HSR: Why are you at the forefront of some of the industry's most controversial issues?
KESSLER: I believe that all trends start in independent health food stores. They are like the nucleus of a cell and the surrounding cytoplasm is the mass market. I believe that the independent health food stores are educational centers that the cytoplasm (or mass market) lives on. Without these educational centers we don't have an industry, because many of the trends, ideas and education begins with the independent health food store owner. Many of our (the industry's) products and concepts are so complicated that they wouldn't sell well in the mass market unless consumers were already educated about them. Thus, the future of the independent health food store is closely related to the future of our industry.
HSR: However, with the recent demand for such media-friendly items as St. John's wort and ginkgo biloba, it seems that the general consumer already has the basic information and would rather purchase these products at a lower price in a more familiar atmosphere such as Wal-Mart or Drug Emporium. What is your response to that?
KESSLER: That is true to some extent, however, those that want to ask more questions and get more facts and information cannot get it in self-service stores, so they come back to the health food stores.
Many retailers say they worry when a GNC opens down the street because they are afraid it is going to affect their business, but really, it creates business for everybody. GNC's customers are generally just browsing through the mall, but then their appetite is whetted and they go to health food stores for more information. So it actually generates business for both.
I'm not against the mass market. All I'm saying is that if you are selling to the independent health food store you shouldn't make them do your work by letting them educate customers and then turn around and sell the product to a mass market store. Not only will it put them out of business, but it will also kill the goose that laid the golden egg--which is the independent retailer.
Editor's note: Gerald Kessler and Natural Organics, along with Health Food Associates Inc. and Akin's Natural Food Market filed suit against the NNFA Sept. 9 disputing the irrevocable proxies that were submitted during the vote for a new board of directors. Kessler's group charges that the outcome of the election was altered by the acceptance of the proxies, all of which voted against Prop. 21, and seek to nullify any voting results determined by the legal proxies and to have the votes revalidated and tabulated without them.
HSR: Why did you support Prop. 21?
KESSLER: The reason I supported Prop. 21 is because in a democracy, majority rules. Since there are more independent health food stores than suppliers in the NNFA, the independent health food stores should have control of that organization and Prop. 21 gives them that control.
The NNFA hired an accounting firm to be unbiased and count the votes, and that's what they did. The accountants noted that Bill Knudsen's proxies were written as "irrevocable" and told NNFA officials that they weren't sure if the proxies were legal. So we need to let a judge decide if the proxies were legal. If they aren't, they shouldn't be counted. This isn't a lawsuit aimed at the NNFA, it's two people who put proxies into the vote and the judge has to determine which proxies are legal. The reason we have a vote at a show is so people will come to the meetings, hear both sides and make a decision. But an irrevocable proxy cools the desire to come to the meeting because they've already assigned their voice without hearing both sides.
HSR: Several Prop. 21 opponents said that suppliers need to get more involved in the process. What's your opinion?
KESSLER: The suppliers make up 15 percent of the voting group and the people who show up amount to 1 percent or so. The politically strong show up, but the independent retailers who need to earn a living at the show don't show up to vote because they are trying to carry out their business on the show floor.
Two-thirds of the paying members are independent health food stores and I believe that majority should rule. The truth is that it is very difficult for a mom and pop store to have much say in this industry and it is very difficult for a small manufacturer to get a vote.
HSR: What should the NNFA's role be?
KESSLER: The NNFA should support the educational process of the independent health food stores and encourage them to not surrender to discounted prices in an attempt to compete with the mass market, because they will lose to the greater purchasing power of the larger stores.
Instead, health food stores should concentrate on what makes them strong--education, service and giving special attention.
HSR: Do you think these recent events will cause a division of the NNFA?
KESSLER: In the United States, we have democrats and republicans and they haven't destroyed our system by a division of ideas, they have made it stronger. Both the mass market position and those supporting independent health food stores should have a voice. All Prop. 21 does is give independent health food stores an organization that allows them, as a majority, to have more say. The people who don't want division are people that don't want both sides to have their say.
HSR: What impact has your involvement with this issue had on your business?
KESSLER: I think overall most people do understand what we are trying to do and support our right to do that. Has it made us controversial? Do we have questions we need to answer? Yes, but even those who don't agree with us support the right for us to have our say to protect the part of the industry we feel is important--the independent retailers.
HSR: Have you noticed a polarization of Kessler proponents and opponents?
KESSLER: There are some board members who are not fully informed and feel that this is an attack on the NNFA, which it is not. They also feel that opposing opinions are threatening and basically misunderstand what we are trying to do. If you are going to step out front and take a position, you are going to have to answer questions. It goes with the territory. I think people on the other side respect what we are trying to do no matter what they say. They respect the fervor of our beliefs.
HSR: Is this an attack on the NNFA?
KESSLER: By all means this is not an attack on the NNFA. It's not personal. It's simply recognizing how important it is to have the NNFA be a viable organization that represents our interests in the future as they have in the past.