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    Published on: December 9, 2005

    The Financial Times reports that Albertsons’ board of directors is scheduled to meet this weekend to evaluate the current status of the company’s proposed sale.

    However, according to the paper, things are not going as hoped.

    First of all, there is only one credible offer on the table for the entire company – from a consortium that includes Apollo Management, Kohlberg Kravis Roberts, and Texas Pacific Group. And the price is several dollars per share lower than the company was hoping it would fetch.

    There are other possibilities, of course.

    Company management could decide to stay independent. They could sell off the company in pieces. They could decide to take a lower price. Or, there could be new offers put on the table, including one from Kroger, which is reported to be pondering a bid made in conjunction with Thomas H Lee Partners and Bain, which previously dropped out of the bidding. Another group, made up of Cerberus Capital and Kimco Realty, joined by Supervalu, also reportedly is interested in making a bid.
    KC's View:
    Larry Johnston must be wondering how come he can’t get a break. Couldn’t get the company operating at the level it needed to, and now can’t sell it for the price he wanted to.

    Just can’t get a break.

    Published on: December 9, 2005

    Advertising Age reports that Procter & Gamble is now offering consumers the ability to download music at the rate of five-songs-for-ninety nine cents at its Home Made simple website. “The idea,” Ad Age writes, “isn’t to make money, but to add a new dimension to what was primarily an e-mail newsletter program heavy on promotional offers primarily for the home-care brands it supports.”

    Maurice Coffey, who runs the program for P&G, says that he “sees music downloading as a start toward understanding how digital media can work for the program and as a form of product integration with entertainment content.”

    Essentially, if he can offer editorial content and music downloads that are consistent with the promotions being offered and appropriate for his target audience, Coffey hopes that he can build site traffic and, in the long run, sales.
    KC's View:
    Robust online content always works better. Trust us.

    Published on: December 9, 2005

    Reports in the local press say that John Elbin, CFO of Indianapolis-based Marsh Supermarkets, has quit suddenly because of what the company termed a disagreement “with other members of senior management on actions to improve the company's results of operations and financial condition."

    The move comes just after Marsh announced that it would consider selling the company and less than a month after Elbin got a $250,000 bonus for setting up the possible sale of the company and securing a new credit line for Marsh.

    Replacing Elbin as CFO is Douglas Dougherty, who held the post until retiring in May of this year.
    KC's View:
    Think this might raise the eyebrows on anyone thinking of making a bid for the company?

    Published on: December 9, 2005

    CNN reports that “the Food and Drug Administration is pondering new ice cream rules covering everything from pasteurization temperatures to artificial flavor levels to the amount of berry juice in sherbets.” But included in the new rules is one that would allow ice cream manufacturers to use milk from animals other than cows.

    “This includes sheep and goats, much to the delight of health food store types,” CNN reports. “But it also includes yaks, water buffalo, reindeer and other exotic beasts the typical American consumer rarely associates with the white stuff in the plastic jug in the back of the grocery store.”

    The new rules have, in fact, been proposed by the International Ice Cream Association. The reason: it will make the manufacturing of ice cream more efficient.

    Which means less costly.

    Critics complain that ice cream manufacturers will try to not label the change in where the milk came from, or at least obfuscate it in small print. The industry, however, says that this is not true and that basic labeling rules will require them to make sure the change is out in the open.
    KC's View:
    We’re perfectly happy to try ice cream made from yak milk, or reindeer milk, or whatever they want to put out there.

    But the industry had better make sure that it is labeled clearly. Very clearly.

    Otherwise, the only yakking that will be going on will be consumers complaining that their trust has been violated.

    Published on: December 9, 2005

    Business Week reports that Wal-Mart, responding to a letter sent to it by the publishers of more than 300 rural and suburban Midwestern newspapers, has placed full-page advertisements in all of those newspapers.

    The publishers complained that by ignoring their papers, Wal-Mart was putting them at economic risk because there are fewer other retailers to support them through advertising. At a time when Wal-Mart is trying to improve its image, Business Week writes, it made sense for the retailer to change its ad plans.

    It may not be just a one-time move. "If there is a significant return, we would consider incorporating the local papers into our overall ad strategy," Wal-Mart spokeswoman Mona Williams told the magazine.

    • Wal-Mart, Visa and MasterCard have launched an investigation, along with federal officials, into how as many as 600 customers who used their credit cards at Sam’s Club gas stations between Sept. 21 and Oct. 2 ended up with fraudulent charges on their credit card bills.

    Advertising Age reports that Wal-Mart is going out of its way to highlight its support for the Salvation Army this holiday season, “running a TV spot prominently featuring the iconic red kettle in front of its store.”

    Not only is this first time that Wal-Mart has used a specific charity in a television spot, but it puts the chain in marked contrast to Target, which is allowing online donations to the Salvation Army through its website but is not allowing its kettles and bell ringers to take up positions outside its stores because of its longstanding no-solicitation policy.
    KC's View:

    Published on: December 9, 2005

    The Boston Herald reports that a New England company that owns seven Krispy Kreme franchises is closing two of them and selling another four, convinced that the cost of operating the stores was too high to make any money.

    The only one it is keeping open is one in the Mohegan Sun Casino in Connecticut.
    KC's View:
    How fast and far the might have fallen.

    We trace the company’s problems to our decision to stop eating doughnuts. We’ve fallen off the wagon occasionally (like with a Hot Pot glazed applesauce doughnut in Seattle yesterday morning), but have cut way, way back on our doughnut consumption.

    Published on: December 9, 2005

    The Morning Call reports that Sears has decided to back away from its Sears Essentials format, which was supposed to combine the best of the company’s Sears and Kmart formats and help the company forge a more successful future. Fifty have been opened and 400 were promised, but now company chairman Edward Lampert says the existing units have fallen far short of expectations.

    The problem, according to analysts is that the combination of two format ended up adding up to almost nothing – or at least nothing that many people wanted to shop at.

    ''We will not simply throw money behind any concept, but instead will test, evaluate, refine and prove the math, so that the investment is justified before we make it,'' Lampert wrote in a letter to investors.
    KC's View:
    We got an email yesterday from an MNB user telling us that he heard a radio spot for Sears promoting a holiday sale this Saturday -- with "employee discount" pricing between 7 and 10 a.m.

    He made an excellent point: that like GM and Ford, which tried the same thing, “Sears is lurching toward oblivion.”

    There is a sense of not-so-quiet desperation…

    Published on: December 9, 2005

    • Next week, Food Lion will open what is a new prototype for the company, a store with a stand-alone organic/natural foods section that is grouped with the wine department, and what is described as a more shopper-friendly layout.

    The company plans to roll out more of the prototype next year, but the timetable and locations have not been divulged.

    • The Washington Post notes that when Michael Resnick, former CFO for Ahold’s scandal-ridden US Foodservice division in the US, goes on trial next year, he may be supported by some former associates. The Post reports that Resnick’s attorneys are saying that other former executives for the company are saying that the ex-CFO may not have known about the artificial inflation of profit numbers.

    • The New York Times reports that Kellogg Co. plans to start using a new kind of soybean oil, called low-linolenic, replacing trans fats in its baked goods.

    CNet News writes that the growth of the DVD market is likely to stall out as the practice of downloading movies and television shows becomes more and more popular. At the same time, the DVD industry is facing another, more uncertain threat from high definition technology, which could make the current DVD format obsolete.
    KC's View:

    Published on: December 9, 2005

    • Dave D’Arezzo has resigned from his COO position at Raley’s Supermarkets. Pending the hiring of a successor, company president/CEO Bill Coyne will take on the role of acting COO.

    No reason for D’Arezzo’s resignation was disclosed.
    KC's View:

    Published on: December 9, 2005

    • Costco reports first quarter sales of $12.66 billion, up 12 percent over the same period a year ago, with same-store sales up nine percent.

    Net income for the quarter was also up 12 percent, to $215.8 million.
    KC's View:

    Published on: December 9, 2005

    On the subject of changing organic standards, MNB user Bill Knudsen wrote:

    To quote a former President “There you go again”. Maintaining organic standards does not mean lowing the standards and repeating the misstatements of the Berkshire Eagle doesn’t make them true.

    For instance, the congressional amendment does not “allow cows raised on conventional farms - fed with genetically-modified food and injected by hormones - to move to an organic farm where their milk can be called organic”. What the amendment actually says is “Crops and forage from land included in the organic system of a dairy farm that is in its third year of organic management may be consumed by the dairy animals of the farm during the 12 – month period immediately prior to the sale of organic milk & milk products. The Eagle editorial seems to be an example of lazy journalism where they would prefer to print the press releases of self appointed “activists” rather than doing some confirming research.

    And regarding the recent study that Americans eat fewer organics than people in many other countries, MNB user Andy Gromen wrote:

    I am pleased to see that there is SOME discourse leaking through showing another point of view concerning “Organically Produced Food”.

    Having reached the age of 52, I am far more skeptical about every fad-de-jour or hot-button issue that comes along than I was as younger lad. I will believe that there are actually ET’s flying UFO’s when someone drags an alien crash victim before a TV camera and airs it on FOX News. (Not CBS) I don’t believe in the existence of the Yeti / Sasquatch. Elvis was NOT sighted last week shopping an organic section of a Trader Joe’s.

    Why do I hold these opinions? Because there is no credible evidence to convince me otherwise. I COULD get all warm and fuzzy over the thought of a small civilization of almost-human creatures sharing our planet peacefully on the fringe of our civilization. Or Elvis just about to resurface, after decades of self-exile, and share that special voice with us again. I would then be eligible to join the ranks of the hard core “Organic” proponents. (see warm and fuzzy above)

    There are a huge number of less vocal people out there that just don’t buy into the “Organic-is-Better” hype that is implied in almost everything written on the subject. It adds excitement to a category to describe it as “Fast Growing”. But when it starts out as nothing and grows to the size of a pimple on a Yeti’s butt, it’s still a … well you know.

    Earlier, Philip Herr wrote: “There is no evidence that organic foods are more nutritious. Organic foods tend to look less uniform and attractive.”

    I will add that they do not taste any better either. In fact, at times the opposite is true. I must admit that my experience has been limited to some fresh vegetables and free-range chicken though.

    In general, we utilize the best systems available for producing, growing, storing, packaging, & distributing food. We mortals routinely take antibiotics, vaccines, hormones, vitamins etc. Properly administered, they IMPROVE our lives. (See polio, small pox, and yes … per-capita cancer rates have actually fallen if you research the data.) We aren’t killing ourselves because our food is produced using the most scientific, modern, efficient & safe techniques known to man. The yields are so high and the prices so relatively cheap that we’re EATING WAY TOO MUCH OF IT!

    But I can be convinced that organically produced food is more than just a Zen thing for its proponents. Just show me the hard, believable, credible evidence to support what is always implied about the superiority of organic food. I’ll be the guy standing next to Elvis in the “Organics” aisle ... paying a premium … getting less.

    On a somewhat less serious subject, we got the following email from an MNB user about seasonal beers:

    Not sure if all of these are available in your area but here are some excellent holiday beers to try:

    • Avery Old Jubilation - Boulder, Colorado
    • Anderson Valley Winter Solstice - Boonville, California
    • Three Floyds Alpha Clause Christmas Porter - Munster, Indiana
    • Allagash Brewing Grand Cru - Portland, Maine - you should be able to find this one
    • Lost Coast Winterbraun - Eureka, California
    • Troegs Mad Elf Holiday Ale - Harrisburg, Pa.
    • Weyerbacher Brewing Heresy ( Imperial Stout aged in Oak Bourbon barrels..YUMMY! ) - Easton, Pa.
    • North Coast Brewing Old Rasputin Russian Imperial Stout - Mendocino, Ca - I just brought home a sixtel ( 5 gallon keg ) of this for my keg meister at home. It's like liquid happiness. Stoke up a fire, kick your feet up and fall in love!

