Growing New Mexico's Co-op Economy

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Above: La Montañita’s Nob Hill store. Below: the MarketPlace Natural Food Store before the co-op conversion.

La Montañita’s two co-op locations in Albuquerque, New Mexico will soon be joined by two additional locations in the communities of Gallup and Santa Fe. Our Nob Hill store, located at its current site since 1987, has 9,600 square feet and annual sales of $6.7 million. Our North Valley store opened in 1999 and has 8,800 square feet and sales of $5 million.

The Wild Sage Co-op in Gallup contacted us for advice and support during the summer of 2004, and this relationship led to their decision to merge with La Montañita in January of 2005. The owner of Santa Fe’s only independently owned natural food store also contacted our co-op last summer about the possibility of selling her operation, and La Montañita is scheduled to close on this acquisition in February of 2005.
 

Wild Sage joins La Montañita


Gallup’s Wild Sage Co-op was operating with an all-volunteer staff that was struggling to keep the store open and profitable. La Montañita’s staff developed a close working relationship with this group of volunteers (mostly their board of directors), and over several months it became apparent to both groups that Wild Sage could not continue to operate in this manner. Both co-op boards discussed the idea of a merger, and this led to several Wild Sage member meetings in which La Montañita participated.

A professional market study was conducted to insure the viability of the project, and both co-ops worked hard to insure that the process facilitated full participation by all Wild Sage members. This process included several informational mailings to member homes, and a mail ballot in September of 2004. The Wild Sage membership voted overwhelmingly in favor of the merger.

The Wild Sage lease expired in December of 2004, requiring that we find a new location. Our new 1,200-square-foot store opened in February 2005. Gallup is a relatively small town of 20,000 and one of the few communities to open a new co-op in the past 10 years. La Montañita is especially delighted with the opportunity to maintain a natural food co-op in Gallup. We are now working with our new members there to develop appropriate volunteer and community-based cooperative projects.

Santa Fe purchase
The Marketplace Natural Food Store in Santa Fe, open for 22 years, has built a strong presence in a highly competitive market with a business philosophy very similar to many food cooperatives. This store, with $6 million in annual sales, moved into its current 10,000-square-foot facility in December of 2002. The Marketplace’s owner first contacted us requesting a confidential purchase, but our commitment to full transparency required an open and fully public process with our membership and the community of Santa Fe. We did reach an agreement on an open procedure that included financial remuneration for The Marketplace should we go public and not complete the purchase.

We first announced and discussed the potential of this opportunity with our staff in two all-store meetings where they expressed their support for the project. We then began a series of articles in our monthly co-op newsletter to fully engage our membership. The mainstream media picked up on this story and ran several print articles in both cities. We were also interviewed on three local radio stations.

Over the next several months we engaged in a series of well-publicized community meetings in both Santa Fe and Albuquerque. We enjoyed stronger than anticipated turnout and met many people who remembered Santa Fe’s New Life Co-op, which closed in the mid 1980s. The support expressed for the possibility of a co-op returning to Santa Fe through La Montañita was heartening and inspiring to the La Montañita staff and board. We also heard from a number of current La Montañita members living in Santa Fe and the surrounding area who came out in support of the idea. And an unexpected avenue of support came from the numerous farmers and local producers in northern New Mexico with whom we currently do business.

With strong support from both Santa Fe and our membership, we began a two-pronged approach to moving the undertaking forward. Our board began to work on the governance challenges presented by a cooperative system spread over 200 miles covering western, northern, and central New Mexico. A new governance member brochure was created to help educate and engage our members from these diverse communities. Research continues on electronic alternatives to in-person board meetings as well as discussion around representational issues. Work has also begun on developing strong board member linkage committees in each community.

While our board worked on governance issues, the co-op’s senior leadership team engaged both legal and accounting expertise to complete an intensive due diligence process. We sought offers to finance from several banks and ultimately signed a commitment with the National Co-op Bank. Our accounting firm reviewed about 40 pounds of the seller’s records and at our request developed their own financial analysis independent of our internal projections. We also received valuable input from staff and several members of the National Cooperative Grocers Association. After several months of revisions, we finalized a purchase agreement that our board of directors formally approved at their meeting in January 2005. We are now scheduled to complete this transaction in late February.

As both of these projects come to fruition, it is fascinating to note that these opportunities came to us just months after a new “Global Ends Policy” was adopted by our board. This new ends policy states: “A thriving member-owned cooperative that results in an increasing number of people having and making more informed and sustainable choices at costs that do not exceed the revenues of the cooperative.” While our board continues to work on our ends policies, this current global policy clearly guides us towards growth. The Gallup project is a relatively low-cost undertaking; however, the Santa Fe purchase is a significant financial investment for La Montañita.

Although both of these projects work financially, it is the value that the cooperative economic model brings to a community that inspires these endeavors. Early in the undertaking, we developed a long list of “why grow” discussion points, and what we learned excited and supported us throughout this effort. Our process took us back to the cooperative principles and values, and it was there that we found great importance in these projects for the communities of Gallup, Santa Fe, and La Montañita Co-op.

*** C.E. Pugh is national development director for the National Cooperative Grocers Association and formerly was general manager of LaMontanita Cooperative ([email protected]).

See other articles from this issue: #117 March - April - 2005