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Real Pickles: The Story of a Co-operative Conversion

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Learn how Real Pickles made the decision to convert from a sole proprietorship to a worker co-op and explore the process that led to the conversion, including a successful community investment campaign.
Presenter: Kristin Howard, Founding Member, Real Pickles Co-op.

Published in: Business
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Real Pickles: The Story of a Co-operative Conversion

  1. 1. Real Pickles: The Story of a Co-operative Conversion Kristin Howard NOFA Summer Conference 2016 Real Pickles kristin@realpickles.com
  2. 2. MISSION We are committed to promoting human and ecological health by providing people with delicious, nourishing food and by working toward a regional, organic food system. We aim to produce the highest quality, traditional pickled foods available, using natural fermentation. We buy our vegetables only from Northeast family farms and sell our products only within the Northeast. Our ingredients are 100% organic.    
  3. 3. EARLY  DAYS  
  4. 4. Hain Celestial #82 ShariAnn's M&M Mars #10 Mondelez (spinoff from #4 Kraft in 2012) Coca-Cola #11 General Mills #8 Cargill #15 Dean #7 ConAgra #14 Kellogg #12 Walnut Acres Millina's Finest Frutti di Bosco Muir Glen Celestial Seasonings Imagine/Rice Dream/Soy Dream Little Bear Arrowhead Mills Bearitos Spectrum Organics Lightlife The Organic Cow of Vermont Breadshop Alta Dena Westbrae Mountain Sun DeBole's Earth's Best Nile Spice Health Valley Westsoy Cascadian Farm Garden of Eatin' Casbah Horizon Odwalla White Wave/Silk Organic Industry Structure: Acquisitions & Alliances, Top 100 Food Processors in North America October 2001 $181 M July 1998 13% Equity; January 2004 100% Equity $216 M Morningstar Farms/Natural Touch November 1999 $307 M Organic Brand Acquisitions # Numbers refer to rank in North American food & beverage sales according to Food Processing, August 2012 October 1997 $23.5 M June 2003 October 2001 June 2001 September 1999 From Heinz March 2000 $390 M December 2002 April 1999 $80 M April 1998 $80 M December 1998 Back to Nature Boca Foods French Meadow Seeds of Change 1997 July 2000 December 1999 March 1998 May 2002 $189 M May 2013 Spinoff, 0% Equity May 1999 April 1999 June 2000 September 2003 100% Equity; August 2012 majority stake sold to Brynwood Partners Kashi August 2005 $33 M August 2003, alliance to develop nutritionally enhanced ingredients February 2000 Food Processors # Hershey Foods #20 Dagoba October 2006 TofuTown June 2007 From Dean May 2002, alliance to develop nutritionally enhanced ingredients Naked Juice Pepsi #1 November 2006 Green & Black's January 2010 Alexia Foods July 2007 Wholesome & Hearty Bear Naked November 2007 $122 M July 2006 Nestle #3 Tribe Mediterranean Foods September 2008 $57M via Israeli subsidiary Osem Group (50.1% Equity) LaraBar Honest Tea May 2013 February 2008 40% Equity $43 M; March 2011 100% Equity June 2008 MaraNatha SunSpire March 2008 Rich Products Corp. #42 Post Foods (spinoff from #25 Ralcorp in 2012) Golden Temple Peace Cereal Willamette Valley Granola Food Should Taste GoodFebruary 2012 Campbell Soup Co. #30 Bolthouse Farms July 2012 $1.55 B Phil Howard, Associate Professor Michigan State University Hillshire Brands (formerly #28 Sara Lee) Aidell's Sausage May 2011 $87 M Sweet Leaf Tea May 2011 Stonyfield Brown Cow J.M. Smucker #23 R.W. Knudsen Santa Cruz Organic Snyder's- Lance #61 Late July BluePrint November 2012 May 2013 Ella's Kitchen Happy Family May 2013 92% Equity AB InBev #5 Goose Island March 2011 $38.8 M Ralcorp #25 (private label organic foods) Bloomfield Bakers Lovin Oven March 2007 $140 M November 2012 $6.8 B Millstone November 2008 1984 1989 December 2007 minority stake February 2003 October 2001 40% Equity; January 2004 85% Equity May 2013 $158 M May 2010 $71 M Miller- Coors #17 Crispin February 2012 Fox Barrel January 2010 Maple