“Parent company” takes on a whole new meaning for Elinor “Nell” Newman, a purveyor of organic snacks who also happens to be the daughter of blue-eyed actor Paul.
An ecologist who for years quietly crusaded on behalf of endangered birds, Nell Newman decided in 1993 to start a “green” division of Newman’s Own, her father’s wildly successful philanthropic food company in Westport, Conn. She and her business partner, Peter Meehan, run Newman’s Own Organics, the Second Generation, from Aptos, Calif., near Santa Cruz. Their division produces pretzels, chocolate bars and cookies.
Newman, 39, talked about her life as an entrepreneur in the family enterprise, which gives all after-tax profits to a variety of educational and charitable causes.
Q: What is it like working with a parent, particularly a famous parent, in a family business?
A: I think all family businesses are difficult and fraught with problems because you have that family relationship to get over. But my dad has been so supportive, we’ve managed to work around that. I grew up fishing with my dad. This is just another part of our relationship. But it’s a challenge, because you do have to get over the parent-child perspective. It gives me a better understanding of my dad and his shy behavior. After getting recognized in public from my picture on our pretzel bag, I can understand not wanting to be in the public eye. It has given me a public persona I had always avoided as a child. I do it because it’s for a good cause.
Q: Tell a little of the history of Newman’s Own.
A: It’s an interesting experiment. . . . There had never been any celebrity successes in terms of food products. Dad took that as a challenge. He was also extremely lucky in that he found one grocery customer to take the first 30,000 cases of salad dressing. Then other grocery stores wanted it. He gave away $850,000 [in after-tax profits] in the first year. That was all seat-of-the-pants. It’s harder for Dad now. He enjoys giving the money away, but not so much the day-to-day aspects of the business. He has his hands full with acting and directing. He has an expression: The tail is now wagging the dog. His company [which also makes pasta sauces and popcorn, among other products] was not expected to be a success. But it will give away between $8 million and $10 million this year. As of last year, profits given to charity [since the company’s 1982 founding] total about $90 million. That’s a big business.
Q: How did Newman’s Own Organics come to pass?
A: Dad would say, “If it’s organic, it tastes bad.” I buy really great quality organic produce and free-range turkeys. I have become the family cook and had been preparing organic meals for years, but hadn’t made a big deal of it, so he didn’t know. But probably seven years ago, I made an organic Thanksgiving dinner for him and he loved it.
Q: So he said to go for it?
A: Yes. I had a friend, Peter Meehan, with a business degree. I told him I really wanted to do this but that I knew I was in over my head. Pete offered to help me. We started going to natural-products shows and basically just educating ourselves. We had a big learning curve and spent most of our time listening, learning and talking to people. Most of the other health food companies--like Erewhon and Hain--have been around for 20-something years. We didn’t want to make fools of ourselves. It served us well to spend a year and a half getting educated. When we did come into the market, we got a lot of compliments for being knowledgeable and hands-on.
Q: Not everyone would have that luxury. How did you pull it off?
A: Dad advanced the start-up costs, and we had to pay him back. We had tiny salaries, and we worked out of our homes. We paid him back when we started to make money.
Q: How do you decide which products to make?
A: We were just really lucky that Dad happened to like pretzels, a hot product with very simple ingredients. The only ones [in the natural foods arena] were made with whole wheat and seven grain. I knew we could never push one of those off on Dad. [The pretzels are made from organic wheat and rye flour, among other ingredients.] We came up with a good-tasting product and managed to get 75% of the market within three years. It’s still doing incredibly well.
Q: But you have to deal with knockoffs and private label products from the big natural foods chains, right?
A: Luckily, they haven’t been as successful. There’s so much great stuff in [the product]. We’re really lucky because we’re riding on Dad’s coattails. We’re in a very rare group, donating all our profits to charity. [The chains] can’t do that. They don’t have Paul Newman on their label. Newman’s Own has a stronger cachet and a stronger presence. I do a lot of food shows, and people are so thankful. People come up and say: “Your father gave to a local charity in my town where my grandmother went when she had Alzheimer’s.”
Q: How do you decide where to donate money?
A: We’re pretty small. We give away a couple of hundred thousand dollars compared to $8 million [for Newman’s Own]. The profit margin is half what it is for Newman’s Own because of the premium we pay for organic ingredients and because our market isn’t that big. Seventy-five percent of the pretzel market is great, but it doesn’t get us that far.
Basically, what we’ve done is, every year we take half the money and allow people who’ve helped us in the industry to give it away. One year, the ladies who put the pretzel bags in the boxes got to give it away. Plus, I do research and find groups of interest. We’re funding the Organic Farming Research Foundation [in Santa Cruz] because they do research on organic farming. We see who’s doing the best job in certain areas--organic agriculture, the environment, homeless issues. We tend to be broad-based.
Q: How do you split up duties?
A: Pete’s the workaholic. He does all the marketing and distribution. I do the public relations and demos. We split the food shows. We both do product formulation. I’ll do most of the organic-certification questions, and we both source ingredients.
Q: How much time do you spend on the road?
A: I would hate to figure it out. It varies year to year. There are natural-products shows on either coast and distributor shows. I have three public speaking engagements in October [including The Times’ Small Business Strategies Conference Oct. 17-18 at the Los Angeles Convention Center]. I’m probably now doing fewer food shows and more public speaking.
Q: Are you at all intimidated by your father? Do you defer to him in disputes?
A: I’m certainly not intimidated. He has been absolutely supportive. He is Pete’s and my partner. He realizes we do know something now and are capable of making decisions on what works with organic. We’re really in a different realm than Newman’s Own. There’s such a big difference between organic and conventional. He gives us free rein to make mistakes and learn from them.
Q: Could the parent learn from the child? Would he ever “go organic”?
A: I don’t know if it’s feasible at their level. Their sales are so large. The biggest stumbling blocks would be pricing and availability of ingredients. I think they’re too big for that. It’s a hard balance between the charity dollar and the commitment to organic farming. In fact, I think they’re equal. By supporting organic agriculture, we’re making a charitable contribution.
Q: Your father’s renown came in handy with Fig Newmans.
A: Yes. Pete came up with the name three to four years ago, and I went out and found organic figs just like that. But we thought: We’ll get sued [by Nabisco, maker of Fig Newtons] for using the name. Dad sent a letter to the president of Nabisco and said: “My daughter’s got this little organic division. What do you think?” They gave permission [to use the name under license]. We were surprised, to say the least. The product has done incredibly well. They’re [apparently] the No. 1 cookie in health food.
Q: Have you done any succession planning?
A: Dad and I talk about it on and off. Usually the discussion goes like this: “How would you like to run Newman’s Own?” I say: “That’s interesting. What does it involve?” He says: “I don’t know.” And that’s the end of the discussion. Am I the heir apparent? I don’t know. I think I’ll be involved in their PR forever, because I’m the Newman who’s involved.
Q: What advice would you give families going into business together?
A: To work as closely as possible and to communicate. To be willing to really share ideas without judgment. To spend as much time as possible involved in the decision-making process together.
Q: Why do you do this?
A: I didn’t get into this to make money. Dad gave me the option not to give profits to charity. I said: “What am I gonna do, be the only division that keeps the money?” It was always frustrating for me trying to raise money [for environmental causes]. I’d rather give it away. I had a great mentor. Both of my parents [her mother is actress Joanne Woodward] are extremely generous beings. I was just raised that way. It didn’t occur to me to go into something that didn’t have an ethical return for me.
Nell Newman and Peter Meehan will give a keynote address at 1:30 p.m. Sunday at The Times’ Small Business Strategies Conference at the Los Angeles Convention Center.