retail news in context, analysis with attitude

MNB Archive Search

Please Note: Some MNB articles contain special formatting characters, and may cause your search to produce fewer results than expected.

    Published on: November 26, 2003

    Tomorrow is Thanksgiving Day here in the US, so in honor of this national holiday and what traditionally is a slow news period, MNB won’t be posting either Thursday or Friday…we're going to take a four-day weekend with Mrs. Content Guy and the Content Kids.

    So have a good weekend and a Happy Thanksgiving, everybody. We'll be back Monday morning with an all-new edition of MorningNewsBeat.com
    KC's View:

    Published on: November 26, 2003

    Last Friday, we asked people what kinds of wines they'd be pouring for the Thanksgiving holiday…and got a wide variety of responses.

    i>MNB user Katherine Whelen wrote:

    Matua Valley Pinot Noir 2001. Happy Turkey Day and throw all carbs and caution to the winds!

    MNB user Brad Morris chimed in:

    I like the idea of sharing our Thanksgiving traditions.

    While I am normally a BIG Red drinker, I do prefer whites on Thanksgiving. While the Turkey, gravy and the savory stuffing are perfect for a Pinot Noir, there is something about the Waldorf salad, and the cranberry/orange relish that say white to me.

    For myself I always have a Chardonnay; nothing too woody, normally something from the Pacific Northwest with a fruit-forward nature. For me this splits the difference of the savory-sweet nature of the meal: Big enough for the turkey, light enough to compliment the fruit flavors as well.

    For quests I will usually also have available a good dry Riesling, a semi-dry sparkling wine and one bottle of white-zin for those guests that haven’t quite developed their pallets yet; although, this year I am thinking of offering a Pinot Gris as well.

    Later, while most everyone is going for the pumpkin or pecan pies with coffee, I break out the port, or a good Rhone along with a cheese tray for myself and anyone who wishes to join me. For some reason I just don’t care for sweets after a meal the way I once did.


    Another MNB user wrote:

    I would recommend a Gewurztraminer for Thanksgiving dinner. It has just the right spice that goes well with Turkey without the heaviness of the Pinot. Don't get me wrong, I love Pinot, but its rich tannins can sometimes subtract from the gravy and I love gravy more. Gewurtz is not a great tasting wine by itself, but my family had it for with the Turkey on T-day last year and absolutely loved it, they're a tough wine crowd too. If you've been looking for a time to try a bottle of Gewurtz, whether from Germany (the best) or NY (great ones as well), this is definitely the time! Or here's a better idea: get a bottle of Gewurtz and Pinot! Who says we can't have multiple bottles of wine with Thanksgiving? "Bottle of red, bottle of white..." I had a delicious 2002 Weimer (Seneca Lake) Gewurtz the other day that might suit your tastes.

    And yet another MNB user offered:

    I'm betting you won't get many suggestions for this. As a very young boy - probably 5 or so - I recall my parents breaking open a bottle of "Cold Duck" at Thanksgiving. I grew up having a sip here and there and as I "matured" and my tastes "matured" one thing that has never changed is "Cold Duck" on Thanksgiving. Cheers!

    And, from yet another member of the MNB community…

    Wine, my favorite subject. For Thanksgiving, we open both a nice dry champagne (actually, sparkling wine as only the French stuff is allowed to be called champagne, and we're still boycotting all French wines) and a higher end cabernet sauvignon for the occasion, something like Joseph Phelps. We've found that these 2 very different wines pretty much satisfy everyone's taste w/turkey. Years ago, we used to buy "Sparkling Burgundy" for this day, a nice combination of the bubbles and red wine, but we haven't seen this around for a long time.

    MNB user Debbie Murphy wrote:

    We just went on a Long Island Winery Tour last weekend and had a terrific time. I couldn't believe that we have such great, reasonably priced wines, so close to New England. Pindar's "Winter White" gets our vote--not too sweet; not too dry. It is going to taste great on Thanksgiving Day.

    Happy Thanksgiving and thanks for all of the great info you provide!


    And finally, another MNB user had a somewhat different take on things:

    Um...Bud Light?

    To each his own.

    As for us, we're pretty sure that we're going to go with the 2001 Pedroncelli F. Johnson Pinot Noir that we had last weekend and fell in love with…we'll have to pick out a nice chardonnay for the people who prefer white wine, but we haven't decided on it yet.
    KC's View:

    Published on: November 26, 2003

    Reaction to our pieces about coverage in The Los Angeles Times of Wal-Mart's economic and social impact:

    One of the most interesting points in the Los Angeles Times article was that Raleys simply closed up and left town when the Wal-Mart supercenters arrived in Las Vegas. What does this portend for the L.A. market if those 40
    supercenters materialize?

    While Stater Bros. may be enjoying a temporary surge due to the strike, they may be the most vulnerable when Wal-Mart invades. Even if no chain leaves the market, those 40 supercenters could easily result in 100 shuttered supermarkets. The current strike/lockout is the last chance for both sides to reach a reasonable compromise on labor economics before the supercenters arrive. Then the chains need to get to work improving their ability to compete before it's too late.


    Maybe Stater Bros. will be vulnerable. But if we had to guess on an attack strategy that might be employed by CEO Jack Brown, it would be to hit Wal-Mart on what could be viewed as un-American sourcing policies. That's certainly a place where the Bentonville Behemoth might be considered vulnerable…though only time will tell if it is a weakness that can be effectively exploited.




    In response to our story yesterday about the $1.2 million salary and more than $2 million in bonus that potentially could be paid to new Ahold CEO Anders Moberg, one MNB user wrote:

    Absolutely unbelievable that they are willing to pay someone at this compensation level who is unproven at Ahold…The shareholders ought to be mad as hell!

    Hard to believe the board couldn't find a proven expert in the field to be on a retainer for less bucks than that, and give the person the reward only after success is evident.

    Is there really a shortage of high level expert and innovative retail talent in the industry that may be willing to accept a challenging role and only be rewarded after doing an excellent job?


    We don't mind a high bonus level if the salary is low and if the criteria for success is not transitory. But we suspect the Moberg numbers will irritate a lot of people.




    On the subject of Country of Origin Labeling (COOL), MNB user Al Kober wrote:

    I have been in the retail supermarket business for over 50 years. I have been in various focus groups and involved in many consumers groups. I have done some one-on-one customer interviews, and have seen few customers who are as concerned about what country their food comes from as some would indicate. To most customers it come from that store where they bought it, and if they trust the store, they trust the food. In most cases the inquires where about imported foods which they preferred and would pay more for.

    I can't remembering any customer who wanted to pay more for USA goods. If that were the case, Wal-Mart would be out of business. If there was this market, that many seem to continue to talk about, it would exist with out the government imposing a law to help make customers decide that that want to pay more for something that has no value to them.


    And another MNB user wrote:

    Any manufacturer or retailer that believes they can create a competitive advantage by identifying the origin of their meat and vegetables has always had the ability to do so. There is nothing to stop them.

    Maybe they haven't because their consumers have never indicated that this is something about which they have particularly strong feelings.


    MNB user Steve Lutz wrote:

    Our company has conducted extensive consumer surveys on COOL as it relates to produce. What we find is that consumers say they are very satisfied with the current level of origin labeling on fresh produce, ranking it way down the list of purchase considerations. Consumers say they are much more concerned with things like produce quality and availability. Hence, my prediction is that groups with a trade-protectionist agenda will wail and a few of the left leaning "consumer groups" will cry foul, but the response from consumers at large is likely to be a huge, collective yawn.

    And MNB user Ron Losch wrote:

    Finally someone is listening to the issues the implementation of this law will have. They need to revisit the entire law, and rewrite it, taking out all the items that favor special interest groups. There are easier ways to do this, look at the Florida COOL law for a great example.