Leaf Foods #24 Olafson's Baking Co. 90% Equity July 2002 Perdue Farms #27 Coleman Natural May 2011 Hans August 2003 August 2007 Draper Valley Farms Petaluma/ Rosie January 2002 Tea Forte January 2012 JAB/D.E. Master Blenders (formerly #28 Sara Lee) Wolfgang Puck July 2008 Foster Farms #46 Humboldt Creamery August 2009 $19.5 M CROPP (Organic Valley) #93 Canada Bread Co. #63 TreeHouse Foods #50 Sturm Foods December 2009 $660 M Naturally Fresh March 2012 $25 M Hearthside Foods (cereal division) #89 Meyer Natural Foods December 2010 Diamond Foods #88 Kettle February 2010 $615 M J&J Snack Foods #92 Kim & Scott's June 2012 $7.9 M John B. Sanfilippo & Son #98 Orchard Valley Harvest May 2010 $29.5 M June 2010; joint marketing agreement November 2009, Stonyfield brand licensed to CROPP for fluid milk Danone (Dannon) #66 Dakota Beef Peet's Coffee & Tea August 2012 $1 B New Morning December 2012 Erewhon Plum Organics May 2013
  5. 5. •  Business owned and democratically controlled by members - the people who use the co-op’s services or buy its goods. •  Board is elected by the membership and may be composed of members as well as non-member representatives. •  Return surplus revenues to members proportionate to their use of the cooperative. •  Exist not to maximize profit but to meet their members’ needs, goals and aspirations. WHAT IS A CO-OP? NaturallyFermented&Raw REAL PICKLES
  6. 6. •  Who is interested? Do staff want to own the business? •  What do we want Real Pickles to look like in 10-20 years? Do we have a common vision? •  Do Dan and Addie want to sell? Do they think a co-op could run Real Pickles effectively? •  Learning more about what a co-op could look like •  Practice working together “Transition” means create a new entity incorporated under Mass co-op law and buy Real Pickles August 2012 DECISION – YES, we want to own it! 5 potential co-op members sign memo of understanding THE PROCESS - PART 1
  7. 7. •  Governance – Who would run it? How do we want to be structured? •  Writing by-laws – What is important to us? •  Business valuation – What is Real Pickles worth and how do you measure it? •  How to pay for it? THE PROCESS - PART 2 NaturallyFermented&Raw REAL PICKLES
  8. 8. •  Each of the five members bought a $6,000 member share for a total of $30,000 •  Co-op Fund of New England loan $69,000 •  Line of credit from our local bank $150,000 •  Community investments (DPO) $500,000 •  Family, friends, stores, food co-ops, allied organizations •  Minimum investment of $2500 •  Limited return - target dividend of 4% •  Non-voting HOW TO PAY FOR IT NaturallyFermented&Raw REAL PICKLES
  9. 9. •  Successful transition •  Owners stayed on as members •  More worker became members •  Shared mission and vision •  Continued staff education •  Continued business success THREE YEARS LATER   NaturallyFermented&Raw REAL PICKLES
  10. 10. •  Maintain strong social mission •  Meaningful jobs •  Keep local businesses local •  Preserve economic infrastructure •  Support community minded owners •  Ensure long-term viability beyond founders WHY CO-OP SUCCESSION? NaturallyFermented&Raw REAL PICKLES
  11. 11. •  Started with a thriving business •  Supportive founders committed to long-term success •  Critical mass of engaged and skilled staff willing to commit and do the work •  It was the right moment •  Governance clarity •  Staff education and training •  Had a communication plan, especially for capital campaign •  Engaged outside expertise •  Strong network WHY IT WORKED (IN OUR OPINION)   NaturallyFermented&Raw REAL PICKLES
  12. 12.   MAY  9,  2013  CO-­‐OP!  
  13. 13. •  Communities Involved in Sustaining Agriculture (CISA) - Case Study of Real Pickles DPO •  Co-op Fund of New England (CFNE) •  Valley Alliance of Worker Co-ops (VAWC) •  Project Equity - Case Study of Real Pickles Conversion and Case Study of Real Pickles Financing •  Cutting Edge Capital RESOURCES NaturallyFermented&Raw REAL PICKLES

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