Did This Vegan Mayo Startup Buy Its Own Product To Inflate Sales?

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By Cooking Panda

Hampton Creek reportedly inflated its sales by directing contractors to purchase its own products throughout the country.

From approximately March 2014 to January 2015, Hampton Creek contractors were instructed to buy mass quantities of Just Mayo in order to make the product appear more popular to investors, according to Bloomberg.

“We need you in Safeway buying Just Mayo and our new flavored mayos,” Caroline Love, then-director of corporate partnership, wrote in an April 2014 e-mail. “And we’re going to pay you for this exciting new project!”

“It is highly questionable for a company to purchase its own goods,” said David Larcker, a professor at Stanford Graduate School of Business. “Revenue is an important number for evaluating growing companies, but the companies need to be transparent about the source of that revenue.”

Love reportedly explained strategies for contractors to purchase the product without appearing suspicious.

“I might go through the self-checkout lanes, or make several transactions going to different cashiers each time to avoid questions like, ‘Why are you buying so much mayo?!'” Love wrote. “Make sure you are not wearing your HC gear … This is an undercover project.”

Contractors were also told to call grocery stores to inquire about Just Mayo. A high demand of a product increases the likelihood that retailers will increase its inventory.

“Remember, you are calling as a customer,” Melanie Myers, currently Ingredient Sourcer for the company, wrote in a March 2015 email to a contractor. “The conversation should go something like this: Hi, I’m doing some catering and I’m looking to pick up this new mayonnaise. I think it’s called Just Mayo.”

Josh Tetrick, chief executive officer of Hampton Creek, said the purpose of the buybacks was for quality control performances.

“Because of this, we now understand the impact of trucking and shipping our product and enabled the system we have today that mitigates the risk of extreme temperatures,” Tetrick explained. “Assessing the product from the customer perspective, more than anything, gets us out of the bubble of typical manufacturing.”

However, former contractors said they were free to consume or throw out the mayonnaise after buying it. Furthermore, companies typically check the quality of their products before they leave the factory, according to Kurt Jetta, owner of Tabs Analytics.

“There’s no legitimate explanation for a manufacturer buying significant quantities of their own product from the shelf,” Jetta said.

Source: Bloomberg / Photo credit: Green Savers

Tags: buybacks, deceptive practices, Hampton Creek, investors, Just Mayo
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