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    Published on: May 13, 2004

    In a letter sent to her membership, Katherine Albrecht, founder and president of Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), criticizes Wal-Mart’s rollout of Radio Frequency Identification (RFID) technology.

    The letter reads:

      “Wal-Mart has crossed our line in the sand and has begun placing LIVE RFID TAGS on individual consumer goods. Last week, they began stocking the shelves of seven Dallas-Ft. Worth area stores with Hewlett Packard products with live spychips affixed. Wal-Mart has no plans to deactivate the tags at the register and instead tells customers they can deal with the tags themselves.

      “Wal-Mart executive vice president and chief information officer Linda Dillman said:

      “‘...down the road there are so many possibilities to improve the shopping experience that we hope customers will actually share our enthusiasm about EPCs,’ Dillman said, referring to the RFID-based Electronic Product Code industry hopes will replace the barcode. ‘As we look forward five, 10 years, we see the possibility of offering expedited returns, quicker warranty processing and other ways to minimize waiting in lines.’

      “Of course, each of these applications requires leaving the tags ‘live’ on products after sale, where they can be used to invade consumers' privacy. (To see how, please refer to information on our website at

      “It's time to roll up our sleeves and give Wal-Mart a lesson in ‘consumer acceptance’!”

    In addition, CASPIAN has issued a press release charging that Wal-Mart is unethically “selling” the technology to consumers with “partial truths” that it passing off as consumer education.

    “The giant retailer's decision to tag individual items on the store floor violates a call for a moratorium on such tagging issued last November by over 40 of the world's most respected privacy and civil liberties organizations,” according to the CASPIAN statement.

    Part of the concern seems to be that Wal-Mart and other companies might be able to link information gathered via RFID technology and link it with loyalty marketing data, therefore infringing on consumer privacy.
    KC's View:
    While we’re enough of a conspiracy theorist to worry about invasion of privacy implications of RFID technology rollout, our primary reaction is that while almost anything is possible, it just seems incredibly unlikely that companies will do what CASPIAN worries about. After all, most retailers don’t even access or use all the loyalty marketing data they’ve accumulated…so a major effort in this area just seems unlikely. Though we concede that we could be a trifle naïve on this.

    When we link RFID and conspiracies, we prefer what one MNB user once told us – that RFID is essentially a plot by Wal-Mart to bankrupt every other retailer in the US. The theory here is that everybody else will go broke trying to keep up with Wal-Mart on this, while it’ll really only cost the Bentonville Behemoth petty cash.

    We also think that CASPIAN isn’t exactly a credible source of information on issues like this. We often think that the CASPIAN folks ought to be sent with the PETA folks to a desert island for the humorless lunatic fringe.

    That said, retailers and manufacturers have to be cognizant of the potential landmines that RFID (and other) technologies present. These companies ought to have somebody on staff who has as a principal job recognizing privacy issues and advocating for consumers. It’s the only way, in our view, to navigate the minefield.

    Published on: May 13, 2004

    Global notes and comment from…

    Recent weeks have seen further developments in the Australian fuel retail sector. The sector was set alight in the middle of last year, when Coles Myer, in response to the success of rival Woolworths’ Plus Petrol operation, launched an alliance with Shell that enabled it to introduce its own fuel discount scheme across some 584 sites. Not to be outdone, Woolworths hit back with a new joint venture of its own with Caltex in August 2003.

    It has now been announced that following trials in 41 Caltex petrol stations co-branded Caltex Woolworths at the end of last year, the two partners have finalised arrangements for the national expansion of the fuel discount scheme to around 450 sites. According to Woolworths CEO Roger Corbett, the retailer is taking a very significant step by extending its petrol offer to customers nationwide. "Our popular offer to customers of spending AUD30 (USD22.48) or more in Woolworths/BIG W stores to receive four cents off per litre of petrol will now be extended across the nation," he stated.

