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Friday, February 05, 2016

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Friday Morning Eye-Opener: The Super Bowl, Augmented

by Kevin Coupe

The Seattle Times has a piece this morning about how Microsoft may turn watching football on TV into an entirely new experience.

At a panel timed to coincide with Sunday's Super Bowl 50 game between the Denver Broncos and Carolina Panthers, Microsoft debuted a video (that you can watch here) demonstrating how its in-development augmented-reality headset, dubbed the HoloLens, could revolutionize spectator sports.

It shows various windows being opened, offering in-depth views of player stats and replays, and even has the ability to allow viewers to watch the action playing out in three dimensions on a tabletop.

Now, the story notes that "Microsoft stresses that the video is conceptual. The company doesn’t have HoloLens-related NFL apps in the works." And it says that the overall aim "is to boost interest in the device among developers and potential customers. Headsets are to make their way to select developers by the end of March, Microsoft says, at a cost of $3,000 a piece."

That's pricey ... and it doesn't sound like the revolution is going to happen in the near future.

On the other hand ... technological revolutions tend to happen a lot faster than they used to, and so it isn't hard to imagine traditional ways of watching ballgames being disrupted by technology and turned into a far more involving experience. (From here, it seems like a short distance to the holodecks introduced on "Star Trek: The Next Generation.")

And when coaches are talking to players on the sidelines, instead of using the tablet computers that they all seem to be using these days, they at some point in the near future will start using these 3D tools to explain plays and strategies.

Watch the video. It's an Eye-Opener.

From Nickel Bags To New Sales Highs

The New York Times this morning reports that national legal sales of cannabis reached $5.4 billion in 2015, up from $4.6 billion the year before, and expectations are that it could hit $6.7 billion this year. By 2020, as acceptance grows and laws continue to change, legal cannabis sales are projected to be close to $22 billion.

"The promises and headwinds of the industry are potentially far-reaching and attracting notice on Wall Street," the Times writes. "As more states legalize marijuana sales, analysts are weighing the stock market benefits of new businesses as cannabis goes corporate. Funds are considering the ethics of investing in marijuana. Parents are even debating whether to allow their children to buy the stocks.

"And say goodbye to the common resealable bags and heat lamps in the closet. Lucrative legal side businesses are spinning off, like the climate systems for growers built by a company in Boulder, Colo., and the FunkSac odor-proof and child-resistant marijuana bags produced in Denver."

The Times notes that four states and the District of Columbia allow full adult use, with seven more expected to vote on it this year. Twenty-three have legalized medical marijuana, and four more could legalize medical pot use in the near future.

KC's View: I do think that some of this is speculative. For example, NJ Gov. Chris Christie has said that if he becomes president he will work to shut down the sale of legal or medical marijuana by using federal drug laws to supersede states' more relaxed positions. (We'll know a lot more about whether this is a possible scenario after the New Hampshire primary, though I suppose it also is possible that a Republican president could name Christie Attorney General, which would have a similar impact.)

I do think it is going to be increasingly hard for lawmakers to resist the lure of all the tax money that they'll think could come out of legal marijuana. Which I suppose means that in the not-too-distant future, we could be looking at the mainstreaming of cannabis retailing.

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The Sweet Path To Retailer Disintermediation

Venture Beat reports on how Mondelez International "is prioritizing ecommerce, announcing a goal to hit $1 billion in direct ecommerce sales by 2020. That’s a 10x increase over its current $100 million annual online sales but only 3 percent of the company’s annual sales."

The story goes on: "In the same way you’d impulse-buy a candy bar while waiting in the supermarket checkout line, Mondelez would like you to impulse-buy snack food while hanging out on digital channels. That requires rethinking the customer journey and path to purchase, and in 2015, the company announced three programs to help them do that.

"Through its program Shopper Futures, Mondelez has selected eight startups to team up with retailers and Mondelez brands to create in-market pilot programs in 90 days. Mondelez has renewed its partnership with Facebook to create video that drives online snack purchases. It also announced a partnership with ChannelSight to place Buy buttons across web, social, video, CRM, and other digital touchpoints to connect to more than 130 retailer websites."

KC's View: I mostly find this interesting because it suggests the extent to which manufacturers - not just Mondelez - may be willing to do to disintermediate retailers that they view as actually inhibiting sales or getting in the way of their relationship with consumers. I don't think this is going to be easy by any means, but I do think that retailers need to be aware that their connection to consumers can be disrupted ... if they do business using old paradigms, some manufacturers are just going to leap-frog them whenever and wherever possible.

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Global Brand List Illustrates The Diminishing Power Of CPG Companies

An organization called Brand Finance that evaluates and advises companies about brand equity and both tangible and intangible assets is out with its annual list of the most valuable global brands of 2016 and the top 10 are, in order: Apple, Google, Samsung, Amazon, Microsoft, Verizon, AT&T, Walmart, China Mobile, and Wells Fargo. Most of the top 10 were at the top of the 2015 list, though there has ben some shifting around; China Mobile was number 11 last year and move dup into the top 10, while McDonald's was number nine last year and dropped to 12.

Other noteworthy names and positions on the list included Coca-Cola, down to 17 from 12 a year ago; Starbucks, up to 38 from 50; and CVS, up to 39 from 48.

KC's View: As a friend of mine pointed out to me, this list - as debatable as some of the rankings may be - illustrates how the world has changed. For years, CPG companies topped the list, and now there isn't even one CPG company in the top 10. Two of the top 10 (Amazon and Walmart) are retailers, and two more have significant retail presences (Apple, Microsoft).

No wonder CPG companies are trying to figure out how to disintermediate retailers. They're losing their juice, and a growing national skepticism about "big food" isn't helping.

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FDA Bans Import Of Products Containing GM Salmon

Lexology reports the the US Food and Drug Administration (FDA) has issued a new rule that "bans the import of any human or animal food containing GE salmon until the FDA publishes final labeling guidelines for informing consumers of such content."

According to the story, "The import ban on GE salmon is significant because it follows only months after the FDA’s November 2015 approval of AquaBounty Technologies’ AquAdvantage genetically modified salmon ... The AquaBounty modified salmon contains a growth hormone from a Chinook salmon and a gene promoter from a second fish (the ocean pout)—the combination of the two helps the salmon grow large enough for consumption in 18 months, rather than the typical three years."

However, the AquaBounty GM salmon is not yet being imported into the US, so there is no immediate impact on the ban.

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Walmart Truck Driver Pleads Not Guilty In Tracy Morgan Accident Case

Kevin Roper, the Walmart truck driver who is accused of driving for so long without sleep that he crashed into a limo on the New jersey Turnpike, injuring comedian Tracy Morgan and killing one of Morgan's friends, has pleaded not guilty to charges of aggravated manslaughter, vehicular homicide and aggravated assault.

The Associated Press notes that "aggravated manslaughter carries a 10- to 30-year prison term on conviction, while a death-by-auto charge carries a five- to 10-year prison sentence. Each assault-by-auto charge is punishable by up to 18 months in prison."

The story points out that "an investigation by the National Transportation Safety Board concluded in August that Roper hadn’t slept in the 28 hours before the crash," though Roper disputes that conclusion. And lawyers for Roper plan to argue that Walmart's decision to settle a lawsuit by Morgan for an unspecified amount has hurt any chances of a fair trial, and that the case should be thrown out.

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Worth Reading: The Secret Of Life

The new Vanity Fair has a long piece about Francis Ford Coppola, looking at both his movies and his investments in the food and wine business, which have become a much bigger part of his personal portfolio in recent years. It is an interesting piece, especially if - like me - you could watch movies like The Godfather, The Godfather, Part II, The Conversation and Apocalypse Now over and over and over.

At one point in the piece, Coppola compares winemaking and filmmaking and finds them similar: "I believe the creative process of making wine and making a film is identical," he says. "It has the same phases. You have the gathering. Grow grapes and gather them. With movies, you gather the days of shots. You have the refining. In wine, it’s the selection. In movies, that’s editing. Then you have the finishing phase.”

Perhaps my favorite part of the article is when Coppola is asked about the secret of life.

“The secret of life is to say yes all the time,” he says, “because when you’re old, you don’t want to say, ‘I wish I’d done this, I wish I had done that.’ When I die I’m going to say, ‘I got to be in the movie business. I got to see my kids go into the movie business. I got to be in the wine business. I got to be in the hotel business. I got to see my father win an Oscar.’ I’m going to be saying all that and when I die I’m not even going to notice.”

And I just thought that was wonderful and worth reading here.

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From WAFC...

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• The Associated Press reports that "Dunkin’ Donuts, feeling sidelined by a discounting fight in the fast-food industry, is planning to jump into the game with its own deals," with three planned national promotions this year. The move is prompted by some slippage in customer visits at stores open at least 18 months, but the company acknowledges that before it can introduce the promotions it has to get the approval of its franchisees, who are expected to be resistant.

"Finding the right promotion could be tricky," the story says, "because the popularity of menu items varies by region. In the Northeast, for instance, the company sells more drinks, while other markets rely on doughnuts."

• The National Retail Federation is predicting that 54.8 percent of US adults plan to spend an average of $146.84 on Valentine's Day presents this year - slightly more than the $142.31 average spend last year.

Total Valentine's Day spending this year is expected to hit $19.7 billion, with candy still listed as the top present to be purchased for the holiday.

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Your Views: Full Disclosure

Got the following email from MNB reader Mike Overschmidt:

You write a great deal about all the ways we can receive entertainment today.  It seems content delivery is an infinitely splintering mosaic of choices.  However I wonder if I’m the only one who as a result is also feeling content confusion?  In fairness, classify this as a first world problem.

