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    Published on: November 24, 2004

    Additional testing of a cow suspected to be infected with bovine spongiform encephalopathy (BSE), better known as mad cow disease, indicates that the original test was a “false positive,” and that the animal did not have the brain-wasting disease.

    The US Department of Agriculture (USDA) made the announcement in an email after tests were performed at the National Veterinary Sciences Laboratory in Ames, Iowa.

    “Negative results from both the IHC tests makes us confident that the animal in question is indeed negative for BSE,” John Clifford, deputy administrator of the USDA's Animal and Plant Health Inspection Service, said in the statement.

    It was just a year ago that the first case of BSE on US soil was found in Washington State, leading to a ban on US cattle exports by a number of countries and heightened testing here in the US – though there have been those who have maintained that the current testing procedures do not go far enough.
    KC's View:
    This announcement certainly helps the Bush administration dodge a couple of bullets, since it has been negotiating with Canada to allow live Canadian cattle back into the US, and talking to Japan about opening its borders to US beef imports.

    This won’t quiet the naysayers, however, who will remain convinced that just because you dodge a bullet doesn’t mean that the opposition is out of ammunition.

    Published on: November 24, 2004

    The Wall Street Journal reports that a study done by the US Centers for Disease Control and Prevention (CDC) saying that in 2000 there were nearly as many obesity-related deaths, at 400,000, as there were deaths related to tobacco use, at 435,000, may have been an exaggeration.

    An 80,000-death exaggeration.

    The original study got a lot of attention because it suggested that obesity was about to surpass tobacco as the leading cause of preventable death in the US. Now, the CDC reportedly is preparing an addendum to the study that will correct and explain the overstated figure.
    KC's View:
    Of course, 320,000 deaths from obesity-related causes doesn’t sound exactly like chopped liver…

    Published on: November 24, 2004

    A new study from ACNielsen suggests that many shoppers are strapped for cash as the holiday shopping season commences, which could lead to less than robust sales between now and the end of the year.

    In fact, of the 28 markets around the world surveyed by ACNielsen, the U.S. had the highest percentage of consumers (28 percent) who say they have no extra money to spend, and 33 percent of those surveyed said that if they did have extra cash, they would be using it to pay off debt.

    “When it comes to spending money, you can never count U.S. consumers out; their willingness to take on debt is legendary,” said Tom Markert, ACNielsen’s chief marketing and client service officer. “However, this study adds to a considerable body of research indicating that U.S. consumers are nearing a financial breaking point, pointing to at least a moderate holiday selling season this year.”

    In the U.S., women were more likely than men (30% vs. 22%) to say that they have no spare cash, while men were more likely than women (36% vs. 32%) to say that they use such money to pay off debts. As for specific purchases people make with spare cash, U.S. men were much more likely than women to indicate that they spend it on new technology (20% vs. 8%).

    There were differences by age as well, with older respondents more likely to say that they have no spare cash and younger respondents more likely to say that they spend extra money on debt repayment. Respondents on both ends of the age spectrum were more likely than those in the middle to build savings with spare cash. Younger people were more likely to spend it on out of home entertainment, clothing, and technology.
    KC's View:
    We’re thinking of getting copies of this study and putting them in each of the Content Kids’ stockings…

    And it gives us an idea for a country-western song: “Cash Poor At Christmas…”

    Published on: November 24, 2004

    BusinessWeek reports on the efforts of Kraft CEO Roger K. Deromedi to divest non-core businesses and focus only on the “blockbuster brands” that he believes can dominate their category world-wide, and that “consumers and retailers are more excited about.”

    However, the article notes, while analysts generally endorse the strategy of getting rid of non core businesses – the company has just sold Life Savers and Altoids to Wrigley, and Oscar Mayer is believed to be the next likely candidate for a sale – it remains for Deromedi to figure out how to generate more sales and profits out of the brands that remain.
    KC's View:
    The strategy probably makes sense, though we have to wonder if the best way to sell a business is by telling potential buyers that it is one that retailers and consumers just aren’t all that excited about.

    Published on: November 24, 2004

    A new study from the US Department of Agriculture (USDA) suggests that next year, for the first time in fifty years, the United States could import as much food as it exports.

    The New York Times notes this morning that the reason for this sea change is the fact that government and consumers have been on different pages. As the United States concentrated on farm exports, the NYT reports, “American consumers have been buying more imported goods. This year the rise in imports was especially marked for processed foods, essential oils used in food and beverage processing, snack foods, red meat, wine, beer and fresh vegetables.”

    Canada is the biggest market for US food exports, buying $9.7 billion. The NYT writes that the next four projected big buyers are Mexico, at $8 billion; Japan, at $7.7 billion; the European Union, at $6.5 billion; and China, at $4.6 billion.
    KC's View:
    We can remember as a kid learning that America was the “breadbasket of the world,” and that one of the things that made us special was the fact that we could feed not only our own people, but also millions of people around the world less fortunate.

    Now, we understand that the world has changed. And we’re far from being expert in the area of import-export policy. But we hope that somehow we haven’t squandered one of our greatest advantages as a nation – the ability to fill people’s bellies, and to teach them to feed themselves.

    As a people, we spend an awful lot of time worrying about the obesity issue, but spend precious little time thinking and talking about worldwide famine, which still affects tens of millions of people.

    We’ve met a lot of great people in the years we’ve been writing about this business, but among the best folks we’ve encountered are those who, in the latter parts of their careers, decide to devote their energies to helping less fortunate people around the world to figure out how to feed themselves.

    We read this story, and we wonder if somehow an opportunity has been missed.

    Published on: November 24, 2004


    • A Canadian appeals court has ruled that Wal-Mart must turn over all internal documents related to the attempted unionization of one of its stores in southern Saskatchewan.

      The Saskatchewan Labor Relations Board requested the paperwork at the request of the United Food and Commercial Workers (UFCW), which said that enough workers at the store had signed membership cards to make union certification of the store automatic. Wal-Mart said that a number of employees had not been included in the unionization drive, and therefore the certification was neither legitimate nor automatic – and refused to provide the documents on the grounds that they were irrelevant.

      Wal-Mart said it was considering an appeal of the appeals court ruling.


    • CBS MarketWatch reports that Wal-Mart seems ready to make a big move in terms of its Internet presence this holiday season, as it puts a 50 items - ranging from electronics to cashmere sweaters, none of which are available at its brick-and-mortar stores - on sale via its website.

      Wal-Mart’s site has seen both a dramatic increase in traffic (up 47 percent last month compared to October 2003), commensurate with an expansion of the categories and selection of products available on the site.

      Walmart.com CEO John Fleming tells CBS MarketWatch that the company understands that there will be more than 85 million people shopping on the Internet this holiday season, and that the company wants a piece of that action.

    KC's View:
    Make that a “big piece” of the action. Wal-Mart doesn’t believe in small pieces.

    Published on: November 24, 2004


    • CIES, the international global food business organization, has appointed Alan McClay, the organization’s longtime COO, to the position of CEO.

    KC's View:
    Alan McClay is one of the nicest, most thoughtful people we’ve met in this business, and is a wonderful ambassador for one of the best organizations out there.

    Published on: November 24, 2004


    • Employees represented by the United Food and Commercial Workers (UFCW) who work at a dozen Kroger stores in Ohio and West Virginia reportedly have approved a new contract. Terms of the deal were not disclosed.


    • Wal-Mart’s Asda Group in the UK is teaming with a UK charity, the Kids Cookery School, to create a line of healthy foods that kids can prepare and cook themselves. The line is scheduled to appear next year.

    KC's View:

    Published on: November 24, 2004

    Global notes & commentary from PlanetRetail.net

    Major Canadian grocer Metro has announced that its net earnings for the fiscal year ended increased by 1.2% to CAD168.8 million, meaning that the company’s net earnings have increased for the 14th consecutive year. Sales were up 4% in fiscal 2004 to CAD5,998.9 million, despite low inflation in retail food prices. Comparable sales increased by 0.5%. Metro’s pharmaceutical sector’s sales grew 9.3% in fiscal 2004 to CAD491.3 million, largely the result of organic growth. Total investments reached CAD158.3 million in fiscal 2004, for a net expansion of 33,740 square metres representing a 3.8% increase in total retail floorspace. Major renovations and expansions of 26 stores were completed and 18 new stores were opened. “The key to this strong performance lies in effective merchandising, an important retail investment program and the commitment of its retailers, employees and partners. We are confident that these elements will continue to ensure positive results in the next fiscal year,” stated Metro’s President and Chief Executive Officer, Pierre H. Lessard.

    These are a creditable set of results given the increasing competitiveness of the Canadian grocery sector, with Metro pursuing initiatives such as ongoing private label development and the conversion of Metro stores to the enhanced Metro Plus format. Metro appears to be getting its strategy right, as same store sales growth accelerated to 2.7% for the fourth quarter on the back of new merchandising programmes (improved grocery merchandising at the Metro, Metro Plus and Super C banners) implemented in the second quarter complemented by the company’s long-term retail network development strategy.

    Metro’s decent showing will see it attain a 2004 modern grocery distribution market share of around 7.1%, forecast by M+M Planet Retail to climb to nearly 8% in 2008, based on Metro’s recent tempo of expansion and store openings. This will still leave it well short of the 14% taken by Sobeys and the 32% market-leading share of Loblaw, but these forecasts do not account for any potential M&A activity. Metro has already stated that it will “remain vigilant” for potential takeover targets, and it is worth remembering that these could be in the drugstore market as well as in the grocery sector.
    KC's View:

    Published on: November 24, 2004


    • Ahold NV Wednesday reported a third-quarter net loss of $217.2 million (US), compared with a net loss of $131.4 million (US) during the same period a year ago. Sales during the period dropped 7.8 percent to $15.8 billion (US) from $17.1 billion (US) a year ago.


    • The Campbell Soup Company reported that first quarter earnings were $230 million, up nine percent from the period a year ago, when profit was $211 million. Sales rose nearly 10 percent, jumping to $2.1 billion from $1.9 billion.

    KC's View:

    Published on: November 24, 2004

    …will return.
    KC's View:

    Published on: November 24, 2004

    We’ve enjoyed a couple of new wines over the past week, either of which would make an excellent choice for Thanksgiving dinner if you’re still casting about for something unique to bring.

    We enjoyed a bottle of L’Ecole No. 41 2001 Columbia Valley Merlot the other evening, a gift from a generous MNB user, and it was fantastic – smooth and supple and just wonderful. It’s actually a blend of Merlot, Cabernet Franc, Cabernet Sauvignon and Carmenere. But it’s all great.

    We also enjoyed a 2002 Buckeley’s Shiraz from South Australia, which was a very nice surprise – the label says it has flavors of plum, blackberry, chocolate and pepper…though we thought the prevailing flavor was a kind of deep cherry. We loved it, and will certainly be bringing a bottle to dinner tomorrow night.

    As for movies, we regret to tell you that one you can avoid is “National Treasure,” the new Nicolas Cage adventure film, which plays out like “The DaVinci Code For Dummies.” (If you’ve seen the trailer, you’ve seen the movie…and it is shorter and better paced.) There’s absolutely nothing intelligent about it, and makes us look forward even more to the movie version of “DaVinci,” which will star Tom Hanks. (We were very happy with the casting of Hanks as hero Robert Langdon instead of a more traditional choice such as Russell Crowe, who reportedly was the other option. There’s a good lesson here – sometimes it make sense to make the unconventional choice, because it puts a unique spin on your product.)
    KC's View:

    Published on: November 24, 2004

    Here in the US, tomorrow is Thanksgiving…and we’ll be marking the holiday by taking a four-day weekend during which we intend to watch football, eat turkey, drink good wine, and try to work it all off with the occasional run, Christmas shopping trip, and maybe even venture out to cut down a Christmas tree.

    We’ll be back Monday with a whole new edition of MNB…and hope you have a great weekend.

    Sláinte!!
    KC's View: