Environment Scan

2007 was a year of ups and downs for Whole Foods Market (NYSE: WFMI), the

world’s leader in natural and organic foods. Positive publicity for an international

expansion into London was replaced by negative media attention from a Federal Trade

Commission (FTC) lawsuit.

In February 2007, Whole Foods made an offer to acquire Wild Oats Markets. Its

attempts to merge the two companies raised suspicions among government regulators who

filed a formal complaint in June 2007. The complaint questioned the motives of Whole

Foods’ interest in Wild Oats, citing a statement made by the CEO in a letter to the Board of

Directors regarding the proposed merger. The FTC claimed that the merger would result in

a monopoly of the natural foods industry that would ultimately hurt consumers. A

restraining order was issued to put a hold on the merger.

In response, Whole Foods filed a legal rebuttal addressing the allegations made

against it. Additionally, the CEO of Whole Foods used his blog on the company’s Web site to

communicate directly with its publics about the circumstances.

In the midst of the FTC investigation, a scandal emerged when it was revealed that

Whole Foods’ CEO, John Mackey, was posting under a pseudonym on the Yahoo! Finance

forum boards. The Whole Foods’ Board of Directors put a temporary hold on Mackey’s

corporate blog pending further investigation by the Securities and Exchange Commission

(SEC).

In the months following the FTC’s complaint, Whole Foods communicated directly

with its stakeholders using traditional and social media tactics. The challenge was to prove

that its intentions were in the best interests of its consumers while remaining transparent

and honest with its key publics.

2. Natural & Organic Foods: A Growing Industry

Natural foods are foods that are “minimally processed, largely or completely free of

artificial ingredients, preservatives and other non‐naturally occurring chemicals as near to

their whole, natural state as...