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    Published on: February 7, 2006

    The Milwaukee Journal-Sentinel reports on an interview with Roundy’s CEO Bob Mariano, who says that “it's fair to say that in a reasonable time there's going to be a change in the (company’s) capital structure; in the next year to 18 months. All possibilities are on the table.”

    The change is keyed to the company’s current ownership by a Chicago investment firm, Willis Stein and Partners, which typically holds onto companies for about five years. Willis Stein bought Roundy’s in 2002, which means 2007 would be the year for some sort of divestment.

    Mariano tells the paper that once the decision is made to sell Roundy’s, “the owners will hire advisers and go through the usual steps, considering such options as an outright sale to a competitor or another private investor, or a public stock offering.”

    The Journal-Sentinel writes that if and when Willis Stein decides to sell Roundy’s, it will be a vastly different company than it bought. “Since 2002, the owners have taken Roundy's on an acquisition path that has changed the company from a wholesaler to a retailer. The addition of retail has made Roundy's the fastest-growing retailer in the world, according to the latest annual global report from Deloitte. The report, published in January by Stores magazine, ranks the 250 largest retailers in the world, and also lists the 50 fastest growers, based on a five-year compounded annual growth rate. On that basis, Roundy's came in No. 1 in growth, with retail sales of $3 billion in 2004 and a five-year compounded rate of 56.7%. The wholesale business brought total revenue to $4.8 billion in 2004. In size, Roundy's retail business ranks 202 on the list.”

    Even as the company prepares for some sort of change in ownership, Mariano says, it will continue to build new stores and acquire locations that make sense – including independently owned Pick 'n Save stores that may come available, and any Jewel-Osco stores that may go on the market once Supervalu completes that acquisition.

    Analysts tell the Journal-Sentinel that one other tantalizing possibility remains in play – that Mariano might want to make a move on Dominick’s in Chicago if Safeway decided to make it available at the right price. Mariano, of course, used to run Dominick’s.
    KC's View:
    Looking at the food retailing industry today, you get the sense of pieces being moved around the chess board as companies try to position themselves for even greater levels of competition that are just down the road a piece.

    For many of them, it will be what the great Bob Murphy used to call “nine miles of bad road.”

    Published on: February 7, 2006

    Published reports say that Ron Burkle’s Yucaipa Cos. investment group has raised its ownership stake in Wild Oats from 9.2 percent to 14.9 percent.

    According to a report in the Rocky Mountain News, the increased level of ownership raises the possibility of “strategic transactions” that could lead to a merger between Wild Oats and other supermarket chains.

    The Los Angeles Times this morning reports that Bear Stearns analyst Robert Summers believes that this could mean that Yucaipa plans to be more active in determining the company’s direction.

    The language in the latest filing "suggests a more hands-on approach and greater involvement," Summers says. "This represents a dramatic change and could foreshadow more aggressive efforts by Yucaipa to increase visibility on the earning power of the underlying business."
    KC's View:
    Again, chess pieces around the board. What is interesting about this is that it seems likely that if any sort of “strategic transaction” were to take place, it would be between Wild Oats and some chain not in the natural/health foods business.

    Published on: February 7, 2006

    Good piece in the Washington Post by columnist Dan Oldenburg, who writes about how he believes that checkout cashiers ought not be required to call club-card and credit card customers by name. The column actually is a follow-up to a previous piece that called for much the same thing – in this one, Oldenburg writes that numerous readers have written in the agree with his conclusion.

    “Grocery checkout lines for most of us are little more than a few mind-numbing minutes of glimpsing hot models on slick magazine covers or surreptitiously reading tabloid headlines about a painting of Saddam that cures hiccups,” Oldenburg writes. “Then there's the paper-or-plastic wake-up call, the bar-code swipes, you pay and go home.”

    Readers tell Oldenburg that they tend to get annoyed about mispronunciations of their names, but there is a larger issue – possible fraud. One reader wrote in about her mother, who lives in South Carolina, shops at a store where they use customer’s names. When she got home from one shopping trip, “she got a phone call supposedly from the store manager who called her by name and asked for her credit card number again to re-run her charge because the machine botched the first attempt. The woman complied -- and you know the rest of that story.”
    KC's View:
    It’s interesting. Almost every major consultant would tell you that calling customers by name is a way of personalizing the shopping experience, but at least some shoppers find it to be an invasion of privacy.

    Don’t know what the solution is, except that customer concerns need to be taken seriously. It might be fair to say that it isn’t the use of a customer’s name that is so important, but rather a genuine smile, some real engagement. We think it would be a good first step to require checkout people to not talk to each other about their personal lives while customers are on line.

    Published on: February 7, 2006

    The New York Times writes that a ruling is expected this week from the World Trade organization “on charges by the United States that Europe is illegally restricting imports of genetically modified crops.

    “Even if the United States wins — that is the prevailing rumor — genetically modified foods would not flood Europe because citizens there remain wary of them. But the American government and the biotechnology industry hope a ruling in their favor would sound a warning to other nations not to follow Europe's lead in restricting farm biotechnology.”

    The European Union has maintained that GMO crops pose a threat to health and the environment that had to be weighed with "a prudent and precautionary approach." But the US has countered, according to the Times, that the EU “violated a global treaty on standards for food, which requires governments to act without ‘undue delay’ and to base decisions on scientific risk assessments, not political expediency.”
    KC's View:
    We think that it is true that this is a case where a legal decision may not have an impact on how consumers think, but it would definitely affect how the EU can protect its own borders.

    One can only wonder what the US position would be if the situation were reversed – if the US population were anti-GMO, and the EU wanted to force the issue.

    Published on: February 7, 2006

    The Baltimore Sun reports that lawmakers – both Republican and Democratic – are pushing the Bush administration to appoint a full-time commissioner of the Food and Drug Administration (FDA), noting that “the FDA's top post has seen no fewer than four interim commissioners over all but 18 months of the Bush presidency.”

    The Sun writes that the legislators believe that “a permanent leader…would be more focused on long-term strategic planning and could help the FDA gain more funding from Congress for prompt approval of new drugs and medical devices.”

    Some critics say that the Bush administration is not highly engaged in food and drug regulatory issues and doesn’t want yet another confirmation fight with Congressional Democrats. However, the White House says that it is interviewing potential commissioners and could name someone to the post any day.
    KC's View:

    Published on: February 7, 2006

    • The Orlando Sentinel reports that Wal-Mart plans to make a push with its Neighborhood Market concept in the Orlando area. One is open at the moment, with two more planned for the immediate future.

    KC's View:

    Published on: February 7, 2006

    • Publix has signed a deal with The Little Clinic LLC to open medical clinics within Publix stores. The first clinics will be located in the Atlanta, Miami, Orlando and Tampa markets in the first half of 2006.

    • The Chicago Sun Times reports that boxed wine is making inroads in terms of customer acceptance. “Though it accounts for only 6 percent of total wine sales at supermarkets,” the Sun Times writes, “boxed wine is selling faster than any other wine segment, ACNielsen reports. Last July, sales by volume of 3-liter boxed wines were up 77 percent over 2004.”

    One measure of the shift taking place – even some trendy restaurants are starting to use boxed wine.

    • Unilever has signed a deal with PepsiCo to launch a line of Ben & Jerry’s milk shakes later this year. The flavors have not been announced, but they are likely to be versions of traditional Ben & Jerry’s ice cream.

    KC's View:

    Published on: February 7, 2006

    …will return.

    (We’re sorry about this, but in addition to being on the road at the moment, we’re also coping with either the flu or food poisoning…which also accounts for the rather abbreviated version of MNB this morning. We appreciate your understanding and patience, and hope to be back to full strength in a day or two.)
    KC's View: