Editor's note: This tour of small businesses across the country highlights the imagination, diversity, and resilience of American enterprise.
Biodiversity sounds so environmentally correct that one forgets it is also beautiful. Cradled by the gently looming Blue Ridge Mountains, the farm at Gaia Herbs is a glorious quilt. The electric purple of violet skullcap. The saturated orange of California poppies. The delicate lavender of blue vervain. The pink and red sunburst of echinacea.
Gaia's founder, Ric Scalzo, searched more than a year before the January day when he found this herbal Eden, its vernal promise hibernating in winter ice. Here, he oversees the production of natural supplements, from seed selection to packaging. To Scalzo, the farm is at once a spiritual sanctuary and the basis for a $50 million business. "Western North Carolina is home to 80 percent of the plants that grow in the United States," says Scalzo. "So it is pretty magical."
If you consume herbal supplements--and roughly one in five Americans does--you've likely encountered some of Gaia's innovations. The company, which occupies 250 verdant, rolling acres in Brevard, North Carolina, introduced to the industry fresh plant extracts; liquid herbs in capsule form; and 100 percent plant-based canisters for packaging powders. Gaia is also the nation's best-selling producer of turmeric, today's wunder-herb thanks to aging baby boomers who increasingly succumb to inflammation.
Jonathan Lawrence is director of vitamins and body care for Fresh Thyme Farmers Market, a 48-store organic grocery chain in the Midwest where Gaia sales have recently been up 196 percent. Customers flock to Gaia because it clearly explains the benefits that each product delivers--and then delivers them, he says. "They have got the science. They have got the herbalist background. They have got the mission," says Lawrence. "They also drive innovation, making something that was really old new again."
In 2010, Gaia took home the Herbal Industry Leader Award from the American Herbal Products Association, an honor that has since gone to companies like Toms of Maine and Dr. Bronner's Magic Soap. At the time, someone asked Scalzo what he was most proud of. "I said, 'Living my dream without compromising my values,' " says Scalzo. Among those values: Do no harm. Work with nature. Allow nature to be your healer. Honor the earth as a teacher.
The healing power of plants
Scalzo grew up in Worcester, Massachusetts, part of a sprawling Italian brood that included 16 aunts and uncles, some of them entrepreneurs. His closest connection to plants back then was a grandmother who liked to garden. After high school, Scalzo spent four months traveling to America's national parks and then through Europe. "I was looking for answers to how I was connected to the spiritual world," he says.
Scalzo had planned to study aesthetics and philosophy in college. His fascination with plants grew out of a meditation class, where he sought answers to life's mysteries within himself. "Plants and people have been co-evolving for a long, long, long, long time," he says. "The connection between the human genome and the plant genome is very intimate. I knew that there was a connection I needed to make between the world of plants and my inner spiritual growth."
So Scalzo enrolled in Bastyr University in Seattle, where he trained in naturopathic botanical medicine: healing with plants. Returning to Massachusetts, he joined Comprehensive Medical Services, a clinic that bundled acupuncture, herbal, and Chinese medicine with Western practices. Typically, a patient would see the Western doctor first for lab and blood tests and a conventional diagnosis. Then she would swing by Scalzo, who performed his own examination, considering her "constitution," which in homeopathic medicine refers to the underlying physical traits that affect how the body expresses symptoms and disease.
Scalzo would then customize a treatment for each patient that typically included herbal medicines, a nutritional regimen, and sometimes detoxification, exercises, and fasting. "You end up not just treating the symptoms but treating the person," says Scalzo.
This was the 1980s. Interest in alternative medicine had been rising for more than a decade. Over the course of eight years, Scalzo treated more than 10,000 patients. "I decided that I would raise my rates as a way to control the patient load," he says. "I doubled my rates, and that very week my patient load increased by double."
"I began to realize that it was just going to be 10 or 12 patients a day, five days a week," says Scalzo. "Going out on weekends to harvest herbs, make medicines, without a life for myself." At the clinic, he had blended most of his own formulas, informed by a system of alternative medicine called Ayurveda, rooted in India. Scalzo decided he could make a business from that, cutting out direct contact with patients.
Organic goes big time
Scalzo started Gaia (a reference to Mother Earth) in 1987 with seven elixirs, extractions from plants delivered in syrup form. They included an elixir for general rejuvenation, one for healthy digestion, and one for stress. Unlike most elixirs at the time, Gaia's eschewed sugar, relying instead on concentrated fruits such as apricot and mulberry. Scalzo bought herbs from growers around the country and gathered them himself--a practice known as wild-crafting.
Not surprisingly, startup costs were minimal: less than $2,000 of his own savings.
"At that point, I had no vision for what was to come," says Scalzo. "I was following a simple thought: to make rejuvenative elixirs and share those with the people of New England."
That sharing took place at independent health food stores. Scalzo traveled all over the region, delivering evening lectures to 30 or 40 people. The next morning, he would be back at the store to answer questions and sell product. "I didn't think of myself as a salesman at all," says Scalzo. "I was an educator."
Back then, the only such products on the market were made from dry herbs. Scalzo developed a mechanism to double-macerate--essentially to soften by steeping in liquid--and to concentrate plants when they are at their most succulent. In 1989, Gaia produced the market's first elixirs made from fresh herbs. "It seemed to me that you could capture more vitality that way, but nobody was offering it," says Scalzo.
Supported by the regional health-food community, Gaia hummed along for several years. Then Whole Foods and Wild Oats Market, which had been around since the 1980s, began to gain critical mass. The large chains snapped up Gaia's products, and revenues swelled to $10 million.
At that scale, a supply chain based on wild-crafting wasn't going to cut it. "It was obvious that a sustainable model could only be around certified organically grown herbs," says Scalzo. So in 1992, he bought 11 acres in the Boston suburb of Harvard and became a grower. Fifteen employees bottled and packaged products on site. The company launched a division selling to health professionals. It also established a research institute and published a professional journal of botanical medicine.
By 1996, demand had outstripped the capacity of the Massachusetts farm. Scalzo chose North Carolina, with its varietal abundance, for his new location. From 250 acres of farmland an hour outside Asheville (and a much smaller farm in Costa Rica), Gaia produces about 30 percent of its raw material. It sources the rest from partner farms and wild-harvesters around the globe.
The move was necessary, but the timing was bad. In the late 1990s, St. John's wort leapt to overnight sensation status as a cure for depression. "It was blowing off the shelves. It became a household word," says Scalzo. One of Gaia's best-selling products was a blend of St. John's wort with other herbs that Scalzo says worked better than the single-plant form. But the demand for St. John's on its own knocked the blend off its perch.
Then, after a couple of years, "people realized they were not getting well using St. John's wort," says Scalzo. Sales dropped dramatically industry-wide, decimating a glutted supply chain. Revenue for many companies fell by 50 percent. Gaia fared better but still was rocked by the blow.
The company regained its momentum with a string of innovations, starting in 2000. The most disruptive were Phyto-Caps, vegetarian capsules containing ultra-concentrated liquid versions of raw herbs. "We knew we could get more rapid absorption with liquids, but people don't like the taste of liquids, so we needed a different way to deliver them," says Scalzo. Today, 70 percent of Gaia's products are in Phyto-Cap form.
In 2001, Gaia received a $2 million grant from the National Institutes of Health to study Echinacea, whose curative powers at the time were viewed with skepticism. "And boy, did we study it," says Scalzo. "Echinacea is definitely on a comeback now, and we played a very important part in that." The company also used the best practices it identified to commercialize a product called Quick Defense. "We can't make disease claims," says Scalzo. "But I would say it is probably the closest thing to a cure for the symptoms of a cold than anything I know."
The triumph of turmeric
At $50 million, Gaia--which sells both through retailers and online--has grown far beyond what Scalzo ever anticipated. And it has recently found a new market in what he calls "holistic hopefuls": people who look askance at pills but will happily incorporate powders into their soups and smoothies. Gaia's new powders--derived from plants like maca, whose root is known for improving energy, and that rock star herb turmeric--have taken off, says Scalzo.
Turmeric alone contributes $12 million to the company's top line. Its Curcumin Synergy products combine extract from the whole plant with black pepper to increase absorption, "which is how turmeric has been used for thousands of years, in curries and so forth, in all of Southeast Asia," says Scalzo. The company grows its turmeric chiefly in Costa Rica, along with plants like ginger.
Scalzo recently appointed a president, Angela McElwee, to handle the day-to-day of Gaia so he can concentrate on overseeing agricultural operations and formulating new products. He lives in a house overlooking the farm and loves to roam the property, accompanied only by his dogs, communing with the plants. "From the beginning it's been about connecting with nature," says Scalzo. "This is where I find my joy."