ADMP Investment Proposal: Erewhon

TO: Clark Hansen, CEO

FROM: Ashley McKean, Research and Development Analyst

DATE: March 5, 2024 

SUBJECT: Erewhon Investment Proposal 

ADMP STANDARDS: 

AMDP emphasizes the values of the following: 

Triple Bottom Line: A framework that measures a businesses social and environmental impact through profit (the financial return generated by an organization for shareholders), people (the organization's commitment to bettering society), and planet (an organization's effect on the environment) (Miller 2020). 

Corporate Social Responsibility (CSR): The idea and ethos that companies should adopt policies that positively support society and the planet (Reckmann 2023).

Social Enterprise: Mission-driven enterprises who conduct entrepreneurial pursuits with public interest at the top of their priorities (OECD). 

Carbon Footprint: The measurement of the total amount of greenhouse gas (GHGs) emitted by an organization or business and all of its activities that may have directly or indirectly impacted emissions (Issel 2022).

EREWHON BACKGROUND: 

Erewhon is a certified organic retailer, which very few retailers hold,  and certified B corp supermarket chain with 10 locations all in Los Angeles County, California. In 1966, Erewhon’s founders Michio and Aveline Kushi opened a mini store in Boston below street level that sold both macrobiotic and organic foods, the first store of its kind in America. The Kushi’s later moved to Los Angeles where they opened the first Erewhon store in Los Angeles in 1968. It wasn’t until 2011, that Erewhon became the brand that consumers know it to be today, when Tony and Josephine Antoci purchased Erewhon and expanded its locations across Los Angeles over the years after increasing success and made the Erewhon brand more well-known. Erewhon is known to be an upscale health-based supermarket chain, beloved by celebrities, that strives to support only the most ethical brands that use ingredients that won’t harm your health, supporting local growers and farmers and sustainable farming practices (“Our Story | Erewhon Market”).

EREWHON FINANCIALS: 

Many grocery store chains across the nation struggle to revive their business, however Erewhon continues to thrive and grow. Since 2016, Erewhon has been growing over 35% year-on-year. There is also an increased demand for new stores to open. Although Erewhon has a cult following on the west coast, including celebrities and LA locals, the stores have become so popular that people travel across the country to Los Angeles and Erewhon is one of the first places they visit. In 2019 a New York based growth equity firm, Stripes Group, gained ownership of a “substantial minority stake in Erewhon”. This investment will go towards opening more stores in Los Angeles, as well as expanding to Orange County and Northern California. The possibility of a store opening in New York City is highly likely in the coming years (Sorvino 2019). 

EREWHON CLAIMS: 

Erewhon is committed to providing its customers with the highest quality products and foods that are ethically sourced and organic. Erewhon proudly lists “The Erewhon Standard” which is the standard that they instate for all of their business practices. 

• Selling organic produce that is not sprayed with pesticides, herbicides, or synthetic fertilizers 

• Selling non-GMO and non-irradiated food

• All seafood is sustainably sourced whether it be wild-caught or farmed 

• Sell animal products that are sourced with animal welfare in mind (open spaces, antibiotic and hormone free, sociability, natural diet, and healthy environment are all standards for the animals) 

• Regenerative and biodynamic food that is grown in a complete bio-system, in naturally regenerating soil which is sustainable, reduces runoff, and produces biodiversity 

• Local sourcing to reduce carbon emissions and provide fresher food

• Seasonal produce - crops that grow naturally at specific times during the year 

• Family-Owned 

• B Corp and Organic retailer certified 

In addition, Erewhon supports fair trade and fair wages for the products they buy from producers, and sells their Erewhon branded products in eco-conscious, low impact packaging. Erewhon is also known for its “unmatched education” and service in the health and food sector. They use their unmatched knowledge to provide a supermarket full of the highest quality, most ethically produced products so that their customers don't have to do the research themselves (“Our Story | Erewhon Market”).

EXPERT OPINIONS: 

The CEO and founder, Alex Totterman, of Cove, a California based company that creates sustainable materials and packaging, talked about its partnership with Erewhon. Cove decided to partner with Erewhon to sell the first ever fully biodegradable water bottle. They decided to enter the retail world with Erewhon because it was very important “to find a mission-aligned retail partner to debut Cove” (Totterman). In addition, Erewhon has created an option for people to deposit their used Cove bottles into their compostable bins which will then be used for biological recycling (Asperin 2022). 

Bridget Goldschmidt, a food industry expert and the managing editor at Progressive Grocer, talked about Erewhon earning its B corp status and how important and prestigious that certification is in terms of sustainability. Erewhon having this certification means that they have proved to have exercised the highest environmental and social standards on top of maintaining a high level of transparency and accountability (Goldschmidt 2021). 

FINAL RECOMMENDATION: 

I recommend that ADMP invest in Erewhon. From a financial point of view, Erewhon is thriving and continues to have increasing success each year that it is in business. There are also promising plans of expansion not just outside of Los Angeles county but across the country to New York City. Many experts agree that Erewhon is genuinely a sustainable and socially conscious business, as demonstrated with their B corp certification that only comes with demonstrating high environmental and social standards. In addition, they are a cerrtified organic retailer which is a very rare certification to achieve. They demonstrate their commitment to sustainability by partnering with companies like Cove, which decided to make Erewhon its first retailer seller because of Erewhon’s commitment to high environmental standards. With all this being said, I highly recommend that ADMP invest in Erewhon as they have a strong triple bottom line, CSR, social enterprise, and are committed to limiting carbon footprint, all values that ADMP emphasizes. 

Works Cited

Asperin, Alexa Mae. “World’s First Biodegradable Water Bottle to Be Sold at LA Erewhon Stores.” FOX 11, 28 Nov. 2022, www.foxla.com/news/la-erewhon-stores-worlds-first-biodegradable-water-bottle.

Berlinger, Max. “How Erewhon Became L.A.’S Hottest Hangout.” The New York Times, 17 Feb. 2021, www.nytimes.com/2021/02/17/style/erewhon-los-angeles-health-food.html.

Dunn, Julia. “The Greenest Grocery Stores in America.” Mashed, 11 May 2022, www.mashed.com/860129/the-greenest-grocery-stores-in-america/. Accessed 6 Mar. 2024.

“Erewhon Market.” Www.erewhonmarket.com, www.erewhonmarket.com/post/bcorp/.

“Erewhon Market.” Erewhon, www.erewhonmarket.com/post/the-erewhon-bottle-program/.

“Erewhon Market.” Erewhon, www.erewhonmarket.com/post/erewhonorganiccafe/. Accessed 6 Mar. 2024.

“Erewhon Market - LA’s Organic Grocery Store to Know About.” MonthlyFavorites - a FASHION & LIFESTYLE BLOG, 27 Jan. 2023, monthlyfavorites.com/erehwon-market-the-ultimate-organic-grocery-destination/. Accessed 6 Mar. 2024.

“Erewhon Proudly Announces B Corp Certification.” Www.businesswire.com, 3 Aug. 2021, www.businesswire.com/news/home/20210803005171/en/Erewhon-Proudly-Announces-B-Corp-Certification. Accessed 6 Mar. 2024.

“Erewhon’s Insane Grocery Prices Explained by a Farmer.” Www.youtube.com, www.youtube.com/watch?v=WE_LDzusgu8. Accessed 6 Mar. 2024.

G, Brennan. “Revolutionizing Retail Sustainability: Are Erewhon’s Digital Pricing Labels Reshaping the Future of Eco-Friendly Shopping?” Www.linkedin.com, 5 May 2023, www.linkedin.com/pulse/revolutionizing-retail-sustainability-erewhons-digital-brennan-gerald/. Accessed 6 Mar. 2024.

Goldschmidt, Bridget. “Erewhon Earns B Corp Certification.” Progressive Grocer, 4 Aug. 2021, progressivegrocer.com/erewhon-earns-b-corp-certification. Accessed 6 Mar. 2024.

Issel, Marc. “The Corporate Carbon Footprint: A Quick Guide.” Www.onetrust.com, 8 2022, www.onetrust.com/blog/corporate-carbon-footprint-guide/#:~:text=A%20company%27s%20carbon%20footprint%2C%20also. Accessed 6 Mar. 2024.

Marketing, Precision Global. “Erewhon: Pioneering Health and Wellness in Calabasas.” Medium, 20 Feb. 2024, medium.com/@precisionglobalmarketing1305/erewhon-pioneering-health-and-wellness-in-calabasas-eabf1ad58c6f. Accessed 6 Mar. 2024.

Miller, Kelsey. “The Triple Bottom Line: What It Is & Why It’s Important.” Harvard Business School Online, 8 Dec. 2020, online.hbs.edu/blog/post/what-is-the-triple-bottom-line.

OECD. “Social Entrepreneurship & Social Enterprises - OECD.” Www.oecd.org, www.oecd.org/cfe/leed/social-economy/social-entrepreneurship.htm.

“Our Story | Erewhon Market.” Erewhon, www.erewhonmarket.com/about/.

Reckmann, Nadia. “What Is Corporate Social Responsibility?” Business News Daily, 5 Sept. 2023, www.businessnewsdaily.com/4679-corporate-social-responsibility.html.

Sorvino, Chloe. “Organic Grocer Erewhon Eyes Expansion after Private Equity Deal.” Forbes, 7 Oct. 2019, www.forbes.com/sites/chloesorvino/2019/10/07/erewhon-stripes-group-investment/?sh=71690fbe189c. Accessed 6 Mar. 2024.