A competitive cooperative
Now in its 40th year, the Essential food cooperative presents itself as a viable alternative to the unjust food system, and its worker-owner management model is a inspiring example to anyone who wants to change their social and economic relationship to people and food.
The days of wholefoods being considered impractical, ‘odd’ and personified by ‘brown rice and sandals’ have long gone. Much has changed in this market since its humble beginnings in the 1970s to embracing organic, fairtrade, ethical and sustainable goods. Oddly, such goods are now considered more upmarket and desirable than their mainstream counterparts and the choice of conscientious consumers, as opposed to the ‘wacky’ audience of its early years.
There were critics a-plenty when wholefoods first emerged and many thought this would be a fad; a passing phase. How wrong they were! Essential Trading – one of the pioneering wholefood retailers – is celebrating 40 years’ successful trading this year. As it goes from strength to strength, the critics have long been silenced and ethical, sustainable, organic wholefoods are here to stay.
As it celebrates 40 years in the business, Essential Trading has a turnover of around £12m. It produces its own Essential branded products and offers a cash and carry service for around 6,000 goods in the UK and abroad. Its export arm that supplies European countries is growing 15% year on year. Essential Trading employs 85 people, making it one of the largest successful worker co-operatives in the UK. Yes, not only is this a successful wholefood business, it is superb proof that a cooperative can be competitive.
How it all started
Essential Trading was one of the first wholefood businesses to set up shop in 1971. It has come a long way since selling pulses and muesli out of hessian sacks on the shop floor. Over the years the market and consumers have changed and come around to the sustainable way of thinking, but the ethics and principles at Essential Trading have remained unchanged in all its 40 years.
Essential supplied organic and fairtrade food for ethical reasons, long before it was trendy to do so. It has held steadfast to its views and gradually – with issues such as BSE, salmonella in eggs and GM crops attacking the ‘traditional’ mode of thought – the mainstream market has finally seen that the ethical, organic, fairtrade and wholefood movement is, in fact, not just viable but preferable. Essential was a founding member of Genetic Food Alert and lobbied parliament against GM. To this day, brands that cannot guarantee to be GM-free are not listed with Essential.
Supporting the independents
It took the supermarkets nearly 20 years to make the leap into wholefoods – when they were good and sure that the independent sector was onto a winner. Despite its strength and reputation, Essential made a conscious decision not to supply supermarkets and instead stayed true to its values and core principles by continuing to trade with local, artisan and specialist producers and to supply only the independent health food trade. This ensures retailers retain many unique lines that they know customers cannot find elsewhere and has been key in keeping the independent health food shop alive on our high streets.
“The last 40 years have seen the wholefood market grow exponentially,” says Eli Sarre, marketing manager for Essential. “Back in the 1970s health food stores were novel and the foods they stocked relatively limited,” she explains. “But now, through education, a distinct rise in vegetarian and vegan diets, growth in free-from diets and the shift towards organic and ethical foods, we have a strong and thriving industry. It has been most gratifying for Essential to see the changes and improvements down the decades, and we are looking forward to seeing what the next 40 years will bring.”
Essential adheres to a strong code of ethics that runs through its business, employees and suppliers. It actively supports organic and fairly traded goods and continues to call for the banning of GM crops. “The wholefood movement started with organic commodities – most of which were supplied in bins, such as pulses and rice,” recalls Steve Penny, Finance Director at Essential who has 25 years’ service within the company. “Everything was in 5kg and 10kg bulk sizes but the health food stores and their customers didn’t mind. It was a brave new world of wholefood shopping and demand grew rapidly,” he says.
Mass Market Triggers
Essential believed strongly in the inherent value of eating good, unprocessed, additive-free, organic and vegetarian food. But it took a few major events in the 80s and 90s to start to change the opinion of the masses. Firstly, the Daily Mail published the F-Plan diet, which advocated the importance of fibre in the diet from whole grains instead of processed “white” foods. This created a big run on such goods. Next came salmonella, BSE and pesticides scares, not to mention the worrying concept of GM crops. Suddenly people were questioning the provenance of their food. With 15 years’ experience in the organic, sustainable, wholefood market, Essential was ready for this new dawn of conscientious consumer demand. When in 2004 Dr Gillian McKeith recommended people eat more pulses, she ‘nearly killed us with success’ says Eli. While the F-Plan and pulses stampedes may have subsided, their legacies remain.
