Swain can rebut each of Niman's criticisms. And both McConnell, who is no longer affiliated with the company, and Hurlbut, now the CEO of Attune Foods, continue to believe in Niman Ranch products. "If the new guys have moved 10 degrees to the practical side," says McConnell, "Niman Ranch meat is still 79 degrees better than anything but meat from a local farmer."
Niman agrees -- to an extent. "I would say Niman Ranch is just as good as any other natural-meat company," he says. But coming from him, that's not exactly a compliment. "The people that are raising natural cattle are opportunists," Niman says. "They don't really believe in it. When a cow gets sick, Niman Ranch medicates it and takes it out of the system, so it's not sold as Niman Ranch beef. But then they implant it with hormones and sell it into the commodity beef market. To me, that shows they're not really opposed to using hormones. They just see hormone free as a marketing opportunity."
Swain bristles at such statements. "I spent a lot of my career working to make money," he says. "This is something else. This is about falling in love with a value scheme and helping the company to grow responsibly, with a firm financial footing." Niman Ranch, Swain adds, finally became profitable in February.
Back in Bolinas, Bill, Nicolette, and I head over to the turkey pen. "This is our first year with the turkeys," Nicolette says. "These breeds are unchanged since the late 19th, early 20th centuries."
"We picked these up in Kansas," Bill says. "We saw them as eggs on a Friday evening, and on Saturday they hatched. There were four crates of them -- 225 turkeys. They were in the back of our car. Thirteen percent died within two weeks. It was dispiriting."
"A baby turkey doesn't even fill the palm of your hand," says Nicolette. "We had to keep opening the boxes and taking the sick ones out, so that they wouldn't be stomped on."
Entering the turkey house, I almost choke on the smell of ammonia. A wire fence separates the males from the females, some of whom have jumped over it. Bill and Nicolette chase them back. "They're beautiful," Bill says. "But they're the meanest animals in the barnyard to each other."
We eventually wind up back in Bill and Nicolette's living room, talking about mistakes that were made on the road to the sale of Niman Ranch. "My biggest mistake was giving up control," Bill says. What would he have done differently? "I wouldn't have grown the business so quickly," he says. "I would have proved it first. We should have concentrated on tightening up our operations. Instead, we acted like Kraft. We were having strategic planning sessions with outside facilitators, and our staff was spending days in conference rooms at hotels. We should have used that money as a tool to achieve profitability, rather than as a tool for growth."
I point out that Niman Ranch was profitable on the pork side, while the beef business had consistently lost money -- mainly because Niman had insisted on buying cattle from his rancher network when they were ready for the feedlot. He had also insisted on owning the feedlot in which the cattle would be fattened up prior to slaughter. In contrast, Niman Ranch did not purchase pigs until they were slaughtered and then bought only as many as it could sell. On the pork side, the company avoided having capital tied up in inventory for long periods of time. But on the beef side, it had cows, barns, real estate, and feed, not to mention exposure to the risks posed by inevitable fluctuations in the prices of all four. Hurlbut and McConnell had argued that Niman Ranch could become profitable just by applying the pork business model to beef. Indeed, that's essentially what Swain has done. Looking back, did Niman wish he had relented and let Hurlbut have his way?
"That's a really tough question," he says. He pauses. "Considering how much the values and ethos of the brand have changed, yeah, I think that would have been a better outcome. Rob would have done a better job of maintaining the values. Would I have been able to stay with it? I don't know."
Why not? "Well, remember I got into this because I had a ranch and needed to sell my livestock profitably. I really didn't want to be in the meat business. As advantageous as it might seem on a spreadsheet to divest all the agricultural parts of the enterprise, that was not appealing to me. I also thought that our standing in the marketplace came from our involvement as ranchers. I wanted Niman Ranch to be the gold standard."
He pauses again, and his mind wanders. "Yes," he says at length, "if I had it to do all over, I wouldn't have given up control, that's for sure. How did it happen? Little by little, led on by delusions of grandeur and a big payday." For a moment, he seems lost in thoughts of what might have been.
Bo Burlingham is an Inc. editor-at-large.
