Target Ends Relationship With Troubled Startup Hampton Creek

(Bloomberg) -- Target Corp. will no longer sell products made by food startup Hampton Creek Inc. after an internal review, the latest major blow to the beleaguered maker of Just Mayo eggless mayonnaise and other plant-based foods.

The retail giant decided to end the relationship about two months after receiving what it described as “specific and serious food safety allegations about Hampton Creek products.” Target pulled the San Francisco company’s products from shelves in June while it looked into the matter and shared the claims with the U.S. Food and Drug Administration.

Hampton Creek has said its products are safe and comply with FDA rules. The FDA has said it won’t investigate unless it receives reports of consumers getting sick and has “no safety concerns with Hampton Creek at this time.”

“Although the FDA is not pursuing this further, we used the opportunity to review our portfolio, as we regularly do, and decided to reconsider our relationship with Hampton Creek,” Jenna Reck, a spokeswoman for Target, wrote in an email Friday. “We are not planning to bring Hampton Creek products back to Target and have openly communicated our decision with the Hampton Creek team.”

Last week, Hampton Creek released a statement saying the FDA had concluded its products are safe and that the company hoped to resolve the issue with Target soon. Hampton Creek said its public statement was to blame for the retailer’s decision. “Target informed us that sharing with the public the FDA’s conclusion that our products are safe violated Target’s vendor communication guidelines,” Andrew Noyes, a spokesman for Hampton Creek, wrote in an email.

Target said the statement was one of several factors. “There were multiple reasons we terminated our relationship with Hampton Creek and all of the reasons were clearly communicated to Hampton Creek,” Reck said by phone. She declined to elaborate, saying Target doesn’t discuss details of its business relationships.

The loss of Target’s business is a big setback for Hampton Creek after a year filled with scandals. Before Target’s review this summer, it was the venture-backed startup’s largest retail customer, two people with knowledge of the business have said. Target was expected to bring in about $5.5 million a year for the money-losing food maker, representing about a third of Hampton Creek sales from stores, according to one of the people, who asked not to be identified because the financial information is private. Noyes disputed these figures and said Target accounted for less than 10 percent of the company’s total net revenue in 2016 and 2017.

Some former allies have been distancing themselves from Hampton Creek recently. In the last year, the company has been rocked by revelations of an undercover project to buy back its own products from stores that briefly drew scrutiny from the feds, fundraising struggles and an executive exodus. This summer, the startup’s entire board left except for Chief Executive Officer Joshua Tetrick, and a bottled-water company co-founded by actor Jaden Smith sued over a trademark dispute.

“We’re thankful to the millions of consumers and a growing number of partners who continue to support our mission to build a food system where everyone is eating well,” Tetrick wrote in an emailed statement. “We’ve learned that focusing on doing good work, the kind that has an enduring impact, is the best way to approach these types of challenges.”

To contact the reporter on this story: Olivia Zaleski in San Francisco at ozaleski@bloomberg.net.

To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Nick Turner