Hampton Creek Ran Secret Buy-Back in First Year

Aug 08, 2016

Vegan mayonnaise creator Hampton Creek Inc. pumped up first-year sales and general buzz by having employees and contractors buy up jars of its Just Mayo, according to an investigation by Bloomberg News.

The news medium reported Aug 4. it had uncovered payment receipts and talked to former employees and contractors who were told to go to Safeway and other early retailers of the product in 2014 and buy hundreds of jars and otherwise talk up the product while hiding the fact they were employed by Hampton Creek.

Entrepreneur/founder Josh Tetrick, who remains CEO of the company, admitted the tactic but said it amounts to about $77,000, representing less than 0.12 percent of the company’s sales. Bloomberg hinted that it could be much more, but did not specify an amount.

Tetrick said the tactic was more about quality control than trying to inflate sales. He said the employees and contractors were told to check jars for misaligned labels, breakage or issues involving ingredient separation, which he said occurred early on when the pea protein spread was exposed to extreme temperatures in transit.

Whichever, it certainly helped Tetrick raise an early $90 million to fund his startup. We profiled Tetrick and Hampton Creek in a September 2015 cover story titled "Hero or Hustler?" -- a story that made Food Processing and Managing Editor Kevin Higgins a finalist in the coveted Jesse Neal Awards.

“We need you in Safeway buying Just Mayo and our new flavored mayos,” Caroline Love, Hampton Creek’s then-director of corporate partnership, wrote in an April 2014 e-mail to contract workers, which Bloomberg obtained. “And we’re going to pay you for this exciting new project! Below is the list of stores that have been assigned to you.”

Former workers say Hampton Creek also purchased its own products at Kroger, Costco, Walmart, Target and Whole Foods locations across the country. While a November 2014 e-mail from the corporate partnerships team said the company would stop store buyouts, three former contractors who worked for the company in 2015 say the practice continued, but directions became verbal, not written, according to Bloomberg.

Five former Hampton Creek contractors and two ex-senior staff members say the buyback assignments were separate from quality checks at stores. The ex-contractors say in most cases they were told to simply buy up jars at nearby stores and were free to consume or discard them, not look for quality issues, according to the Bloomberg story.

One former contractor provided receipts showing purchases of more than 140 jars of Just Mayo in a single day. Another contractor said he bought at least 20 jars per store after being directed to visit more than a dozen stores in less than a week.

In that crucial time period, from April 2014 to April 2015, Hampton Creek's grocery store sales were $4.6 million, not including sales at Whole Foods, according to an IRI report cited by Fast Company. Sales more than doubled the following year, and Tetrick told the magazine he expects $100 million in sales this year.

Since Hampton Creek is a privately held company, it may not have broken any laws.

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