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    Published on: June 24, 2003

    We went off on a rant yesterday about questions being raised about diet supplements, including ephedra, suggesting that while there are issues about the questionable science used in creating and marketing them, retailers ought to consider not carrying them.

    Not everyone agreed.

    MNB user Jem Welsh, who has written often to us about issues such as these and who seems to have a pretty level head on the subject (certainly more level than ours, which isn’t hard), offered the following response:

    Be careful when you generalize about "these products". I am from the dietary supplement industry (not a supplier of them) and can tell you that, in most cases, the retailer knows much, much less about these products than their customers know. By arbitrarily removing products, they may look stupid to their customers. I think it is imperative that retailers get more educated about dietary supplements if they carry them or don't sell them at all!

    How can we expect a supermarketer to learn enough about these products to judge their efficacy and safety? When you generalize about dietary supplements, "these types of products", you lump healthful vitamins, minerals, amino acids and herbs that have been found to be safe and effective. But if a retailer doesn't know about the products, know about their dangers/benefits, they may unwittingly connect a product that is proven safe with one that is questionable. Ephedra is BAD NEWS and it should be a controlled product. But how is a supermarketer to know?

    If retailers want to sell these products and can educate themselves and their customers, they could be among the industry leaders to be emulated. (What was Whole Foods share price this morning? How does that compare with the industry mean price?) If retailers do not like that model, they should not consider selling these products. But by generalizing the category as dangerous, you suggest that one bad apple will spoil the whole bunch. In the case of dollars per running feet of shelf space, you are comparing apples to apples. How much does the retailer stand to lose by throwing out the entire apple barrel!

    The problem creating this Ephedra controversy is regulations governing it. While the regulation calls these products "food", many of the herbs, chemicals and some nutrients act more as drugs than foods. Anyone putting pills in their mouth should know what the heck the outcome may be and should know the dangers of its use before taking it. Yet, the DSHEA (Dietary Supplement Health and Education Act) regulations do not call for label information about potential interactions with medications, other herbs, and/or vitamins, potential problems with overdoses of the products, etc. Many reputable companies in the supplement industry (and there are such companies) provide balanced and accurate warnings and label information to help educate the consumer and the retailer. Due to the regulations, they are not obliged to do so.

    There are terrible companies in the dietary supplement industry. I hope retailers would never do business with them. If they do, jerk their products and don't look back. There are also companies with missions to help the populace through quality products and education, fair prices and best intentions. I would suggest the supermarkets and other retailers interested in carrying these products should do so (and I wish they would).

    But don't generalize, Kevin. By your argument, when mounting evidence suggests that products with trans-fatty acids "cause harm" (your words) retailers should "take them off the shelves and tell consumers why." Are retailers willing pull the products, have an empty margarine section, no pudding section, no shelf stable vegetable oils or many prepared foods. "Here is a perfect example of an area where retailers ought to take the B.S. by the horns and consider not carrying products such as these, no matter how much they add to the bottom line!" (Your words, not mine.) What exactly is the definition of "these".

    Incidentally, stores have already been sued for carrying these products. And the litigation has worked to get the products off the shelves. The herb Chapparal and the amino acid L-tryptophan are no longer allowed to be sold as dietary supplements. Retailers were respondents in both suits. It is these two suits that set up the current regulations, as enforced by the FDA.

    And I hope Ephedra goes the same way. Then our industry in general can stop being trashed for it. Let those unconcerned about safety get sued and leave the good people of the industry to keep trying to make products that are healthful and helpful. If there are enough suits, maybe there will be a change in the regulation.


    Well put.

    We didn’t mean to suggest that all such products be disposed of, nor that retailers ought to do it on our say-so. (Fact is, we wouldn't suggest doing anything on our say-so.)

    And we absolutely agree that retailers need to do more than just put these products on the shelves and/or take them off. They need to understand each and every one of them, and communicate that knowledge to their consumers.

    Another MNB user wrote:

    Controversy over ephedra-containing weight management products has raged for years, even within the natural products industry. I bought dietary supps for about 12 years for a large, privately owned natural foods retailer. In the mid-1990's, the store owners & I made the decision to not carry ephedra products, unless they were sold as decongestants. According to the United States Pharmacopoeia , ephedra is classified as a broncho-dilator only. Not a weight management aid. The contraindications are well documented. In my opinion, manufacturers of weight management products who put ephedra into their formulas are irresponsible. Many times they will substitute guarana or mate, both of which are about equal to the stimulant properties of ephedra, and will proclaim in bold letters on the bottle or in advertising "Ephedra Free!". Unfortunately, the entire dietary supplement industry has received bad press as a result of the ephedra problem. However, people keep buying the stuff to lose weight--which brings us back to the ever-popular obesity issue!