A Little Essential History
Essential Trading is the company and Essential is its own brand label but the business was borne out of local co-ops established in the 1970s, Harvest in Bath and Nova in Bristol. Harvest dealt mainly with retailers while Nova had a customer base of wholesalers, so a merger made absolute sense. The two came together in 1991 and the company name was changed to Essential Trading. All jobs, customers, products and ethics from both companies were kept at the bigger company.
As a co-op supplying wholefoods, Essential Trading wasn’t trusted by the big banks who considered their business to be a fad and unreliable. So Essential had to trade very carefully to ensure cash flow and survival. They devised a system whereby orders were in on Wednesdays, they bought the goods on Fridays and delivered on Saturdays. Essential asked for seven days’ credit from their suppliers and cash on delivery from their customers.
All the sales money was banked before the cheques were presented. All the profits were invested in building up stocks, to ensure a reliable supply and better margins. Gradually – organically! – the business grew. Its development, like its goods, was sustainable. This business model is worthy of anyone starting out in 2011 – and preferable to shouldering a business loan or overdraft.
Supplying organic and fairtrade food before it was trendy meant Essential was early to market and, when the demand escalated in the 1980s, it stepped up its business and grew rapidly right up to 2008 when things started to plateau. By the 1990s, organic was really coming into its own across Europe. Essential’s buyers went to the European trade show Biofach to see what producers further afield had to offer. Essential started importing key organic food and non-food goods and its status as an international trader was established. As in the UK, Essential was competitive and other businesses had a similar trading pattern: the market was becoming exciting and dynamic.
Supermarket Wake-Up Call
Once the wholefood companies had established a substantial market, the supermarkets woke from their slumbers and started to stock organic. The honeymoon period was most definitely over and Essential had to regroup to ensure it maintained its success, despite the threat of the ‘mass market’ organic brands being sold through the supermarkets.
The Essential Trading co-op made the decision to not supply the supermarkets. By trading with the independent wholefood stores only, it guaranteed retailers a bespoke range that could not be bought at the supermarkets. Thus it protected its heritage and gave the independents key selling advantage of selected lines to keep their customers coming back.
As organics levelled out, the new kid on the ethical food block was fairtrade. Arguably, fairly traded and sustainably sourced foods set the independents apart from the multinationals even more so than organic. Again, Essential’s ethical code that had embraced fair trading saw the business in the right place at the right time: it was simply a case of stepping up its fairtrade business in line with the demand.
“Organic trading was bigger financially and commercially, but fairtrade defines Essential internally,” says Eli Sarre. “We all believe in the bigger picture that includes people and communities across the world. Organic farming is important but sustainability of this farming is even more important. Markets need to be sustainable if they are to survive. And the livelihoods of the producers must also be safeguarded.”
Why a Co-op?
Essential Trading – and Harvest and Nova before it – is a workers cooperative meaning the business is owned and managed by its workers. Like its stock-in-trade, co-ops were considered rather faddy and ‘alternative’ back in the 1970s. The Thatcher years were not exactly conducive to flat management structures or seeking a consensus of opinion across all employees. But Essential had unshakeable faith in its coop status and employees all embraced the opportunity of being a stakeholder with a voice.
Each employee pays a minimum £500 to Essential as their ‘stake’ in the business. Every member has an equal say in all major decisions and this democratic and non-hierarchical structure makes for an empowering environment – and a spirited community where all views are welcome. The co-op structure also gives some financial stability and Essential Trading currently has over £90K of members’ loans. As a cooperative, Essential actively seeks out other co-ops at home and abroad to work alongside to perpetuate this caring, sharing business model that is endemic to the wholefood trade.
Like most 40 year olds in 2011, Essential Trading is far from middle-aged. In fact, it aligns itself more closely with those who believe ‘Life Begins at 40’. The market will no doubt continue to change but, as Essential has shown for four decades already, it is alert to opportunities and will move with the times to sustain its business. Organic is here to stay and fairly traded food continues to gather pace with new goods coming on-stream every year. The overarching goals of sustainable farming and production and ethical wholesale and retail practices will see this market survive. Supporting the planet, protecting people, eating healthy food and cooperating with your business and social partners will not go out of fashion.
Essential Trading Co-operative is a worker-owned organic food wholesaler based in Bristol. It supports strikers with food and pallets for fire wood, and also sponsors the Easton Cowboys and Cowgirls.