Vegan food start-up Hampton Creek undertook a large-scale operation to buy back its own mayo, likely in an effort to make the product appear more popular than it really was, Bloomberg reported Thursday.
CEO Josh Tetrick once impressed leading Silicon Valley VC firms by getting his eggless Just Mayo product into the likes of Walmart, Kroger and Safeway, within about three years of starting his company, raising more than $90 million from investors.
At least eight months before the funding round closed, Bloomberg's Olivia Zaleski reported, Hampton Creek execs launched a quiet campaign to purchase mass quantities of Just Mayo from stores, according to five former workers and more than 250 receipts, expense reports, cash advances and e-mails reviewed by Bloomberg.
Hampton Creek was a CNBC Disruptor 50 in 2015. When asked to comment on Bloomberg's report, CEO Tetrick confirmed with CNBC the buyback program began in 2013 and "it's helped [Hampton Creek] a lot."
"It was all expensed in an appropriate way ... In total, we spent about $77,000 on the program," he said. This was all a push to ensure quality control and "build momentum" around products, Tetrick emphasized. "If a company isn't purchasing its product [for quality control], then that company isn't doing its job."
Tetrick provided Bloomberg with 15 e-mails to contractors referencing quality-control assignments. But former Hampton Creek contractors and two ex-senior staff members told Bloomberg the buyback assignments were separate from quality checks at stores.
In addition to buying hundreds of jars of the mayo across the U.S., contractors at Hampton Creek were told to call store managers pretending they were customers asking about Just Mayo, Bloomberg reported. Expense reports reviewed by Bloomberg show contractors bought back jars of Just Mayo from Safeway stores. Former workers told Bloomberg that Hampton Creek also purchased its own products at Kroger, Costco, Walmart, Target, and Whole Foods locations across the country.
For more on the story, see Bloomberg's report.
Mary Catherine Wellons contributed to this report.