With a public company, the No. 1 driving factor is stock price. It's absolutely a reality that the major money in this industry is pension funds, Wall Street, bankers. The major driving force in [the natural products] industry was the belief that we're doing something good. I think that's still there, it's just that the priorities have changed because of the amount of money and the profit and the investment made in the industry," he says.

With his hefty severance package, he took a year off, traveling and spending time with his wife, two teenage children from his first marriage and his young twins. "Business had ruled my life. I had a fairly strong guilt trip in my head about not spending time with my family," he says.

A Fresh & Wild Start
The vacation had to end, Hassan says, because he needed money. The merger with Wild Oats left him with stock options, but he says he didn't have much stock to sell because he only had a small ownership stake in Alfalfa's. "Remember, I was a house painter; I didn't have anything to invest in the beginning," he says.

"I wasn't one of those people who made $25 million selling their company. Plus I had four kids—two in college and two in private school. I had to get back to earning some money."

Hassan also wanted to spend more time with his mother, brother and sister in London. "Much as I love Boulder and Colorado, it's a fairyland. I miss being part of the larger world," he says. He was also tired of working and living in the same small city. "I'd pick weird routes to drive around town because I didn't want to drive by my competitors," he says. "I'd go to friends' houses and look in their refrigerators. I was obsessed—'Where did they get their food? Where did they buy it? Did they buy it at Alfalfa's?' " he says with a laugh.

He considered various businesses he could start in the United Kingdom—a bagel shop or a Mexican or high-quality fast-food store. But in the end, "you sort of retreat to what you know," he says.

In 1998, he put together a partnership with Barney Feinblum and former Alfalfa's board member Bill Rothacker. "We started on a handshake, no partnership plan, no papers," he says. They also had $2 million, most of it Hassan's money. They bought two natural foods stores in London—the 1,500-square-foot Fresh Lands and, ironically, a 2,000-square-foot store named Wild Oats Whole Foods Market. They combined the two names and christened the stores Fresh & Wild.

London in those days was like Boulder 20 years ago in terms of the sophistication of its natural foods stores. "It's a good thing he never showed me a picture of the stores—they looked like Green Mountain Granary, the first natural foods store in Boulder in the '70s, in the hippie-dippy days," Feinblum says.

Although the Brits are more aware and accepting of organics than their American cousins, Hassan says other factors have prevented the growth of English natural foods supermarkets. British mainstream supermarkets are aggressive at stocking organic products, and many have their own organic lines. Organic farms have developed "box schemes" (similar to community-supported agriculture programs in the United States), where they bring a box of produce to subscribers' doors every week. Also, the lack of available real estate in London creates competition for anyone wanting to build a natural foods store. "The real estate has Manhattan prices, and there are 50 other people in line waiting for the site—people like The Gap," Hassan says. In addition, "everything's smaller. You can't find a 35,000-square-foot site for a supermarket with 120 parking spaces." The Fresh & Wild store in London's Camden Town—the first store Hassan and his partners built—is only 3,000 square feet. Their largest store is 6,000 square feet.

"Truly, the British definition of a large retailer in 1999 was stores larger than 700 square feet," Feinblum says.

Because there were so few British workers experienced at running a natural foods supermarket, Hassan initially brought his own people over, including Lyle Davis and Marcus Christopher.

"We had to create an efficient system that could really work," Christopher says. "The stores were right on the street, so trucks would have to pull up on the street and we would unload everything by hand, load it on a two-wheeler, and haul it up the stairs because the stores were at least two stories. We had to handle product three, four, five times more than we should have."

Davis says from the beginning, Fresh & Wild was "put together in a more corporate way. Before the stores opened, they had a marketing and accounting staff. It wasn't like Alfalfa's, which literally had an organic process of growing and responding. Hass has a very keen sense of there being an opportunity to fill in England."

Hassan says the key to creating successful natural foods stores in the United Kingdom is understanding why the English buy organics. "It's not like the industry here. You have to figure out exactly how to meet the need and make it work." The British choose organic products more for political and environmental reasons than because they want to look and feel good, he says, and they tend to be purists, meaning natural foods stores rarely sell anything that isn't organic. They're cynical about big business and want to support small farmers and local suppliers, he says. They don't expect things Americans demand, such as big, pristine food stores with a large variety of products. Hassan says the English also have a strong bias against American government and business—including natural foods retailers, but they love the American people and culture. "It's worked well for me that I still have an English accent," he says, only half jokingly.

Looking Ahead
After the initial $2 million investment, Fresh & Wild raised another $3 million in 1999 from Boulder-based venture capitalists and British investors, Feinblum says. Although the six stores gross about $25 million a year, Feinblum says the money is being reinvested and "we'll need 10 stores before we're really profitable." However, he says, "our Notting Hill store has 50 percent more sales per square foot than Whole Foods—£1,000 [$1,600] per square foot."

Hassan envisions doubling the number of U.K. Fresh & Wild stores in the next couple years, but isn't as keen on expanding into Europe. "It's tough to grow in Europe. It's an old culture that's been highly developed for a long time, and we're at the back end of a 20-year economic upturn there. It's hard to do business and get established in that climate."

In the meantime, he'll continue the hands-off approach he's established with Fresh & Wild. He travels to England one week a month and serves as the company's executive chairman, dealing with investors, formulating strategies and designing stores, but he has a chief executive and an operations person to handle day-to-day decisions. "I'm not there every day running the stores. I don't want to do that anymore. I'm not big on repeating things," he says.

As for his days with Alfalfa's, he says, "I was lucky to be in the right place at the right time. Now [natural foods supermarkets] are mainstream, taken for granted, a part of America. In pretty much every educated, affluent city, there's a natural foods supermarket, and it feels good to be a part of that.

"It's a nice feeling to be able to do something for people."

Vicky Uhland is a Denver-based freelance writer. She may be reached at [email protected].

Natural Foods Merchandiser volume XXIV/number 3/p. 38, 40, 42, 44, 46, 48, 50

TAGS: Archive News
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.