    Another MNB user wrote:

    I would like to see some hard, reliable data that shows consumers are interested in COOL. I am confident that if you polled the many grocery retailers Consumer Affairs folks you would find very few customers requesting this information. I really would like to know if, in fact, consumers are wanting this type of labeling and more importantly, willing to pay more for their food to get it. I also would be interested to know what consumers think they are getting by having this information on the label...better food?, more protection from bioterrorist attacks?, assurance that they are only buying from within the U.S.?....I could challenge all of these and so could many of my peers. What is the goal here?




    We wrote the other day that we'd heard from a number of people inside Wal-Mart that the company's biggest potential problem is not being able to generate enough quality staffers to keep the company on its current trajectory. To which one MNB user replied:

    This is absolutely true. They are opening a Neighborhood Market near me and I went to apply for a job thinking with my background they could use my skills. What they wanted to offer me was a $6.25 cashier's job. I was told that they promote from within and don't bring management people into the stores from the outside. Another friend who has perishable background also went at my urging because he was also out of work. Again, they said the most they could pay him was $8.00 in the produce section.

    Luckily, I have been offered a position (I will have to move) and this company was impressed enough with my skills and background that I was interviewed on a Friday and offered a position on a Monday and start working for them next week.

    My friend went that same day to a job fair (again at my urging) and was interviewed on the Friday of that week for a store manager's job, called the following week and given an offer. He starts his training 12/1. Again at more money than Wal-Mart.

    This is just 2 examples of Wal-Mart missing out on some very qualified people.

    Kevin, I do think the job market is opening up. The salaries for the most part will be less than what people were making before but still a livable wage with benefits. People have to be patient. I was patient for 19 weeks and think I am making a great move with a great company.

    On another note about Wal-Mart and pricing:

    I had to pick up a few things this morning so I went to my local Wal-Mart Supercenter because Target wasn't open. This was before 7. I go to checkout and there wasn't one person to check me out. The only checkouts that were open was the self-checkout. I told them I wanted a human checkout and to call the manager, which they did. He checked me out. (I've used self-checkout and don't mind it but I think they should have had one person at a cash register.) Again, here they aren't paying livable wages and are now cutting more people out of their operation. I was telling a friend about this today and he said what he has seen over the last 3 weeks is that Wal-Mart has been raising their prices gradually 2-3 cents on a lot of their products. I am wondering if they are trying to build a fund for all the attorney fees they may have to pay if the government comes after them?





    We posed the question yesterday whether Wal-Mart at some point might decide to get into the health/wellness biz, and MNB user Jem Welsh had an opinion:

    In response to your question about whether Wal-Mart will get more involved in the Wellness game, I think the answer is - not well. Why not? Wellness products for the most part must be sold, they are not "jump off the shelf into your cart" products, no matter the price. Too many questions are not answered and so far, this has kept these products from being sold well.

    During the initial rush of nutritional supplements and herbs to the mainstream market, stores like Wal-Mart and Kmart tried to cash in on the top lines. They drove a hard bargain for price and put up lavish sections of wellness products. A year later, these companies were picking up all the inventory. The reason, most in the supplement industry feel, is that the products are usually well sold with counsel and that price was not the biggest factor. So, it really didn't fit WM's paradigm for sales.

    Wal-Mart still has some products but in no way can they compete to Whole Foods in the same area for these types of products. They try to sell them for less, but people still want to talk to someone about it, something Whole Foods does well. Further, Whole Foods devotes more % of labor dollars to selling these products than Wal-Mart would ever tolerate.

    Will they get market share? Of course. Savvy consumer will get the info and initial products from stores that offer good counsel, then buy their second and third bottles in places that sell them for less. However, the people that tend to buy these products ongoing are also buying the other products Whole Foods sells in all their departments. So, unless WFI works out a store within a store concept with WM, the leader will be Whole Foods, week in and out.

    There is a lesson in this for stores wishing to re-invent themselves. The niche market of organics, gourmet, wellness and fitness products is wide open. Unless there is a Whole Foods in your trade area, you have an opportunity to get into this business. There is still a wide open arena for this type of trade.

    The supermarket industry is a huge ocean of dollars with a lot of sharks swimming in the market share. Many operators, especially independents, are really small fish and can be gobbled up by the sharks (WM, etc.). Others are constantly trying to get out of the nets, which are labor problems, competition, etc. How many are looking for another place to swim. I suggest there are other waters and Wellness is only one of them. Swim where the sharks can't go! Wellness is here to stay and Wal-Mart will never devote the labor funds to make it work. I sense opportunity for others.

    Hire a couple of sales-minded nutritionists and watch found money floating in. Don't believe me; ask John Mackey...


    Willie Sutton once said that he robbed banks because that's where the money is. These days, the way you compete with Wal-Mart is by going where the Bentonville Behemoth is not…because, ironically, that may be where the money is (at least for the moment).




    We wrote yesterday about Wal-Mart planning to launch a line of private label laptop computers, which prompted one MNB user to ask:

    So, what's your beef?

    None. We just thought it was interesting in a "conquer the world" sort of way.
    KC's View:

    Published on: November 26, 2003

    See the highly relevant cartoon on page 38 of the December 1, 2003 edition of The New Yorker.
    KC's View:

    Published on: November 26, 2003

    Sitting watching television last evening, we couldn’t help but notice the barrage of ads by Wal-Mart publicizing special deals and extended hours this Friday, the day after Thanksgiving.

    Now, this isn’t unusual in the world of retailing. Plenty of retailers use the day after Thanksgiving to generate traffic, excitement, and sales.

    But we couldn't help but recall that a Wal-Mart executive once told us that the day after Thanksgiving actually is the company's least favorite day of the year - since it is the one day that the retailer goes off message.

    The other 364 days of the year, Wal-Mart brags about its lowest possible prices.

    But this Friday, for one day only - they're lower.
    KC's View:
    This isn’t necessarily a comfort to people competing with the Bentonville Behemoth…but it's nice to know that the world's largest retailer can be pressured into making moves it doesn't want to make.

    On the other hand, Wal-Mart will generate enough revenue this Friday to buy several small countries. So let's not feel too sorry for the folks from Arkansas…

    Published on: November 26, 2003

    So last night we were at the local food store that we frequent. It was fairly busy, though hardly overwhelming.

    As we checked out, the cashier looked at us and said, "Wow, it's busy. Hope it slows down."

    We replied, "Thanksgiving is the day after tomorrow. It's probably only going to get busier."

    She looked at us with wide eyes, and said, "I hope not. It's terrible here when it gets really busy."

    The subtext of her message: "When you as the consumer come in here, it is a inconvenience to me."

    This made us rethink our position on self-checkout. This is one cashier who probably shouldn’t have been so talkative.

    And what it made it worse was the fact that she was slow.

    Every retailer's nightmare.

    During the same visit, we were at the seafood counter and saw a card that read, "Where Your Tuna Comes From," and detailed where tuna comes from during the summer months. This being late November, we turned to the person behind the counter and asked, "But where does it come from during the winter?"

    They looked confused. They consulted with other people behind the counter, and then finally said, "The Caribbean." Except that it was more question than answer, with the implied hope that we wouldn’t further challenge their expertise.

    We didn’t. (At that point, our 14-year-old son was beginning to roll his eyes…)

    These are the kinds of store inadequacies that try consumers' souls…
    KC's View:

    Published on: November 26, 2003

    The Grocery Manufacturers of America (GMA) has called on the Bush administration to file a new World Trade Organization (WTO) case against the European Union's biotech traceability and labeling requirements.

    GMA and 21 other organizations sent a letter to US Trade Representative Robert Zoellick requesting that the government pursue all available avenues to nullify the EU's trade-restrictive biotech labeling regulations. GMA maintains that the EU's policies constitute an illegal barrier to trade as defined by the WTO's Sanitary and Phytosantiary and Technical Barriers to Trade agreements. Under these agreements, WTO member country regulations must be based on science and must not discriminate between domestic and imported products.

    "WTO standards require that all members base their regulations on science," said GMA President and CEO C. Manly Molpus. "The EU has ignored this mandate by pursuing a biotech labeling scheme based instead on politics. Mandatory labeling for biotech ingredients gives the false impression that these foods are unsafe. As numerous international scientific bodies - including the European Commission - have found, biotech foods on the market today are as safe as, if not safer than, their conventionally-bred counterparts."

    Enforcement of the labeling requirements is scheduled for April 2004.
    KC's View:

    Published on: November 26, 2003

    During one of the most challenging periods in the recent recession, food retailers turned in a resilient economic performance, according to the Annual Financial Review, 2002-2003 released by the Food Marketing Institute (FMI).

    Operating income increased to a five-year high of 3.34 percent in the fiscal year from April 1, 2002, to March 31, 2003. "This figure reflects disciplined and efficient management at the store level," said Tim Hammonds, FMI president and CEO. "Supermarkets are spending their dollars on technology to improve productivity and on the products and services that customers value."

    The industry also posted a five-year high in another key indicator, gross margin return on inventory (GMROI), at 409 percent. "This result shows smart inventory management," Hammonds said. "For over a decade, the industry has focused intensely on reducing inventory costs. We're now seeing progress, especially among the smaller companies."

    For retailers with sales below $100 million, the GMROI increased to 530 percent, up from 470 percent the previous year.

    Astute inventory management was also evident in the 3.33 percent asset turnover rate, another five-year high, along with inventory as a percentage of assets ó 22.03, down from 26.64 a decade ago.

    In earnings before interest, taxes, depreciation and amortization (EBITDA), the industry scored 5.08 percent - the second straight year in the past five that this figure surpassed the 5 percent mark.

    While industry net profits dropped below the one percent mark for the first time in a decade. Hammonds said, "The predominant reason had nothing to do with industry operations. Large companies changed accounting practices and wrote off significant extraordinary expenses. If these costs are discounted, industry profits were well within the recent range of 1.3 percent."

    "Despite the industry's resilience, competition continues to constrain both top and bottom line growth. Price-driven competition remains relentlessly intense, and today just about every retailer - from big box stores to gas stations - is selling food."

    Hammonds aid that the report provides cause for optimism in the performance of the top 25 percent profit leaders. "These companies are investing profits in their stores with capital expenditures nearly twice that of industry norms (4.71 percent vs. 2.67 percent). They're outpacing other companies by even greater margins in return on assets (7.64 percent vs. 3.04 percent)and return on equity (24.48 percent vs. 10.60 percent)."

    The FMI Annual Financial Review, 2002-2003 is available to FMI members at the FMI website:

    http:// www.fmi.org/pub/
    KC's View:

    Published on: November 26, 2003


    • Marsh Supermarkets reported second quarter net income was $375,000 compared to $306,000 last year.

      Sales and other revenues for the second quarter were $508,955,000 compared to $512,722,000 last year -- a 0.7 percent decrease.

      Sales in comparable supermarkets and convenience stores decreased 1.9 percent to $472.1 million from $481.1 million, while sales in comparable stores excluding fuel sales decreased 3.3 percent to $434.8 million from $449.7 million.



    • Ahold posted results for the first nine months of 2003, with net sales the equivalent of $51.2 billion (US), down 10.5 percent on current exchange rates but up 3.3 percent excluding currency adjustments. The company had a net loss for the period of $73.3 million (US), compared to a net profit of about $20 million (US) during the same period a year ago.

      Royal Ahold unveiled a plan this morning that will have it selling the equivalent of $3.5 billion (US) worth of stock at a reduced price as a way of raising cash to help it meet higher operating expenses as well as deal with its mountain of debt.



    • Dollar Tree Stores Inc. posted third quarter net income of $36.2 million, compared with $30.9 million a year earlier.

      Sales rose 19.4 percent to $665.2 million.



    • Starbucks Corp. reported that net sales for the four weeks ended Nov. 23 rose 28 percent to $387 million from $301 million a year earlier. Same-store sales for the period were up 11 percent.

    KC's View:

    Published on: November 26, 2003


    • Reuters reports that Wal-Mart Stores is close to making a deal with Ahold to buy its Bompreco chain, Brazil's third-biggest retailer.

      The only holdup at this point reportedly is a court injunction that is stopping Ahold from selling both Bompreco and its smaller G. Barbosa Comercial supermarket chain to the same buyer.

      Once the legal situation is worked out - which is expected to happen in a matter of weeks - the estimated price tag for the chains is north of $400 million (US).



    • The Wall Street Journal reports this morning that Procter & Gamble (P&G) has been sued by Colgate-Palmolive for allegedly falsely disparaging its teeth whitening products in advertising. According to the WSJ, this is the fifth such lawsuit filed against P&G in the past 13 months; other plaintiffs have included Kimberly-Clark, Georgia-Pacific, Playtex Products, and a Johnson & Johnson and Merck & Co. joint venture.

      The paper notes that this marks a shift in P&G ad strategy; the company used to be a somewhat benign advertiser, but these days the company has gotten so adversarial that "the constant stream of litigation is taking a toll."



    • Bankrupt Fleming Cos. will pay its banks $325 million out of cash that it accumulated during its Chapter 11 proceedings, assuming that the bankruptcy court overseeing its case approves an agreement that Fleming reached with its creditors yesterday. According to reports, the banks had been entitled to this money months ago, but held off pressing for payment because they did not want to derail the Chapter 11 process.

      In addition, Fleming was ordered by the bankruptcy court to put $14.7 million into escrow for eventual payment to vendors.

      The only part of Fleming still operating is its Core-Mark c-store distribution business…which also is on the market.

    KC's View:

    Published on: November 26, 2003

    Pilgrim's Pride has announced that it has completed its acquisition of ConAgra Foods’ chicken division for about $546.8 million.

    The deal makes Pilgrim's Pride the second-largest US chicken firm with sales of about $5 billion.
    KC's View:

    Published on: November 26, 2003

    Clark Retail Enterprises Inc. has struck a deal to sell Chicago-based c-store chain White Hen Pantry Inc. to New York-based investment firm Angelo Gordon & Co. for $45 million,.

    A group of White Hen senior executives, including CEO Brandon K. Barnholt, is slated to acquire a small stake (less than five percent) in the new company, which will be called WHP Corp.

    Clark has been in bankruptcy protection since October 2002. the company acquired White Hen three years ago for about $80 million.
    KC's View:

    Published on: November 26, 2003

    USA Today reports this morning on the growth of the so-called "Slow Food" movement.

    The "Slow Food" movement originated in Italy 17 years ago and is "spreading from hot spots in California and New York to points between," according to the paper.

    "Slow Food aims to be everything fast food is not. It's slow — in the making and the eating. It's fresh — not processed. It's from neighborhood farms and stores — not from industrial growers such as Tyson Foods or retail goliaths such as Wal-Mart."

    To those who would suggest that the "Slow Food" movement is just a niche, supporters would say, "No problem."

    But an indication of the movement's growing popularity can be found in "Slow Food" chapters being created around the country (there are 70 chapters in 40 states, some with more than 100 members), and the growth seen by companies that embrace or mirror the philosophy - such as chef Alice Waters' restaurants, or supermarkets such as Whole Foods and Wild Oats.
    KC's View:
    "Slow Food" is only slow in comparison with the crap served by so many chains through drive-up windows, or the stuff that masquerades as food in other retail environments.

    It seems to us that if families were to embrace this notion just once a week, it could have a tremendously positive impact on American society and culture. Just once a week…

    Think that perhaps the US food industry ought to set that as a goal (which seems appropriate considering tomorrow is Thanksgiving)? As an industry, we ought to try and get families to have one more meal together a week…a meal that they make together, a meal over which they share stories and ideas and experiences.

    We know this sounds sappy. It feels that way even as we write the words. But it strikes us as a noble effort, and one that reinforces the best of what this industry can do, the best of what it can be.

    Published on: November 26, 2003

    The Washington Post reports this morning on the growing popularity of cross-channel marketing, as retailers look to peddle their wares in brick-and-mortar stores, in catalogs, and via the Internet.

    "This year a number of Internet-only retailers are adding print catalogues, stamping their brand names on products at traditional stores, and in some cases opening bricks-and-mortar stores," the Post reports. "At the same time, traditional retailers are making it easier for shoppers to buy their products online and pick them up in the stores. Some are doing more on their floors to drive shoppers to their Web sites."

    A Jupiter Research survey recently said that four out of ten people who use the Internet are planning to do some of their holiday shopping online this year, up 18 percent from 2002's numbers, and suggesting to prognosticators that this year's Internet holiday sales will be up 21 percent to an estimated $16.8 billion. While this is just two percent of overall retail sales, a 21 percent growth rate is four-times the expected brick-and-mortar growth rate.

    "This is the first time in my research where consumers do not seem to care whether it's e-based or brick-and-mortar based," C. Britt Beemer, chairman of America's Research Group, told the Post. "Whoever makes the shopping experience the cheapest or the easiest wins."
    KC's View:
    Our mantra remains the same. The retailer that survives will be the one that is where the customer wants, how the customer wants, when the customer wants, with the products the customer wants at a price the customer deems appropriate.

    Published on: November 26, 2003

    The US Department of Commerce announced yesterday that the country's gross domestic product (GDP), the broadest measure of economic activity, grew at an 8.2 percent annual rate during the third quarter of 2003, the fastest pace since the first quarter of 1984.

    GDP grew at a 3.3 percent pace in the second quarter of 2003, and at a 7.2 percent clip in the third quarter last year.

    Third-quarter growth also was helped by consumer spending, which rose 6.4 percent, the strongest pace since the third quarter of 1997, and almost double the 3.8 percent growth rate during the second quarter of 2003.
    KC's View:

    Published on: November 26, 2003

    The Toronto Globe and Mail reports that Voortman Cookies Ltd. has announced that by March 2004 all 120 types of cookies that it manufactures will be trans fat-free.

    "Most consumers are not aware of this issue but when they become aware, they don't want to eat products with trans fats," said Harry Voortman, the company's president. "It's really bad for your cholesterol."

    Scientists have concluded that trans fatty acids raise levels of bad cholesterol and also prevent good cholesterol from clearing the circulatory system; they also are believed to contribute to heart disease, diabetes, and Alzheimer's. The US Food and Drug Administration (FDA) has given food manufacturers until 2006 to include trans fat information on package labels.
    KC's View:
    The Voortman folks seem to believe that this move will pressure larger cookie companies from making a similar move, but we're not sure that this is going to happen.

    Still, it is a promising move, and one we wish more companies would make.

    Published on: November 26, 2003

    Catalina Marketing Corp. has announced that it plans to hire an investment banking firm to help it divest its outdoor advertising, direct mail and marketing research divisions, and will "reorganize the company to focus on businesses which maximize its proprietary and strategic advantages" - specifically "point-of-sale applications within the consumer packaged goods, retail and pharmaceutical industries."

    Michael R. O'Brien, Catalina Marketing's interim CEO, said, "As we have conducted an overall assessment of the business and its potential, it has become clear that our best opportunities to generate long- term value are in Catalina's proprietary products and services. These areas require Catalina's complete focus and energy at the present time."

    Susan Gear, Catalina's executive director of corporate marketing, told the Tampa Tribune that the reorganization likely will include a number of layoffs that will be determined by the end of the year.

    In a prepared statement, Catalina said that it is in the process of reorganizing the reporting structure of its executive management to better reflect the company's renewed focus, and has accepted the resignation of group president Patricia A. Melanson, a 16-year veteran of the company.

    Catalina has gone through a number of executive changes recently. CEO Daniel Granger resigned this month, and was replaced by interim CEO O'Brien, who is leading the restructuring effort as well as the search for a new, permanent CEO.

    Among other executives who have left the company during the past few months have been Michael Bechtol, a longtime Catalina executive who was named the company's president/COO in April, George Neal, and David Diamond.

    The Tampa Tribune reports that accounting problems at Catalina in its Health Resource Division have delayed the company's financial reports for three consecutive quarters; a re-audit dating back to 2001 currently is underway.
    KC's View:

    Published on: November 26, 2003

    The U.S. Senate Tuesday approved a $400 billion Medicare overhaul that supporters believe will provide prescription drug coverage to 40 million older Americans, while critics warn that it could destroy the Medicare system.

    The legislation adds a prescription drug benefit to Medicare, provides billions of dollars in subsidies to insurance companies and HMOs, and begins to allow private plans to compete with Medicare. It is the largest expansion of Medicare since the program's creation in 1965, though it will be phased in over several years. The drug benefit does not take effect until 2006, though in the meantime seniors will be able to purchase a discount card that could provide 10 to 25 percent off prescription drugs.

    Bush called the vote a "major victory" and said, "We inherited a good Medicare system. It has worked, but it was becoming old and needed help. Because of the actions of the Congress, because of the actions of members of both political parties, the Medicare system will be modern and it will be strong."

    "This bill is an extraordinary day for seniors and indeed all Americans," said Senate Majority Leader Bill Frist (R-Tennessee). "The legislation we just passed is consequential, it is far reaching. ... It is epochal in the sense it modernizes Medicare to provide 21st century care for our seniors."

    Senate Minority Leader Tom Daschle (D-South Dakota), however, predicted seniors eventually will mobilize against the overhaul. "I was struck by how vacant the galleries were and so few seniors citizens looking down," Daschle said. "What you saw instead were lobbyists packing the halls. They will do well. Our seniors will not, and that is why the fight will go on."

    Critics of the bill say it does little or nothing to slow the rapid increase in the cost of prescription drugs, which has led to the popularization of "reimportation," or the sourcing of less expensive prescription medicines from countries like Canada.

    The House of Representatives had passed its version of the bill early Saturday morning.
    KC's View:
    We suspect that if the practice of reimportation continues, it will certainly dampen the ability of anyone who supported the bill to point to it as a complete solution to Medicare's inadequacies.

    We also suspect that this is a battle that, while it is over in the halls of Congress, will continue to be played out in the political arena over the next year.

    Published on: November 26, 2003

    Published reports say that talks have broken off between negotiators for 70,000 supermarket employees and Southern California's three major grocery chains, a result of the move by the Teamsters yesterday to observe picket lines that were thrown up around the chains' distribution centers.

    While organized labor had hoped that the new picketers and the Teamsters' support would encourage the chains - Albertsons, Kroger, and Safeway - to be more compliant at the negotiating table because of disruptions because caused during the high-traffic Thanksgiving week, it appears that the move may have simply hardened management's resolve not to capitulate.

    Indeed, representatives of all three chains said their stores were either "in great shape" or at the very least had enough products to satisfy shoppers in the few days remaining before Thanksgiving.

    At this point, no new labor talks have been scheduled between the two sides.

    It was on October 11 that union members of the United Food and Commercial Workers (UFCW) union walked off the job at Safeway's Vons and Pavilions units, followed quickly by a lockout of union employees at Kroger's Ralphs units and Albertsons' stores, in what was termed a "show of corporate solidarity."

    The face-off is over the union's desire to preserve or improve current wage and benefit packages, while the chains are looking for a wage freeze, cuts to health and pension benefits for current employees and a substantially lower wage and benefit package for new hires.
    KC's View:
    On top of everything else, the two sides appear to be waging a public relations war. If consumers can be convinced that the stores have plenty of food - or don't have food - that will influence their decision to patronize or not patronize a store.

    It may have little to do with the actual presence of food in-store. The publicity wars have commenced.