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    Published on: May 9, 2003

    We had the opportunity this week, during a pair of visits to the wonderful Bin36 restaurant in Chicago, to try a number of excellent wines that we'd like to recommend:

    • 2000 Cabernet Sauvignon/Merlot from Buckeley's, South Australia.

    • 2000 Cabernet Sauvignon/Shiraz, Elderton, "Tantalus," South Australia.

    • 2000 Cabernet Sauvignon, Laurel Glen Vineyard, "Quintana, North Coast, California.

    We also had the chance to try Sunrye Beer from the Red Hook Brewery, which we'd never had before. It was light, but excellent…and may become a standard offering around MNB World Headquarters this summer.

    And no, none of the above would be considered health food…
    KC's View:

    Published on: May 9, 2003

    We got a number of emails reacting to yesterday's story about the top 10 things we tasted at FMI this year.

    MNB user Mark Boyer wrote:

    "Kevin: your list of 'innovative and inspired' items found at FMI includes margaritas, BBQ sauce, pretzels, cookies, sweetened cereal, chocolate, ice cream, chicken wing sauce and more cookies. Plus, irradiated ground beef. This sounds like a shopping list for a family reunion picnic.

    "What there doesn't seem to be an abundance of are food products that will help the retailer convince the consumer to prepare one more meal at home (save for the ground beef). Think what could happen to the average market basket ring if product innovation convinced the consumer to prepare just one more meal at home."

    No argument with that point…though we like to cook using beef, barbecue sauce, and wing sauce, while sipping margaritas and planning ice cream for a homemade dessert.

    Doesn't everyone?

    Another MNB user wrote:

    "Check the sugar grams on Smorz and Cinnamon Crunchers. Most of the cereals we are feeding our kids are packed with SUGAR! 4 grams = 1 teaspoon of sugar. (It's nothing to see 30-40 grams of sugar in one serving.) If we want to defeat obesity among children in America the adults need to grab the wheel and feed our kids what is GOOD for them."

    Hey, our kids are the worst eaters on the planet. We've gotten to the point where we'll let them eat almost anything just to see them put something -- anything -- in their stomachs.

    MNB user Richard Lowe wrote:

    "Your list may be wonderful, but WHERE are the no sodium added, low saturated fat, low sugar products that are a benefit to your health and longevity of life? Or better yet teach your kids to eat the right things."

    Boy, you folks are getting a little fanatical on us…

    Just kidding.

    You make good points.

    It's just that we're subscribing lately to the "live life today like you’re going to get hit by a bus tomorrow" philosophy, which means we're going heavy on the margaritas and barbecue sauce, and light on the tofu and soy.

    MNB user Randy Harter wrote:

    "Just prior to lunch, as I read your FMI tour recommendations, the brain in my stomach came to life. The NewTree Pure Pleasure Chocolate sounded wonderful, but alas, no online sales. This I was going to top off with your number one choice: Margarita In A Bag, but again, no on line sales. Actually, wanted to order for my 20 something kids. So was relegated to ordering a tin of the wonderful sounding Brent & Sam's Key Lime White Chocolate Cookies for my bride, with which they will attach a personalized note (great website). Perhaps they will cause her to pucker up! More to follow!"

    Good luck. And remember to "live life today like you’re going to get hit by a bus tomorrow…"
    KC's View:

    Published on: May 9, 2003

    • McCormick & Co. will acquire Zatarain's, the New Orleans-style flavored rice and meal manufacturers, from Citigroup Venture Capital and other investors for $180 million in cash.

    KC's View:

    Published on: May 9, 2003

    • Wal-Mart de Mexico (Walmex), reported April same store sales that were up 7.8 percent over the same month last year. Total sales for the month were the equivalent of $885 million (US), up 13.4% from April 2002.

    • Delhaize, which owns US chains Food Lion, Hannaford Bros. and Kash n' Karry, posted a 4.2 percent fall in net profit to the equivalent of $52.6 million (US), far better than the 20 percent decrease that analysts had been predicting.

      Sales, however, were off close to 14 percent, to the equivalent of $5.34 billion (US).

    • BJ's Wholesale Club Inc.'s posted April same-store sales that were up 4.8 percent. Total April sales increased 14.4 percent to $ 457.3 million from $399.7 million a year earlier.

      First-quarter same-store sales rose 5.7 percent, while total sales were up 15.7 percent to $1.44 billion from $1.25 billion last year.

    • Dollar General Corp. posted April same-store sales that were up 5.9 percent, with total sales for the four weeks ended May 2 up 14.8 percent to $490.3 million from $427.2 million a year ago.

    • Family Dollar Stores Inc. posted a 7.1 percent increase in April same-store sales, with total sales for the four-week period ended May 3 reaching $366.1 million, up 17.9 percent from the same period a year earlier.

    • .
    KC's View:

    Published on: May 9, 2003

    The UK's Royal Society has issued a report saying that there is no evidence that genetically modified foods are any worse for people that conventionally created foods, according to the BBC.

    While GM technology could lead to "unpredicted harmful changes in the nutritional status of foods", the BBC says, the same could happen with traditional methods of crop breeding. In addition, the likelihood of allergies is no worse with GM crops than conventional crops.
    KC's View:
    Proving it is one thing. Convincing the public is another…especially when Greenpeace attacks the report almost before it gets issued.

    Published on: May 9, 2003

    The city of Washington, DC, reportedly is negotiating with McDonald's to have the fast food retailer's "Red Box" vending machines placed in selected commuter rail station, allowing consumers to pick up food, drink and other amenities without actually having to go to a store.

    There are two other Red Box units, each one approximately the size of a minivan, operating at present, one in the metro Washington area, and the other in Bethesda, Md.
    KC's View:

    Published on: May 9, 2003

    The five new Sears Grand stores being opened by that retailer in markets like Salt Lake City and Las Vegas will include an edited grocery selection that will be heavily weighted toward snack and convenience foods, as well as HBC products.

    In addition to its traditional inventory of soft and hard lines, the Sears Grand format also will carry CDs and DVDs, as well as toys and greeting cards.
    KC's View:
    Because there just aren't enough people out there selling groceries these days…

    The expanded selection is believed by Sears executives to make the company more competitive with chains such as Kohls and Target. Also more competitive with Kmart…if anyone were actually worried about competing with Kmart.

    Interestingly, the Chicago Sun Times reports this morning that the Sears-Kmart merger that was recently being speculated about was discussed by executives with the two companies back in 1999. The discussions ended when a Sears analysis of Kmart's business suggested that they would cannibalize each other's business.

    Published on: May 9, 2003

    US Secretary of Health and Human Services Tommy Thompson said yesterday that he plans to apply public pressure to fast food chains that are contributing to the nation's obesity problems, and find ways to reward companies that offer healthier menu options.

    According to Thompson, such initiatives are more likely to impact fast food chains' behavior than lawsuits…though he made his comments as it was announced by an anti-obesity activist that legal action is likely to be taken against the American restaurant industry.
    KC's View:
    We think that this would be a good idea if Thompson were starting from scratch and weren't facing off against marketing campaigns for fast food that run in the gazillions of dollars.

    But he is.

    Besides, trying the case against fast food in the court of public opinion hardly guarantees that it won’t find its way into real courtrooms.

    Published on: May 9, 2003

    Reuters reports that Robert Gillison, the treasurer at embattled US Foodservice, has conceded that when Ahold bought the company three years ago it knew accounting problems were going to be an issue.

    "We had identified that we had inadequate controls and we needed to work on them," Gillison, told Reuters in an interview. "Generally speaking, the openness and visibility of this stuff in this company is going to be much higher."

    Gillison said he had no idea why two former executives with the company had inflated profits by $880 million over two years, and noted that there is no evidence that the two men were pocketing the money themselves.
    KC's View:
    Better late than never.

    Unless, of course, you happen to be a stockholder. Or one of the two executives who got sacked. Or Cees van der Hoeven, who was forced to resign from his Royal Ahold CEO job.

    We'd feel sorry for the executives if we didn't think that this was a sanctioned, pervasive policy, and that this lone gunman theory of financial fraud against the company was a lot of bull.

    Published on: May 9, 2003

    Spartan Stores announced that it will sell its convenience-store distribution subsidiaries L&L/Jiroch Company and J.F. Walker Company to The H.T. Hackney Company, a Knoxville, Tennessee wholesale convenience-store distributor.

    H.T. Hackney and its affiliates are expected to pay Spartan Stores approximately $42 million in cash and assume certain liabilities.

    The Spartan subsidiaries generated $720 million in sales during its last fiscal year.

    The transaction does not include Spartan's subsidiary, United Wholesale Grocery Company; a 12 location cash and carry convenience-store distribution operation.

    In a memo to all employees, John Sommavilla, executive vice president, supply chain, wrote that the company has "signed a definitive letter of agreement with the H.T. Hackney Company for an ongoing business relationship between our companies for distribution of products now distributed by L & L Jiroch to Spartan owned retail stores and Spartan independent customers.

    "Consistent with our supply chain strategy on cigarettes, cigars, tobacco accessories, non-palletized candy and spices, the acquiring company will continue to be our designated distributor.

    "In addition, Spartan Stores has agreed not to compete with H.T. Hackney on these same products currently sold to our existing grocery customers and traditional c-store customers by L&L Jiroch."
    KC's View:
    Somehow, that seems like an awfully low price for a business generating three-quarter-of-a-billion dollars a year.

    It may have something to do with the inherent instability of the c-store business these days, as it is under attack from some many different competitors. And, it may have something to do with Spartan's need to improve its bottom line.

    We can't help but feel that this isn't a good sign…but we're willing to be surprised.

    Published on: May 9, 2003

    Fleming Cos. announced that it will shut down operations at five of its divisions, resulting in the elimination of some 800 positions, or seven percent of the company's workforce.

    While there are no estimates yet available about how much the job cuts and closures will save the company, Fleming did say that the divisions are not profitable and show no signs that they will become so. The closures include a general merchandise distribution center in King of Prussia, Pa. and grocery wholesale divisions in Phoenix; Salt Lake City; Warsaw, N.C.; and Northeast, Md.

    The divisions are scheduled to be shuttered by mid-June. All told, they combine for roughly $1 billion in sales. Fleming has been in bankruptcy protection since April 1.

    Bill May, President and CEO of Wholesale Distribution, said, "While the decision to exit any market is difficult, it makes excellent sense for us to scrutinize our operations and concentrate our human and financial resources on those business units and markets in which performance is highest and opportunities are greatest. The previously announced loss of business at these divisions and their limited growth opportunities has made it impossible for us to continue in these markets as a core part of Fleming operations.

    "After careful study and consideration, it was decided to take this necessary action to advance our restructuring, which is important to our company and our aggregate customer base."

    "To minimize disruption to our customers supplied by the closing divisions, we are committed to assisting the affected retail customers in their successful transfer to a new supplier, as practicable," said May.

    Fleming also announced that it will open a new convenience division in Denver, Colorado, replacing one that was destroyed by a fire lat last year.
    KC's View:
    It's a start, at least from the financial perspective. We're not sure what it does for the company's long-term operational issues.

    But here's the question that needs to be considered.

    If you were a retailer looking for a wholesaler, is there any reason -- any at all -- that you would consider Fleming?

    The only one we can come up with at the moment would be if Fleming were the only wholesaler serving a market.