Twitter Can’t Stem the Fallout This Time

Picture 67Whole 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.

13 Responses to “Twitter Can’t Stem the Fallout This Time”

  1. TCPITS Says:

    Firing Mackey is really putting lipstick on a pig. Whole Foods is an anti-union scab outfit. I’m embarrassed I shopped there in the past but it is over.

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  3. AhmedF Says:

    Second largest anti-union retailer in the entire US.

  4. Dave Hucker Says:

    Any time a high profile member of a corporation comes out publicly in favor of or against a POLITICALLY CHARGED ISSUE he/she puts their standing at risk in the eyes of some on the other side of that issue.

    I assume Mackey weighed the risks (like any executive would) before stepping into the public area on this issue. Having said that, there are others on Mackey’s philosophical side of the issue who are forming a Pro-Whole Foods “buycott”. Details at link: http://www.bizjournals.com/stlouis/stories/2009/08/24/daily70.html

    Once again, thanks Greg for keeping me up on all types of issues.

  5. Dave Hucker Says:

    an additional comment:

    Whole Foods stock is at an all time high (post economic blowout, of course)
    http://www.google.com/finance?client=news&gl=us&q=WFMI&hl=en

    This may just blow over….of course, Mackey may be without a job if the board of directors gets skittish because of the bad press. It’ll be interesting to see.

  6. AhmedF Says:

    I would be surprised if the buycott made a dent versus the boycott.

    People shopped there believing it to be aligned with their core values. It was more expensive and rather hipster – but that was all fine because the $ was going to a ‘progressive’ cause.

    What the CEO had said is considered a betrayal, and thus a complete boycott.

    On the other hand – a buycott? People who are used to paying $x per tomato will suddenly be willing to pay $2x? And consistently? I just don’t see that happening.

    At the same time – I wonder what ever happened to the entire boycott/support Danish sillyness. Greg – have any #s on that?🙂 I’ve looked far and wide but never got anything (was hoping the Economist would publish a follow up but never did see one).

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  8. Greg Sterling Says:

    Dave:

    I don’t think he carefully weighed the risks of the short term impact of his comments. He might have thought “this isn’t going to hurt WF long term however.”

    A “buycott” is by definition going to be less effective. People who agree with him who already show there will continue to. But those who don’t shop there already and have conservative leaning politics are unlikely to continue to shop there over time because it’s so expensive.

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  11. Carga Says:

    Let it snow so we can reap it when it is cold.

  12. GSM Says:

    My feelings about Mackey conflict strongly with my loyalty to Whole Foods. I’m a long-time Austinite who has shopped at Whole Foods since the beginning (well, the second location, not the original). I’m also a (very minor) stock-holder.

    Everyone has an opinion, but Mackey’s was printed in the WSJ because he is a synecdoche for Whole Foods. It’s disingenuous to claim that his public statements do not represent the position of Whole Foods. Healthy food is part of the Whole Foods mission; health care is not.

    Surely he knew that Whole Foods has both liberal and libertarian shoppers. Why does the BOD continue to let him hurt the business this way?

    This is hardly his first mistake: Google “Mackey wild oats” if you’ve forgotten. When will the BOD take action?

  13. Paul Says:

    Back in 2008, this Whole Foods, CEO John Mackey (how old is this kid?), was caught posting negative comments (trash talk) about a competitor on Yahoo Finance message boards in an effort to push down the stock price. So now I am suppose to take this loser seriously? Please, snore, snore.

    It’s funny we hear Republicans say that they do not want “faceless bureaucrats” making medical decisions but they have no problem with “private sector” “faceless bureaucrats” daily declining medical coverage and financially ruining good hard working people (honestly where can they go with a pre-condition). And who says that the “private sector” is always right, do we forget failures like Long-Term Capital, WorldCom, Global Crossing, Enron, Tyco, AIG and Lehman Brothers. Of course the federal government will destroy heathcare by getting involved, Oh but wait, Medicare and Medicaid and our military men and women and the Senate and Congress get the best heathcare in the world, and oh, that’s right, its run by our federal government. I can understand why some may think that the federal government will fail, if you look at the past eight years as a current history, with failures like the financial meltdown and Katrina but the facts is they can and if we support them they will succeed.

    How does shouting down to stop the conversation of the healthcare debate at town hall meetings, endears them to anyone. Especially when the organizations that are telling them where to go and what to do and say are Republicans political operatives, not real grassroots. How does shouting someone down or chasing them out like a “lynch mob” advanced the debate, it does not. So I think the American people will see through all of this and know, like the teabagger, the birthers, these lynch mobs types AKA “screamers” are just the same, people who have to resort to these tactics because they have no leadership to articulate what they real want. It’s easy to pickup a bus load of people who hate, and that’s all I been seeing, they hate and can’t debate. Too bad.

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