BATTLE
OF THE BBQ
Meatless-burger manufacturers may not have to slaughter
cows, but as Gardenburger has found out, they're still
in a brutal business.
Last month, shortly after the Portland veggie-burger
maker announced its first profitable quarter following
three years of mounting losses, the company's CEO, Lyle
Hubbard, bailed out--the latest in a string of high-level
departures from the struggling company. Perhaps more painful,
investors continued to shun Gardenburger's shares, yawning
at the company's return to profitability.
"They're in a tough spot right now," says John Rogers,
an analyst who follows the company for the local brokerage
firm D.A. Davidson.
Six years ago, Gardenburger was a Wall Street darling,
riding high on the seemingly limitless potential for meat
substitutes. The company's stock traded as high as $30
per share, six times its current price.
For supporters of the company, which was founded as Wholesome
and Hearty Foods in 1985, the promise of the market for
meat substitutes--helped along by regular E. coli scares
and the Food and Drug Administration's enthusiastic endorsement
of soy products--has made the company's dismal results
particularly hard to swallow.
In 1995, Gardenburger's board hired Hubbard to lead the
company into the big time. A hotshot at Quaker Oats, Hubbard
was credited there with popularizing rice cakes and granola
bars.
His mission at Gardenburger was to take a niche product
to mass market. According to former employees, he quickly
purged the company of the rootsy sprout-heads who were
more attuned to Hawthorne Boulevard than Madison Avenue.
Hubbard then launched a high-profile, high-cost marketing
and advertising campaign that culminated in Gardenburger's
paying $1.4 million for a 30-second spot on the final
Seinfeld episode
in 1998.
Hubbard wanted to "brand" Gardenburger, making the word
as synonymous with a meatless patty as Kleenex is with
tissues or Xerox with copiers. The strategy worked brilliantly--in
part. According to Gardenburger's annual report, sales
of meatless patties grew 55 percent in 1998, with the
local company getting the nearly all of the increase.
"The company ramped up advertising and gave the whole
industry a boost," Rogers recalls.
Having sent sales and market share soaring and created
name-recognition nearly equal to George Costanza's, Hubbard
looked like
a genius.
The bad news is that, in its effort to win customers,
Gardenburger lost tens of millions of dollars and went
into debt. Faced with growing losses, the company slashed
ad spending last year. Customers quickly drifted away;
in the most recent nine months, sales dropped 16 percent.
It was as if Hubbard had opened a hot new restaurant but
then couldn't afford the electricity to light the sign
out front.
To make matters worse, since 1999, Gardenburger's two
principal competitors, Worthington Foods and Boca Burger,
have been taken over by Kellogg and Kraft respectively.
Although Gardenburger still sells more meatless burgers
than either of them, its lead is shrinking as its beefed-up
competitors open their bulging wallets.
But even with Kellogg and Kraft pushing their products,
the veggie-burger category ground nearly to a halt last
year, growing only 5 percent, and has actually seen grocery-store
sales shrink 11 percent so far this year, according to
interim Gardenburger CEO
Jim Linford.
Linford points to a couple of hopeful signs. The company's
new flame-grilled burger is its best-selling product yet,
he says, and the overall market for meat substitutes is
growing. Yet Gardenburger's best hope seems to lie in
being bought out by someone else.
The faux-burger industry's growing pains generally, and
Gardenburger's specifically, don't come as a big surprise
to Portland restaurateur James DeFeo, who caters to a
health-conscious crowd at his Vita and Paradox cafes.
DeFeo says he's lucky to sell one veggie burger a day
at Vita, and five at Paradox.
What's worse, DeFeo admits that even though the Paradox
menu says "Gardenburger," he actually sells Boca Burgers
because, he says, that's what his customers prefer.
Battle
of the BBQ
In some parts of Portland over the holiday weekend, people
lined up bottles of last year's pinot noir and argued
over whether the Willamette Valley will ever rival France's
Burgundy region. In an earthier part of town, eight Willamette
Week staffers--including a dyspeptic vegan theater
critic, a sheep-ranching news editor and various riffraff
attracted by the offer of free booze--lined up meatless
patties and argued over whether meatless burgers will
make beef cattle obsolete or go the way of Space Food
Sticks.
The answer, to paraphrase one carnivore in the group,
is the jury is still out. "I'd rather sew my eyelids shut
with a rusty fish hook than take another bite of this
shit," commented that taster as he finished his 12th sample.
Our methodology involved grilling six meatless patties,
baking the same six and then tasting them blind. We used
no condiments (very unsafe eating, it turns out) and no
buns, and followed the swirl-and-spit method employed
at fine wineries. The burgers we tasted included Gardenburger
Hamburger Style, Gardenburger Vegan, Boca Vegan, Boca
Chef Max, Lightlife Light Burger and Amy's Burger.
We rated each patty on three attributes: taste, texture
and likeness to beef. The third criterion was obviously
highly subjective, but if we believed in objectivity,
we wouldn't be working for an alternative paper.
A collation of our collective judgment showed that in
nearly every case, we preferred burgers cooked on the
barbecue. And, on that score, the local company smoked
the competition: The Gardenburger Hamburger Style patty
racked up the most points on the grill. On the other hand,
we rated the Iams-like Gardenburger Vegan second-worst,
barely better than the hapless Amy's California Burger.
--NJ
SCORES FROM THE GRILL
Gardenburger
Hamburger Style 10
Lightlife Light Burger 9
Boca Chef Max 8
Boca Vegan 6
Gardenburger Vegan 3
Amy's California
Burger 2
