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Gregg Engles’ Zen-over strategy

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Steve Demos, who once practiced Buddhism in a cave, started making tofu in a bathtub and selling it at his tai chi class about 20 years ago. By 2001, his organic food company boasted the nation’s best-selling soy milk: Silk.

That same year,Yale-educated Gregg Engles tried to take over Demos’s company. Engles had built a dairy company, Dean Foods, into a giant by sucking up little enterprises. Now, he wanted a play in organic food.

Demos sued to block the takeover, saying his company was “all about being green.” Engles replied that he also was devoted to green: money. Engles won. Worlds collided.

The two leaders formed one of the oddest couples running one of the hottest properties in the food business. Measured by annual revenue, Dean Foods now beats Kellogg and H.J. Heinz.

So, how can these two get along? The credit seems to go to Engles.

After the takeover, a mistrustful Demos prepared to leave. But Engles wanted the soy boy to stay, because he thought Demos had insight into organic-food consumers. So, Engles raised the buying price by about $40 million, offered $30 million in incentives and appointed Demos “head bean.” Because he now controls about a third of the nation’s milk supply, Engles let Demos run his own show.

Example: When Dean Foods met with the soy people to write a mission statement, Demos wanted to embrace the Buddhist concept of “right livelihood”: work that’s ethical and spiritual. One of the Dean people thought the term sounded extremist.

Once again, Engles swooped in. Having read up on Buddhism, he explained the concept using Hindi words, and supported Demos.

Last year, Engles doubled the amount of business Demos oversees. For his part, Demos is rolling out waves of new products and persuaded Starbucks to feature Silk as its exclusive soy milk.

Last summer over dinner, Demos apologized to Engles for suing him.

— Adapted from “Behind a Food Giant’s Success: An Unlikely Soy-Milk Alliance,” Janet Adamy, The Wall Street Journal.

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