Even
as Wheatsville Food Co-op was planning its 20th anniversary celebration last March, the
neighborhood grocery store was, in truth, hobbling along. Sales were
down 10%, the store was posting its first yearly loss in almost a decade, and
longtime members — the lifeline of the co-op — had dropped out of sight.
Business was bleak last spring and worsened further under summer’s heavy
malaise. Around the middle of August, Daniel Poe, the general manager, decided
it was time to sound the alarm. He wrote a letter to the co-op’s 3,300 members,
imploring them, more or less, to have mercy on the store that has given so
freely to every major progressive cause in town. “Please come back to us,” he
intoned. “This is your store.”
By most accounts, the letter-writing campaign was a good move. The store’s
parking lot and grocery aisles are showing signs of life again, and there are
lines at the deli counter. The cash registers are ringing up sales under the
warm glow of new light fixtures installed to brighten up the place. Will this
renewed spark of energy continue? Poe raises his hand in mid-air, fingers
tightly crossed. That’s his best answer.
Living by hook or by crook is nothing new for Wheatsville, a Guadalupe
Street child of the Seventies that grew up on the legacy of Sixties’
counter-culture. Through collective labor and a lot of luck, Wheatsville has
always managed to slither out of trouble with unconventional yet refreshingly
honest aplomb. It has survived meager beginnings, an expensive move, brushes
with the IRS — even near-death experiences with powerful debt collectors. Now,
the present-day challenge is just as daunting: The rise of H.E.B.’s Central
Market, the monster natural foods store down the street that has taken
Wheatsville’s organic mission to new heights.
The question now is, can the co-op shore up its sales, which have been
on a gradual decline from its $4 million mark three years ago? Wheatsville has
a knack for playing the card that tugs at the community’s heart strings. “Where
else,” Poe asks in his letter, “can you sign petitions to save Barton Springs,
shop for organic vegetables, vote for a board of directors, pick up a free
kitten and sing “Volare” in the aisles all in one visit?” Certainly not — the
message implies — a few blocks down the road at Central Market, the trendy
gourmet and natural foods supermarket that has come to represent one of
Austin’s most popular tourist stops — and Wheatsville’s greatest threat. “Big
business has figured it out and gotten into the natural foods market,” says
Poe, sitting in his tiny office behind the co-op. “And we’re the ones taking
the hit.”
 Danny Poe, General Manager of Wheatsville Co-op photograph by Alan Pogue |
that “We had always felt some pressure from the many Whole Foods stores around
town, but we had never faced a challenge quite like this, right on our home
turf.” However, Central Market is not so ready to take the credit for
Wheatsville’s latest money troubles. “Before Central Market came along,
Wheatsville was attributing its problems to a different retailer,” notes
Central Market spokesperson Kristy Ozmun.
Clearly, the 1994 opening of Central Market’s 65,000-square-foot mecca
was a turning point in the local grocery store industry; Austin very quickly
became one of the most aggressive and closely watched markets in the country.
And the H.E.B. chain’s one-upsmanship into the beautiful, healthy food arena
forced another organic icon, the homegrown Whole Foods Market, into a complete
makeover.
Eighteen months ago, Whole Foods chairman John Mackey ferreted his troops
out of their humble hovel at 12th and Lamar and marched them down the street to
slicker quarters and a new dress code in the trendy business hub at Sixth and
Lamar. A chain-reaction of supermarket reshuffling followed citywide, giving
local foodies the best of both worlds — good eats at competitive prices.
Whereas Whole Foods had corporate capital on hand to defend its natural foods
turf and duke it out with the mainstream, Wheatsville was left at a
counter-cultural crossroads. The co-op had grown accustomed to competition from
rival Whole Foods, but with miles between their stores and Wheatsville, they
didn’t present quite the peril that Central Market did when it moved into the
same neighborhood touting more than 500 organic products.
Central Market’s demographic profile is a retailer’s dream: The shoppers fit
nicely into the disposable income market niche, giving rise to rumors that the
prototype store pulls in about $1 million per week in sales. The store
generally appeals to higher-end shoppers — many of them ex-hippie baby boomers
who once fit the profile of the Wheatsville customer. Some of these shoppers
routinely divide their dollars between Central Market and Wheatsville. “I know
that we do share a lot of the same customers,” says Nona Evans, a spokeswoman
for Central Market. “But Wheatsville, to their credit, certainly serves a
special niche in their community and we [in the retail business] could all
learn from what they’ve been able to accomplish.”
Perhaps Wheatsville’s biggest accomplishment is staying true to its co-op
roots. “The chain stores are kind of anxiety-inducing,” says Kim Dean, an
11-year member who counts herself as a hard-core Wheatsviller. “I like the fact
that Wheatsville is small and independent, and you can easily get in and out of
the parking lot. And,” she adds, “they play groovy music on the sound
system.”
Cesar Chavez Stood Here
No longer able to claim organics and healthy foods as their own, Wheatsville,like food co-ops everywhere, has fallen into a bit of an identity crisis:
Should we lower our prices? Spruce up customer service? Increase advertising?
Change our focus? Or maybe, some Wheatsville veterans reason, we should just
get back to our roots. There is talk now of reviving the enthusiasm that
members shared during the annual boycott vote. While Wheatsville still refuses
to carry the boycotted products, the old political fervor just isn’t there
anymore, Poe says. Used to be, if it was Nestles, Styrofoam, tobacco, tuna,
veal, or grapes you were looking for, you weren’t likely to find it at
Wheatsville. But if it was tofu or a box of Kamut Flakes you wanted, well,
Wheatsville was, and still is, the place.
And it’s not too many store keepers who can point to their produce section and
say Cesar Chavez stood here. The late farmworker rights leader considered
Wheatsville a good friend for honoring the United Farm Workers’ grape boycott,
a deed that put the little co-op on the map as the only retail store in Texas
to stand up for labor. Wheatsville today is the only grocery store in Austin
that continues to boycott grapes. Whole Foods, for instance, continues to sell
organic grapes despite the UFW’s inclusion of them in the boycott.
 Central Market touts 15 kinds of mushrooms versus two at Wheatsville photograph by Alan Pogue |
are not “reflective of Austinites’ shopping practices,” explains Ozmun. “Central Market doesn’t pre-determine choices for its customers,” she
says.
Therein may lie the crux of what sets Wheatsville apart from the others. As a
community-owned store, the co-op mirrors the collective social conscience of
its members. They have a voice in what belongs on the shelves, and in what
causes to support. Poe’s letter makes the difference clear: “Most stores exist
simply to support their owners; and while there is absolutely nothing wrong
with that, this co-op has a wider agenda than profitability alone… We try to
stand up for what our members believe in as well as provide them with what they
want to buy… (we) give voice to as many of our members’ political,
environmental and economic concerns as we can.”
That difference may mean slimmer profits, but it also leads to staunch
loyalty. This loyalty was deeply entrenched in the so-called “New Wave” of
co-ops that sprouted across the country in the early- and mid-Seventies. This
movement was preceded by the first wave of co-ops, between 1933-1940, that
swept the nation in response to the Great Depression. Whereas the early co-ops
were borne out of economic constraints, the New Wavers grew out of a
disillusionment brought on by Vietnam. In addition to an overall distrust of
government and business, the New Wave organizers had a keen interest in health
and nutrition. All of these factors combined came to represent the
counter-cultural environment in which co-ops came into being.
Even before the birth of Wheatsville, Austin in the early 1970s was a hotbed
of co-op activity. The Austin Community Project (ACP) formed in 1972 to serve
as an umbrella for the food and housing co-ops and farming collectives. “The
ACP,” recalls John Dickerson, a co-op pioneer and early Wheatsville organizer,
“was one of the most developed of what was going on in the rest of the country
about that time. In our heyday we had a few thousand members and a pretty good
system of shared labor between the housing and food co-ops and the farms.”
But co-ops, like large corporations, are just as capable of growing fat and
unwieldy. “I have great memories of a lot of the things that we did, but in the
long run I came to frankly disagree with the way the way co-ops operated. They
were supposed to be very progressive, but it was almost impossible to get
things done,” says Dickerson.
Purist Foods and Politics
ACP folded in 1976 amid heavy debate over control and financing; eventually,some co-ops withered away. The year before, in 1975, another co-op movement
began taking shape — the Third Wave — whose believers included Dickerson, who
is now a co-owner of Hidden Cellars winery in Berkeley, California, and
Wheatsville founders Gary Newton and Burgess Jackson. The Third Wave movement
formed as a protest against the New Wave’s narrow view of the world, says
Dickerson. “There was an awful lot of puritism in both politics and food that
we didn’t agree with. For the New Wavers, there could be only purist foods and
an anarchic organization,” he says.
What Wheatsville founders Newton and Jackson envisioned early on was a co-op
that was much more inclusive of the community and one that would operate under
a sensible business plan. In that vein, they took a bold new step outside the
realm of New Wave thought.
“Wheatsville was a reaction against the New Wave co-ops that were
vegetarian-oriented and very, very exclusive,” says Newton, owner of the
wholesale distribution firm, Texas Specialty Foods. What Newton and Jackson,
now an attorney with the Texas Attorney General’s office, envisioned at the
time was a co-op with a more inclusive customer base and a broader line of
groceries that strayed from the strict vegetarian diet — a politically dicey
move in those days.
About the time Newton and Jackson were cooking up the Wheatsville plan in
1975, the University of Texas Students Association brought ZZ Top to town.
Concert attendance topped all expectations and the student group found
themselves sitting on a tidy sum of money. So Newton and Jackson went before
the association seeking seed money to start a new food co-op, and walked away
with a $5,000 interest-free loan. They brought in Dickerson (largely regarded
as Wheatsville’s guiding light) and another co-op veteran, Walden Swanson, and
the small group of idealists went to work building a co-op grocery out
of the remnants of two earlier “new wave” food co-ops, Woody Hills and
Avenues.
The new co-op leaders signed a lease on a warehouse at 29th & Lamar (today
it’s a Schwinn bicycle shop), and opened for business on March 16, 1976, with a
small but growing number of members. Bearing out their commitment to
inclusiveness, the founders christened the store Wheatsville — named after
James Wheat, a minister and freed slave who founded Wheatsville, one of several
local “freedom towns” that came to life after the Civil War. In 1869, Wheat
bought a plot of land at 24th & San Gabriel and the neighborhood — bounded
by Rio Grande Street, Shoal Creek, 24th, and San Gabriel — quickly grew into a
thriving community with two churches, an original Wheatsville store, and a
school. The area flourished well into this century until white residents, as
well as the university, began forcing black landowners out of the community to
make way for new developments.
To Hunter Ellinger, an original long-haired Wheatsville member who later
headed the co-op’s board of directors, the Third Wave philosophy closely
matched his own beliefs that a co-op could run as an efficient business while
upholding democratic principles. “I was more interested in the political aspect
of co-ops rather than the food. I thought it was possible to have a co-op that
could run on efficient democracy, not on whoever could talk the longest about
democracy,” says Ellinger, who today wears his hair closely cropped as the
chief scientist at Scientific Measurement Systems and an Austin Community
College board of trustees member.
Eventually, Wheatsville outgrew its warehouse location and began scouting
around for a new site, settling on the Guadalupe building, a former Kash-Karry
grocery. Funding for the 1981 move came from a Co-op Bank loan of $145,000 and
some $200,000 in loans from members. Once the remodeling was complete, the
Wheatsville staff loaded the store’s belongings onto U-Haul trailers and hit
the road for Guadalupe.
Near-Death Experiences
Once settled into its new digs, the co-op fell very quickly into debt. A yearlater, Mary Jude Peterson took over as the co-op’s general manager. Poe
lovingly refers to Peterson as a cross between Henry Kissinger and Mother
Teresa, and credits her conservative business skills for bringing order to
economic flux. Indeed, Peterson tightened the purse strings and kept track of
every Wheatsville penny. “If you wanted a pencil, you had to request it from
Mary Jude Peterson. And the answer was usually no,” Peterson recalls of herself
with a laugh. “Things were so tight then, nothing could be spared. We could
hardly afford to buy groceries.”
With the store having over-borrowed heavily to pay for its relocation and
remodeling, bill collectors came calling all too frequently, it seemed. At the
same time, there was heady debate over how the co-op should be governed. While
cooperatives need profit to operate, they don’t operate for profit. On that
premise, the co-op leaders tried to develop sound business practices without
losing sight of their idealistic goals. There were some hard lessons learned in
those days, but Wheatsville veterans look back on their foibles in good
spirit.
Once, when staffers discovered a $20,000 tax error in the books, they
didn’t breathe a word to the Feds. Instead, they quietly began sending monthly
checks to the Internal Revenue Service. By the time the tax man finally caught
on, they had already put a pretty good dent in paying down the debt. Bare
shelves were another problem after the move to Guadalupe; if not for the humor
that was kept up, the store would have surely worn the look of Dickensian
despair.
This was also about the time of the shop’s near-death experience, when a
series of overdue payments ultimately led to a bank representative and a
sheriff’s deputy driving up one day armed with shiny padlocks. Luckily, a
sympathetic courthouse employee had tipped off the Wheatsville crew of the
impending visit. The co-op workers met their makers at the door with a fat
check and smiles all around. They managed to come up with the money the
old-fashioned way — by passing a hat among comrades a few days earlier at a
co-op convention in Chicago. It wasn’t small change, either; the hat-passing
episode netted Wheatsville $7,000 toward paying off its debt to the National
Consumer Co-op Bank. (This year, incidentally, when Wheatsville needed to buy a
new cash register system, the store bypassed the bureaucratic Co-op Bank and
obtained a $25,000 loan in short order from Bank One.)
Those troubled times after the move prompted Peterson to take matters into her
hands the Wheatsville way — by writing a letter to members. Time and again,
Wheatsville staffers have drawn on their wits, and their command of the
language, to rally the support of members when the co-op starts to falter. By
sounding the alarm early enough, as Poe did last August and as others have done
before him, Wheatsville always manages to keep itself from going under.
Niche It Tight
But Emily Esterson, an editor of the national trade publication, NaturalFoods Merchandiser, says it’s going to take more than a series of
beseeching letters to stay afloat. With natural foods so accessible in the
mainstream, there are fewer reasons for people to go to co-ops any more, she
says. “So the co-ops need to reach out beyond their demographics. The ones that
are going to survive are the ones that know how to niche market,” she says. “Go
after the people who are tired of shopping in the big stores. Spruce up those
discounts for members. Just get in there and work on that niche market and
niche it very tightly.”
Even with the erosion of their specialty food niche, co-ops can still survive
by moving from a product-driven to a member-driven operation. At least that’s
the advice of co-op analyst Dave Gutknecht, who edits and publishes the
Ohio-based Cooperative Grocer. “In Wheatsville’s case, it’s not
surprising they’re having some problems because Austin is such a competitive
market,” Gutknecht says. “What this means is that they’re going to have to work
hard to keep the customers and the members they have. Co-ops in general have a
very loyal customer base.”
 Al St. Louis, consummate defender of Barton Springs, chooses among countless varieties of olive oil at Central Market photograph by Alan Pogue |
and the giant chains have learned that organics aren’t such a nutty concept
after all, Wheatsville could also learn a thing or two about customer service
from their competitor down the block. At Central Market, the employees (or
partners, as they’re called in the chain) practically fall over themselves in
their eagerness to please. At Wheatsville, there are times when non-member
customers feel as though they have stumbled into a private club. “We’re working
on that,” Poe acknowledges. “We’re trying to stress that it’s okay to be
strange-looking, just be polite.”
What Wheatsville does have over the rest of the bunch is a history rich in
idealism and democracy. Little did Wheatsville’s founders know then that they
were pioneering a growth market for organics in Austin. “Now that they’ve
gotten into organics,” Poe says of the corporates, “I only hope that they can
maintain the same integrity that we’ve always tried to uphold.”
This article appears in November 8 • 1996 and November 8 • 1996 (Cover).
