The Boulder Natural Foods Industry

By Jim Harrington.

Looking for health food stores in Boulder while staying at the Best Western Plus Boulder Inn? Look for them at three Whole Foods stores, Alfalfas, Vitamin Cottage, Trader Joes, Lucky’s, Sprouts, and even in traditional grocery stores like King Soopers, Safeway and Walmart. Just ask at the Boulder Inn front desk to find the closest stores just a block or two away. Boulder has an abundance of natural foods, open space, mountain parks, sunshine, shopping, brew pubs and bike paths to enjoy.  This and more helped create the fertile ground for a local natural foods industry to grow into a national movement. Many national natural food products and grocery stores started in Boulder during the 1970’s and later. But it was seventy years earlier that the Boulder Valley landscape was first tilled for the natural food entrepreneurs of today to grow.
The genesis of the natural foods industry in Boulder began in 1896 with the opening of the Sanitarium at the base of Mount Sanitas. The Sanitarium, with the Latin base root meaning “Sanity and Health”, drew health-seekers from around the world. The Boulder Sanitarium was part of a growing national movement called the Western Health Reform Institute. The institute promoted ‘hydro-therapy, exercise and a vegetarian diet’ as the way to good health.

The Boulder Sanitarium at the base of what is now called Mt. Sanitas
The Boulder Sanitarium at the base of what is now called Mt. Sanitas

More than a century ago, the “San” as the “Sanitarium” was nicknamed and how Mount ‘Sanitas’ is pronounced by Boulder locals today, was a resort and health spa with claims to cure both ‘body and soul’. It included hikes up the mountain,–right out the facility’s backyard ‘outdoor gymnasium’.  Today the Mount Sanitas trail is one of Boulder’s most popular hiking destinations including a nice gradual valley walk up Dakota Ridge to a scenic overview of the city and majestic Flatirons along with a steeper backside trail to the summit used by experienced hikers in the off season to prepare for submitting Colorado’s fourteeners in the summer months.
The sanitarium was run by the Seventh Day Adventist Church and was founded by Dr. John Harvey Kellogg, of Battle Creek, Michigan. Dr. Kellogg had become a follower of Sylvester Graham, the first person to make affordable and nutritious graham crackers as a whole wheat breakfast food available to the larger general public. Dr. Kellogg then invented granola and started to combine nuts and grains into other foods which he prescribed for his patients. One of Dr. Kellogg’s patients was Charles Post, inventor of “Elijah’s Manna,” which didn’t sell well until Mr. Post changed the cereal’s name to “Grape Nuts”.

An early box of Elijah's Manna, now called Grape Nuts
An early box of Elijah’s Manna, now called Grape Nuts

Dr. Kellogg’s first claim to fame was in rolling and flaking kernels of corn. He stated, “new-fangled corn flakes provide the very best capital upon which people who have real work to do in the world can begin the day.” With 2015 sales of $3.33 billion many people are still starting their day with their favorite Kellogg cereals.
Today we accept as fact that diet and exercise are essential to one’s health and well-being. This obvious fact of today was a brand new controversial concept in the late 1800s. Victorians of that age were well known for five course meals, rich with meats, cream, starch, butter and sugar. In 1876, a typical breakfast could consist of steak, bacon and eggs, fried potatoes, pancakes and sausage, porridge, donuts and fruits. Dr. Kellogg believed this diet was at the root of many of the diseases that plagued his generation. Dr. Kellogg was determined to change the way Americans not only ate, but lived, and developed the Sanatoriums as a place where guest’s lifestyle could be changed into a healthy one. Dr. Kellogg was potrayed by actor Anthony Hopkins as an eccentric in the 1994 movie “The Road to Wellville.” The Sanatoriums became a popular and profitable method of spreading the gospel of good health. By the turn of the century, he and his brother, W.K. Kellogg began to use lessons and recipes learned from the sanatoriums to produce healthy affordable food for the masses. This historical model for national healthy food product development became a guide for Boulder’s future natural foods industry. From the late 1970’s onward Boulder was a place where natural food entrepreneurs could test and perfect their product recipes, marketing labels and begin to manufacture and distribute healthy foods nationally.
Dr. Kellogg’s essential advice on exercise and health food is timeless. In addition to prescribed hikes up Mount Sanitas, he told his guests to “eat what the monkey eats–simple food and not too much of it.” At its height, the Sanatorium had its own dairy, bakery, a food factory to produce new healthy foods for convenient mass consumption and a natural food store to share with the larger Boulder community.
By the 1940’s the Sanitarium had closed. But its influence was still felt in Boulder neighborhoods. These local Boulderites and their children would be receptive to the sprouting natural foods businesses that would begin to emerge in the early 1970’s.

Boulder hippies circa 1970
Boulder hippies circa 1970

In the 1960’s and 1970’s the back to earth hippies started to migrate to beautiful places like Boulder with their new dietary explorations for greater health and prosperity. Lost in food rebellions of their day few hippies knew then they were following the legacy of Dr. Kellogg. Boulder hippies created new health food products, grocery stores and retail strategies to make Boulder Valley the Silicon Valley of natural foods. Dr. Kellogg would be so proud. In the 1970’s health food in Boulder was really not as ubiquitous as it is today. To satisfy health food buyers’ longings there was a bread bakery from the old Sanitarium days (called ‘Sanitarium Bakery’), the Green Mountain Granary Grocery and a Carnival diner of cooperatively minded buskers.
Downtown Boulder, near what would become the Pearl Street Mall, was a row of old wooden storefronts from the early part of the 1900’s that had been taken over by young entrepreneurs. In the early 1970’s the rent was cheap and month to month because one day the City knew it would turn the buildings into a parking lot but for seven plus years a healthy searching entrepreneurial soul could find there free loving hippies engaged in a sharing-caring-cooperative movement running a small restaurant brightly named the Carnival Café and up the street a small co-op grocery called the Green Mountain Granary. The Carnival Café exuded a gypsy-esque bundle of energy that called upon like-minded wanderers to its doors. The Cafe was a colorful potpourri of numerous, luminous enthusiastic alternativeness. The Carnival Café was founded initially by Mark Gunther who later sold it to all 20 plus workers  many were also in the performance troupe who had gained significant experience with Mark in cooperative business operations in and around Berkeley, California. They brought their cooperative business expertise from California to Boulder. The “Carnies” as they were called were a lively bunch of buskers running a restaurant, bakery and store who were also involved in theater, clowning and dance. The Café was a living workers collective demonstration that “Life is a Carnival” to be loved and enjoyed every day. The food was affordable vegetarian healthy grub rich in local vibrant ingredients and made with plenty of “free love”.
The cafe was visited by the likes of Joni Mitchell, Alan Ginsburg, Black Elk, Dan Fogelberg, Steven Stills and others. Joni Mitchell, knowing the fate of the Café to come, once drew a picture on a napkin of the Carnival Cafe turning into a parking lot. The East- West Journal, the Yoga Journal and other national magazines heralded the Carnival Cafe as the prototype for a collective business.
But all good things must come to an end. In 1977, the city announced that an entire block of buildings would be torn down to make room for a parking lot.  People made parallels to Joni Mitchell’s lyrics, saying “they paved paradise and put up a parking lot.” Despite protests, no one in power was going to listen to a bunch of hippies over the parking needs of paying downtown customers.
The Carnival died a premature death but its loyal keepers of the heart spread to the four winds and took on other adventures including leading an emerging Boulder natural foods industry in teas, tofu and grocery stores. The passing of the Carnival Café, like the passing of the Sanitarium signified another passing of an era in Boulder. Now Boulder started to change from being a Western college town to being a sophisticated metropolitan growing community at the foothills of the Rockies and an incubator for wholesome food products and stores.
The popular Green Mountain Granary, one of the first real natural food stores in Boulder, was razed to make space for the new Senior Citizens Center. Hanna Kroeger’s New Age Foods on Pearl Street, an outgrowth of the European natural foods movement which started well before the US hippies discovered it, kept making wonderful, inexpensive nutritious meals well into the 1980s. But when the US ‘New Age’ and yuppies truly hit Boulder helping to make the Pearl Street Mall a huge success, gentrification was assured and they brought with them new upscale businesses to the Mall that drove out most of the local stores. Hannah’s New Age Foods was one of the last ‘Carnival like’ cafes to leave town.
The Carnival Café left a big imprint on the city’s culture and consciousness during its short existence. It offered a cherished look at “life as a dance waiting to be danced and a song waiting to be sung. …amongst all of one’s daily work and strife, you need to not just stop and smell the flowers along the way, but lie among them and be one yourself.”
Flower power of the 1960’s and 1970’s would lead Mo Siegel to pick wild flowers and herbs in Boulder Mountain parks to brew into an assortment of teas. During his hikes he filled up gunnysacks with chamomile and red clover blossoms then sewed them into little muslin tea bags. With the help of the assembled flower children of the day he tested, rebranded and sipped his way into the successful founding of ‘Celestial Seasoning’ the label that became known for teas such as ‘Sleepytime’ and ‘Red Zinger’. Mo Siegel eventually sold his company to Kraft Foods, later bought it back, and then sold it again to Hain Foods for $336 million. It became part of the Hain Celestial Food Group which has projected 2015 net sales to be about $2.8 billion.
Petal power would compel Steve Demos to experiment with cooking techniques of the Far East, cooking up first in a bucket and then in his cauldron a new company ‘White Wave’ and tofu delicacies for the western palate to later include ‘Silk’ milk. He would pedal on his bike around town and sell tofu from a bucket to health food stores and cafes. The tofu cauldron was an innovation over the plastic bucket on back of his bike and it looked like a witches brew pot but what it did was expand tofu production and helped launch White Wave Foods. The tofu company Steve Demos brewed up in that pot had net sales of $3.4 billion in 2014. The cauldron was recently among the artifacts voted as Colorado’s 10 Most Significant Historic Artifacts.

An earl picture of a White Wave employee pressing tofu
An earl picture of a White Wave employee pressing tofu

These products and others grew into such a success because the small funky health food stores of the 1970’s and 1980’s grew to become today’s modern grocery stores. As the health food stores grew from counter culture to upscale so did their need to have more products to put onto their growing shelf space. Stores needed new natural food products that fostered not only good health and convenience but also style.  Yesterday’s Kellogg flakes, Graham Crackers and Grape Nuts would not do. Health food stores got a retail makeover which created a need for more natural food products which created a need for larger and more health food stores. This ongoing cycle of growth led, according to the Natural Foods Merchandiser, a Boulder-based industry trade publication, to more than $152 billion dollar domestic sales of natural, organic and health products we have today. They project this could grow to $252B by 2019. This is a compound average growth rate of 8.6%, which is more than four times the projected growth rate of normal mainstream consumer packaged goods.  Yes, people will pay more for what they perceive is good for them.  This industry started with flower power, small stores and hippies with dreams.

The grand opening of Alfalfa's Market in Boulder, Colorado
The grand opening of Alfalfa’s Market in Boulder, Colorado

Boulder’s natural foods industry all started at a small health food store in the late 1970’s experimenting with modern retail techniques called the Pearl Street Market.  It was so successful immediately they had to open in a larger location also on Pearl Street and then find even another larger location to move into within a couple of years. Pearl Street Market should be a historic monument because it is a historic moment in natural food history. It was the forerunner of everything else that happened. There would be no Whole Foods, which opened later in Austin Texas, without the initial success of the Pearl Street Market. What they did was start to move the selling of natural foods from health store retail to upscale grocery. They sold bulk coffee, had a dairy case and sold a much better selection of vitamins and natural products than any other store anywhere nearby. They eventually moved to a former Safeway grocery store in downtown Boulder and rebranded as Alfalfa’s Market. With the new move to a larger space they fully embraced having a prepared foods department and melding natural foods and gourmet foods. The store opening was not full, it was not packed, it was mobbed by people ready for a new grocery experience. Over time the legend of Alfalfas still lives on in a song “I wanna work at Alfalfa’s” by Boulder-bred band, Leftover Salmon. –

“When I grow up, I wanna work at Alfalfa’s!
Where the cheese is dairy free.
A Birkenstocks, Spandex, necktie patchouli grocery store.
I’d have a job, picking through the produce – no pesticides for me!
I’ll be a working moderate income socially conscious Boulder hippie!
And I’d drink soy milk all day long
And fest on bulgar, wheat grass, and Windom Hill songs.
Ride home on my mountain bike,
Just in time to turn on my solar powered growing lights.”

Now some very good entrepreneurs locally and nationally took note of what was happening. The high end grocery business model could be brought to natural foods by creating high turnover of healthy food which allowed for lower retail margins, relatively reasonable prices, easy access, and good availability. The new natural foods entrepreneurs saw win-win opportunities to make a business selling only products you cared about, while improving people’s lives and changing the world for the better.

