Planet Organic acquires New Leaf; market still expected in HMB

A new player entered the Santa Cruz grocery field Friday, acquiring three of the locally owned New Leaf Community Markets in Capitola and Santa Cruz for terms that will be disclosed Tuesday.

Planet Organic Health Corp., headquartered in Edmonton, Alberta, is the new owner of the three natural foods stores, which have 240 employees and sales totaling $28 million, New Leaf co-owner Rex Stewart said.

Stewart, 54, said he and co-owner Scott Roseman will stay in their current roles leading the company while co-owner Chris Quinn will pursue other interests after spending 19 years with the local market.

New Leaf has been a stalwart for local ownership and for natural foods for more than 20 years.

The move shocked some, like competitor Dario Dickinson of the Food Bin, and employees at Staff of Life, both longtime and locally owned natural foods stores.

Others said it made economic sense given the narrow margins in the grocery world, Safeway's push to expand and renovate, and plans by Whole Foods, the giant organic chain, to open stores in Santa Cruz and Capitola.

"We need to be strong to survive," Stewart said. "This allows us to remain who we are and gives us the capital we need."

New Leaf won city approval Tuesday to build a big, new Westside store estimated to cost $4 million.

New Leaf also is opening a store in Half Moon Bay, another $4 million project, and plans to remodel its downtown location in July, adding a kitchen, grill and coffee bar. Slatter Construction of Santa Cruz is doing both projects.

Stewart said the subprime mortgage meltdown made it expensive to secure the $10 million to $12 million for expansion and remodeling.

"We have a strong relationship with Comerica, but we weren't able to leverage all the money we needed," he said, blaming the credit crunch for higher interest rates. "It's all about ratios."

A search for private equity funding in New York that started a year and a half ago led to an unsolicited offer from Planet Organic. The 22-year-old Canadian company, which trades on the TSX Venture Exchange, recently acquired Mrs. Green's Natural Market, which has 11 stores in New York and Connecticut.

Planet Organic runs a supermarket retail chain of eight stores, Sanger's Health Centres, 50 franchised vitamin and natural health stores, Healthy's, seven natural health outlets, and owns Trophic Canada, a manufacturer of vitamin, mineral and herbal supplements.

Like New Leaf, Planet Organic started as a single store featuring organic produce in the 1980s.

After Planet Organic's executives made three visits to balmy Santa Cruz, the two companies decided to join forces.

"It's 40 below [in Edmonton]," Stewart said, joking that the deal will not require Santa Cruzans to visit Planet Organic headquarters between October and May.

New Leaf will keep buying from local growers and supporting local nonprofits and environmental organizations, he said, and will keep its name and the relationship with the New Leaf stores in Felton and Boulder Creek.

But he doesn't expect to be able to remain a member of the Think Local Santa Cruz County, founded last year to champion locally owned businesses.

Employees who learned about the acquisition Friday reacted positively, he said, noting that Planet Organic will buy all the stock, including the 5 percent minority stake owned by management employees.

"I'm glad to see they're not changing staffing," said Peggy Miars, whose husband is a buyer for the market.

Miars, who runs the California Certified Organic Farmers, once worked for the Granary all natural foods store in Pacific Grove, which was acquired by Whole Foods. She wasn't surprised that New Leaf was acquired.

"It's the way retail works," she said.

"The margins in the supermarket business are minimal," said Keith Holtaway of the Downtown Association in Santa Cruz, although he said, "I'm sure people are going to be shocked."

Local shopper Lisa Michel cheered the news.

"More power to them," she said. "Perhaps it will help make New Leaf stronger to combat the monopolizing character of Whole Foods."
Contact Jondi Gumz at 706-3253 or jgumz [at] santacruzsentinel.com.

"Lumbermen's" acquired San Lorenzo Lumber a few years ago and made the same bullshit promise that there would be no changes, blah, blah, blah. They wouldn't even change the name they assured employees. It would be just like the same old locally owned business as before, but now with deeper, better pockets. Uh, right.

A year or so later, the Lumbermen's group was sold to another company that had made no such promise and promptly started making all sorts of changes, company name, employees, policies, etc.

This is the same horseshit that every acquiring company has made to assure employees and customers since time began.

A few years down the road New Leaf "Community" Markets will be part of a chain of Whole Foods clones.

Shame on the local owners for selling out our community. These are probably folks who made impassioned pleas to customers to "shop local" for years and lobbied their city council members as esteemed Local Business Owners to protect them from unfair competition from Whole Foods and the like.

So if you still give a shit about local, healthy food and don't care to enrich some far away megalithic corporation:

Food Bin/Herb Room
1130 Mission St. Santa Cruz
Independent market

Staff of Life
1305 Water St, Santa Cruz
Independent market

New Leaf Market
6240 Hwy. 9. Felton
Independent market

Kresge Community Natural Foods
600 Kresge Ct (Kresge College UCSC)
a student-run cooperative

New Leaf Market
13159 Hwy 9. Boulder Creek
Independent market

Aptos Natural Foods
7506 Soquel Dr
Independent market

Plus there are numerous little shops that specialize in herbs, remedies, and homeopathic stuff and offer some bulk foods.

There are a lot of Farmers Markets around here, too. A cool free skool project would be a commuity food growing and distribution program. We let people know which fruits or veggies we grow in our backyard in abundance. Food Not Lawns!

Hey All-
The Planet Organic deal fell through Spring of 2008 and New Leaf remains as always locally owned and proud of it! We received funding from all local banks to finance our recent expansions.
Thanks for shopping!
S