August 9, 2016

Food Startup Darling Caught In Scandal

food business fireI’m sure many of you have heard the story about Hampton Creek already and, like me, may be shaking your head.   In case you haven’t, the short version is that Hampton Creek, the makers of vegan mayonnaise ‘No Mayo’ and other products, reportedly ran an operation where they paid people to go into stores and purchase their products and/or call up stores asking for Hampton Creek products.  This was, it appears, an effort to boost store sales and inventory turns to make the company’s sales numbers look good and also convince buyers that they needed to reorder more often and/or add new Hampton Creek skews to their store because of so-called customer demand.  You can read the full story, which was broken by Bloomberg News by clicking here.  

Ugh!  Any one else feel this way when learning about this?

Regardless of your thoughts about shelf-stable vegan mayonnaise, the fact that a small startup with a unique product had grown so fast that they were being valued at over $1 Billion at one time was ‘proof’ that startups could succeed in the supermarkets, against the big brands, and with consumers.  While I still believe that small companies can succeed, this scandal does leave a really bad taste in my mouth.

Perhaps more worrisome, does this scandal leave buyers and/or consumers worried about the ethics of smaller brands as a whole.  Will this leave a black mark on the entire small food business world or will consumers see it as the actions of one company and not how the industry as a whole chooses to operate.

My worry, right or wrong, is that consumers are already jumpy when it comes to the honesty and integrity of food companies.  That’s what has made it possible for the rise in artisan foods.  Consumers’ distrust of big brands made them actively seek out, and be willing to pay more for, food made in ways that was in line with their own personal values. If those values are tested, will consumers determine that artisan products aren’t worthwhile?

I’d really love to know what you think.  Are you concerned at all about how this may shake down to other small food companies?  Are you planning to proactively make your business and business practices more transparent with consumers and buyers?  What are your thoughts about how Hampton Creek acted?

Related Articles: