business news in context, analysis with attitude

Regarding our story about Wal-Mart opening an export office to send US products to its stores around the world, MNB user Dan Raftery of Prime Consulting wrote:

“I'd watch this closely. We may see more international distribution, but classifying it all as exporting may not be correct. A significant shift is occurring in the sourcing of several categories of consumer goods. U.S. factories are closing; Asian factories are booming. I don't think we can classify shipments from China to Europe, for example as U.S. exports just because Wal-Mart is the expediter.”

Another MNB user wrote:

“Manufacturers new to the export arena need to tiptoe into Wal-Mart's new export program. Why ? Pricing. Export pricing is often the lowest price going, as it typically unburdens itself from USA admin and trade costs. Once Wal-Mart learns of a manufacturers low export price...don't you think that they will want that price for the USA or at least use it as leverage? Also, Wal-Mart's export department won't get around the fundamental requirement of packaging your product with the right foreign language. i.e. Spanish for Mexico/Argentina, French/English for Canada etc.”

In response to the discussion we posted Monday and Tuesday about the pros and cons of independent grocers embracing Wal-Mart as a wholesaler (should the Bentonville Behemoth decide to get into this particular part of the business), MNB user Frederic Arnal wrote:

“I enjoyed the discussion on Wal-Mart as a supplier but I am curious about one point in your summary, ‘Doesn't it make sense to pay for promotional
performance at POS?’

“Who is paying here? All too often, the manufacturer pays, which ends up in the cost. There still ain't no free lunch. If we agree that the retailer needs to differentiate to match his local market/target consumer, shouldn't he be creating his own, unique portfolio of products and marketing tools to create, reach and satisfy the needs of that market? And to optimally do that, doesn't he need to buy at the best possible cost, without promotional funds built in?

“The cynic/realist in me can't help but believe that if the manufacturer funds promotions, the ultimate benefit goes to him.”

We would agree that “best possible cost without promotional funds built in” is the way to go…it would benefit the consumer, the manufacturer, and ultimately the retailer (though it is hard to make the argument to retailers hooked on the heroin of promotional monies that they’d be better off without them).

But if promotional monies are to be paid, we think they ought to be based on actual sales, not in the form of slotting allowances and failure fees and other such programs that have nothing to do with whether a consumer actually wants or needs a product, or whether the retailer ought to be selling it.

MNB user Ted File added:

“Was a little surprised by the responses in that I saw no one who commented on the private label issues. WOW How could anyone, be it Wal-Mart or others, handle the brands that are required by the myriad of wholesalers who now distribute private label to their independents. Would it necessitate direct shipments to the retailer? What would that do to cost of product? Who is going to support the promotional aspects of the PL products and what about expansion of same? Lots of questions but not too many solid answers.”

Plenty of reaction to yesterday’s story about a new campaign to get people to lose weight because obesity can cause cancer…and our suggestion that there could end up being a move to tax fatty foods as a way for the government to influence consumer behavior and direct toward healthier options.

MNB user David Whitesel wrote:

“While I agree an opportunistic lawyer will sue retailers and manufacturers for being purveyors of Fatty Foods. However, I am surprised that a foody like you would miss another opportunity for food retailers to take advantage of the plethora of ingredients and unprocessed foods in a retailer’s store. Especially, someone who worships at the stove of Emeril.

“Retailers have another sales opportunity with this one. Teach consumers how to cook. Set up cooking stations with trained people preparing simple recipes from ingredients available in stores. Why not have cooking stations teaching people how to prepare chicken tacos, stir fry, low fat yet delicious steak burgers (yum, my favorite) healthy sandwiches using ingredients in the store? Cross merchandise those ingredients next to the cooking station along with free recipes so everything is bundled together in one location. Good food, properly seasoned, satiates ones appetite sooner than fatty processed food. A simple concept, eat less better quality food and you will lose weight. Another simple way to cut a couple hundred extra calories and fat grams out of the daily diet. If a retailer is taking a proactive stance against fatty foods by working to educate consumers on how to cook healthy low fat foods than courts may look more favorably on them if they are dragged into frivolous lawsuits.

“Retailers are in the food business, aren’t they? Where is the food passion? Show your customers how to use the products in your store your and you may just sell more food!”

We agree with everything you say, David. We weren’t suggesting yesterday that the government should tax fatty foods. Just that, under pressure from outside organizations and facing an obesity epidemic, it might.

Another member of the MNB community wrote:

“Taxing or otherwise restricting access to "cancer-causing" and "obesity-causing" foods might work if the only foods considered are fried foods and Twinkies. But would this affect fresh foods as well? After all, a potato can be held blameless (except for those who believe that carbohydrates are fattening) until it's cooked in hot oil. So do you tax the oil and the potato? Some foods cause chubbiness in adults but are literal "brain food" to children.

“This issue could potentially confuse bureaucrats. It would probably start with an honest effort to tax the obvious offenders. But like all taxes tend to do it would creep outward to encompass more and more categories. And if there were a study showing that a food previously thought to cause obesity or cancer didn't cause it? Don't expect the tax to go away. That revenue will be too "important" for them to let go of.”

The possibilities inherent in these developments, especially a proposed Great American Weigh In, scheduled for March 5., modeled on the three-decade old Great American Smokeout, were explored by another MNB user:

“I think retailers are missing the mark when they don't have calories, fat grams and fiber content displayed at their deli counter. If they can offer a viable low fat alternative source for take out compared to the fast food places, they are one up. Also they should try promoting more with Weight Watchers. In case you don't know the program, it counts points instead of calories (it really is a simplified way of counting calories because you still have to weight and measure.) It doesn't have to be the WW product. It can be any product and have POS showing the points of a serving. With the great weigh out on March 5 what better way to have a tie-in.”

All excellent ideas. And developing ties to Weight Watchers is a way of creating the kind of value network that we referred to above in our Tops/Montana Mills story.

Another MNB user wrote:

“There is a slippery slope to be tread with this I get a tax benefit if I buy lean ground beef for burgers at my cookout? Do the fries cost less if they're baked? Do I get a huge tax rebate if I smoke light cigarettes while I eat baked taco chips and drink diet soda? If I eliminate carbs from my diet and supplant them with lean meat to lose pounds, do I now miss out on the cash because I could get colon cancer?

“If this was a joke, it was very witty indeed. If it wasn't, then it's just plain scary.”

Depends on how you define “joke.”

And, reacting to our report on a new 30-second television commercial sponsored by the Physicians Committee for Responsible Medicine that tells viewers that a high-protein, meat-intense diet can promote osteoporosis, kidney disease, and possibly colon cancer, MNB user Al Kober wrote:

“They can't allow eating meat to be good for you, can they. It is time we all, in the meat industry, wake up and become aware of the underlying agenda that is included in all of these efforts, that is, to eliminate meat from the food chain.”

MNB user Bob Vereen weighed in on our story about how Wal-Mart’s Asda Group in the UK plans to spend a half-billion dollars building 10 new stores and expanding many others through new mezzanines:

“I recently spent a week's holiday in the UK, and visited an Asda store in Eastleigh because I'm a longtime Wal-Mart stockholder.

“The store was heavily food, with some clothing. An ideal candidate for a larger mezzanine as the small mezzanine it had was for a little cafe. As a retired hardware magazine editor, I checked out their hardgoods section, which was very, very tiny.

“The Wal-Mart stores in Germany more nearly approximate those over here in non-foods, The Asda store had a strong, and good, housewares section, but awfully light on Do It Yourself items.”

Bob, you don’t have to justify a vacation visit to Asda for us. For your wife, maybe…but not for us. (We don’t own Wal-Mart stock, and we’d have done the same thing, much to the chagrin of Mrs. Content Guy.)

In response to a story about cereal prices on the rise, we joked yesterday that this would create a problem at our house, where the Content Kids have decided that Kellogg’s new Smorz cereal is the finest product of its kind currently on the market, are eating boxes of it each week, and will shortly make us go broke!

MNB user Richard Lowe wrote:

“Make your own Musselli! It is far less expensive, much better tasting, and much better for you. 1# thick cut rolled oats, .5# barley, .5# wheat, and
.5# rye flakes. 1# mixed dried fruit, .25# ea. unsalted almonds, walnuts,
peanuts, and pecans. Put fruit in the bowel banana, grapes, strawberries,
peaches, etc. 3 tbls yogurt and 1/4 cup musselli. Stir around and all the
musselli coats the fruit. DELICIOUS! I eat it every morning.

Sounds fine. We know this makes us sound like a complete weenie, but if we put that in front of the kids one morning, the Content Kids would ask themselves whether it would be easier to have us institutionalized or just killed.

And Mrs. Content Guy would agree with them.

We wrote yesterday about how California-based Peet's Coffee & Tea has announced that it will open its first store in the Seattle market – home turf to the estimable Starbucks, and noted that “the founders of Starbucks learned their coffee roasting techniques from Alfred Peet, who founded Peet’s.”

One MNB user wrote:

“Actually...isn't it more that Jerry Baldwin was one of the founders of Starbucks???”

Correct. Jerry Baldwin is a founder of Starbucks. And he is on the board of directors of Peets.

MNB user Neil Gaylor also had a perspective on this story:

“Speaking as a coffee aficionado (now where did I put my official SCAA membership card?), I have been buying coffee from Peet's for years and they are one of my favorite places to buy fresh roasted beans. I would rather drink nothing at all than what the under-skilled, high school aged employees at the majority of local Starbucks' could give me. It is generally admitted, among coffee snobs, that Starbucks has been good for one thing; that is, to introduce the casual American coffee drinker, one who is used to burned, hotplate 7-Eleven
swill, with just an inkling of what coffee can and should be. However, given the vastness of their empire and the sheer bulk of coffee that they are now distributing, the quality of their roast has greatly diminished. That, in addition to, generally under-skilled staff, poor roasting quality, and price increases is enough to turn away a serious coffee drinker.

“Peet's is the only online coffee roaster that I have been consistently happy with. Their bags come with a "Roast Date" stamped on them so you know exactly how old your coffee beans are when you get them. They also take great care in selecting their beans from estates all over the world, and are one of the ONLY places to get a good dark roast that doesn't taste like charcoal (ahem, Starbucks, are you listening?) I wish Peet's all the best in their efforts to re-introduce quality coffee to the "Average American Consumer".

“Whew! That little diatribe puts me in the mood for a nice, fresh cup of

Yesterday’s MNB included a story about how Anheuser-Busch lost its legal battle in the UK to prevent a Czech state-owned brewery Budejovicky Budvar from using the trademark "Bud."

MNB user John Lightfoot provided some background and perspective:

“No surprise here. As you know, Czech Budvar "BUD" is an excellent and popular beer. It’s as old as any beer in the Bohemian region. For many years following the Soviet occupation of then Czechoslovakia, AB is said to have paid an annual "fee" to the Czech brewery owners ( i.e. communist controlled government ) for the rights of the names BUD and BUDWEISER for market in North America. Other than in military PX's, AB "BUD" wasn't distributed throughout Europe. Budvar BUD was. More recently Czech authorities claimed that AB made a settlement with the Budvar brewery in order to gain non exclusive distribution rights of the US "BUD" in Europe. With the Czech Republic lining up as a member of the EU, it seems only logical that another EU member (Britain) would support its EU compatriot's cause.”

In response to some differing opinions we’ve had aired here at MNB about the Kmart checkout experience, MNB user Thomas V. Robinson wrote:

“Responding to your reader distressed about his "self-checkout" experience at Kmart. I agree that having your purchases checked at the door is a poor excuse for customer service, fortunately I have never had that experience at Kmart. Sam's club, Lowe's, Best Buy and other "Big Box" stores, yes! I have concluded that the operators of these stores believe that this is a method of convincing their customers that they have low prices. They want you to believe that their prices are so low that they can't take a chance on trusting any of their customers.

“I wonder if it really works?”

Finally, we reported yesterday that Wal-Mart Stores’ sales last week lived up to expectations, and that the company “attributed the performance to Valentine's Day presents and people who bought duct tape because of concerns about possible terrorist attacks.”

One MNB user wrote (and we wish we’d thought of this particular line):

“Are you sure they were buying the tape for terrorism and not Valentine's Day? You hear stories…”

The imagination boggles.
KC's View: