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Monday, August 03, 2015

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Monday Morning Eye-Opener: Fear No Fruit

by Kevin Coupe

One of the more extraordinary people I've ever met in my career is Frieda Caplan, who in the 1960's began a career that revolutionized the fresh produce business, bringing to stores and consumers a vast selection of exotic fruits and vegetables and in the process expanding the American palate.

So, it is with enormous admiration that I report to you that a documentary about Frieda Caplan's life has been produced and currently is available on, among other places, iTunes. Fear No Fruit, written and directed by Mark Brian Smith, is an affectionate look at a woman who became a powerhouse businesswoman in the "Mad Men" era and who many people see as being on par with Julia Child in changing the American culinary landscape.

I didn't realize until I saw Fear No Fruit, for example, that until Frieda brought the New Zealand Kiwifruit to America in 1962, no new fruit had found its way into US stores since the banana in the late 1800's. There's a wonderful segment in the film in which there is a "crawl" listing all the various products that Frieda and her namesake company. Frieda's Finest, has introduced ... as Frieda and her daughters try to name them all from memory. (They can't.)

As impressive as Frieda's contribution to American gastronomy has been, perhaps even more impressive is the story the film tells about her family, and how her daughters Karen and Jackie now run the business, and how her granddaughter Alex not only is in the business, but also lives with Frieda. (Alex seems not just to like the living arrangements, but also to really like her grandmother.) As powerful an influence as Frieda has been, she gives Karen much of the credit for the business's success, noting that when Karen became president in 1986, the company’s sales volume more than doubled in less than 5 years.

Here's the thing I found most heartening - at age 91, Frieda still goes to work every day, showing enormous energy and passion for the business. And she's also ever-present at Santa Monica's legendary Farmer's Market, testing new items, looking for opportunities, and always, always learning. (I also know that Frieda knows her way around the internet ... I don't think she'd mind if I mentioned here that I get emails from her from time to time, reacting to something I've written or suggesting something to which I should pay more attention.)

Fear No Fruit is one of those movies that ought to be required viewing for anyone in the fresh produce business ... or for anyone in the food retail business, for that matter. It provides insight and context about an important part of the American food experience, and shines a well-deserved light on one of the industry's most interesting and influential personalities, and nobody deserves it more.

Fear No Fruit is available on-demand on iTunes, Amazon Instant Video, Google Play, Vudu and XBOX.

Peanut Executive Could Face Life in Prison After Salmonella Scandal

The Washington Post reported last week that Stewart Parnell, the former CEO of the now-bankrupt Peanut Corporation of America (PCA), is facing a possible life sentence related to his company's implication in a salmonella outbreak across 46 states that killed nine people and sickened some 700 others.

The story notes that the life sentence has been recommended to the judge in the case by federal authorities, following Parnell's conviction last year on "71 criminal counts, which included conspiracy, obstruction of justice and wire fraud." An investigation into the case found that the company shipped peanut butter and peanut paste in containers that were "partially covered in dust and rat crap,” the court documents said; it was widely reported that the manufacturing facility had fecal matter and "mold, roaches and water leaks", and that the situation was never rectified because it would have cost money and taken time, and Parnell was focused on making his numbers.

The Post writes that "at trial, prosecutors laid out a seven-week paper trail that included e-mails, lab results and financial records that showed Parnell not only knew about the contamination but had worked to cover it up while he continued to ship bad products to food processors ... The U.S. Department of Justice said Parnell and others made up lab test results when the food had never even been tested and covered up results that later showed the products were tainted."

KC's View: I missed this story last week when it broke, but I'm glad that my work on a separate project brought it to my attention. I have no idea whether life in prison is appropriate when compared to other sentences, but I do think that it is critically important for the government to send a harsh message to the food industry - if you place a higher premium on the bottom line than on consumer safety, you're going up the river.

Keep in mind ... one of the things that the new Food Safety Modernization Act (FSMA) does is make senior executives personally culpable for lapses that create food safety issues. Might as well start sending the message now, and doing it with the guy who is the poster child for food safety malfeasance.

I still think that in lieu of a life sentence, they should make this clown eat the contaminated peanut butter. Three times a day, every day. Doesn't sound like cruel and unusual punishment to me ... in fact, it sounds just about right.

I was amused to see that Parnell's attorney told the Associated Press that the life sentence recommendation was "truly absurd," adding, “We hope the judge will see that Stewart Parnell never meant to hurt anyone. He ate the peanut butter himself. He fed it to his children and to his grandchildren.”

Really? Because I'd like to see video proof of them eating products made with the peanut butter products that came from his factory. I'm not at all convinced that it exists, since how could anyone who knowingly made up lab results and shipped out contaminated product feed that poison to his family? And if he did ... well, if I were a member of his family, I'd have some choice words for him. (Three words, to be precise. The first one would start with "w," the second one with "t," and the last one with "f.")

Editorial continues after a word from our sponsor...

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Now back to regularly scheduled editorial...

Blue Bell Listeria Problems May Reflect Broader Industry Complacency

The Wall Street Journal has a story about Blue Bell Creameries, noting that as the company "prepares to resume production of its ice cream after a sweeping recall, its mistakes are fueling broader rethinking of how to keep ice cream and other foods free of deadly bacteria.

"Federal records show that Blue Bell failed to follow practices recommended by government and industry groups that might have prevented listeria contamination of ice cream at all three of its main plants. At the same time, some food-safety professionals say the crisis is indicative of insufficient attention, beyond Blue Bell, of the risks of listeria."

The story goes on to report that "some food-safety professionals say Blue Bell’s problems reflect broader complacency in the ice-cream industry about listeria. Many people in the food industry believed the frozen dessert was at lower risk of being associated with infections from listeria than some other packaged foods, in part because the bacteria doesn’t grow when food is frozen."

The Journal notes that "three small ice-cream makers recently have recalled products because of listeria contamination, including Columbus, Ohio-based Jeni’s Splendid Ice Creams, which has had to shut production twice. Since its second bout with listeria in June, Jeni’s has been searching its plant for the source of contamination while another facility makes its ice cream.

"Blue Bell’s struggle with listeria also has spurred other rivals to evaluate their food-safety programs. The board of directors at another U.S. ice cream company commissioned a full briefing from its management after the Blue Bell problems surfaced to confirm its own practices were sufficient, a person familiar with the matter said."

To be clear, "Blue Bell won’t resume distribution from any of its facilities until the company, the FDA and state health officials are satisfied its products are safe, according to a company spokesman."

KC's View: The thing that bugs me about the Blue Bell situation is that, according to people I spoken with who are in a position to know, even as the first reports were coming back to Blue Bell that it had a problem, the company did not do what needed to be done to address those issues ... and those folks said they were not surprised by how badly things spun out of control.

As badly as it seems to have done on the food safety front, in a lot of ways it was equally bad on the communications front ... it ignored the fact that these days, you have to be fast and you have to be transparent, or you look like you are hiding something.

I think I've suggested here that Blue Bell would have a hard time coming back, but a number of folks - especially people more familiar with how Texans think about such things than I am - disagreed. it looks like I was wrong and they were right.

It will, however, be interesting to see how it does in other markets where people have a little less dedication to the brand.

Beyond that ... we've spoken about it often here on MNB ... the industry cannot afford to be complacent at all when it comes to food safety, especially with the new FSMA regulations about to be unveiled.

Editorial continues after a word from our sponsor...

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Worth Reading: The Best Of Intentions

The New York Times had a fascinating story yesterday about Dan Price, the CEO of credit card processor Gravity Payments, who made news last April when he decided to cut his million-dollar salary to $70,000 a year so he could give raises to a number of his employees that would, in essence, make $70,000 a year the minimum wage at Gravity.

It has not all turned out as he would have hoped.

"The move drew attention from around the world," the Times writes, "including from some outspoken skeptics and conservatives like Rush Limbaugh, who smelled a socialist agenda — but most were enthusiastic. Talk show hosts lined up to interview Mr. Price. Job seekers by the thousands sent in résumés. He was called a 'thought leader.' Harvard business professors flew out to conduct a case study. Third graders wrote him thank-you notes. Single women wanted to date him."

The story goes on:

"What few outsiders realized, however, was how much turmoil all the hoopla was causing at the company itself. To begin with, Gravity was simply unprepared for the onslaught of emails, Facebook posts and phone calls. The attention was thrilling, but it was also exhausting and distracting. And with so many eyes focused on the firm, some hoping to witness failure, the pressure has been intense.

"More troubling, a few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase — despite repeated assurances to the contrary — also left. While dozens of new clients, inspired by Mr. Price’s announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has already had to hire a dozen additional employees — now at a significantly higher cost — and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.

"Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees."

And yet, Price - who has a conservative religious background (not a Socialist one) and seems to be rooted as much in values-and-faith as in politics - seems to be convinced that his move has the potential to create a revolution.

You can read the entire, fascinating story here.

KC's View: I feel bad for the guy, though it sounds like maybe he brought some of this on himself by bring perhaps a little too aggressive in how he positioned the decision and presented it to the public. I still think it is nonsense to label it socialism, especially when you get a sense of the conservative religious values that seem to inform much of his thinking, even if he's not very religious anymore.

What Price did was deliver a shock to the system ... and in doing so, he left himself open to criticisms from a variety of places, which then turns into a self-fulfilling prophesy when his business starts to be hurt be his decision.

I still think he had the best of intentions, though he might've been more judicious in how he changed his company's policies. And I think his general premise - that income inequality is creating economic and social problems in this country - is a sound one. it's just that his prescription for how to fix it didn't work as well as he would've liked. But I give him credit for being willing to try something different and put himself and his company on the line.

Editorial continues after a word from our sponsor...

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Now back to regularly scheduled editorial...

The Truth May Hurt, But It's Still The Truth

The New York Times had a piece over the weekend about the A&P store on Riverdale Avenue in the Bronx, noting that it "is the last in New York City, where the once-mighty chain was born just before the Civil War. Now the company has filed for bankruptcy protection for the second time in five years. Once its plan for liquidating is approved, the store’s A.&P. signs will come down. And the A.&P. name will vanish from New York."

Linda Fisch, a longtime A&P customer, tells the Times that "it does look like the last A.&P. in New York City ... It’s not that it’s dirty, it’s that it looks tired. And when we have Fairway and Whole Foods and Trader Joe’s and all these upscale markets with food that’s flown in from all over the world, and even Target - it’s very clean and orderly and well-managed - the competition is fierce."

And then, Fisch delivers the knock-down punch: "It’s like it’s been going out of business for a long time."

KC's View: Ain't that the truth?

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Unfriendly Skies: How Far Is Too Far?

Interesting confluence of stories in recent days about the airline industry, which currently is being investigated for possible collusion - the US Congress has suggested that by limiting flights, major airlines are in fact conspiring to keep prices high and limit consumer choice.

In the case of these two stories, the subject has more to do with how they treat their customers ... and the impact it could have on long-term brand equity.

For example, the New York Times had a story about all the extra fees that passengers now have to pony up when they fly:

"Some airline passengers view high fees, an increasing number of fees and poor disclosures as sources of friction when traveling. But even with recent meetings among regulators, pressure from lawmakers and now a Department of Justice investigation into possible collusion among airlines, the airlines’ penchant for fees is not going away any time soon in what has become a highly profitable industry ... A recent analysis of 63 airlines by the airline consulting firm IdeaWorksCompany and sponsored by the travel-technology service CarTrawler found that these airlines earned $38.1 billion in ancillary revenue, or revenue from nonticket sources, last year."

Now, not all of that $38.1 billion was from fees. But a lot of it was. And passengers don't like it ... not that they can do much about it, since pretty much everybody charges those fees.

The Times also had a story the other day about how, "over the last 18 months, Delta Air Lines ... no longer posts any award chart explaining how many miles your free tickets will require, the way that United and American Airlines still do" for their frequent flier programs. "But Delta also hasn’t moved to a transparent miles redemption system that is based entirely on the cash price that the 'free' ticket would otherwise cost, as Southwest Airlines and JetBlue Airways do.

"Instead, Delta issues proclamations like this one that came along a few weeks ago: 'For travel on or after June 1, 2016, the number of miles needed will change based on destination, demand and other considerations. But most Award prices will remain unchanged.'

"Which destinations? How much demand? What other considerations? Which prices? The airline won’t say. You’re just supposed to cross your fingers and hope that you have enough miles come vacation time or if you have to get to a funeral quickly. Or hope for some magic."

KC's View: For me, stories like these about the airlines serve as a reminder that brands do have a breaking point, and that brand equity doesn't last forever, especially if the brand abuses the customer for its own purposes.

Right now, we're in a period where lack of competition seems to be hurting the customer, but regardless of what conclusions the government comes to, I suspect the tide will turn at some point, either because one of the big airlines decides it is in its best interests to change policies, or because some new competitor comes onto the scene with a plan to disrupt the way the major airlines work. And then, the airlines may have to face the music, as it deals with customers that they disenfranchised for years and years.

Editorial continues after a word from our sponsor...

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Now back to regularly scheduled editorial...

USPS Looks To Make A Buck On Booze

IJR Review reports that Rep. Jackie Speier (D-California) has introduced a bill that would allow the US Postal Service (USPS) "to ship alcoholic products across the country ... Current law prohibits Postal Service customers from shipping beer, wine and distilled spirits to consumers. Speier believes this puts the company at a competitive disadvantage against competitors like UPS and FedEx, both of which allow customers to ship alcoholic goods."

The story says that The USPS Shipping Equity Act already has 24 co-sponsors from both parties; the ban on shipping of alcohol through the USPS goes back to the Prohibition era.

The Congressional Budget Office anticipates the bill would provide the consistently troubled USPS with $50 million in annual incremental revenue.

KC's View: It won't solve all the USPS's problems, but Congress should pass the damn bill and Obama should sign it, ASAP. I see no reason for anyone to oppose it (unless they're being lobbied by FedEx and/or UPS.)

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Now back to regularly scheduled editorial...

Tech Titans Look To Broaden Retail, Service Presence

Wired reports that Facebook has announced that "it has begun testing virtual storefronts on company Pages, so consumers can shop without ever leaving its app or site. Google too is now testing an e-commerce option to let mobile users make purchases directly in search results via shopping ads that pop up at the top."

The story goes on to say that "the push into more naturally integrated e-commerce makes sense, even if the real goal isn’t to become a retail hub.

"These tech titans don’t necessarily want, or need, to replace a shopping site like Amazon, or even the IRL Walmart. But with millions of people signing onto Facebook and searching in Google daily, adding another seamless in-house service has bottom-line appeal. What’s for an advertiser not to love about buying an ad that itself is also a way to make a purchase? As for consumers, in-app purchases mean you never have to leave, which is exactly what these companies want."

Meanwhile, there also are a number of reports that Google wants to push into the home services business - going where Angie's List has made a considerable impact, and where Amazon is broadening its presence. Buzzfeed says that Google is "working on a service that would connect local plumbers, cleaners, painters, and other workers with homeowners."

KC's View: To use the word again ... this is about creating ecosystems and removing barriers between the shop and the shopper.

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ProLogic Introduces “Loyalty Express”



Now back to regularly scheduled editorial...

FastNewsBeat

...with brief, occasional, italicized and sometimes gratuitous commentary…

• The Orange County Register reports that Fresh & Easy plans to close 14 stores in markets that include San Diego, Los Angeles, Orange County, Arizona and Las Vegas.

“Fresh & Easy is closing a small number of underperforming locations,” spokesman Brendan Wonnacott tells the paper. “While recent initiatives have helped drive additional sales across the Fresh & Easy business, in the case of these locations the progress was not enough to bring their performance in line with the rest of the business.”

What do you think the odds are that Haggen decides to buy these units? I mean, based on recent history, anything is possible...


Business Insider reports that "IBM and pharmacy chain CVS Health have announced a first-of-its-kind new partnership to put IBM's supercomputer Watson to work for millions of Americans with chronic health conditions."

The story goes on: "Watson will watch data from what IBM describes as an "unprecedented mix of health information sources" including a person's medical health records, prescriptions, environment, even fitness devices. It will then spit out suggestions on how to improve that person's health care to save the person money and help the person feel better.

"But the ultimate goal of this partnership is really pretty astounding: IBM and CVS hope to find people at risk for illnesses before they've gotten sick and create custom programs to help them avoid the illness."

Beats the hell out of playing Kern Jennings at Jeopardy...


• The Wall Street Journal reports that "to stop a precipitous sales decline, McDonald’s Japan is inviting 100 mothers to tour its facilities ... Women living in Japan who have at least one child are eligible to enter a competition for the facility tours."

The fast feeder's problems in Japan began when "Chinese media reported that one of the fast-food chain’s suppliers allegedly sold expired chicken nuggets," and now the company is hoping to rebuild trust.

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There's Good News, And More Good News



From MNB, May 29, 2015:

USA Today reports this morning that "companies are scrambling to hold on to workers amid a tightening labor market and higher turnover, doling out bigger raises, expanding benefits and providing more training and other perks ... The U.S. unemployment rate last month fell from 5.5% to a near normal 5.4%, helping shift the labor market's balance of power to employees. In March, 2.8 million workers quit their jobs, largely to take other positions, the most since April 2008.

"Companies are responding. Wages, salaries and benefits jumped 2.6% in the first quarter, the most since 2008, according to Labor's Employment Cost Index."


This is just the beginning...and it is both good news and good news. It means that there is competition for great jobs at great companies, and that great people can find great opportunities. But they can't do it alone.

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It's time to get to work.

Now back to regularly scheduled editorial...

Executive Suite

Whole Foods announced that its chief information officer (CIO), Jason Buechel, has been promoted to the company’s executive leadership team, in a move that the Wall Street Journal says "signals technology’s growing importance at the grocer, which recently has made significant investments in IT."

KC's View: Y'think maybe one of Buechel's main tasks these days is to figure out what and how long it will take for Whole Foods to develop a credible delivery option that will allow it to step away from Instacart? Because one of the reasons Whole Foods went with Instacart in the first place is that it didn't have the right kinds of people and technologies in place to offer its own service. But now that it does ... I think that maybe Instacart should be worried that it might eventually lose one of its premier retailers.

Editorial continues after a word from our sponsor...

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The Reviews Keep Coming In...

"Your presentation was well-received, very thought-provoking and was a great lead-in to the overall theme of our show."  - Tim Myers, CMO, Affiliated Foods Midwest

"Your presentation was unbelievable – everything we hoped for and much, much more!  Thanks for making our customers (and us) better!"
- Joe Himmelheber, Director of Marketing and Merchandising, Caito Foods

"Both of your presentations kept the audience engaged ... This was a difficult subject, but you made it easy to understand - and learn from. Everyone who has not yet seen one of your presentations, should know how informative and to the point your program is and how it will definitely enhance their event. "
- John M. Dumais, president/CEO, New Hampshire Grocers Association

"Kevin is an engaging speaker who really brought the content to life.  He customized his program to meet our needs to ensure our event was a success!"
- Kim Richardson-Roach, Network of Executive Women (NEW), New England Region

"The response to this session was overwhelmingly positive. The audience appreciated the lively and enlightening exchange between the moderator and panelists ... the spark you added to the panel as moderator contributed to the flame of excitement this event engendered ... Thank you for helping ground the material in a reality readily recognized ..." - Leslie G. Sarasin, President/CEO, Food Marketing Institute (FMI)

With a uniquely fast-paced, provocative and entertaining approach, Kevin Coupe identifies the ways in which consumers are changing, the reasons behind these changes (technology, the economy, culture, demographics), how new and unorthodox competitors are altering the marketing landscape, and what companies need to do to find and exploit differential advantages.

Want to make your next event unique, engaging, illuminating and entertaining?

Start here: KevinCoupe.com. Or call Kevin at 203-662-0100.

Now back to regularly scheduled editorial...

Your Views: Unicorns And Big Macs

On Friday, we took a look at a Washington Postpiece about a study suggesting that if McDonald's "maintained its current profit margin of 6.3 percent - which, to be fair, is fairly slim - hiking the pay floor at fast-food restaurants to $15 an hour would mean just a 4.3 percent increase in prices." That would mean a Big Mac would cost about 17 cents more - though "this is just a rough estimate - the numbers would vary based on location and what the minimum wage is now, just as financial needs vary depend on where the employees live."

I commented, in part:

Essentially the question is whether people would be willing to "pay 17 extra cents for a Big Mac if it meant the person who prepared it could earn a living wage." Though I suppose that some might ask whether people should be forced to pay that extra 17 cents for a Big Mac to support a living wage.

Seventeen cents? To me, that's both a no-brainer and an Eye-Opener.


One MNB user wrote:

This is awesome Kevin.  I can't wait to ride my shiny white unicorn through the drive thru at McDonalds and solve poverty with the change I found under my couch pillow.  Unfortunately white unicorns don't exist and the folks at Purdue left some pretty obvious logic out of their model.  Let's say I have been working at the slaughterhouse that provides beef to McDonalds and after breaking my back for the last 10 years, I earn $15/hour.  I am not going to high five the 16 old kid flipping burgers and tell him great job on his raise.  On the other hand, I am definitely going to my boss and demand that my wages be increased so I am not earning the same as a fry jockey.

This will cascade throughout the market and wages/retails will correct; however, in the short term owners will find creative ways to reduce hours and ultimately jobs.  Folks need to keep in mind that currency is merely a symbol of economic value.  This might seem unfair to someone who works really hard at an entry level job but it is a fact of life.


But another MNB user wrote:

I agree, a no-brainer.  They wouldn't have to raise the cost of a Big Mac if they had healthy fast food to go ... Or organic sirloin beef (not mystery meat) grilled burgers?  fair trade ....coffee with real half n Half, healthy band name organic green juices, Ben N Jerry's ice cream, kale wrap salads.   How about organic milk and lactose free?  What about gyro sandwiches which can be eaten in the run...as long as it is not mystery meat.   They have the facilities and infrastructure -- they just need to sell something healthy but good that people need to buy on the run when there is no time to run into Whole Foods...

Here's a question I would ask. Let's say the study was way too optimistic about the numbers...and the actual amount that a Big Mac would go up is twice that, or 35 cents. Is that too much to pay for a higher minimum wage? Is 50 cents a Big Mac?

I don't know what the numbers are, and I'm no mathematician. But I guess that I think this debate could be connected to another discussion we've often had here on MNB - that Americans are addicted to low prices, and nobody really knows what anything costs ... which ends up artificially driving down prices in a way that may not be helpful to the economy or the culture.




On the subject of the Amazon Dash Buttons now available, allowing people the ability to reorder single items extremely easily, one MNB user wrote:

I can see this catching on. I am also waiting for the very comical story of the toddler that ordered 30 bottles of detergent “helping with the laundry”.

My understand is that there is a failsafe mechanism to prevent this from happening ... but yes, this sort of thing probably is inevitable.




I asked last week if there was anything remotely positive about the Haggen debacle, which led MNB reader Joel Yochem to offer:

Those 146 new Haggen stores could have just gone away, along with the employees…

True. On the other hand, if Haggen had not done it, maybe they would've been sold off piecemeal to a bunch of other companies better equipped to keep them viable.



In writing about a study suggesting that red mean could be carcinogenic, I joked that I was glad I'd ordered the veggie pizza that night and not the meat lovers ... though I conceded that the fact that it was pizza and not a salad probably made the whole point moot. But MNB reader Herb Sorensen wrote:

As someone with nutrition credentials (Ph.D. biochemist, former founder of a nutrition lab and one time Nutrition Advisor to Denny's Restaurants;) and as a lifetime near-vegetarian, here's my comment on: "eating pizza instead of a salad probably mitigates against any health advantages."

It's hard to see how avoiding carcinogens in one food ingredient (red meat,) could be mitigated by eating the kind of salad typical of pizza restaurants.  Other than the significant fat content of the pizza, it is FAR more nutritious than the salad, which would have the advantage on micro-nutrient vitamins common to fresh vegetables.  Any pizza would likely be more nutritious than any salad, in relation to the macro-nutrients of protein and carbohydrates.  For the fat, it depends on your overall diet (and exercise.)  If you've got a problem there, deal with it.


I feel so much better now. And as you read this, I'm probably off on a 12-14 mile bike ride along the Willamette River. So I'm dealing with it...

PWS 22