I’m not a big TV watcher other than when the illustrious St Louis Cardinals are playing baseball.  I do have a couple of shows at any given time I try to catch.  My problem is that with the array of choices for TV and movies, I have trouble keeping things straight.  Exclusive deals for movies, original series’ on emerging platforms, DVR/on-demand time shifting and wholly unpredictable “seasons” all serve to leave me unsure what I can watch when.  I have to try to remember “now is that movie on Netflix streaming or Netflix DVD or maybe it’s a Redbox exclusive?” 

Sometimes I think, “I saw a preview of that new show that looked interesting but what channel was that and when?  Or wait, maybe that was Amazon Prime.”  Got a favorite show? Quick!, when does the new season start?" Frankly, it’s overwhelming trying to remember not only what I want to watch but how to watch it.  All this choice, it’s just too much work, man.

Pitchers and catchers report in 13 days.  Until then I think I’ll just watch funny cat videos on YouTube...

You're right ... except that the problem of plethora of choices isn;t a new one. In the supermarket industry alone, look how SKU count has grown over the years ... and now, e-commerce essentially makes everything available to everyone.

I think it is likely there will be some winnowing down of available content and platforms over the years. We're probably in a bubble right now. But the good news is that there is more great content available than ever, and I plan to relax and enjoy it.

Kate McMahon's column about Death Wish coffee prompted the following email from Tom Tomaselli, who, we should note, is Vice President of Own Brands at Price Chopper Supermarkets/Market 32:

It’s really exciting for us at Price Chopper to see Death Wish win the Super Bowl Commercial opportunity.  Our own merchandising team was voting for them daily to help the effort.  We have been a huge fans of their products since we started selling their coffee in our Market 32’s back in July.  Congrats to them and we wish them the best of luck as they get national exposure this Sunday!

I hope you stocked up.

Finally, I got this note about my Apple Store "Face Time" commentary from MNB reader Frank S. Klisanich:

Apple is remarkable and I enjoyed your experience.

I too get lots of surveys and when I am not satisfied I "letem" know. The fun part is the reaction....P&G are very good.

I have a suggestion. ... if you are a stockholder of Apple you should declare that ... same with any retailers stocks.

Full disclosure and transparency is what KC is all about.

I've actually said it before, but maybe it is worth saying again. I don't own any Apple stock, nor do I own any Amazon stock. Though I wish I did ... I've said here before that if I'd spent as much on Apple stock as I have on Apple products, and spent as much on Amazon stock as I have on products bought from Amazon, I'd be sitting pretty.

OffBeat: Efficiency As The Enemy of Effectiveness

Just a couple of quick notes this morning...

I mentioned here a few weeks ago that I really liked "Billions," the new Showtime series that I described as essentially a battle of two heavyweight actors - Damien Lewis and Paul Giamatti - playing two heavyweight characters, hedge fund billionaire Bobby Axelrod and Chuck Rhoades, the U.S. attorney for the Southern District of New York (which used to be Rudolph Giuliani's job). Axelrod's wealth may be ill-gotten, and Rhoades wants to prosecute.

Not surprisingly, "Billions" offers some pretty good business lessons.

Last Sunday's episode centered in part on Axelrod's investment in a company called YumTime, which makes Twinkie-like products. At one point, after Axelrod eats one of its products, he tells a younger associate, "Whenever you can, put a company in your mouth." In other words, taste can tell you something that balance sheets can't.

In this case, Axelrod has an emotional connection to the product. he came from modest beginnings, you see, and when he delivered newspapers as a kid, his end-of-week reward for himself was to spend a little of his hard-earned money on one of the treats. But now, as he's gotten older, he's discovered that the product doesn't taste the same ... because the company switched from sugar to high fructose corn syrup and started sourcing ingredients abroad. And while his motivations and actions are a lot more complicated than just returning the product to its former glory (I don't want to ruin things for you), Axelrod makes a compelling argument for why efficiency can be the enemy of effectiveness.

He's right about that ... especially when it comes to companies you can put in your mouth. Consumers almost never eat a product and say, "Wow! I can tell that they made this as efficiently as possible and did everything they could to bring down costs." But they do say, "Wow, that tasted great!" or "Wow, that tasted like crap."

Sometimes, I just get lucky.

Like last night. I happen to be in Toronto, and had dinner with an old friend in Oakville, which is just a few miles to the southwest. We ate at a little restaurant called Bru, which ended up being phenomenal. The beer, as one might expect, was delicious - I had an Inn O' Slainte Amber (how could I not?), from the nearby Innocente Brewing Company, and it was smooth and tasty, like an red Irish ale. And I had the pizza special, which had toppings of andouille sausage, corn, shrimp and jalapeño tomato sauce ... I can only describe it as tasting like a jambalaya pizza, which combines two of my favorite things in the world.


That's it for this week. Have a great weekend, and I'll see you Monday.


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