A government-supervised group representing the egg industry overstepped its authority by waging a two-year "crisis" campaign to halt the growth of a San Francisco vegan mayonnaise startup, joking about putting "a hit" on its CEO and deleting emails in an apparent attempt to cover its tracks, a federal investigation has found.
The investigation, sparked by documents obtained through the Freedom of Information Act by an Massachusetts Institute of Technology researcher and his Washington attorney, reveals how the American Egg Board and the $7-billion egg industry perceived Just Mayo, an egg-less mayonnaise, to be a threat — and the measures it took to try to crush its manufacturer, now called Hampton Creek.
The American Egg Board, an industry-funded promotion group overseen by the U.S. Department of Agriculture's marketing branch, spent at least $59,500 to counter the product's publicity advances, including hiring a top-tier Chicago public relations firm to plant "USDA approved" pro-egg messaging with bloggers the firm considered "influential," according to investigation documents.
Other board efforts included pop-up ads promoting eggs — usually the board's "Incredible Edible Egg" logo — that would outrank other content when Internet users searched such terms as "Beyond Eggs," the initial name for Hampton Creek, or its founder, Josh Tetrick, according to the internal investigation by the Agriculture Department.
Email exchanges among egg board members asked "Can we pool our money and put a hit on him?" and suggested having "old buddies from Brooklyn pay him a visit," referring to Tetrick.
The parties involved in the exchange told investigators they were just joking, and those investigators concluded the messages were written in jest.
But the activities appear to have pushed Egg Board CEO Joanne Ivy into early retirement last year, according to the investigation documents, posted late Thursday on the USDA website.
Ivy refused to respond to a subpoena by USDA investigators, investigators said. She "entered into a Confidential Severance Agreement and Release with AEB and retired from her position" in September 2015, a few months before the end of her tenure, investigators said.
She and board officials involved in the allegations could not be contacted for comment late Thursday.
Investigators concluded that efforts to monitor and undermine a specific company and its products exceeded the 1976 bylaws that govern the 18-member board, which is appointed by the secretary of Agriculture and uses the $20 million in annual fees it collects from large-scale producers to support research and promote the egg industry.
Ivy approved of an offer from Anthony Zolezzi, identified as a consultant and serial entrepreneur, who bragged during a strategy session in Chicago in 2013 that he could make "one phone call" and get Whole Foods to pull the product from its shelves.
"If it is that easy, I will contact Anthony and remind him to make that call if it isn't too steep" in cost, Ivy wrote to Chad Gregory, president and CEO of United Egg Producers, a board-affiliated cooperative of egg producers.
An executive for Whole Foods told investigators that no such attempt was made, and investigators found no other evidence the plan was executed after it was proposed and supported by Ivy in 2013.
Zolezzi, who later apologized to Tetrick for his role, never was under contract with the board, the investigation concluded.
Investigators from the USDA's Agricultural Marketing Service said these exchanges were "inappropriate discussions about an action that, if acted upon, would have significantly exceeded the provisions of the Egg Research and Consumer Information Act" that established the board and its duties.
"The sworn statements obtained during the [Agricultural Marketing Service] Review indicate that the inappropriate discussions did not result in any actual conduct detrimental to 'Just Mayo' being marketed by Whole Foods," the investigation concluded.
Ivy also instructed staff to erase all emails having to do with Beyond Eggs after reading them. Staff did not erase them, but Ivy apparently did, according to investigators, who retrieved the deleted communication.
The board paid a Chicago-based public relations firm, Edelman Inc., to monitor every story about the company and to encourage bloggers and mainstream writers to tout the benefits of eggs.
In an email under the subject "Beyond Eggs," Ivy suggested that the company should look at the upstart company as "a crisis and major threat to the future of the egg products industry."
The campaign eventually included pop-up ads promoting eggs that would appear when Internet users searched the company name — an action that investigators said "was not an appropriate activity" under USDA guidelines. It was not clear from the documents who created the ads.
The public relations firm, which specializes in the food and beverage industry and has an annual revenue of $855 million, told the board that it had compiled "key messages (USDA approved) to ask our Beyond Eggs bloggers (full list below) to weave into their blog posts."
Edelman estimated that it would cost $33,000 for "research and coordination with 5-10 key influential bloggers in food and health/nutrition space, drafting key messaging and coordinating posts," according to the board documents.
Investigators found no evidence that the bloggers, who acknowledged egg board sponsorship, wrote disparagingly of Hampton Creek or its products.
Edelman no longer has a contract with the board, according to the documents.
Investigators found no evidence to support allegations by Tetrick that the board intervened in a lawsuit by food giant Unilever that unsuccessfully challenged Hampton Creek's use of the word "mayo" to describe its egg-free product.
A separate action by the Food and Drug Administration, which monitors claims and labeling of food products, caused Hampton Creek to make several alterations of its label, including defining what it meant by the word "just."
The investigation found no evidence to support Tetrick's allegation that the board tried to influence that inquiry, although emails show that an official with the marketing service suggested forwarding the board's concerns about labeling to the FDA. Ivy replied, "Okay. Let's do it," but expressed unspecified "concerns" that needed further discussion.
Ivy also suggested to a United Egg Producers member that the agency already knew of complaints about labeling but that "maybe it needs to be pushed."
Investigators said that the board's spending to fund research to compare the environmental footprint of egg substitutes with those of eggs was justified, but that specifying one company and product in its internal budgeting documents, which were not properly submitted for USDA review, violated federal guidelines.
"The review indicated certain activities appear to not have been approved" by the USDA's Agricultural Marketing Service, and that some budget amendments were not even submitted to the service for approval. The board "acted inappropriately by failing to obtain AMS approval for specific budget allocations and the related project activities," the investigation found.
Penalties for the behavior were mostly confined to additional training in ethics and procedures. No criminal charges were made.
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