The focus was no longer just on the hippie lifestyle but on the shopping experience and the good health of young families. The timing and demographics were right for a natural foods revolution led by caring health conscious moms making food buying choices for their new families. This was not about the rise of the health food store in select neighborhoods this was about the revolutionary transformation of the traditional grocery store into a natural foods shopping experience.
Alfalfas would blossom with their success into eleven stores. Two former employees Michael Gilliland and his wife, Elizabeth Cook had a greater national vision for natural grocery retail stores and in the later 1980’s maxed out seventeen credit cards and took a second mortgage on their mom’s house and bought the original Pearl Street Market store to learn the ropes of transforming a health food store into a natural foods grocery store and proceeded to launch a new grocery chain. When they were ready to take off they named the second store they purchased in South Boulder, now a Whole Foods Market two blocks from the Best Western Plus Boulder Inn, ‘Wild Oats’ and created a holding company with the same name and a strategy for rapid growth. The national landscape was ripe with regional health food stores lacking gourmet foods and specialty gourmet food shops lacking natural foods. Acquiring these individual stores under one banner and applying grocery store chain management with upscale retail marketing techniques allowed for the rapid expansion of the natural foods industry to take a larger market share of peoples grocery dollars.  In 1993 and 1994, Wild Oats was named one of the “500 Fastest-Growing Private Companies in America” by Inc. Magazine. In 1996, it became a public company traded on the NASDAQ Stock Market. By the turn of the millennium Wild Oats would grow to about 110 stores in 24 states and Canada and become the nation’s second largest natural and organic foods chain.
Supermarket News ranked Wild Oats No. 63 in the 2007 “Top 75 North American Food Retailers” based on 2006 fiscal year estimated sales of $1.2 billion. Wild Oats was included in Corporate Responsibility Officer (CRO) magazine’s annual “100 Best Corporate Citizens” list for 2007, ranking No. 59 out of 1,100 U.S. public companies surveyed.
Wild Oats went into direct competition with Alfalfas Market regionally and eventually bought them out.  Then Wild Oats went into a head to head national competition with Whole Foods for dominance in the national natural foods grocery business. Whole Foods would come to Boulder and build their flagship store 10 blocks down the street from the original Pearl Street Market and under cut all the prices in town until they were the only game in town. It quickly became their best-selling store. In 2007 Wild Oats lost the natural food competition and Whole Foods bought them out for an estimated $565 million.  After extensive regulatory battles with the Federal Trade Commission and US Federal Courts concerned with maintaining competitiveness in the natural foods marketplace it was determined Whole Foods had to sell some of the Wild Oats stores it had purchased along with the Wild Oats product label and Intellectual property. The original owners of Alfalfa’s have since bought back their original store and relaunched. The Wild Oats brand label has been bought and sold by several distributers and now currently produces and distributes various food products, including cereal, beverages, condiments, frozen and fresh items through partnerships regionally with Fresh & Easy stores in California, Nevada & Arizona and with Walmart stores nationally, “part of their strategy  to remove the price premium that is associated with organic products.” Just like the tradition of Dr. Kellogg a hundred years earlier making good food available to the masses.
The original owners of Wild Oats went on vacations until their non-compete clause expired and then they went at it again starting a new chain of grocery markets called “Sunflower” that would later sell to “Sprouts” and now some of the original Wild Oats team are taking a another Boulder grocery venture “Lucky’s Markets” into a national grocery chain.

A modern Lucky's market
A modern Lucky’s market

The original Pearl Street market that started it all was now too small to be a Whole Foods or Alfalfas store and it was closed but not before the neighborhood rose up to try and save it and when that failed utopian activists opened a cooperative market just up the street with a re-blooming of the Carnelavesque and Green Mountain Granary spirit of yesteryear. That rebirth of idealism lasted about four years before it too closed. Natural foods in Boulder are not to be found in islands of carnival like cooperatives but in mainstay grocery stores.  The times had indeed changed both for the better health of the masses and increased national grocery sales of natural foods.
Traditional grocery stores were not going to let the rising trend in natural foods pass them by so they upped their game and created islands of natural food stores in their larger supermarkets. At the grunt level what is telling about natural food stores is their earth tone flooring, wooden shelving and special lighting onto ever new and exotically healthy hip natural food products.