    Under the final arrangements, the 305 existing Woolworths sites will become jointly branded, while Caltex expects that it will co-brand more than 130 of its sites near Woolworths stores. The Caltex sites involved in the arrangement will include company-operated sites and franchisees selling fuel under a commission agency agreement. In addition, the rebranding of the Woolworths sites to Caltex Woolworths and the rollout of the additional Caltex sites as co-branded stations will commence immediately and will completed as soon as practicable.

    Following this announcement, Foodland, the fourth largest retailer in Australia, confirmed that it had completed a deal with ExxonMobil for the purchase of 16 Mobil service stations in Western Australia. Additional details have not been released although it is thought that most of the 16 sites will incorporate a grocery store operation supplied by Foodland, while the retailer is to launch its own discount petrol scheme.

    All of the leading grocery retailers in Australia now have some sort of presence in the petrol sector. As well as Coles Myer, Woolworths and Foodland, the country’s third largest retail force, Metcash Trading, also launched its own discount fuel offer in September 2003. Under the scheme, consumers who spend more than AUD30 (USD18.45) at any IGA store in Queensland will be reimbursed AUD0.04 (USD0.02) for every litre of fuel purchased. If successful, the programme will be rolled out to the remaining 1,000 odd IGA supermarkets across the country in the "near future."

    The rush to offer fuel discount schemes was kick-started by the success of Woolworths’ foray into the petrol sector in 1996. Between 1999 and 2002, petrol sales rose by 262% to reach AUD1.7 billion (USD0.9 billion), or 6.5% of total sales. In addition, the fuel discount scheme also boosted sales at its supermarkets by between 1% and 2%. Woolworths' success did not go unnoticed and for the likes of Coles Myer, the introduction of a fuel discount scheme of its own was essential.

    The movement of the grocers into the petrol sector coincides with the trend amongst the major oil companies to slowly withdraw from forecourt retailing, in order to focus on core upstream extraction and refining operations. In addition, they need the brand strength and expertise of the grocers in order to entice customers into their forecourt shops. This is not just happening in Australia, but across the globe – see the recent developments in Japan and the USA for example. However, the Australian grocers have been amongst the most aggressive in making inroads into the sector. In this highly competitive environment, further expansion by the leading retailers is likely.
    KC's View:

    Published on: May 13, 2004

    • Wall Street Journal reports this morning that Dunkin' Donuts will open 10 shops inside Wal-Mart stores over the next three months, and hopes to open more than 100 stores inside Wal-Marts over the next few years.

      The goal is to help Dunkin’ Donuts expand outside the northeast US, and to give customers yet another reason to shop at Wal-Mart.

      The WSJ notes that Wal-Mart has similar agreements with other food retailers, including McDonald’s and Blimpie. For a time, it seemed like Wal-Mart was leaning towards opening its own foodservice operations, called the Radio Grill, but that impulse seems to have subsided.

      There’s another food retailer in the Wal-Mart mix, as well: Krispy Kreme. The WSJ reports that Wal-Mart “already has an agreement with Krispy Kreme to test two of its outlets inside Wal-Mart stores, with a plan to open five more this quarter. Furthermore, Wal-Mart, which has about 3,000 U.S. stores, already sells boxed Krispy Kreme donuts in the main area of more than 500 of its stores.”

    • In the UK, Wal-Mart’s Asda Group said that it will create 4.300 new jobs this year as it invests the equivalent of $705 million (US) in the company.

    • Wal-Mart Stores Inc. reported first quarter earnings of $2.2 billion, compared with $1.8 billion a year earlier.

      Sales in the first quarter jumped 14.2 percent to $64.76 billion.

      U.S. same-store sales rose 6.4 percent, reflecting a 5.9 percent increase at Wal-Mart stores and an 8.8 percent rise at Sam's Club.

    • Wal-Mart Stores has agreed to pay a $3.1 million fine to settle charges brought against it by the US Department of Justice (DOJ) and Environmental Protection Agency (EPA) that the company violated the federal Clean Water Act at store construction sites across the country.

