Local News

Food co-op eyes future growth

A group of Sitka residents who got together informally last year to buy bulk natural foods have organized a co-op, and have set their sights on possibly a larger retail operation in the future.

The group recently brought in a professional consultant to examine the prospects for scaling up their non-profit grocery operation.

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Stuart Reid (l.) with the Food Co-op Initiative, and  local board chair Keith Nyitray.

Stuart Reid (l.) with the Food Co-op Initiative, and local board chair Keith Nyitray.

Stuart Reid is with the Food Co-op Initiative in Dennison, Minnesota. He’s been helping set up co-ops for a long time.

“The first connection was actually my then-college girlfriend, who was a vegetarian…”

I think we’re beginning to get the picture.

“…I’m not a vegetarian. I was for a time in my life. But I did start appreciating clean food and the culture of co-ops. More than anything else, it’s a social environment that’s very different from other businesses.”

Co-ops at first did have a culture, and may not have been for everybody. Reid says they’ve come a long way from when he used to go shopping with his vegetarian girlfriend.

“It’s less political. A lot of the co-ops in the early 80s that were getting started were part of a progressive movement. It was often the alternative community that was starting co-ops, and it was partly the nature of what they were selling — natural foods, whole foods which were unavailable at that time. Well, that’s not the case any more. You can go to most supermarkets and find at least some of those products. Co-ops keep evolving and find that they’re active in supporting local farmers, fishermen, meat and dairy producers — whatever. Grocery chains can’t deal with that, because they can’t deal with small producers effectively. We can keep that niche pretty well.”

Co-ops are member-owned businesses. Sitka already is home to one large co-op, the fish processor SPC, which stands for Seafood Producers Cooperative.

Food co-ops work on a similar template. Shareholders buy in at a nominal cost, and receive one vote. Profits are reinvested in the business, or possibly distributed as dividends. But the basic rule is always one member, one share.

Keith Nyitray chairs the board of Sitka’s newly-incorporated food co-op. Typical co-op member fees are $150-300.

“Here in Sitka, our board decided to keep the membership fee as low as possible. So right now it’s only $20 a year. We’re taking the slow growth approach, so we can include as many members in this community as possible without having the bar too high for them to participate in getting bulk foods or natural foods as cheaply as possible.”

Right now, the Sitka food co-op has 93 members, up from 20 last year. Their purchase volume has grown proportionally from $3,000 per month to over $12,000 last month.

Members do their shopping online through three food distributors. Those distributors bundle all the orders for co-op members and send them to Sitka as freight on the barge.

The freight is unbundled at Grace Harbor Church, and members drop by on delivery days to pick up their orders.
Nyitray says the long-term vision for Sitka’s food co-op is an extension of this model.

“Our goal is to eventually have more like a distribution center with a retail store associated with that. It may not be open seven days a week; it may only be open twice a month. Because we started out as a buying club, and our distribution is the most important thing — to have a centralized location is what we’re going for.”

But co-ops can be much, much larger. In some communities they might resemble a corner market. Other co-ops are huge, and indistinguishable from mainstream supermarkets.
Stuart Reid says this growth speaks to the adaptability of the co-op.

“The grocery industry has become incredibly sophisticated. The profit margins are thin; product offerings are from all over the world. You can get anything you want in a US grocery store anymore. It’s all run through computers and electronics, the ordering, the scanning at the register. The co-ops that survived the 80s — and a lot of them didn’t — have grown with that and learned from that. Now we have stores that are more beautiful than anything in mainstream, perhaps, and every bit as clean, neat, and professional. And doing millions in sales. Some of the larger ones are doing $20- and $30-million in business a year.”

The important difference, Reid argues, is a co-op’s connection to community. He is not anti-supermarket. In fact, he says there are many large, independent grocers who contribute significantly to their communities. He has more concerns over large chains that move profit out of communities.

Keith Nyitray calls it “food for people, not for profit.”

“The root of the cooperative is cooperation. And community. So those two words, community cooperative, is where we’re at.”
Like any of the numerous buying clubs that exist in town, the co-op is viable with very low numbers, but Nyitray says they’re already eligible for volume discounts on freight. He says the co-op will be working with the Sitka Local Foods Network to involve more local producers in the effort. They’re also exploring ways to partner with local seafood producers.

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