The natural foods business in Boulder started out with young baby boomers seeking out alternative life styles. As time passed hippies began to settle down in town and have families. They still wanted healthy food but now also with modern convenience. Thanks to a boom in international travel and relatively cheap flights abroad these former hippies had also traveled more than most generations before them. The baby boomers had tasted stuff in other places. They were more open to the world and more open to the new world of healthy foods that was being created for them. There was no way the traditional grocery store was not going to pay attention to the expanding tastes of this new larger upwardly mobile generation. So over time traditional grocery stores got healthier too. Also natural food manufactures wanted to expand their product into everyday life. Steve Demos studied shopping habits at a traditional “King Soopers” grocery store in Boulder and crafted ‘Silk’ milk. Organic soymilk sold in a regular packaged milk box in the cooler where people in the US people go to buy fresh milk. Before then soy milk was in a square box sold on the dry shelf with other exotic health food items as you may find in Europe. By catering to the American shopper White Wave Foods was able to extend soy products into US consumers’ everyday life via their normal culinary tastes.
Grocery stores have many items on their shelves and it seems like many companies are competing for you your dollar but really mostly a handful of companies own the majority of items and their respective labels sold in major grocery stores. Those larger traditional companies started to go shopping for natural food companies to add to their portfolio and Boulder natural food companies were ripe for the picking. In fact Boulder is an incubator for them. A whole bunch of companies have gotten spun out as a result, and are now national or international players. Things like IZZE soda, sparkling water with fruit flavors now owned by Pepsi was started here as was Horizon Organic Dairy.  Phil Anson a mountain climber line cook began selling burritos out of a cooler to other climbers in Eldorado Canyon, some of the world’s best climbing only a handful of miles from the Best Western Boulder Inn in early 2002. In 2013 he sold the frozen food company he formed to support huis climbing habit to Boulder Brands for $48 million dollars.  Boulder Brands was purchased by Pinnacle Foods at the end of 2015 for $975 million. They intend to maintain the Boulder offices because Boulder is a hot bed of trendy food start ups. In 2004 Justin’s peanut butter started selling at the Boulder Farmers market and eight years later had revenue growth placing the on Inc. Magazine’s Inc. 5000 list of the fastest growing companies in the country. Boulder is one of the foremost makers of chai. There are two major chai companies here Bhakti and Third Street and a number of smaller ones like Sherpa and Sanctuary. Before Starbucks would deploy their chai in stores nationwide they tested and refined it here in Boulder first. One thing they learned how to refine better was the selection of dairy milk substitutes to use.  So Boulder as an incubator fed on itself. New companies could be formed in garages, second kitchens, introduced at farmers markets, relabeled refined and brought into Whole Foods stores and then relabeled again to be sold to the bigger grocery conglomerates. The City of Boulders Open Space and Mountain Parks helps make Boulder a great city to live in but it also creates a green border that limits the size companies can grow. The result is a town for incubation and creativity within smaller businesses. After successful companies start having 100’s of employees or so they either start to look at moving out or selling to continue to grow their operations. That may be limiting to established business but it creates fresh opportunities for new start-up companies to emerge.

Justin Gold, founder of Justin's Nut Butter
Justin Gold, founder of Justin’s Nut Butter

And what do you do after you sell your natural foods company? Take a vacation, get bored as retired entrepreneurs often do return home to Boulder or move to Boulder and become part of a network of support to pass the torch of inspiration to a new generation of natural foods entrepreneurs and become an angel investor to help a new company take this ride all over again. All sort of companies come here to be at the epicenter of the natural foods industry in hopes launching the next national brand.

An early picture of Celestial Seasonings founder Mo Siegel, collecting herbs at the base of Boulder's Flatirons
An early picture of Celestial Seasonings founder Mo Siegel, collecting herbs at the base of Boulder’s Flatirons

When you take a hike and see some herbs do you think of starting a tea company? When you travel abroad and see foreign food being prepared like tofu do you think of forming a new company out of a cauldron? When you see high end retail shelving, lighting and floor practices in New York department store’s do you ask why not sell groceries that way? Do you want to sell healthy frozen food to your climbing buddies? Do you make your own peanut butter or some other tasty delight and wonder why you can’t buy it at the grocery store? If you do you may be a food entrepreneur. Come to Boulder hike up Mount Sanitas and follow in the steps of Dr. Kellogg, Mo Siegel, Steve Demos and others. Boulder has a team of people to help you make good food affordable and available to the mass national market. And Boulder Inn is glad to be part of your hospitality team. Whether you are here in town for business or just here to eat great food, enjoy good company, take spectacular hikes and drink fresh brewed beer Boulder Inn is happy to meet your hospitality needs. Call us any time at 303.449.3800 and ask for Ari if you are looking for a business rate. We know Boulder Business and Boulder’s Social life and we are here for you.