Real Food Company Sold to Utah Corporation.
By Olivia Boler - Noe Valley Voice, May 2002
Noe Valley's largest health food store, the Real Food Company on 24th Street, is now in the hands of a national supplier of vitamin supplements and other health products.
On March 1, Nutraceutical International Corporation of Park City, Utah, through its subsidiary Fresh Organics, Inc., acquired three of the five Bay Area Real Food Company stores, including the one located at 3939 24th Street. Nutraceutical is one of the country's largest marketers and manufacturers of quality-brand nutritional supplements sold to health and natural food stores.
Bill Gay, CEO and chairman of Nutraceutical, commented in a March press release that the purchase of the stores "offers [Nutraceutical] a retail presence in a locale many consider to be the birthplace of the health food industry." He hopes that having direct contact with consumers, rather than selling products through a distributor, will help the company to better serve the community, he said. Gay went on to state that Nutraceutical conducted a nationwide search before settling on the Real Food Company as its best choice.
Though the sale marks the end of three decades of local ownership -- San Francisco resident Kimball Allen opened the Noe Valley store in 1970 -- 24th Street Real Food store manager David Kloski feels the acquisition is a positive change.
"Because Nutraceutical is a bigger company, the store will have more opportunities to grow and make improvements," says Kloski, who has worked at the Real Food Company for eight years.
Kimball Allen, 82, and his wife Jane, 63, still own two Real Food stores: the flagship San Francisco store, which Kimball opened on Stanyan Street in 1969, and a store on Caledonia Street in Sausalito. Their Polk Street and Fillmore Street stores were among the three sold to Nutraceutical in March.
Jane Allen, speaking from the couple's home in Mill Valley, says she and her husband decided to part with the stores because it was time to "slow down."
"We still have two stores and one nightclub, Kimball's Carnival, in Jack London Square," she points out.
Nutraceutical has the right to retain the Real Food name and logo, Allen says, but it also may opt to change the store name to Fresh Organics or to combine the two names. That decision has yet to be made.
Meanwhile, the Allens will maintain a presence in Noe Valley because they still own the 24th Street Real Food Company building, which Nutraceutical is leasing.
"It's a collaboration," Jane Allen says of the Real Food Company's new relationship with Nutraceutical. "We are buying [products] jointly and publishing our newsletter jointly. It's a sort of co-op arrangement."
Even so, some Noe Valley residents are skeptical about the purchase.
"We can assume Nutraceutical is going to emphasize its own products [at the expense of others]," says Paul Kantus, president of the East & West of Castro Street Improvement Club.
Resident Tracey Hughes, who has lived on 24th Street for 17 years, fears that the new larger chain store will be less neighborly. She says she is already alarmed by the "corporatization" and high prices on 24th Street.
Kloski responds that so far, Nutraceutical has not even installed its own products. Still, stocking them might not be such a bad thing, since it would make sense to carry the company's supplements, he says. Nutraceutical brands include Solary, KAL, NaturalMax, VegLife, Premier One, Solar Green, Natural Sport, ActiPet, Action Labs, and Thompson. The company also publishes books through Woodland Publishing. Kloski says Nutraceutical's products are excellent and have an outstanding reputation. Real Food has not carried them in the past because Nutraceutical did not have a local sales representative, he says.
As for customers' concerns about other Real Food hallmarks such as the huge produce section, Kloski says not to worry.
"We've spent 30 years developing relationships with small, local organic farmers, and that's not going to change," he says. "Face it, our selection of organic produce is our calling card. A lot of pride and care goes into that."
Kloski also points out that no staff members have left or been replaced because of the Nutraceutical purchase. In fact, according to Kloski, the employees feel more secure in their jobs. "The bills are getting paid faster," he says with a laugh. Also, resources will now be available to make improvements, such as putting in new fixtures, replacing the freezer, and painting the walls.
But don't expect produce prices to go down. Prices are dictated by what the store must pay the farmers, plus a standard markup. Kloski says most customers understand this and support the store's loyalty in sustaining small, nearby organic farmers rather than purchasing from large, out-of-state farm operations.
As for people's fears about a big corporate takeover, Kloski thinks they're largely unfounded.
According to him, Bill Gay, Nutraceutical's CEO, is a champion of small businesses and does not want to change anything about the store or its involvement in the community.
"It's an ethical company," Kloski says of Nutraceutical. "Large, but ethical."
He hopes that once customers see the improvements being made to the store, they will accept the change as one for the better.
Jane Allen adds that she and her husband want to thank Noe Valley residents for their support over the years. "We've had a lot of emotion invested in the store, and Nutraceutical expressed a commitment to keeping it the way it's been. We would not have sold it if they didn't."
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