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    Published on: September 30, 2004

    The New York Times reports this morning that Cees van der Hoeven, the deposed CEO of Royal Ahold, will be facing charges connected to the $1.2 billion (US) accounting scandal that threw the company into turmoil. He has been served with papers by prosecutors instructing him to appear in court on Oct. 13.

    The issue that prosecutors reportedly have been examining is how Ahold and its top management consolidated the earnings of its various companies in order to maximize the impact on its stock price. Van der Hoeven and former CFO Michiel Meurs resigned in February 2003 in the wake of the accounting revelations.

    Ahold, the Dutch prosecutors and van der Hoeven all refrained from commenting on the reported indictment.

    At the same time, Ahold has agreed to a settlement with Dutch prosecutors that will have the company paying a fine that is the equivalent of $9.9 million (US) to settle charges that the company had illegal agreements that led to the accounting scandal. Peter Wakkie, Ahold’s chief corporate governance counsel, said that the settlement “will prevent a lengthy, costly and time-consuming legal procedure”.
    KC's View:
    "The insufferable arrogance of human beings to think that Nature was made solely for their benefit, as if it was conceivable that the sun had been set afire merely to ripen men's apples and head their cabbages." -- Cyrano De Bergerac

    Published on: September 30, 2004

    General Mills, the nation's second-ranked cereal manufacturer, is scheduled to announce today that it will convert all its cereals — including kids’ products like Trix, Cocoa Puffs and Lucky Charms — into whole grain products. About 60 percent of the company’s cereal line already is whole grain, but the remaining 40 percent will switch over to whole grain over the next three months.

    "(It) could signal the most comprehensive improvement in the nation's food supply since the government began mandatory fortification of grains in the 1940s," David Kessler, former commissioner of the Food and Drug Administration, tells USA Today.

    Nutritionists say whole grain flours are healthier than refined corn meal or wheat flour. Analysts suspect that Kellogg’s will make a similar decision in the near future.
    KC's View:
    It doesn’t solve all the nutritional challenges faced by kids, but it certainly is a good start…and there’s something to be said for taking the step first.

    Published on: September 30, 2004

    Stop & Shop and Giant Food, both Ahold-owned chains in the eastern US, will unveil a line of natural and organic foods this week under the name Nature’s Promise. The line, according to a report in the Washington Post, will include milk, butter, cookies and frozen vegetables.

    The goal, according to the company, is to simultaneously meet the growing demand for natural and organic products and, by making it a private label solution, keep prices down so that the category will be even more appealing to shoppers. There will. Be about 90 SKUs by the end of 2004, and an estimated 200 by the end of 2005.

    The Food Marketing Institute (FMI) estimates that the natural and organic categories generated $20.5 billion on them in 2003, up from about $8.3 billion four years ago.
    KC's View:

    Published on: September 30, 2004

    The Associated Press reports that chain drug stores are looking to expand their role from being a place where pharmacists count out pills to being a place where people obtain health care services and advice. In doing so, these chains hope to be able to charge for health care counseling that results in a more preventive approach.

    Key to making this shift is a change in the law that will get insurance companies to cover such consultations. The federal government currently is in the process of evaluating how the final regulations should be changed to allow for greater health care participation by pharmacists.
    KC's View:
    Let’s forget the insurance aspect of this trend for a moment. It seems to us that this is an intelligent strategy on the part of the pharmacy community, and one that can be imitated by food retailers in a broader context. In a competitive marketplace, one of the great opportunities is for a retailer to be as resource to the consumer for products, information, support and advice…not just a source of product. That’s what these pharmacies are doing, and that’s what more food retailers ought to be doing.

    Published on: September 30, 2004

    The Canadian Food Inspection Agency has ruled that as of December 2005, low-carbohydrate claims will not be permitted on any foods sold in Canada. According to the new regulations, consumers looking for guidance on how many carbs are in foods instead will have to refer to a mandatory “nutrition facts” box on the side of each package that will “disclose the calories, the amount of total fat, saturated and trans fats, cholesterol, sodium, carbohydrate, fibre, sugars, protein, calcium, iron and vitamins A and C contained in a specified amount of food,” according to a report in the Toronto Globe and Mail.
    KC's View:
    Essentially, the Canadian government’s position seems to be that “low carb” is a marketing program, not a scientific approach to weight loss.

    Which sounds about right to us.

    Published on: September 30, 2004

    The Washington Post reports that Amy Bentley, an associate professor in nutrition, food studies and public health at New York University’s school of education, postulates that the low-carb diet has actually achieved something other than helping a lot of people lose weight quickly – it has created an environment in which dieting is more acceptable for men.

    The reason, according to Bentley: low-carb diets allow men to eat hunks of red meat, which is seen as masculine.

    And, she suggests, it isn’t an accident that the low-carb diets have largely been promulgated by men like Dr. Robert Atkins.
    KC's View:
    This is the biggest load of hooey we’ve ever heard. It’s 2004, and it seems to us that it’s time to put aside all these old-world notions of what is masculine and feminine behavior.

    It’s this same kind of thinking that locks so many food retailers into thinking that they only ought to market themselves to one particular kind of customer, and not broaden their approach and target demographic. Retailers need to realize that a lot of the old stereotypes are breaking down…

    The fact is, we’ve always thought that the toughest part of the low-carb diets is that they consist of too much red meat. Monday, we made salmon. Tuesday, we made lasagna. Last night, we made a shrimp, tomato and feta cheese dish. And tonight, it’ll probably be meat loaf.

    It’s a changing target, folks.

    Published on: September 30, 2004

    Global perspectives from PlanetRetail.net…

    Albertsons has announced that it has acquired Southern California's fresh, gourmet and specialty food retailer, Bristol Farms. The acquisition is said to mark Albertsons' entry into one of the industry's fastest-growing sectors. Financial terms of the transaction were not disclosed. Larry Johnston, Chairman, CEO and President of Albertsons stated: "We are thrilled to welcome Bristol Farms to Albertsons' world class family of stores. Bristol Farms has clearly built a solid leadership position in the Southern California specialty, gourmet market segment with strong performance over the past several years. This acquisition is the latest example of our dedication to diversify into new formats that can accelerate growth, tap into new customer segments and maximise return on invested capital."

    Bristol Farms operates 11 stores in Southern California and will continue to operate under the Bristol Farms banner, with separate management operating the business independently from Albertsons' traditional food and drug operations. Kevin Davis will continue as Bristol Farms' President and CEO. The transaction was completed through a merger whereby Bristol Farms has become a wholly owned, but independently-operated, subsidiary of Albertsons. Bristol Farms was formerly majority-owned by private equity funds managed by Oaktree Capital Management.

    It is believed that Bristol Farms, which operates the bulk of its stores in Los Angeles county, has sales of around USD175 million dollars. Its stores are upscale units that include distinctive wine departments, upmarket fresh food counters, instore cafés, sushi counters and catering services. The stores are idiosyncratic outlets that feature standalone "shops" with full facades and themed accessories. The wine area in most stores, for instance, has four walls, wine racks and a roof trellis, resembling a dedicated wine boutique. Other common features of the Bristol Farms stores include gourmet and international grocery departments, extensive meat counters with a focus on organic and 'natural' products, seafood departments, sushi counters, extensive fresh produce areas, Bristol Café instore restaurants, floral departments, instore bakeries and catering departments.

    Albertsons is proving itself to be among the more dynamic players in the US grocery sector at the moment. The current year has so far seen the launch of a far-reaching restructuring programme, the introduction of a RFID programme, the acquisition of Shaw's, the roll-out of dollar store zones throughout its store estate, the launch of the new Super Saver extreme value format, the roll-out of the "Renaissance" drugstore concept and, now, the acquisition of Bristol Farms. Not a bad year's work - and it's not even over yet.

    There is no doubting that the Bristol Farms move is an extremely modest one in absolute terms (adding a barely discernable 0.47% to Albertsons' store count and turnover), but it is a heartening indicator that the larger company is not content to merely tread water as it seeks to defend its market share. The company obviously feels that, despite its massive size and heritage, it can still learn from smaller businesses - an observation that will have been underscored by the acquisition of Shaw's this year. Indeed, the deal may have opened CEO Larry Johnston's eyes to the true potential of what he has termed "reverse synergies" - Albertsons can bring its scale, systems and buying power to the party, but can also learn best practice from smaller operators that become part of its family.

    With the launch this month of its new Super Saver extreme value chain (the conversion of seven Albertsons stores in Texas and Louisiana), it seems likely that further acquisitions are very much on the agenda. Albertsons has promised that Super Saver will expand rapidly through a combination of acquisitions and new store development. The fact that Albertsons is simultaneously targeting the value end of the market and the gourmet niche at the upper end of the market reflects that it is assembling the fluidity and the responsiveness that will furnish it with the competitive arsenal required for long-term survival in the competitive US market.
    KC's View:

    Published on: September 30, 2004


    • Tesco in the UK reportedly is anticipating a pretty busy holiday season…so much so that it plans to hire as many as 12,000 temporary employees for its 780 stores. In fact, checkout personnel at Tesco units have been instructed to keep an eye out for likely candidates, and to recruit them when shoppers seem particularly cheerful and solicitous.


    • Kmart has completed a deal to sell 50 stores to Sears Roebuck for $575.9 million, including $172 million in cash.


    • At the same time, the Detroit News reports that starting next year, Kmart plans to match employee contributions to 401(K) plans on a dollar-for-dollar basis up to 3 percent of their total earnings and 50 cents per dollar on contributions beyond 3 percent up to 8 percent. This represents an upgrade of the company’s current program, and suggests that since emerging from bankruptcy, Kmart is putting a greater premium on attracting and keeping top talent.


    • CVS CEO Tom Ryan said yesterday that the company plans to close 160 of the 1,260 recently acquired Eckerd stores, and convert at least 300 of the acquired stores to the CVS banner by the end of the year.


    • Donald Trump’s casino business may be in financial trouble, but he apparently still can sell toothpaste. Last week, when reality television program “The Apprentice” featured the contestants developing a marketing program for Procter & Gamble’s new Crest Refreshing Vanilla Mint toothpaste, the company’s website logged 4.7 million hits.

    KC's View:

    Published on: September 30, 2004


    • Wal-Mart’s board of directors has authorized a new $10 billion in repurchases of the company's shares. The company already has repurchased $4.64 billion worth of shares under a prior $7 billion repurchase authorization.

    KC's View:

    Published on: September 30, 2004

    …will return.
    KC's View: