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    Published on: March 1, 2005

    Published reports say that C&S Wholesale Grocers is negotiating for the acquisition of 140-unit Pathmark Stores, a purchase that could cost it an estimated $800 million.

    The New York Post reports that it could take several weeks to close any deal, though the negotiations are said to be at a delicate stage where they also could fall apart at any moment. There also is said to be the possibility that knowledge of the C&S interest could prompt another bidder to step in.

    While located in the densely populated New York metropolitan area, Pathmark has suffered from declining sales and profits, and has been on the sales block for several months.
    KC's View:
    The knock on C&S always has been that it is an efficiency-driven organization without the marketing and merchandising skills necessary to be really helpful to small independent retailers, beyond the ability to negotiate prices from a position of strength. If that’s true, you have to wonder if C&S would be a natural retailer, especially in New York.

    Published on: March 1, 2005

    The Christian Science Monitor breaks the news that many traditional supermarket companies are being squeezed on either end, on one side by stores like Wal-Mart, and on the other by the likes of Whole Foods, Trader Joe’s and Wegmans that appeal to customers with a growing taste for good food.

    The companies experiencing the most difficulties, the Monitor points out, are chains like Winn-Dixie, unable to adapt successfully to changing retail realities; Winn-Dixie, of course, has filed for bankruptcy protection amid speculation about whether or not it can successfully reinvent itself.
    KC's View:
    What supermarkets have to do is choose between commoditization and specialization…but, of course, it isn’t that simple.

    Because if they choose commoditization, they have to do so in a way that is so efficient that they can compete successfully with Wal-Mart…which is tough to do at best.

    A decision to be more specialized carries different risks – because if they try to be specialized without being truly special, the effort ends up being hollow.

    Published on: March 1, 2005

    Delhaize USA-owned Food Lion announced the introduction of a new private label wine line, Braidenwood Estates, and will offer a chardonnay and a cabernet exclusively at Food Lion stores. Braidenwood Estates is made by the Canandaigua Wine Co.

    The wines currently are being offered at the introductory price of $5 for two 11.5 oz. bottles.

    “The unique bottle makes a great trial size for our customers,” said Jason Wilson, Food Lion wine category manager. “It’s also an ideal size for a glass or two of wine with dinner.”
    KC's View:
    It’s exclusive and it’s priced like the hugely successful Two-Buck Chuck. Now, if it tastes good, Food Lion almost certainly will have a winner on its hands.

    Published on: March 1, 2005

    Good piece by Advertising Age editor-in-chief Rance Crain in the current issue, in which he decries the growing notion that mass marketing is dead.

    Maybe the problem isn’t that the mass market doesn’t exist anymore, he argues. Maybe the problem is that lousy advertising doesn’t do anything to reach or appeal to the mass market, and the world is filled with lousy advertising.

    “It's nonsense to think that the mass market is dead,” Crain writes. “It's just harder to reach. But great advertising still has the capacity to bring consumers together, to reassemble them as a mass market. The problem is there's very little reason for them to get together.”
    KC's View:
    This is a good corollary to the food retailing business, where people bemoan the fact that customers are so difficult to attract and retain…which is why there has been such a fall-off in weekly shopper visits to the supermarket over the last few years. In fact, it isn’t the customers who are so difficult, but the stores that are ineffective.

    Published on: March 1, 2005


    • Morgan Howard Worldwide, a Connecticut-based executive search firm, has ranked the toughest companies from which to recruit senior-level executives.
      At the top of the list – Wal-Mart. Other retailers on the list are Home Depot (#6) and Kroger (#10).

      No retailers make the list of easiest companies to recruit from…but apparently, if you want to hire someone away from a major company, the best places to look at Hewlett-Packard, Ford, Citigroup, Fannie May, American International, Boeing, Merck, Motorola, Verizon, and AT&T.

    KC's View:
    Assuming, of course, you actually want someone from those companies.

    Published on: March 1, 2005

    The Washington Post reports that a survey by the Kaiser Family Foundation “found that 78 percent of adults say prescription drugs make a ‘big difference’ in people's lives, and 91 percent believe drug companies contribute significantly to society by researching and developing new drugs.

    At the same time, however, 65 percent of Americans said that they want the government to do what it can to reduce drug costs, 73 percent want Americans to be able to buy cheaper drugs from Canada, and 70 percent of those polled said that drug companies put profits before customers.
    KC's View:
    If we were in the drug industry, we wouldn’t find this study to be too heartening. After all, it seems that they like the drugs and believe that they improve quality of life…but they don’t trust the drug companies.

    Now there’s a surprise.

    Published on: March 1, 2005

    The New York Times reports on the factors that seem to helping McDonald’s-owned Chipotle succeed.

    “Eating at Chipotle is about freedom of choice with a small set of choices,” the NYT reports. “Customers are offered a menu of just four items: tacos, burrito, fajita burrito and a '’burrito bol’ (a burrito made without a tortilla; the bowl is made of recycled newsprint). These are assembled by spooning the fillings on top of a clean cutting board and sliding them down. The room for error -- or style -- is zero. At the condiment bar, there is a selection of just three hot sauces. Nothing to dilute the purity of the tightly swaddled burrito.

    “Nearly all of the food at Chipotle is prepared in the restaurants, except the beans and the pork, which is cured with salt, juniper berries, bay leaf and thyme and then braised and shredded at a central kitchen in Chicago.”

    While the food at Chipotle is made to better than the average fast food meal, management says it has to maintain a kind of balancing act – trying to maintain the food’s integrity while not being preachy about it.
    KC's View:
    While we would love to have a Chipotle near us, we have to admit that we recently went to a quick-serve restaurant that actually was much better – California Tortilla, in Washington, DC. There are only about a dozen of them…but they are terrific, and superior to Chipotle.

    We actually think that the notion of limited choice is the most interesting thing about Chipotle, and maybe something that more retailers ought to think about. It isn’t always about offering all the available choices…sometimes, it may make more sense to offer just the right choices, having already screened out the products that seem less appropriate for a store’s demographic.

    It is sort of the Stew Leonard’s approach – only offer about 1,000 SKUs, but male sure they are the right 1,000 SKUs…and be a huge success doing so.

    Published on: March 1, 2005

    A new survey by the Produce Marketing Association (PMA) reveals that “only slightly more than a third of consumers are aware of the fruit and vegetable recommendations contained in the recently released 2005 Dietary Guidelines for Americans, and that the concept of what constitutes a ‘serving’ of produce varies widely among respondents.”

    Sixty percent of those surveyed said that they had seen nothing about the produce-oriented recommendations.

    Eight-one percent of consumers surveyed said they have a ‘clear understanding’ of what is meant by a serving of fruits and vegetables, but were all over the map when asked to define it.

    Which means that PMA and retailers need to do a better job defining it. “Our challenge is to effectively market fruits and vegetables in a manner that emphasizes the taste, convenience, and nutrition of our products – resulting in consumers eating more produce,” said PMA chairman Steve Junqueiro. “We have to be sure we’re communicating our messages to consumers in relevant and effective ways.”
    KC's View:

    Published on: March 1, 2005

    The Baltimore Sun reports that starting next year, Kellogg Co. plans to add an omega-3 fatty acid, typically found in fish, to products that could include Pop Tarts and/or Corn Flakes.

    The goal, according to the Sun is to allow the company to claim that its products are brain-healthy as well as being heart healthy.

    While adding fish acids to cereal may sound like a stretch, the paper notes that when the company was founded, one of the intentions was to create fortified cereals – which is sort of Kellogg’s is doing now.

    “But the movement, heavily driven by marketing, worries some nutritionists,” the Sun reports. “They fear that people are getting more nutrients than the body needs - too much of a good thing - and that jacked-up junk foods might contribute to the obesity problem in the United States and parts of Europe.”
    KC's View:

    Published on: March 1, 2005

    Published reports say that PepsiCo has developed voluntary restrictions on its advertising to children in the United States and western Europe, as well as limiting portion sizes on products sold in schools.

    The Financial Times reports that “the measures are the latest by food and drink producers to prove they can be trusted to regulate themselves, amid mounting pressure on governments to curb obesity. The European Commission has threatened to ban food and drink ads to children if the industry doesn't change its behavior and the British Government is considering red warning labels on fattening products.”

    While the threats of government regulation don’t seem to be as serious in the US, it certainly has become a public relations issue here, and PepsiCo is trying to head off as much criticism as it can.
    KC's View:

    Published on: March 1, 2005


    • The Miami Herald reports that Starbucks has become the hip place for teenagers to hang out, as they find the coffee chain to be a place where they can be themselves and indulge a growing taste for high-end caffeinated drinks. Parents seem to like it because Starbucks is supervised, and there is no alcohol or tobacco usage.

    KC's View:

    Published on: March 1, 2005


    • Wal-Mart said yesterday that its February same-store sales were up four percent. Full results for the month are to be released on Thursday.

    KC's View:

    Published on: March 1, 2005

    …will return.
    KC's View: