First family of health: launched 52 years ago, Vitamin Cottage rides health-conscious wave.

• Author: Taylor, Mike
• Position: Company overview - Company rankings

When Margaret Isely began going door-to-door in a business that would become Vitamin Cottage, it was 1955 and the benefits of natural foods and supplements were largely unknown to consumers. So Isely, who had embraced vitamins and natural remedies to treat her own health woes, typically would loan out books on the subject and return to the houses later to discuss the reading materials and take orders for vitamins.

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Far from a solitary force in the field anymore, the Lakewood-based chain of healthfood stores has been riding a wave of heightened health consciousness for the better part of two decades, with 20 percent annual revenue growth since the late 1980s. The family-owned company has grown to 24 stores in Colorado and New Mexico, with 850 employees.

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Vice President Heather Isely credits Austin, Texas-based Whole Foods Market for raising awareness and visibility for all health-food enterprises since it came on the scene in the 1980s. "Whole Foods had a huge impact on the natural-foods industry," she says. "Their marketing made the natural-foods industry 'cool,' the in-thing. We've always viewed ourselves as more of a complement to Whole Foods than direct competitors."

She points out that the busiest Whole Foods store in the state and busiest Vitamin Cottage in Colorado are in the same shopping complex on 30th Street in Boulder, their front doors barely 50 feet from each other.

Margaret Isely died in 1997, and a year later her husband, Phillip, sold controlling interest of the nine-store company to three of his children--Kemper, Zephyr and Heather Isely--along with daughter-in-law Elizabeth Isely. Those four make up the executive team of Vitamin Cottage today, with brothers Zephyr and Kemper serving as co-presidents. Heather and Elizabeth are vice presidents. The father, Phillip, turns 92 this year.

Along with ranking in the top five of the ColoradoBiz Top 50 Family-Owned Companies list for the third straight year (No. 3 this year), Vitamin Cottage leads all ranked firms in number of relatives employed, with 12.

The annual Family-Owned Company ranking, now in its sixth year, is based on total number of employees. To qualify, a company must be based in Colorado, the company's ownership must be controlled by a single family, and controlling family members must be active in management.

Another decision influenced by other health-food stores like Whole Foods has been Vitamin Cottage's move to expand its offerings to roughly equal parts groceries and nutritional supplements instead of chiefly supplements. The stores average 10,000 square feet of floor space, and all but one store sells fresh produce. The one store that doesn't, on Happy Canyon and Hampden Avenue in southeast Denver, is based on the old small-store model and is due to move to a location in the University of Denver-Washington Park area, likely in late 2007. The company currently is in lease negotiations for the new location.

Heather Isely says that while the business of Vitamin Cottage has changed in some ways--along with adding the grocery element, they've poured profits back into the company for expansion and remodeling--the founding principles of the company haven't changed under the second generation of ownership. Chief among those principles is a commitment to "everyday affordable prices" that Isely says is possible because of Vitamin Cottage's relatively low overhead.

"Whenever you make prepared foods or you have a meat counter or a seafood counter, they're very labor-intensive, and you also throw away a lot," she says. "You have to make up those margins elsewhere. Because we aren't going to do those things, we have lower margins."

Heather Isely recalls her parents' pioneering days in the health-food movement when educating consumers was a critical part of the sales process.

"My parents felt that people should be able to take charge of their own health and be responsible for it and should learn about it," she says. "They borrowed $200 from my mom's mom and went door to door in Golden, Colorado, with samples of whole-grain bread and books on nutrition. They would come back a week...