Twitter Can’t Stem the Fallout This Time

Whole Foods was built on the back of left-leaning consumers who not only liked the experience of shopping at the over-priced (but very posh) stores but also their community mindedness and seemingly progressive policies.

Whole Foods’ brand took a bit of a hit last year when CEO John Mackey was “outed” in early 2008 for more than 1,000 anonymous postings on Yahoo! Finance message boards that promoted Whole Foods and Mackey himself and “trashed” competitors or those who criticized his company. (See this post for more background on that scandal.)

But the brand is now really under pressure in the wake of a WSJ editorial that opposed the Obama health care initiative. Among other things in the piece, Mackey said:

While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system.

In response to these positions, which emerged as a shock to many Whole Foods shoppers, a Facebook boycott has formed and the Whole Foods brand had taken a fairly substantial hit this time.  Now Whole Foods investors are calling for Mackey’s removal:

The CtW Investment Group called on the Whole Foods Market board to remove CEO John Mackey as Chairman and to begin the process of naming a new CEO in a letter to Whole Foods’ lead independent director, Dr. John Elstrott, yesterday afternoon. Citing the risk to Whole Foods’ brand reputation caused by Mr. Mackey’s editorial opposing President Obama’s proposed healthcare reform, CtW urged the board to take immediate action to prevent continued damage in the face of a quickly-growing boycott by Whole Foods’ progressive customer base . . .

Events of the past week establish yet again that John Mackey’s lack of personal discipline makes him a liability for Whole Foods Market, Inc. Despite past indications that the board needed to exercise independent oversight of Mr. Mackey and supervise his external communications closely – most notably his postings on the Yahoo! Finance bulletin board, which led to an SEC inquiry – you and your fellow directors failed to take meaningful action to prevent Mr. Mackey’s uncompensated brand and reputational risk to our Company.

Certainly Mackey is entitled to his political opinion but given his controversial history and the clientele Whole Foods caters to, the fallout now happening was somewhat predictable. It’s either arrogance, naivete or pure stupidity on Mackey’s part to have not had some foresight bout this. Now his company is paying in diminished brand equity and potential lost sales.

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