investigative report: which local stores buy local?

I am still recovering from a bad cold and cannot do any demos so I figured to conduct a little experiment in San Francisco grocery stores. How many, I wondered, actually sell products made in San Francisco, or at least the SF Bay Area? Of course to make it easy, I selected the jam section for investigation. There are five jam companies including us here in the SF Bay Area that should be in all stores.

From personal experience we know the stores that emphasize local products and they are the independent ones, along with one national chain – Whole Foods. But for my experiment today, I visited only companies with at least 4 stores to see what they sell and here are my results.

1. Safeway
They are headquartered in Pleasanton, CA, in Alameda County and about 50 miles away from San Francisco. They are a very large company and are publicly traded with the ticker SWY. The store I visited was two blocks from my house and where we shop for basic necessities. They have a sign the store is 100 percent wind powered and they carry a lot of their own organic products under the O label. The organic jams under the O label were made in Canada.

This means they were co-packed. Co-packing is a term when companies hire other companies that specialize in making a certain type of food to make a product for them, which they can put their own label on. Many co-packers in the jam business make jam for big supermarkets. Essentially it is the same jam but with a different label. Sometimes they change the formula a little to make it taste a little different. Why use co-packers? For a company like Safeway, they are in the business of selling and not manufacturing. All private label products are outsourced or co-packed so they don’t have to build a factory for making that specific product. For a big store we applaud them for being more progressive than others in their category such as Lucky’s. They are also the first big national, traditional grocery chain to get into the organic act and each month we see new organic products on the shelves. But the fact that their organic products are produced in another country does not reflect well when California produces amazing organic fruit and has companies that can co-pack here in the state. Bottom line? It must be cheaper. But CA jobs and farmers are losing out.

In terms of local jam they failed the test. No local companies were on the shelf, and out of a dizzying array of jams only two brands were made in California.

Both used conventional fruit and both had corn syrup in them: King Kelly and Dickinson’s (call themselves “gourmet” but uses high fructose corn syrup).

2. Andronico’s
They are headquartered in Albany, CA in Alameda County which about 20 miles from San Francisco. They have eight stores in the Bay Area and are privately owned. About 20 years ago this was the gourmet store in the Bay Area known for having the best products and being the most expensive. Since then they have been eclipsed by Whole Foods and are less “classy” and are more in the league of Safeway. They still have high prices and a faint aura of quality.

I was surprised by my visit to the store in San Francisco where we shop now and then. Over the years they never sold any local jam, and repeatedly have rejected selling our jam or bbq sauce. Why? In the old fashioned grocery world the thinking goes the more flavors you have of a product, or SKUs, the more shelf space your brand will occupy and the more likely shoppers will notice and buy the product. We were rejected since we just have one flavor of jam, apricot, and one flavor of bbq sauce that are available for wholesale.

On my visit today to the only San Francisco store on Irving Street, I was surprised to see one San Francisco jam company, CMB Sweets, and then Frog Hollow from Brentwood, CA – about 70 miles east of San Francisco. Hats off to Andronicos for bringing in local companies to the jam section. However, following the multiple SKU logic, both CMB and Frog Hollow had many different flavors on the shelf.

I have a big problem with the multiple SKU logic. First and foremost, it forces companies to make more product to get into a store. This means for someone who specializes in doing one thing well, they cannot gain entry. Quality is never important compared to quantity. In our minds this logic essentially requires companies to use more natural resources to make more products then they normally would and is wasteful from an environmental standpoint. This thinking is endemic in the business world. From car manufacturers to food to cleaning products to clothing, offering as many choices as possible is a ploy to snag customers. The thinking dominates how business is done and focuses on mass production over quality, niche products.

3. Lucky’s

Owned by SaveMart which is headquartered in Modesto, CA. The original Lucky company was founded in 1931, headquartered in San Leandro, CA and was a Bay Area institution. It has gone through several ownership changes, including the name change to Alberstons, and now back again to Lucky or Lucky’s. This is a no-frills supermarket the kind we remember as kids that focuses on huge discounts and national brands. It is very old school and stuck in a traditional, out-of-date supermarket mindset. We never set foot in these stores.

So I wasn’t surprised by what I found in the store on Masonic Street. There were no San Francisco or SF Bay Area brands of jam being sold. There were two brands made in California: King Kelly and Dickerson (that are also sold in Safeway). Most of the brands contained high fructose corn syrup, some with it being the primary ingredient such as this orange marmalade by Super Store Industries.

Almost every item on the shelves of this store has signs of the price being reduced and there is a huge wall of the current discounts.

Quality means nothing. It is all about how cheap you can sell something, which means the brands they sell are manufactured for pennies with the cheapest ingredients possible. As consumers, this is terrific since you can stock up and save a lot of money. But what do you get for your money? Scanning the products and the ingredients revealed things no one has on the spice rack in their home. Preservatives, high fructose corn syrup, artificial flavorings and colors. You know the score. Save money but risk your health eating the products.

4. Molly Stone’s
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Headquartered in Mill Valley, CA – which is Marin for those of you who aren’t familiar with California. Privately owned with eight stores in the Bay Area. They have two stores in San Francisco. Molly Stone’s is very similar to Andronico’s but is more upscale and has better products in our opinion. They are pricey and attract a more upscale customer.

And they failed the jam test. No San Francisco or SF Bay jam brands were on the shelves. There were four brands made in California, none being organic.

Of course we knew this. Like Andronico’s they have rejected selling our products for the same reason as not having more than one SKU. However, this logic is not consistent. They do stock a few single SKU jams, but they are made in either England or out of state. A local company that doesn’t buy local products. Hmmm. Why is that?

5. Trader Joe’s

Headquartered in Monrovia, CA and privately held, this company has around 340 stores and half are in California. For many years there was one store in SOMA area of SF and a new store opened in Stonestown Mall. This is the store I visited. Of course the second I walk in the store I hear “Mr. Haeberli?” and it is one of my former students. We chat a bit and get caught up. Her dad works at Rainbow Grocery, one of the best health food stores in the area that sells mostly local products, including ours.

Trader Joe’s not surprisingly failed the test. Most products are their own private label in the jam section.

The organic ones are made in Canada, just like Safeway’s. It is highly likely both stores have the jam co-packed by the same third party company in Canada. The non-organic Trader Joe’s jam did not state where it was made but just had the address of the company in Monrovia. Probably also made in the same factory in Canada. There were two other brands, each made in the UK. For a US company, with two stores in San Francisco, why are all the jams made in other countries? It is cheap. And Trader Joe’s, like Lucky, is all about bargains first and foremost.

6. Whole Foods

Headquartered in Austin, TX, Whole Foods is a public company with the ticker WFMI and with around 270 stores world wide.

I visited the Noe Valley store which is down the street from where we live. I know of course they sell our jam and our bbq sauce. But how many other local jams do they sell? Two companies from San Francisco were on the shelf: welovejam and CMB Sweets. Six other companies made in California, and within 100 miles were also on the shelf. In the photo below you can see six. On the shelf to the left were two other brands I couldn’t fit into the frame.

Whole Foods is distinctly different in how they do business from other big grocery companies like Safeway, Lucky and Trader Joe’s. Whole Foods gives individual stores buying power and encourages them to buy the majority of their products from local producers and farms. This is a Whole Foods philosophy carried out nationwide. In fact, Whole Foods is the first company that approached us to be in their stores back in 2008 after they discovered us at Slow Food Nation where they were corporate sponsors.

The one beef we have with Whole Foods is they put our apricot jam on the top shelf and out of reach to most people.

Of course, like the wine department, top shelf products are the most expensive in some departments of stores, and we are pricey at $9.99. But for a local company to be physically out of reach unless you are at least 5′9″ tall we are a little sad especially since our sister jam maker is on a lower more accessible shelf. Her jam is almost the same price as the jam you can see to the left our our jars. Someday we hope to move down a shelf. They do make signs for local companies and several stores put them up about our products which is really amazing. For a national company Whole Foods treats us like they are a small independent San Francisco store. That is quite flattering compared to what we have seen on the shelves of all the other chain stores in San Francisco.

Obviously the winner among companies with more than four stores that sells the most local jam is Whole Foods. We also know this is reflected in their other departments. The advantage is customers can support local businesses, many who are small and starting out. The downside is small companies have to price things higher in the early years and customers in Whole Foods usually have to pay more for these products. Whole Foods also has a wide selection of co-packed products that are more affordable. Some are organic and some are not. They are for people on a budget. Whole Foods therefore can target two different types of customers at the same time.

In ten years more stores will be like Whole Foods. They also probably will be smaller and with a more highly edited selection of products – appealing to the budget conscious and the money-is-no-object-I-want-the-best type of customer. The advantage of this is the same logic car companies use. They have the entry level budget model, and then a progression of more expensive models as your income goes up over the years. It is about building brand loyalty. And if there is another recession, you can always go back to the budget product you used to use. All under one roof.