      The company also promised that it would endeavor to reduce storm drain runoff at its construction sites.

      "Runoff from construction sites is a primary contributor to the impairment of water quality in the nation," according to Thomas Skinner, acting assistant administrator of the EPA's office of enforcement and compliance.

    KC's View:

    Published on: May 13, 2004

    Reuters reports that US regulators are warming to the notion that cholesterol-lowering drugs should be switched from being prescription-only to over-the-counter status.

    Such a switch is scheduled to happen soon in the UK.

    Cholesterol-lowering medications such as Lipitor and Zocor are among the world’s most popular and profitable drugs, and the US Food and Drug Administration (FDA) has become more amenable of late to such switches from Rx to OTC. Four years ago, FDA blocked a switch that was proposed for Merck's Mevacor and Bristol-Myers Squibb's Pravachol, but it is generally believed that the government would rule differently today.

    The Bush Administration has called for such switches as a way of reducing the cost of prescription drugs in the US.
    KC's View:
    Get ready for some new planograms and to clear off some room on the HBC shelves. When this happens, it is going to be huge.

    Published on: May 13, 2004

    The San Francisco Business Times reports on the moves by various California wineries to package their wines in new ways. On the list, according to the paper, are aluminum cans, screwtop bottles and Tetra Pak cartons. It is all about appealing to “a younger, hipper crowd with fewer preconceptions about traditional wine presentation.”

    In addition to seeing an opportunity among these younger consumers, the paper writes, “portability, ease of use, quality issues relating to cork-based contamination, and efforts by Northern California wineries to move excess inventories all help explain the sudden burst of interest in new packaging methods.”

    Kendall-Jackson says that it is getting a “great response” with its Pepi wines, which comes in a screw-top bottle. As reported here on MNB a few weeks ago, the Niebaum-Coppola folks has gotten a tremendous response with its 2003 Sofia Blanc de Blancs sparkling wine in a petite, 187ml pink aluminum can. And there are plenty of other examples, as well.

    "(The response) has been so overwhelming that we've gone back to the well," said Erle Martin, Niebaum-Coppola's president. At the moment, it's Niebaum-Coppola's only wine in a can, but "at the moment would be the correct phraseology," he said.
    KC's View:
    We have to admit that we have a mixed reaction to this trend.

    First, we see yet another reminder that, since we prefer wine that comes from old-fashioned bottles with old-fashioned corks, we are neither young nor hip. And we wonder if part of the problem is that this new generation with so few preconceptions simply hasn’t been raised correctly.

    But obviously, that’s nonsense. Sofia sparkling wine is wonderful, even in the can. Ultimately, if new packaging can help the new generation discover wine, that’s probably a good thing. And we bow to the ultimate wisdom of Francis Ford Coppola in almost everything (though why he directed “Jack” is still a mystery to us). If he isn’t tied to bottles and corks, why should we be?

    (Quick note. When we mentioned the Sofia in a can a few weeks ago, noting that we have a bunch in our fridge, a few people asked where they could get it. Our understanding is that it has limited distribution at this point, but you can always try ordering it from .)

    Finally, it occurs to us that maybe more companies in the CPG business ought to be looking at alternative packaging for their products. Some companies, like Campbell Soup, have done just that…but largely, most companies are packaging their products pretty much the same way they always have.

    In 2004 and beyond, “outside the box thinking” ought to be more than a metaphor.

    Published on: May 13, 2004

    The Boston Globe reports that the inevitable is happening – the debate about the propriety of importing low-cost prescription drugs from other nations into the US is becoming an issue in the 2004 Presidential campaign between President Bush and Sen. John Kerry.

    Targeting the Bush administration’s support of drug companies and policy of fighting against reimportation, Democrats are running television commercials in 17 so-called “swing states” accusing the administration of being in league with major corporations and forcing higher drug costs on US citizens. The argument is given a certain currency by the fact that numerous cities, counties and states are making efforts to import drugs from outside the US, despite opposition by the US Food and Drug Administration (FDA), in order to close their own budget gaps.

    The political power of the argument perhaps can best be seen by the fact that the Bush administration seems to be backing off its position. The Globe reports, “Health and Human Services Secretary Tommy Thompson predicted at a news conference that Congress would pass a bill legalizing prescription imports this year. Asked if he would urge Bush to veto such a bill, Thompson said he would not.”
    KC's View:
    We’ve been predicting this all along – that political realities would eventually impose themselves on this issue. The problem is that either these drugs are safe or not – and shaping the issue to presidential politics doesn’t seem right.

    Published on: May 13, 2004

    The Seattle Times reports this morning that was originally intended to be a “modest” labor rally outside a Safeway store near the state capitol building turned nasty yesterday when one protestor got arrested for obstruction.

    The rally was intended to signal rank-and-file support for the United Food and Commercial Workers (UFCW), which is currently negotiating a new contract with the area’s four largest supermarket chains.

    Tensions escalated, the paper reports, “when the rally's concluding speaker, Robby Stern of the Washington State Labor Council, was handcuffed and taken away by police after leading the crowd in songs.

    “Minutes earlier, police officers had directed organizers to move the rally to a park across the street, citing concerns that the sidewalk had become too crowded. Speakers had asked the crowd to keep an open path, but some pedestrians opted to walk on the street instead.”
    KC's View:
    Probably not too big a deal, but we suspect that this does reflect the abiding antipathy that exists between the UFCW and Safeway.

    Published on: May 13, 2004

    • Procter & Gamble Co. announced that it will spend $1.8 billion to acquire the 20 percent of a Chinese joint venture, Hutchison Whampoa Ltd., that it doesn't already own. Hutchison Whampoa sells a broad range of P&G products in China including shampoo and conditioners, laundry detergents, toothpaste, facial moisturizers and feminine-care and baby-care items.

      The move by P&G comes earlier than most analysts expected; originally, P&G was believed to be likely to make the purchase sometime between 2006 and 2017, but the company said that the price was only going to get more expensive.

    • The Food Marketing Institute (FMI) says that attendance at its just-concluded annual show in Chicago was up about 55 percent over a year ago, owing in part to the co-location of other shows at the same time and place.

      Some 34,000 people attended the show, according to FMI.

    • A Michigan judge has ruled that six former Kmart executives accused in a lawsuit of essentially plundering and mismanaging the company while it descended into bankruptcy, including former CEO Charles Conaway, won’t have to face a jury.

      The judge ordered the case to binding arbitration, ruling that the executives’ employment contracts prevented a jury trial.

    KC's View:
    Too bad about the jury trial. If nothing else, we were hoping for tremendous damages against a bunch of guys who clearly put their own interests ahead of their company, ahead of their employees, ahead of their shareholders.

    Published on: May 13, 2004

    • George Weston Ltd., owner of Loblaw Cos., reported that its first quarter profit fell 9.7 per cent to the equivalent of $87 million (US); during the same period a year ago, it was $96.4 million (US).

      Sales increased 2.9 per cent to the equivalent of $4.7 billion (US).

    • Pathmark Stores announced preliminary first quarter results, saying that it expects total sales and same store sales to be down 1.5 percent and 1.4 percent. The company said that its numbers were “negatively impacted by sales and gross profit pressures from steep inflation in certain categories, unproductive sales promotions and increases in medical costs.”

    • Second quarter sales at Unified Western Grocers reportedly were up 16.5 percent to $739.2 million, with first half sales up 17 percent to $1.5 billion.

      Second quarter income was up 19.8 percent to $1.2 million, and up 36.9 percent to $3.2 million for the half.

    KC's View:

    Published on: May 13, 2004

    In a story yesterday about how cooking schools seem to be attracting younger, smarter talent, we commented:

      Y’know, creating culinary scholarship programs is something that every food retailer ought to do. If they could sponsor cooking schools and contests, and try to attract more young people to a food-oriented career, it’d help raise the level of commitment and talents for the entire food biz. We read all the time about stores and chains that offer their employees various kinds of scholarships, but rarely do we see programs specifically targeting food. It seems to make a lot of sense.

    This position seemed to strike a cord in the MNB community.

    MNB user Nicole Schubert wrote:

    I had to write and tell you how much I love your support of bringing young people with culinary backgrounds into the food industry. I am 29 and the product developer for a nationally branded candy company - and until a few years ago I was a professional pastry chef. I have loved food my whole life, but I never thought I'd end up doing what I do now, and I love it.

    I had 2 degrees and was working a decent but unfulfilling job when I decided what I really want to do was follow my childhood dream of becoming a chef. A culinary school diploma later, I was a pastry chef at a great restaurant run by a James Beard award-winner, and teaching at a local culinary school. That's when a colleague told me she was consulting to a candy company that was looking for someone just like me: someone young, enthusiastic and creative to help bring their ideas to fruition. Flash forward: I've been here two years and I still love my job. It is the perfect combination of science and creativity. And you know what? I never ever knew a job like this existed, because culinary schools only prepare you to be a restaurant or personal chef. There is a whole world of interesting, intellectually challenging non-food service positions open to chefs, and most us don't even know it.

    So the next time a food company is looking for R&D staff, instead of looking only for food scientists, they should do a little recruiting at culinary schools. And Kevin, I'm keeping my fingers crossed that you are someday the parent of a professional chef. My parents can attest that the bragging rights are very satisfying...

    Not to mention the dinners.

    Actually, Nicole puts her finger on an important point here when she writes about “food scientists.” We’ve long thought that the problem with too many retailers is that they view food and food sales as some sort of scientific or business formula. In fact, food is art. Food is beauty. Food is culture.

    And we don’t mean just gourmet food. There are few things in the world as satisfying as a great meatloaf, or a wonderful quesadilla, or even just a juicy cheeseburger. But too many of us have lost touch with this fact.

    MNB user Tom Cameron-Fawkes had some additional ruminations:

    Your report on the increase in young people attending cooking schools as the first step to a career in the food industry was very interesting.

    In high school I got a summer job in a huge kitchen at a construction camp in northern Canada. ( Yes, construction camps do have Chefs) I hated that job! Up every morning 4:30 to be at work at 5:00; stuck out in the middle of no where, making toast for five hundred guys, prepping vegetables all day, using a cricket bat to kill the mosquitoes and black flies! "Yes Chef", "No Chef", "Right away Chef"!

    Of course I was making $400 a week with nowhere to spend it until September while my buddies in the big city down south were making $55 a week and were broke by payday! But beyond that I worked for a Chef who took the time to teach me. I learned more from that Chef in ten weeks than any other teacher was capable of teaching me in ten months.

    You are right! Being a Chef is a hard way to make a living. The hours are long and the work demanding. Learning to be a Chef is even harder and more demanding. Kids who want to be Chefs are setting themselves up for years of toil and anonymity, moving from kitchen to kitchen serving apprenticeship under good Chefs who run their kitchens with military like discipline and have already paid their dues.

    Good cooking is an art and all cooking is good cooking.

    These kids will learn skills that will serve them well outside the kitchen for the rest of their lives. So no matter whether they become the next Emeril, Nigella, or Jamie or not, they will learn the self-discipline, determination and dedication that will serve them well in life.

    Forty years later, a dinner invitation to our house is the hottest ticket in town! I started to teach my Son to cook when he was twelve and today we have cooking competitions between ourselves. I am on the verge of having my first cookbook published.

    But, God, how I hated that job!

    Tom, when your cookbook comes out, have your publisher send us a review copy. Maybe we can sell a few books for you…

    And MNB user Mary McMillen wrote:

    What a great idea, for all the reasons you mentioned!! We have cooking schools, though they are for “sport cooks,” and not for accreditation. I really like the idea of a “Buehler’s Culinary Scholarship.” Thanks!

    You’re welcome. If you’re looking for an outside judge, just let us know.

    We wrote yesterday about a story saying that kids like sweetened cereals because it makes them feel empowered. This may be true, but it was a sentiment that didn’t sit well with the members of the MNB community who wrote in.

    Among them were MNB user Jem Welsh:

    Kevin, don't you find it ironic that sugar-laden cereals' growth in our culture coincides with the dramatic rise in diabetes and obesity in children? You can empower them, but come you really think they can understand this? What's wrong with empowering them with knowledge...not Cap'n Crunch, for crying out loud!

    And another MNB user chimed in:

    What's wrong with a little kid empowerment, you ask? Plenty. Our society has gone kid nuts. I am a former teacher and experience has taught me that children are happiest when there are some controls in their lives.

    For many parents and children today, that does not exist. Already 15 years ago this was brought home to me when I watched a toddler in a bread section of a grocery in St Louis move along the bottom shelf of hamburger buns sitting on one bag after another of bun packages. The mother did nothing to stop that. On another occasion, I observed an elementary school aged boy roughly handling and playing with hand dipped candles hanging on spindles for sale in another grocery. The checker told me that the candles were $20 a pair and that they had a lot of trouble with unsupervised children damaging merchandise in the store.

    Try visiting garage sales of parents of children who are selling expensive children's toys for cents on the dollar. The toys are often hardly used or worn and the amount of toys at any given sale is enormous. My childhood memories include playing with elm seeds outside and feeding them to my dolls. I had toys, and I used them, but also occupied myself with creative use of materials at hand. My own children played with the cardboard box that our portable dishwasher came in for years. (We even moved it several times, slipping it over the top of the dishwasher). Kids today have to have every bell and whistle available to them, and then don't play with them. My six-year-old grand daughter is getting rid of a plastic trash bag full of Barbie dolls and accessories that she does not play with any more.

    Teachers’ hands are tied when it comes to discipline (my husband teaches in the inner city) and yet, these same kids are so busy misbehaving they cannot be bothered to learn. Promotion to the next grade no matter what (so why should they care if they get failing grades), leads to kids not being able to read when they graduate.

    Children today have no childhood. They are allowed to act as a grownups from a very early age.

    Kevin, I know this has nothing to do with food or the industry, but you struck a nerve with me. I love kids and enjoy spending time with my four grandchildren, but I expect that they behave. So many people today think that kids do not have to behave or follow any rules but their own. I shudder to think what the world will be like when they are adults.

    There are good parents and lousy parents. Good teachers and lousy teachers. Good coaches and lousy coaches. And so on.

    We’re not to the point of shuddering yet. But what concerns us about this generation is that too few members of it seem to have the kind of work ethic that we think is necessary to survive and thrive.

    Our kids don’t. Have to admit it. Sometimes we try to force the issue, and sometimes we indulge them, and the only thing for sure is that we’re probably screwing them up nine ways from Sunday. In the final analysis, the best thing we can do is provide a good example…and we would suggest that the problems of the younger generation might be a direct reflection of the misplaced priorities of our generation.

    But that’s probably another column, to be done on another day. A slow news day.

    Finally, mostly because we were feeling whimsical yesterday, we finished MNB with all the lyrics to Randy’s Newman’s satirical “Short People.”

    One MNB user wrote in to say she was worried that we might be offending some people and that we’d be deluged with emails from people who thought the lyrics were serious. But the MNB community is savvier than that…we didn’t get one such letter.

    We did get a lot of letters mentioning the lyrics, though. A typical one came from MNB user Paul Woodard:

    Any publication ending with "Short People" is worth reading daily (maybe even twice)!!! While probably not a long-term feature of MNB, certainly begins the day with a smile..

    Good. That makes our day. Smiling is good.

    Another great songwriter/philosopher once sang, “Wrinkles only go where smiles have been.” (He’s the same guy who sang, “If we didn’t laugh, we’d all go insane…”)

    KC's View: