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Co-ops riding a wave

September 12, 2011
By JOHN PEPIN - Journal Staff Writer and The Associated Press , The Mining Journal

MARQUETTE - Cooperative grocery stores have been on a boom-then-bust cycle since they first emerged after the Great Depression and the cycle at the moment is back to boom.

As more Americans look for more ways to control their spending - as well as where their food comes from - small grocers that are owned by their "member" shoppers and focus on local and natural foods are back in vogue.

"We've been averaging a new member a day," said Matt Gougeon, general manager of the Marquette Food Co-op. He said he expects the cooperative to have 3,000 members by year's end.

Article Photos

Caleb Tetreau of Negaunee shops for organic produce at the Marquette Food Co-Op recently. (Journal photo by Danielle Pemble)

Gougeon said the Marquette Food Co-op began rebounding since April 2009. The entity is in its 40th year, which began as a small food buying club in 1971.

"Since the recession hit in 2008, this store faltered a bit in the first quarter of 2009," Gougeon said.

The store has seen membership growth of 7 percent in 2009, 13 percent last year and 9 percent so far this year.

Around the country roughly 300 cooperatives already run 330 stores, with at least another 250 under development, everywhere from New Orleans to Fairbanks, Alaska, according to Stuart Reid, executive director of Food Co-op Initiative, a nonprofit that provides resources and support for organizing groups.

During the past two to three years alone, 10 to 12 new stores have opened each year, according to Cooperative Grocer magazine, which keeps an online directory of food co-ops.

In Michigan, there are a dozen co-ops, eight of which are members of the National Cooperative Grocers Association, which provides support in training, communication and buying power, Gougeon said. In the Upper Peninsula, the Marquette Food Co-op is the only NCGA member, Gougeon said.

Ontonagon has a co-op starting up. There is a small co-op in Ironwood. Alger County has co-op stores which have operated for years at Trenary and Chatham, which is the oldest co-op in the United States.

There is also the Keweenaw Co-op Natural Foods and Deli in Hancock, which has acquired 655 members since re-incorporating at the beginning of 2010.

General manager Curt Webb said the Hancock co-op has been in existence since 1973 and at its current location since 1987. It had about 1,000 members in 2009.

Those involved with co-ops cite several possible sources for the resurgeance in popularity of the outlets.

"The economy is certainly part of the reason, but another part of the reason is Americans are looking for ways to own and control the means of providing the services they want," says Andrea Cumpston, a spokeswoman for the National Cooperative Business Association. "For example, in the food co-op industry they're looking to be able to own the store that provides them with their local foods and to know and trust where those foods are coming from."

That's what keeps Nickie Dymon, 47, shopping for her family at City Market Onion River Co-op in Burlington, Vt. She also appreciates that she can save money - and lessen her ecological footprint - by buying in bulk, and filling her own recycled bottles and bags with coffee, laundry detergent, cooking oils, soy sauce and maple syrup.

"I buy all my fruits and vegetables here and a lot of my groceries here," she said recently while shopping in the produce section, which this time of year offers locally grown fingerling potatoes, blueberries, green and yellow string beans, tomatoes, baby spinach, lettuce and radishes.

The first food co-ops grew out of the Great Depression, but most did not survive, says Reid. The next wave came during the 1970s, fueled largely by interest in natural foods otherwise unavailable at mainstream grocers. But Reid says many of those failed, too, in part because they lacked sophisticated business operations.

Those co-ops that did survive from the '70s and '80s have continued to evolve to meet the needs of their shoppers and compete with mainstream food outlets that have since begun selling the natural and organic products that co-ops once held near monopolies on.

Joining a food co-op generally entails paying a one-time fee that averages about $150, though payment plans are available with much lower fees, and some co-ops offer waivers for low-income shoppers. For that, members own a share of the co-op, might receive a share in the profits, and get to vote for things such as who sits on the store's board of directors, and whether the store should expand or open a second site.

Most co-ops don't require shoppers to be members, but the culture of the stores encourages it.

"It's a very democratic type of organization. And then when the business is profitable the profits go back to those owners who are the people that shop in the store and it's usually done based on how much they patronize the store," Reid said.

Gougeon said members of the Marquette Food Co-op purchase equity shares for $100, which provides rights, benefits and some responsibilities. Webb said the patronage of members at the Keweenaw Co-op is tracked and refund checks are issued each year.

"It's based on the member's purchases and our profitability," Webb said.

Though not all cooperative markets specialize in natural and organic foods, most at least focus on local and bulk items, everything from laundry detergent to rice and nuts. And most of those products often come with higher prices.

"The perception of higher costs comes from the decisions about which products they sell," Reid said. "The products themselves are not more expensive. The way that they're grown and the way that the people who produce them are paid adds costs and ... it's not subsidized like commodity products are."

The price and array of products aren't for everyone. Even co-op members may do only a portion of their shopping there. When the city of Burlington opted to replace its old downtown grocery store with a co-op nearly a decade ago, some people in the community balked.

"'You're not going to take away my red meat and make me eat tofu," Reid said was one fear he heard.

Co-ops typically start at the grassroots level with one or two people wanting to replicate another co-op. Startups can range from a few hundred members to a couple of thousand. Some of the more established co-ops are backed by tens of thousands of members.

For some consumers, another perk is the ability to get hands on to get a discount. Dymon works four hours a month at her store in exchange for a 12 percent discount on purchases.

As co-ops have evolved, they've shed some of their old image. A focus on local and artisanal goods - including locally raised or produced meats, cheeses, beers and wines - as well as the addition of delis and prepared foods have attracted a whole new food-centered generation of shoppers. This is a long way from the organic dried beans, granola and tempeh that once seemed to define these stores.

"They're much more sophisticated and they have a broader mix of products," Reid said.

Many co-ops also use the community-centric approach of their stores to give back to the community.

"This is something that really is based in our community," one manager said. "It's owned by a community and it's supposed to be nurturing in a real fundamental way."



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