    We expressed a certain lack of surprise at the demise of colored French fries yesterday, which prompted some email. One MNB user wrote:

    The colored foods are 'surreal' and underscore the desperation these huge conglomerates are showing to get just 'one more sale'. If they think my kids think 'green' chocolate if fun, or blue fries, or purple ketchup is what drives me to their brand, they are seriously missing the boat. Much of my buying power (I used power instead of decisions because I truly do have the power to buy or not to buy) is based on and blamed on the RETAILER: convenience, quickly get in and out, finding compatible things I need for a meal, price and (realistic) offers and price reductions available, choices and how they treat me.
    Ever go into a store to pick up a couple of things, then have more in your arms than you can carry? ALL the carts are ALL the way up front.

    Try planning a meal for tonight's dinner, and actually COUNT the number of aisles you have to go up and down to find each ingredient/portion.

    Try reading the signage-YOU figure out which aisles) you need and what's on sale. Try finding help in the (grocery) store. Why are all the doors at the far ends of the store, if they are even open? Why are the 'express' lines set up for those spending the least amount at the store? Where's MY express service when I'm spending $200+ dollars?

    Why is the milk in the BACK of the store? Why aren't those express lanes located throughout the store? Why not have kiosks or mobile checkers?

    I could go on forever here, but I think you get the overall idea. Changing the color of the product is NOT the trend this shopper is looking for.





    On the subject of the new Harry Potter novel, and Amazon.com's ability to sell almost a million of them, MNB user Brad Morris wrote:

    I didn’t pay Amazon for shipping, as I included my Harry Potter in with some other items I ordered last month. Based upon their Free Super Saver Shipping policy I was supposed to receive my book approximate five days AFTER 6/21.

    That was ok with me. I wasn’t willing to pay extra to get it earlier. I would rather get the great Amazon price with no shipping charges and no sales tax.

    Imagine my surprise to see the book in my mailbox on 6/21 delivered by the US Postal service. Way to go Amazon; exceeding my expectations once again!


    Just wait until it gets into the food business…




    On the subject of lawsuits filed against fast food companies, MNB user Denise Remark wrote:

    Ultimate responsibility lies with the individual. What a person puts in his/her mouth is the responsibility of that person alone. We all know enough about fast food & junk food to understand that it is just plain bad for us. Period. No litigation required.

    Not everyone agreed, however. MNB user Dylan MacDonald wrote:

    I'm really tired of editorials/right-wing politicians/industrialists complaining about consumers not taking "personal responsibility" for the misfortune they experience or the bad choices they make in their lives.

    Suing fast food companies is a perfect example. In a society where the corporation is king and any attempt to make companies be responsible for the unhealthy, dangerous or antisocial products they produce is considered too regulatory, job-unfriendly or downright un-American, is it any surprise that people are victimized by these same companies' predatory marketing practices?

    The fact of the matter is, if consumers only get half the story (French Fries taste great! vs. French Fries are high in fat and carbs and are hazardous if eaten at the rate at which we are told to eat them) is it any wonder there are so many fat people?

    Laissez-faire government has led to unchecked corporate power. Suing fast-food companies for the awful and downright dangerous products they sell may be one of the only ways to get them to take responsibility for what they sell. It's a two-way street.


    And another MNB user wrote:

    I was just thinking how, in the near future, children will be able to sue their parents for feeding them incorrectly . . . too much butter, too much ice cream, too much steak, too many eggs, too many pancakes . . . bad meal planning and bad cooking . . . and to top it off, not signing them up for athletic activities to offset their time at the TV . . . I think I am moving to Tahiti . . .

    Which is why, as I tell Mrs. Content Guy, once the kids are out of the house we're moving…and not leaving a forwarding address…




    And finally, we got a great letter about the ongoing travails of A&P:

    What I haven't figured out about A&P is this: They're what, a 500 or so store chain total? That's 1/4 the size of Kroger, Albertsons, or Wal-Mart. What A&P is failing to see is that they need to go to Iowa and take a few pages from Hy-Vee. Hy-Vee has running a store down to a science.

    Hy-Vee makes it with 219 stores, and continues to grow. They understand their customers and it shows in terms of what they offer. There's absolutely no excuse for A&P to run its stores so horribly outside of bad management and lack of vision.

    If Ron Pearson (a guy I respect quite a lot) can let Hy-Vee do its thing and do it WELL, with fewer stores in 3 medium sized markets (Kansas City, Omaha, and Des Moines), there's no reason A&P can't run stores in Milwaukee, Detroit, New Orleans, or New York.

    Hy-Vee isn't always the cheapest, but they excel at customer satisfaction. One quote from Ron Pearson that stands out to me about the way stores are designed, "Studying the architecture is very important to us, We love light. We love color. It's part of the shopping experience, the ambiance that we provide."

    There's not a Hy-Vee that's dumpy. There's not one that's in need of attention. There's not one where employees are rude or uninformed (if they are, the store directors are on it fast)

    Hy-Vee ran Albertsons out of Des Moines. Albertsons lasted less than 5 years in the market. Kroger and Albertsons are competing with Hy-Vee in Omaha and finding them to be a very formidable competitor, and Hy-Vee gets a decent market share.

    As for Kansas City, Hy-Vee is in Associated Wholesale Grocers' territory (who runs stores under about half a dozen banners) and is getting decent market share despite Wal-Mart and Target both being in groceries there.

    This all comes back to Sam Walton's philosophy of retail: You see what your competition is doing right and then improve on it. A&P does not get this concept in any way shape, or form. As far as that goes, I don't think even the post-Sam Wal-Mart gets that anymore.


    Provocative thoughts. Hy-Vee is one of the best food chains out there, and quite frankly, more companies ought to be trying to emulate its culture.
    KC's View:

    Published on: June 24, 2003


    • Walgreen reported that net income in the third quarter ended May 31 was $296.1 million, up from $259.0 million a year ago. However, third-quarter profit was boosted by a $12 million pretax gain from legal settlements and a lower inventory charge resulting from the company's lower expectation for inflation on the value of inventory.

      Quarterly sales were $8.3 billion, up 12.6 percent from a year ago. Same-store sales were up 8.2 percent.

    KC's View:

    Published on: June 24, 2003

    Masterfoods USA, formerly known as M&M/Mars, will launch a new Snickers Marathon bar this fall, designed to be an energy bar that tastes like the candy.

    The Associated Press notes that sales of energy and nutrition bars are up about 14 percent in the last year to nearly $600 million, and that Masterfoods USA wants a piece of that action.

    The two-ounce Marathon bars will come in chewy chocolate peanut and multi-grain crunch, both tasting like chocolate, peanuts and caramel, and fortified with 16 vitamins and minerals and has about 10 grams of a special protein blend.
    KC's View:

    Published on: June 24, 2003

    The US Food and Drug Administration (FDA) has approved Prilosec, the Procter & Gamble-marketed heartburn medication, for over-the-counter sales.

    P&G said the product will be on store shelves by this fall.
    KC's View:

    Published on: June 24, 2003


    • Winn-Dixie Stores announced today that G.E. "Mickey" Clerc, Jr. will be retiring June 25 when the Company's fiscal year ends, after a long and successful career that spans back to 1961. Currently the Vice President of Public Relations, Clerc will begin a new role as a consultant to Winn-Dixie on a number of issues while enjoying a well-earned retirement. Winn-Dixie's Director of Public Relations and Promotions Kathy Lussier will assume Mickey's duties.

      "Mickey's contributions not only to Winn-Dixie, but to the communities we serve as well as the grocery industry itself, are immeasurable," said Dan Davis, Chairman of the Board of Winn-Dixie. "Winn-Dixie has trusted its image as a good corporate citizen to Mickey for literally decades, without hesitation. My family is grateful for his contribution."



    • PepsiCo has hired Paula Banks as its senior vice president for global diversity and organization partnerships, with her main goal to increase sales to minorities, as well as promote diversity within the company.

      She replaces Ronald Harrison, who until his scheduled retirement next March becomes special assistant to chairman and CEO Steve Reinemund. Banks is a former executive with BP.

    KC's View:

    Published on: June 24, 2003

    The Chicago Sun Times reports that as department store icon Marshall Field's "refashions itself into a 'house of brands,' it is leasing space to some pretty unlikely branded properties, including Yahoo!, Reflect.com, and Philips Electronics (which is creating a new electronics shops(.

    Approximately 10 percent of the 800,000 sq. ft. store on North State Street in Chicago is being leased out to some 25 outside retailers.

    The goal, according to the company, is to combine new entities with the retailer's old-fashioned hard lines and thus drive consumer traffic.

    In the case of the Yahoo! space, it will be devoted to allowing consumers to "test drive" the site's newest features and technologies.
    KC's View:
    Seems to us that as retailers look for ways of differentiating themselves, it is possible that they should be looking to creating these sorts of alliances to appeal to new customers. It might be connecting with retailers that offer supplemental services, or it might mean finding new ways (like the Internet) to expand the usage and appeal of existing products and services.

    It may not be a decision for everyone. But it is at least one of the options that people ought to be looking at.

    Published on: June 24, 2003

    The Washington Post reports that the perils and advantages of having a relationship between school districts and CPG companies is illustrated by the Oakdale Elementary School in Frederick County, Md.

    The school practically survives on large corporate checks, according to the ,i>Post. "Last year, it won $10,000 for performing the best interpretation of Oscar Mayer's well-known wiener song. This year it won another $10,000 from Oscar Mayer for singing its bologna song and two other melodies, written by music teacher Lori Bower, praising Oscar Mayer Lunchables, complete with children dressed up as dancing pieces of bologna, ham and cheese."

    Just recently, the paper adds, a third grade class had an end-of-year party sponsored by Dunkin' Donuts that celebrated "the class's $6,000 grand-prize victory in the company's contest to develop a one-minute commercial on 'selling' the importance of homework.

    CPG companies say that while they get involved with school districts because they want to promote their products to the young people who will be their future consumers, they also want to help funding-strapped schools.

    Critics, however, say that these kinds of arrangements commercialize the educational experience in a way that does not, in the long run, help young people.

    The consensus, however, seems to be that such arrangements will become more, not less, common.
    KC's View:
    Mrs. Content Guy, who happens to be a second grade teacher, has been under the mistaken impression that she is supposed to be teaching English, math, and Social Studies, as opposed to bologna jingles. (Though she does teach money by opening a classroom store and getting the kids to make budget choices as they acquire snacks and drinks.) However, she is open to appropriate and generous sponsors, and can be bought….er, sponsored…for the right price. She can be contacted through MNB World Headquarters: 203-662-0100.

    Now, to be serious for a moment…

    If it weren't for idiot school boards that bring in hatchet men-type superintendents to cut school budgets, and if not for short-sighted populations that believe schools are an expense as opposed to an investment, then districts might not have to rely on major corporate funders for money.

    Not that we feel strongly about this issue.

    Published on: June 24, 2003

    The Boston Business Journal reports that 7-Eleven CEO Jim Keyes plans to add 60 stores to the company's current base of 22 units in the Boston area over the next three years, and that many of the new units will be "new" prototype stores that are roughly half the size of a traditional convenience store at 1,500 square feet, and that have a broader selection of fresh foods.

    Keyes said that the Boston stores will be tailored for local tastes - perhaps even carrying lobster rolls in addition to Slurpees, and will sell the strongest coffee brewed by the chain in the US. (Just FYI, California &-Eleven stores sell the weakest coffee.)

    The company also plans to expand its base in Chicago and Florida.

    Keyes told the paper that "he wants to take pride in the New England-area 7-Elevens and make the region a flagship market for the entire chain -- if for no other reason than so that his family and childhood pals from central Massachusetts will have a better sense of what he does in Dallas."
    KC's View:

    Published on: June 24, 2003

    It was just about five weeks ago that Kroger Co. announced that it was hiring
    London-based Dunnhumby - a data management, customer analysis and planning firm - to help it better understand its customers so it could make better marketing and merchandising decisions.

    One of those decisions, apparently, has been to go into business with Dunnhumby in the US, created a 50-50 joint venture called Dunnhumby USA that will continue to work with Kroger while eventually being marketed to other US retailers.
    KC's View:
    Interestingly, UK retailer Tesco reportedly is a 53 percent owner of Dunnhumby in the UK, which means that now Tesco is in business with both Safeway (for online shopping) and Kroger in the US.

    We continue to believe that eventually Tesco is going to find a way to become a big player in the US market, and there is little question that these various deals (and whatever conversations it may be having with Ahold and Albertsons) could prove to be stalking horses for the big move.

    Published on: June 24, 2003

    The Wall Street Journal reported that Amazon.com, is using its ability to provide an Internet infrastructure to a wide variety of retailers - witness its work for companies such as Toys R Us, Borders, Target and Gap - to create a virtual supermarket online.

    The move comes as Forrester Research reports that online food and beverage sales this year should be up 40 percent over last year, to approximately $3.7 billion. While that is just a small percentage of the nation's total food and beverage sales, it reflects a growing willingness on the part of consumers to use non-traditional means to acquire food.

    Amazon reportedly is negotiating with companies such as Omaha Steaks and The Cheesecake Factory about becoming their web service provider, which would in turn give those companies access to the 30 million dedicated shoppers who use Amazon.com. Amazon would get a cut of each sale.

    It isn't Amazon's first flirtation with online grocery. In 1999, it invested $42.5 million in HomeGrocer.com, which eventually merged with Webvan - which, of course, did more than any other company to sink the image of online food shopping.

    Still, there are numerous companies still plowing the fields of Internet food shopping. Albertsons and Safeway both have broad initiatives in this area; Safeway is doing so in partnership with UK retailer Tesco, which is renowned for being one of the few online food retailers making money in the business. In addition, Ahold reportedly is making money in several of the markets in which it is operating its Peapod division. NetGrocer.com continues to sell packaged goods online and have them delivered via FedEx, while expanding into a separate business providing "endless aisle" technology to client retailers such as Ahold's Stop & Shop.

    And, there are numerous independent grocers that are either doing online food retailing themselves or using Internet services companies to provide the web infrastructure; such companies include Harris-Teeter, Sentry Foods, Foodland, Lowe's, and Gregerson's.

    (Full disclosure: One of the companies providing Internet services to independent retailers is MyWebGrocer.com, which happens to be longtime sponsor of MNB.)
    KC's View:
    Since the days when Webvan collapsed under the weight of its own arrogance and infrastructure, we've been predicting that eventually Amazon.com would find its way back into the food business. Food shopping is simply too regular a weekly experience generating too much volume to ignore.

    That said, the company seems to be perfectly positioned to get back into the food business, especially because most analysts believe that the company could survive and make money even if it never sold another book - simply because it has created proprietary software systems and expertise that are its most valuable assets.

    Despite the naysaying and the downturns, we always have believed that long-term, Internet grocery shopping will be a reality…and that grocers that want to survive will have to find a way to make it part of their strategic arsenals.

    Published on: June 24, 2003

    Reuters reports this morning that the UK's Competition Commission has asserted that it may block all four supermarket industry bids to acquire Safeway Plc - though it hinted that the bid by William Morrison Supermarkets could be allowed to go through.

    It also seems likely that if any or all of the four chains are allowed to compete for Safeway, there will be the forced disposition of stores.

    Safeway Plc, the UK's fourth largest supermarket chain with 480 stores and a 9.5 percent market share, has been besieged by supermarket chains looking to acquire it. The country's three top food chains - Tesco, Sainsbury, and Wal-Mart's Asda Group - all have said they would like to place bids. However, the commission noted that since the top four companies combine for a 70 percent market share, allowing any merger or acquisition among them could prove to be anti-competitive on a national level.

    In the case of Morrison, the nation's fifth largest supermarket chain and the only company to actually make a bid so far - for the equivalent of $4.8 billion (US) - the issues as explained by the commission are somewhat different. "A Morrison/Safeway merger could be pro-competitive in creating a powerful fourth national player," the commission said in a letter, though it also expressed concern that a Morrison acquisition of Safeway could harm local competition.

    There is a fifth potential bidder - non-industry retailer Philip Green - who has been approved to make a bid. However, he seems to be standing back for the moment assessing the situation.

    A final report from the commission is due August 12, though the deadline could be extended.

    The betting in the UK seems to be that if no bids are blocked, Wal-Mart is the favorite to acquire Safeway Plc simply because it has deeper pockets.

    Tesco, the nation's leading food retailer with a 26.7 percent market share, has taken the somewhat unusual step of saying that it does not believe any of the top three chains will be allowed to buy Safeway.

    "As we have previously stated, and as the Commission notes, the current proposals affecting the future of Safeway raise serious issues as to whether a structural change, which could see the four major retailers become three, should be permitted," said Sir Terry Leahy, chief executive of Tesco.

    Wal-Mart's Asda Group, however, issued the following statement: "We still believe we have got a strong case to acquire Safeway that is pro-consumer and pro-competition."
    KC's View:
    If "pro-consumer" just means the lowest prices, then we suppose that all the chains should be cleared to make bids, and let the chips fall where they may.

    But if the long-term view is that consumers are best served by multiple industry players that are able to compete on the same field, then we can't imagine how the commission could make any other decision than allowing the Morrison bid to go forward and disallowing any bids by Tesco, Sainsbury, and Wal-Mart.