    If you’re hop lovers:

    • Sierra Nevada Celebration Ale - Chico, Ca.
    • Clipper City Brewing Company Heavy Seas Winter Storm - Baltimore, Md
    • Stone Brewing Company Double Arrogant Bastard - San Diego, Ca.

    I love and celebrate good beer and food hopefully you'll get the chance to discover some new favorites from this list…Enjoy.

    Thanks. We will.
    KC's View:

    Published on: December 9, 2005

    NBC is putting its shows on iTunes.

    Great idea. The only problem is that there’s almost nothing on NBC that I watch.

    As a brand, NBC has become almost completely irrelevant to me. Except for when there’s breaking news, because I like Brian Williams and most of the reporters, and MSNBC, because I like Imus and Chris Matthews and Keith Olbermann. But that’s about it.

    Compare that to the old days when I’d watch Seinfeld and Cheers and Hill Street Blues and St. Elsewhere, and NBC was the place with the hippest, most interesting programming.

    Law & Order is pretty good, but quite frankly, it is said that there is an episode of Law & Order or its spinoffs playing somewhere in the world during every hour of every day. So there’s no rush.

    Now, I prefer CBS (CSI and NCIS…I’m a fan of police procedurals), ABC (Lost and Alias) and Fox (24). And HBO, for when The Sopranos andCurb Your Enthusiasm are on.

    There’s an argument, of course, that it isn’t that NBC changed or lost its brand identity, but rather that I got old and my tastes changed. And to a certain extent that may be true. On the other hand, if you look at the ratings, it appears that viewers are abandoning NBC in droves. It can’t all be middle-aged men who find the network to be irrelevant.

    It is a good object lesson for anyone in the brand business.

    About a third of the way through “Walk The Line,” the new movie about Johnny Cash, I have to admit that I suffered a bit of musical biography fatigue. Maybe it is because of “Ray,” the movie about Ray Charles that came out last year to much acclaim, and that I just loved. There were elements that both movies had in common – the impoverished and troubled childhood, as well as the drug abuse and personal torment that came with success.

    But the fatigue didn’t last long, especially because of the enormously sympathetic performances of Joaquin Phoenix as Cash, and especially Reese Witherspoon as June Carter. Phoenix actually had the tougher job, from my point of view, because I was far more familiar with the man he was playing; I’m not sure if I could pick June Carter out of a lineup. But the movie, and their performances, manage to capture their moments in time without being sentimental – especially her steely resolve not to give in to Cash’s demons. It is a remarkable story, all building up to his legendary concert at Folsom Prison in 1968.

    And let’s not forget the music – energetic, haunting, unforgettable songs like “I Walk The Line,” “Ring of Fire,” “Jackson,” and, of course, “Folsom Prison Blues.”

    Good stuff.

    Couple of wonderful wines to recommend this week…

    The 2004 Alamos Malbec from Argentina is sort of dark and smoky and really good with steak or a roast, or even with a pasta with a rich red sauce.

    And the 2004 Vilosell from Spain has a really interesting spiciness when you first taste it, and then leaves you with just a hint of vanilla in your mouth. Not sure why, but it was terrific with a dish I made that consisted of hot ground sausage, chopped onions, garlic, and cheddar and jack cheese piled in between a triple stack of four tortillas and then baked until all the filling had melted together. Yummmm….

    Thanks to those of you from the Seattle area who wondered about a get-together of local MNB subscribers during my trip to the Pacific Northwest this week. It wasn’t possible, unfortunately, because of time constraints; I’m in the middle of producing a series of video segments that will be used in February at the annual CIES Food Safety Conference in Paris. We’ve been wandering the country talking to retailers and other experts about food safety attitudes in this country…I’ll tell you more as we get closer. Or, you can check out the agenda at:

    (Maybe we need to have a get-together of Parisian MNB users…)

    Of course, that doesn’t mean we didn’t squeeze in a good meal while we were in Seattle. The place: our favorite, Etta’s Seafood. The meal: pan seared monkfish with toasted farro risotto, bacon, baby carrots and red wine-mushroom reduction.

    Yes, that old thing again.

    That’s it for this week.

    Have a great weekend.

    KC's View: