Reprinted with permission from the Costco Connection
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| Gary Hirshberg |
In the early 1980s, Gary Hirshberg had an epiphany. It was a life-changing, career-altering, lightbulb-over-the-head moment. And it happened, of all places, at Disney World.
An avid environmentalist, Hirshberg, now president and CEO of Stonyfield Farm—then a seven cow yogurt operation—came to the realization that, in order to achieve his long-held goal of saving the planet, he had to convince business leaders everywhere that being environmental stewards while running their companies would not only benefit humankind, but would make them bucket loads of money. That being a capitalist and caring for the planet were not mutually exclusive pursuits. To get their attention, of course, he had to prove it could be done.
[Stonyfield] was the first company to pay farmers
not to use hormones on their cows.
Today, 23 years later, Stonyfield is the third largest yogurt brand in America and the largest organic yogurt company in the world, selling natural and certified-organic yogurt, cultured soy, milk, frozen yogurt and ice cream in all 50 states, as well as overseas. The company’s sales in 2006 hover around $250 million, having grown an average of 25 percent per year for the last decade, far outpacing the industry. The company is also monumentally “Earth friendly.” It invests in projects that prevent or offset 100 percent of any greenhouse gas emissions that the manufacture of its products might cause. It was the first company to pay farmers not to use hormones on their cows. Seventy two percent of the company’s waste goes out as recyclable. It has introduced green manufacturing processes that have been adopted by other large companies. And Hirshberg has instituted programs such as Menu for Change (vending machines offering healthy foods in schools); O’Naturals, a chain of healthy fast-food restaurants; Good2Go school breakfast programs; and Profits for the Planet, which contributes 10 percent of Stonyfield’s profits to organizations and projects that work to protect and restore the Earth.
Not only have these approaches not detracted from profits, they have actually contributed to the company’s bottom line. Stonyfield is in fact making bucket loads of money, and it is doing it without having strayed from its environmental ideals. And business leaders are paying attention.
Head moo-ver
To meet Gary Hirshberg at Stonyfield’s headquarters in Londonderry, New Hampshire, is to meet the face, the voice and the soul of the company.He doesn’t just run Stonyfield; the self-titled CE-Yo is, to a large degree, Stonyfield. Self-effacing, gregarious, passionate about his beliefs and highly opinionated, Hirshberg has a youthful appearance (which he attributes, naturally, to yogurt consumption) that belies his seasoned 52 years. Over the past 30 years he has demonstrated a canny business sense, a flair for unique marketing techniques and the ability to cultivate loyalty among consumers to a company and product that is just short of cultish. None of this was readily apparent when Hirshberg first came to Stonyfield Farm to help the farm’s owner, Samuel Kaymen. As a matter of fact, the success of Stonyfield as any kind of enterprise, let alone a profit-making environmental leader with designs on changing the very nature of business, was very much in doubt in the early years, or what Hirshberg laughingly refers to as the “bad old days.” Kaymen had recruited Hirshberg, who met him when they were both operating organic farming schools, to develop new ways to keep Kaymen’s Rural Education Center afloat. Hirshberg, whose previous careers included directing an institute devoted to organic agriculture and renewable energy systems and being an environmental-education specialist for the U.S. government, struck on the idea of selling the organic yogurt for which Kaymen had become locally known.
At first, they simply seemed to be exchanging one money loser for another. “At the end of my first day with Samuel, I calculated that we were $75,000 in the hole,” says Hirshberg. “On one side of the desk was a pile of bills, and on the other there was not a single check. Not a nickel. I had to figure out a way to get through that.” “We were working 24 hours a day, seven days a week, and losing money,” says Kaymen, who retired from the business six years ago. “Everything was inefficient and wrong, held together with spit and adhesive tape.” At the same time, they both felt they were on to something, and neither was willing to admit defeat. “Gary had a natural talent for business, and we were on the same page of values,” says Kaymen. “Samuel and I were ideal partners, because we were both fanatical about quality and pathologically optimistic,” agrees Hirshberg. “And also because we had a real healthy respect for what each other knew and didn’t know.
“Samuel was the yogurt guy. He was the creator of the culture and the recipe. But he knew absolutely nothing about financing, accounting, managing people or marketing. That’s where I could help.” They dug in.And they realized that, to pull off the success, they couldn’t just make yogurt. They had to create a unique company, one that embodied their beliefs, blending the focus on business with the focus on the environment. “We both understood that without it we were just like everybody else, in which case we were dead,” says Hirshberg. “We couldn’t beat the big guys with dollars or industrial prowess.” They needed a mission.Which brings us back to Disney World.
Green capitalism
“Before I came to Stonyfield, when I was running the New Alchemy Institute, we developed this amazing technology,” says Hirshberg. “We had solar enclosed environments that were extremely productive, using no fossil fuels, no pesticides, no fertilizers, no chemicals at all. We could feed 10 people three meals a day, 365 days a year, in a space about the size of this office. We had National Science Foundation funding. Prime ministers and heads of state would come see it. About 25,000 people a year visited us.”And then Hirshberg visited Disney’s Epcot Center in Florida. There, a Kraft-funded building called the Land Pavilion was showing how food would be grown in the future. “As you can imagine, their view of how food would be grown was a little different than mine,” he says dryly. “But the most poignant thing that I learned on that trip was that for the 25,000 people who were visiting my institute every year, that’s how many people were paying to go through that exhibit every single day.”
Hirshberg realized that he needed to have the power of Kraft to reach larger numbers of people. And to do that he needed to show that his green technology could make economic sense. Otherwise, he says, “we could be the model of doing the most ecologically henomenal things possible, but if we couldn’t show you could make money, it wasn’t going to happen. It would be some cute hobby.”
And so a light bulb went off. An energy-saving light bulb, no doubt. “It was apparent to me that business was the reason we were in the environmental and climate fix that we are in as a species, and that business was going to be the way we were going to get out,” says Hirshberg. “Business has the power to concentrate capital and resources, and if business makes different decisions, and makes the solutions a priority, we’ll see much different results.” And thus the Stonyfield mission was born—to educate consumers and producers about the value of protecting the environment and to serve as a model that environmentally and socially responsible businesses can also be profitable.
(A little postscript to that story: Stonyfield passed Kraft in sales of yogurt—Kraft owns Breyers—six years ago.)
Making it work
According to Hirshberg, most business models follow this premise: Make the product as cheaply as you possibly can, so you have an enormous margin left over. Use this huge margin to buy advertising everywhere and try to convince the consumer to try your product. From that interest and awareness, hopefully you will get some loyalty. “Stonyfield can’t afford to do that,” Hirshberg says. “First of all, we will not compromise what goes into our product, so our gross margin is much, much lower than those [who follow the ‘make it cheap’ model]. Instead, the programs we developed—Profits for the Planet, Menu for Change, Strong Women Summits, Bid with Your Lid and Good2Go—build loyalty by doing all these things. “The quality that goes into our product is a direct result of the kinds of investments that we’re making into people, into organic farming and into our programs,” he continues. “These investments make a better yogurt. They create value. And value equals loyalty. “I’m really proud, because the mission has essentially remained the same for 23 years. I know if I had compromised anything in terms of quality along the way, any aspect of that mission, I never would be here.” Kaymen says, “Gary has been able to grow the company, be successful and still maintain that perspective and those values.”
Mission accomplished?
The good news is how much things have changed since people thought that organic chow was all “hippie food.” In the United States, organic food is a $20 billion business that is growing 20 percent annually. Every major food company is in it. They may not buy into the philosophy of why, but they now know that you can make a lot of money selling it. Yet, Hirshberg is still champing at the bit. “I would say we are just getting to the starting line. ”he says. “I have a very severe and impatient sense that we need to go faster. “Every trend that you can study suggests that by the middle of this century we’re going to be in a position where the air may be unbreathable, the water may be gone. “It’s not like everybody has to walk around feeling guilty, but if we don’t recognize the power we have with our purchase, which is otherwise known as a vote, to vote for the kinds of products, services and, ultimately, industries that will take toxins out of the biosphere or that will help give our grandchildren a break, then we’re missing the boat. We have the power to encourage businesses to do the right thing. Otherwise, our grandchildren are going to be sitting there saying, ‘What the hell were you people doing? How can you have blown this bountiful, gorgeous, incredible thing called the planet Earth?’ “And I think Stonyfield is an example that it doesn’t have to be that way.”
www.stonyfield.com
©Copyright 2007 Costco
