Small Biz Profile: Spud

Spud, a Vancouver, B.C.–based organic foods home delivery service, started out as a proof-of-concept that the “triple-bottom-line” approach to business could work. During a study on the economics of sustainable community food systems for the University of California at Davis, former KPMG consultant David Van Seters says he saw that few profits reach those who actually grow foods—and also saw an “opportunity to restore that balance and create better connections between consumers and food producers.” Because retail markets drive much of the grocery industry’s pricing, he believed there was an opportunity for a business model with no commercial storefront.

S M A L L  B U S I N E S S  P R O F I L E Company name: Spud Headquarters: Vancouver, B.C. Founded: 1998 President: David Van Seters 2007 sales: $11.5 million Claim to fame: Buys (and delivers) more local produce than any other North American food retailer Learn more at: www.spud.com

Spud started out delivering locally sourced seasonal produce and other organic groceries to Vancouver residents. Van Seters says he spent four years and a lot of money getting the business to break even. “At that point, I had to pay off loans, which meant I needed to grow,” he says. Fortunately, several other players in the space approached Spud about merging or being acquired, and the company expanded its network to several other West Coast cities. In March 2008, Spud acquired its well-known Seattle competitor, Pioneer Organics, as well as two San Francisco–based organic delivery services. Spud now serves 19,000 customers in seven West Coast cities, and plans to reach more than 20 cities in the years ahead.

“In order to compete with conventional grocers, we need to scale up, but we intend to support local small businesses in each location,” Van Seters says. “We want people to associate home delivery with a more local, low-carbon way to get groceries.”

Spud continues to provide a unique market opportunity for farmers. In April 2008, a blueberry farmer was able to sell a surprise bumper crop to Spud, and a co-op of fruit farmers was able to sell cosmetically damaged (but otherwise fine) fruit to Spud. The model appears to be working on all fronts. According to Van Seters, Spud is currently profitable and has been for nearly five years.