Niman Ranch: How "Sustainable"?
February 22nd, 2009 by jay
This article in the SF Chronicle does a great job chronicling the tension between creating sustainable food and running a business. My jaw dropped when I read this:
“But in nearly 30 years of existence, despite becoming the darling of high-end chefs and turning the brand into a household name, Niman Ranch never did turn a profit. In fact, it was broke.”
Niman Ranch beef and pork is literally everywhere in the Bay Area. There was a time when it was a name touted on menus at Chez Panisse and Zuni Cafe but these days, I’ve seen it at local burger joints, the ballpark and even sausage street carts (the nicer ones). With so much volume, I figured they found a way to turn a profit.
In many ways, this is the central tension of sustainable, artisan food businesses. The most voted-on comments in the SF Chronicle article talk about not buying Niman Ranch any more–a testament to the belief in the Niman founder’s vision.
But 30 years is a long time never to have turned a profit. It starts to defy the broader sense of the word “sustainable”…
February 24th, 2009 at 11:49 am
That’s so surprising! Though I wonder how much of this dire situation is specific to the Niman Ranch case, and to its somewhat change resistant founder. I don’t know that artisanal foodmaking isn’t sustainable–but then I’m not in that field!– what people need is a better business model.
February 24th, 2009 at 5:44 pm
I’m not surprised. Speaks to the core tension you mention - specialty and artisinal are fundamentally at odds with mass commercialization and scale. Hence the problem with profit. Consumers like you and I subsidize this through paying higher prices, but the mass market won’t. Niman is no where near mass market. A very sad but real example is Wal-Mart and organic foods - bastardization of a principle in an effort to go big.
February 24th, 2009 at 6:56 pm
There are a lot of small sustainable/artisanal/etc businesses that do make a profit. It sounds like what you’re saying is that they can only make a profit staying in a niche that is willing to “subsidize” by paying higher prices. There must be food businesses that can: 1) adhere to sustainable values; 2) grow large; 3) operate profitably.
It probably depends on the actual industry sector. For instance, the beef industry sounds like it operates on razor thin margins whereas the pork industry has healthier profits (according to the SF Gate article). Also, sectors like high-end chocolate have very high margins, I imagine.
March 13th, 2009 at 8:32 pm
I don’t think that specialty/artisanal foods are fundamentaly unprofitable- the article shows that Niman himself, chose to ignore profitability in a bid to expand markets and influence, and I hope he learned a lesson from that. Also, it’s clear that the new management is not interested in delivering the same beef product. I don’t expect the same quality, and I’ll adjust how much I want to pay for it.
April 8th, 2009 at 7:00 am
Excellent, interesting post. I do think there’s a good point in there about being a great businessperson in addition to an excellent artisan food producer. It’s not easy to find both.