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    Published on: June 4, 2003

    Regarding yesterday's story about Coca-Cola considering a mid-calorie version of its Coke Classic soft drink, one MNB user wrote:

    Take a successful soft drink, lower the calories. Good idea! Now, name it something mind-numbingly stupid like PEPSI XL! Do you really want to drink something that brings to mind the extra-large albatross going directly to your hips? That's a disaster on par with the Hindenburg and the CBS summer broadcast schedule.

    Now, if Pepsi wanted to redeem themselves, they would do something about putting Pepsi One in vending machines and giving it more shelf space. I can't ever buy more than one or two cubes at my local grocer! Me without my Pepsi One...well, that's an ugly thought.

    Good point about the name. Let's hope that Coca-Cola does better than, say, "Middlin' Coke."

    Regarding our story and commentary yesterday about businesses linking up with financially strapped schools to provide educational field trips that offer a different view of the world of commerce, one MNB user wrote:

    In Portland recently, quite a few (15-20, probably) local businesses participated in a program where reps worked with art classes in schools at all levels to designs ads for those companies. The ads then all ran in the local paper for one day in place of the regular professional types, including student names. Some, such as for department stores, were full pages. There were some complaints, but not many.

    Another MNB user wrote:

    For the last four years the Dominick's Finer Foods chain has had school tours. The children are taught about the different food groups and what are the requirements. One year it was FAST FOODS that are good for you. We do make stops at certain products, once it was Kraft macaroni & cheese, recipes were given. This promotes healthy eating and gives the children an inside look at the workings of a grocery store.

    They meet the employees hear about their jobs, what they do and get samples along the way. This gives the stores a chance to give back to the schools in their community and shows that the company cares. I had children from 3 years up to high school attend the tours.

    Each year there are more tours scheduled so it does seem to be working.

    Hey, just ask Stew Leonard's how many school tours it hosts each year, and how many times a year it sends its people out into the schools to talk to kids about a wide variety of issues, including bringing animals from its petting zoo into classrooms. It is an exceedingly smart move.

    MNB user Steve Panza added:

    On your commentary on PetsMart sponsoring field trips - as a student in the 70s, we would go to certain businesses on field trips, including McDonalds. These field trips would tie into our curriculum (I can't remember what the McDonalds trip was about. I do remember getting a free cheeseburger, fries, and orange drink). The most memorable retail field trip was to the former Ed's Diary in Huntington Beach, CA (their cow pasture butted against the subdivision I lived in). We were shown the milking operation, feeding, etc., and got free ice cream and milk. That was fun (for a kid). Ed's Diary and the pasture were plowed over in the late 70's to make way for more houses.

    Schools are strapped for cash when it comes to field trips. If a business can teach something that a kid will remember (instead of memorizing from a book), and it's entertaining (so it caught the kids' attention), so much the better. Textbooks are not the only way to teach something.

    In fact, textbooks often can be the worst way to teach something.

    Our latest tirade against the local school district is that they have too many teachers who teach the subject, and not enough teachers who teach the kids. They get locked into one way of doing things, and can't or won’t even notice if the kids are learning.

    But don’t get us started…

    On the subject of Martha Stewart's probably indictment, one MNB user was sympathetic::

    Martha Stewart was a retail investor but has not been trained and certified on the laws governing retail investor trading.

    Merrill Lynch was the custodian of the rules and are trained and licensed to know these rules.

    Merrill Lynch, the certified "professional" is responsible for ensuring the rules were complied with.

    It is apparently true that both knew something they should not have known.

    It is clear this happens at least 1,000 times per day as evidenced by sudden drops or rises on stock prices in advance of any public news.

    My decision:

    Martha Stewart should receive a letter of reprimand. Her guilt is implied.

    Merrill Lynch should be made to pay all investors who lost money during the period. Their guilt is 100% certain.

    The SEC is going after the wrong party here.

    Maybe. But isn’t Martha Stewart also the CEO of a multimillion dollar public company? And as such, doesn't she have at least a little more knowledge than the average investor, and need to be held to a higher standard?

    On the subject of airlines beginning to sell food in their airport clubs, one MNB user wrote:

    As a frequent flyer, and a semi-permanent resident of American Airlines Admirals Club I welcome the addition of food. Last week had a day trip in and out of Newark, and ended up with a 3 hour wait for my plane home. Rather than dealing with the Newark area, or the airport's fast food offerings the Italian Sandwich in the Admiral's club was more than satisfactory. That sandwich plus a Beck's Dark draft still came in significantly lower than the company's dinner reimbursement limit. Wireless computer access, quiet surroundings, clean bathrooms and a decent meal sure beats hanging around in the general airport. Well worth the expense.

    Finally, we got several emails in reaction to yesterday's piece about fast food chains discovering the possibilities inherent in a gourmet sandwich program. We commented that we thought "these folks are onto something here, and that supermarkets ought to be pushing sandwich options more…especially because they have real appeal to time-constrained families that have a hard time sitting down together for dinner." We did say, however, that we prefer to make our own, "like a hot meatloaf sandwich with melted mozzarella and barbecue sauce on a nice thick crusty bread."

    MNB user Richard Lowe was appalled:

    Kevin, your sandwich will put you in line for a heart attack, high blood pressure, and a host of other ailments. Remember now you are working on 60 years. Maybe you will get religion in the next ten years? Everyone is still way, way over in the sodium, fat, and sugar categories.

    First of all, we're not working on 60. We're not even 50 yet…so let's not push it.

    And with all due respect, if you can't enjoy an occasional meat loaf/mozzarella cheese/barbecue sauce sandwich -- not to mention cold beer, hot quesadillas, a great glass of red wine, shrimp risotto, Krispy Kreme doughnuts, bread pudding, banana cream pie, and all the other culinary indulgences that make life worth living and meals worth eating -- then we're not sure it's actually living. That's not to say that we eat them every day or even every week; we consume our fair share of salads and try to lay off desserts, and try to get as much exercise as we can.

    There's a thin line between denial and discipline…and we think we'd prefer to stay on the side of the latter.

    And, in what was one of our favorite emails in weeks, MNB user Susan Kemp wrote:

    I look forward to the Morning News Beat every day. Your writing is informative, humorous and imaginative. I request that you post a warning label at least one paragraph before a tantalizing food reference is mentioned.

    Like many people, I tend to skip breakfast and survive at work all morning with coffee (and of course, the adrenaline rush that comes from reading MNB!). Imagine my dismay this morning to read the following " a hot meatloaf sandwich with melted mozzarella and barbecue sauce on a nice thick crusty bread..." and know that it will be hours before I can leave the office in search of such a sandwich!

    Sorry about that. We'll have to think about the labels…

    But you made our week!
    KC's View:

    Published on: June 4, 2003

    • Walgreen reported that May total sales increased 12.3 percent to $2.81 billion, compared with $2.51 billion in the same month last year. Same-store sales rose 8.1 percent for the month.

      May pharmacy sales climbed 14.6 percent, while comparable pharmacy sales rose 10.9 percent.

      Sales for the nine months of the fiscal year-to-date rose 13.1 percent from the same time period in 2002, reaching $24.26 billion, vs. last year's $21.45 billion. Comparable-store sales for the fiscal year-to-date grew 8.1 percent.

    • CVS Corp. reported that its total sales rose 6.8 percent to $2.01 billion in the four weeks ended May 24, up from $1.89 billion last year.

      Same-store sales rose 4.6 percent in May, with pharmacy sales gains of 7.5 percent.

      Total sales for the first 21 weeks of the year were $10.30 billion, up 6.6 percent from $ 9.67 billion last year.

      Year to date, same-store sales grew 4.6 percent, with same-store pharmacy sales up 7.2 percent.

    KC's View:

    Published on: June 4, 2003

    • Wild Oats Markets, Inc. announced that it has named David B. Clark to be Senior Vice President, Wild Oats Store Operations for the Company's Wild Oats Natural Grocer format stores. Clark most recently was president/CEO of Homeland Stores, and has had a 25-year career in the food industry with companies such as American Stores/Jewel Companies, Supervalu, and Bruno's.

    • Shaw's Supermarkets appointed Scott Santos to the position of Senior Vice President, Human Resources, responsible for Associate Relations, Training, Management and Organizational Development, Labor Relations and Compensation & Benefits.

      Santos most recently was Executive Vice President responsible for Human Resources, Distribution at Bi-Lo, LLC, a subsidiary of Ahold USA.

    • Coca-Cola Co. has appointed Daniel Palumbo, a former Eastman Kodak executive, to be the company's third chief marketing officer in as many years.

      It is the first time that Coke has turned to an outsider to run its marketing efforts; until a week ago, Palumbo was president of Kodak's consumer imaging division. He formerly was that division's chief marketing officer.

    KC's View:

    Published on: June 4, 2003

    A new National Retail Federation (NRF) survey found that 71.7 percent of Americans plan to celebrate Father’s Day, and those people plan to spend an average of $99.65.

    By comparison, the average consumer spent $97.37 this year on Mother’s Day. In the three years the survey has been conducted, this is the first time consumers planned to spend more on Father’s Day than Mother’s Day.

    Father’s Day sales in 2003 will be up slightly from 2002, when the average consumer spent $94.80. In 2001, the first year of the Father’s Day survey, the average consumer planned to spend just $52.30.
    KC's View:
    All seems right with the world.

    (Note to Mrs. Content Guy is she happens to be reading this and is desperate for suggestions. We like Tommy Bahama, Joseph Abboud, gift certificates, or tickets to a Broadway show or a Mets game.)

    Published on: June 4, 2003

    Rodale's terrific new Men's Health Best Life offers in its Spring/Summer 2003 issue a number of different food-related ideas that the savvy retailer could easily turn into marketing concepts. For example:

    • The benefits and advantages of eating rattlesnake.(pg. 29)

    • The perfect new summer cocktail is a Brazilian concoction called a Caipirinha. (pg. 22)

    • The world's spiciest ginger ale. (pg. 29)

    • The world's best barbecue sauces. (pg. 30)

    • Foods to eat to prevent various diseases and maladies. (pgs. 34-35)

    • Best breakfast drinks. (pg. 41)

    KC's View:
    Men respond to marketing strategies that speak to their needs, and yet they are largely ignored by supermarket retailers. And yet, we think with our stomachs far more than women do…so why aren't retailers doing a better job of targeting us?

    Published on: June 4, 2003

    Namnews reports that a number of British supermarket chains are getting into the pet and pet supply businesses.

    Tesco and Sainsbury are expected to be selling actual animals sometime this summer, while Asda is opening pet centers that sell supplies and accessories.
    KC's View:

    Published on: June 4, 2003

    CNBC reports that Martha Stewart may be arrested as early as today on charges of obstruction of justice, and Newsday reports that if indicted, the style diva plans to enter an innocent plea.

    If and when the arrest and indictment come, Stewart is expected to step down from her role as chairman and CEO of Martha Stewart Living Omnimedia. She would be replaced on an interim basis by Sharon Patrick, the company president. Stewart is expected to stay on the board of directors, remain an adviser to the company, and maintain her position as controlling stockholder with a more than 60 percent stake in the company.

    The charges are related to Stewart's sale of ImClone Systems stock just before the biotechnology company's experimental cancer drug was rejected by federal drug regulators.
    KC's View:

    Published on: June 4, 2003

    The New York Times reports this morning that Miller Brewing Co. will end the notorious series of "Cat Fight" commercials, in which two near-naked women mud-wrestle over whether the beer "tastes great" or is "less filling."

    The decision comes as the fourth in the series has hit the airwaves, this one ending with lingerie-clad women in a pillow fight as a sprinkler system goes off. (Don’t ask.)

    "Cat Fight" got Miller a lot of attention when it first debuted back in January, but apparently the company has decided that a sexually tinged sell was not the way it wanted to be seen in the market. Making the decision easier, according to the NYT, is the fact that sales were not going up because of the ads.
    KC's View:
    So, at least from an advertising POV, we now know that the campaign tasted great and was less filling.

    We had dozens of emails on MNB earlier this year discussing the relative merits of the "Cat Fight" campaign, and the most marked conclusion you could reach from all that was that people at the very least were talking about Miller Lite. Of course, if they weren't drinking Miller Mite the ads weren't doing what they supposed to do.

    We have to admit that we liked their ads, especially the device of framing the sexual content with a scene in which two guys discuss their ideal beer ad, and two women staring at them as if they were complete morons. (Which, of course, they were.) But we never decided to abandon Abita Turbo Dog because of the ads.

    Published on: June 4, 2003

    Toys R Us Inc. and Albertsons reportedly have signed a deal that will have the toy retailer establishing "Toy Box" shops inside many of Albertsons' 2,300 food and drug stores around the country.

    The Toy Box sections will feature toys that sell for $25 or less, and will take up between 200 to 500 square feet. Toys R Us also will operate some unbranded toy sections in some Albertsons units.

    Terms of the deal were not disclosed, though Bloomberg reports that the Toy Box concept is expected to generate upwards of $100 million a year in revenue.

    Analysts say that the combination could be a potent way to compete with Wal-Mart, which has become the nation's top seller of both toys and groceries… It will give Toys R Us broader and more frequent exposure to customers, and Albertsons will be selling higher margin items than those usually sold in supermarkets.
    KC's View:
    Smart move, not the least because it gives Albertsons a leg up on the competition. Toys R Us had been testing the concept with Ahold USA stores, but this will give Albertsons exclusivity, at least in the markets where they compete.

    There could be friction between the two managements, but we’re confident that they'll make it work. We're a little less confident about their ability to catch up with Wal-Mart…but we're willing to be surprised.

    Clearly, the notion of selling toys in supermarkets has taken root…KB Toys is selling products out of more than 4,000 CVS drug stores. We can expect to see more of this.

    Published on: June 4, 2003

    Ukrop's announced this week that it will spend $40 million to open four new stores in the Richmond, Va., area over the next two years.

    Company president Bobby Ukrop said that the expansion, to a total of 31 stores in the region, is part of a "planned, steady growth."

    One of the units, according to, will be a multi-level complex that has "a Family Physicians Ltd. office in addition to a First Market Bank center, dry cleaning services, café seating, banquet space, a juice and coffee bar, self-check-out lines, a drive-thru pharmacy, a wellness center and a fitness center with a spa."

    According to Ukrop, "This will be 21st century, one-stop shopping in a family-friendly environment."

    In addition, Ukrop said, the company will continue expanding its health and wellness foods and services, with 19 stores scheduled to have natural and organic departments within 24 months.
    KC's View:
    One of the best food chains in the country clearly is playing offense, not defense.

    Kudos to them.

    Published on: June 4, 2003

    The Associated Press reports that Wisconsin-based Roundy's Inc. has entered a $121.5 million bid for 31 Rainbow Foods stores that are owned by the bankrupt Fleming Cos.

    Fleming has accepted the Roundy's bid, and the judge overseeing the Fleming bankruptcy is expected to certify the bid as early as today.

    Officials at Miner's, a Minnesota retailer that attempted to make a late, $85 million bid for those stores, reportedly will object to a court certification of the Roundy's bid.
    KC's View:

    Published on: June 4, 2003

    The Financial Times reports that Ahold plans to put its US Foodservice division on the market as a way of reducing some its debt and creating some distance between the division's financial irregularities and the mother company. The sale, according to analysts, is unlikely to recoup for Ahold the $3.6 billion it spent on to acquire US Foodservice just three years ago.

    Ahold is declining comment at this time, but FT reports that interim CFO Dudley Eustace wants to sell all or part of the company, and is supported by new CEO Anders Moberg, who forced the resignation of US Foodservice founder and CEO Jim Miller almost as soon as he joined Ahold.

    US Foodservice has been found through internal review of having overstated profits by some $880 million, and subsequent reviews of other Ahold operating divisions have found additional financial irregularities, including a $29 million overstatement at the company's Top division in upstate New York that has been labeled by Ahold itself as "fraud."

    Ahold has $14 billion in debt to pay off, plus it is facing governmental investigations on both sides of the Atlantic into its financial affairs.

    The FT reported that several private equity and venture capital firms had demonstrated some interest in US Foodservice, which is the second-ranked foodservice distributor in the US, behind Sysco.

    In related news, Ahold announced this morning that it is selling Jamin, its 137-unit Dutch candy sore chain, in a management-led buyout. Terms of the deal were not disclosed.
    KC's View:
    No surprises here. The only big questions that remain is whether Ahold will be forced to sell something else that's big to deal with its debt issues, and whether there is yet another surprise out there in the form of another accounting scandal that will make this even worse for the company.