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    Published on: February 16, 2006

    The Washington State legislative committee that was considering a bill requiring businesses with 5,000 or more employees in the state to spend at least 9 percent of their payroll costs on employee health care, or pay the difference into the state's health care fund, has essentially killed the bill by failing to send it to the full House of Representatives for a vote.

    Because of legislative deadlines, it appears that the bill is dead for this year.

    The bill was modeled on one that has been passed in Maryland, and that is perceived as being primarily designed to target Wal-Mart.
    KC's View:
    From all reports, it seems that this was not a committee decision, but rather a move by the committee chairman to kill the bill because he was worried that passage of such a bill could lead to a political free-for-all in the state later this year.

    If true, it’s too bad. Because these sorts of decisions ought to be made for better reasons than political expediency.

    Published on: February 16, 2006

    The Wall Street Journal reports this morning that major food companies are taking a new approach to identifying the next big diet fad – they’re actually trying to create it.

    The target: creating foods that will make people feel full even when they are not.

    The reality of food trends is that “big food companies often are late comers to diet fads, which tend to bubble up through popular books and personal recommendations,” even though “diet foods are one of the faster growing areas of the otherwise slack food business.”

    An example of what’s happening in produce development: “Scientists at Unilever, which is based in London and Rotterdam, are betting on a technology four years in development that focuses on something called the ‘ileal brake mechanism.’ The ileum is the lower part of the small intestine, an area that fat penetrates only when there is too much for the body to process. When it does, the ileum sends a message to the brain that the body is full. Unilever found a way to alter the structure and the coating of fat molecules so that they remain intact as they pass through the digestive system and trigger a sated response when they hit the ileum.”

    Or, the WSJ writes about how Danone researchers have “applied for patents on special types of fiber that slow the rate at which food travels through the digestive system. The fiber delays ‘gastric emptying,’ which is food's voyage from the stomach to the intestine, and encourages ‘gastric distention,’ or the stretching of the stomach. Combined, that makes people feel full longer. The tricky part is not to block their systems entirely.”
    KC's View:
    We hate it when there’s a tricky part.

    Now, we have no problem with any of this, and will be perfectly happy to eat foods that will make us feel fuller than we actually are.

    But we read phrases like “alter the structure and the coating of fat molecules so that they remain intact as they pass through the digestive system and trigger a sated response when they hit the ileum” and wonder how the anti-GMO crowd will respond to this kind of product development.

    Published on: February 16, 2006

    Ahold CEO Anders Moberg tells a Swedish business magazine that while the company continues to reduce expenses where possible, it also is looking to expand in its existing and contiguous markets.

    “We have around 3,000 stores now,” Moberg says. “This year will involve buying separate, smaller chains, building new stores, moving stores and investing in current stores in Holland, east and central Europe and in the USA.” Moberg also says that in addition to expanding beyond the east coast of the US, Ahold also could move into Canada if the circumstances are correct.
    KC's View:
    Good. The US food industry is healthier if Ahold is active and vital. It makes the competition better, and is good for consumers in the long run.

    Published on: February 16, 2006

    Published reports say that European farmers have been told to lock up their chickens in the wake of discoveries of the deadly bird fly virus in Germany and Austria – the latest birds to be infected with the H5N1 strain of avian influenza that has spread from Asia to Africa and now to Europe, killing 91 people and led to the destruction of millions of birds.

    Just last weekend, the bird flu was discovered in Italy and Greece.
    KC's View:

    Published on: February 16, 2006

    In New Jersey, The Record reports on a new, 49,000 square foot Midland Park A&P store that it describes as perhaps the last, best hope for the company to survive and return to profitability.

    “It's part of a two-prong program imported from the chain's former Canadian operations, converting all of its existing stores into either a Fresh Markets supermarket, built around extensive prepared, natural and organic foods and personalized service, or a no-frills, low-priced Food Basics store,” the paper writes.

    The store is the first of eight that A&P will open in the New York metropolitan area using the essential format, though the company says it will “massage” the concept based on local demographics.
    KC's View:

    Published on: February 16, 2006

    The Chicago Sun-Times reports that the city of Chicago “is willing to offer tax incentives and job-training help to persuade grocers to build stores in under-served minority and low-income neighborhoods, city officials said Tuesday at the first Chicago Grocery Expo.” The city reportedly has 50 sites where it would like supermarkets to open and serve low-income residents.
    KC's View:
    The irony, of course, is that the city rejected a Wal-Mart store that would have served at least some of these same residents.

    Published on: February 16, 2006

    The Wall Street Journal reports that Netflix is testing a new pricing model - $5.99 for three DVDs a month.

    The company already has a $17.99/month plan that allows people to rent three DVDs at a time, and a $9.99/month plan that allows for the rental of one movie at a time.

    According to analysts interviewed by the Journal, “the $5.99 offering could end up having higher gross margins because of lower costs per disc.”

    This news comes as Netflix, often held out as a strong example of finding a new business model to compete with an established presence (Blockbuster), has been enduring some criticism “throttling” shipments of DVDs to frequent renters. The company has been charged by some heavy users of delaying shipments to them because it wants to protect its profits – it makes more money if people get fewer DVDs for the regular monthly fee. So it reportedly is shoving frequent shoppers to the back of the line for oft-requested DVDs, preferring to send them to infrequent renters and new customers.
    KC's View:

    Published on: February 16, 2006

    McDonald’s has introduced a new series of television commercials that attempt to make its longtime mascot Ronald McDonald more attractive to twentysomething consumers, as opposed to the kid-friendly image that previously has been on display.

    Advertising analysts say that part of the impetus is to compete more effectively with the “King” mascot being used to some advantage by Burger King in a new series of commercials.

    Meanwhile, a North Carolina woman has filed suit against McDonald’s, claiming that she found blood smeared inside a bag of French fries. The blood reportedly came from an employee who suffered a cut but didn’t use a bandage; the employee apparently was fired.
    KC's View:
    First we find out that Mickey D’s cooks its French fries in beef-flavored oil, which offends vegetarians. Then we find out that they are seasoned with wheat and dairy products, creating problems for people with food allergies.

    Now, blood on the fries…which while not a system-wide problem, certainly says something about McDonald’s training procedures.

    Vampires may be the only ones not offended.

    Published on: February 16, 2006

    In appearances yesterday before the US House of Representatives Subcommittee on Commerce, Trade and Consumer Protection, Food Marketing Institute (FMI) CEO Tim Hammonds and National Association of Convenience Stores (NACS) CEO Henry Armour addressed the high cost of interchange fees charged by credit card companies.

    According to Hammonds, “Fees paid by FMI members to the card companies have increased roughly 700% over the past 10 years as a result of this combined growth in rates and volume. By comparison, even the cost of a gallon of gasoline at the pump, where consumer outrage is palpable, has increased ‘only’ 100% since February 12, 1996. We say ‘only’ because that’s a huge increase, but it’s not 700%. If consumers had full information on the rates and fees associated with their plastic cards, we would see the same level of outrage we now see over gasoline prices. Consumers already have some experience with this. They know and resent the fees they are aware of that credit card companies are charging them such as late fees, over-the limit fees, zero balance fees, and inactivity fees. There is a whole class of fees that consumers don’t know about. These include interchange fees, dues and assessments, risk fees, access fees, base rate settlement fees, surcharge fees, switch fees and transaction fees. Interchange fees are the most costly: In 2004 alone, Visa, MasterCard and their member banks collected $27.6 billion in interchange fees.

    “Consumers don’t know about these fees because merchants are prohibited from disclosing them. These hidden fees are ultimately reflected in the retail price of every product consumers buy. Consumer anger would increase even more if they learned that this prohibition against disclosing the fees is included in a 1,200-page book of Visa operating rules that merchants must abide by but can’t even have a copy for themselves! This lack of disclosure and lack of competition in these fees are contrary to everything this committee has worked to achieve.

    “The solution to this complex problem is relatively simple.

    • First, shine some light! Require the card companies to disclose their operating rules on a web site and file a copy with the Federal Trade Commission. Small businesses should no longer have to guess the fees they are being charged or the rules they have to follow — rules that can seemingly be changed at a whim.

    • Second, card companies should be required to charge a fair price that reflects the actual cost of their services, but should not be allowed to subsidize the expensive marketing programs and promotional schemes that benefit only the most privileged few.”

    Armour agreed, outlining four fundamental problems with the current interchange market. “First, because of the market power of the card associations, retailers have no choice about whether they accept cards. Second, the card associations exploit their market power by driving up fees and by veiling these fees and their rules in secrecy. Third, these fees are bad for consumers – particularly some middle and many lower income consumers who do not have easy access to credit and debit cards. And fourth, consumers in the United States pay much more for interchange than other comparable countries.”

    And, Armour said, “It’s not just consumers who are left in the dark; Visa and MasterCard refuse to fully disclose their operating rules to retailers. It is remarkable that they make retailers agree to abide by all of their operating rules in order to be able to accept their cards, yet they won’t let retailers see those rules. I find the lack of transparency by Visa and MasterCard to be outrageous.”
    KC's View:
    If Congress does nothing about these fees, and then votes to prevent Wal-Mart from getting into the financial services business, we ought to vote the bums out.

    Published on: February 16, 2006

    • Safeway Inc. has agreed to create a committee made up of employees and outside experts that will examine animal welfare issues. The East Bay Business Times reports that the decision was made in part because of pressure applied to the chain by People for the Ethical Treatment of Animals (PETA), which has been lobbying the company to promote a more humane method of slaughtering birds.

    • France-based retailer Carrefour reportedly plans to open 20 new hypermarkets in China this year. The company currently has 70 stores there, having opened 14 units during 2005.

    • The Toronto Globe and Mail reports that Canada is running a more than $200 million (US) trade surplus with the United States in beer – up more than $30 million (US) from a year ago.
    KC's View:

    Published on: February 16, 2006

    • The Grocery Manufacturers Association (GMA) confirmed yesterday that, as expected, C. Manly Molpus will retire as president and chief executive officer at the end of the year. A search committee has been established, and a search firm hired to enlist his replacement.

    Meanwhile, negotiations about a possible merger reportedly continue between GMA and the Food Products Association (FPA).

    • The Food Marketing Institute (FMI) has named Jeff Rumachik to be executive director of FMI’s Wholesaler Division, succeeding Jack Block, who retired on December 31, 2005. Rumachik continues to serve as FMI’s group director of field services, which he has led since March 2000.
    KC's View:

    Published on: February 16, 2006

    We got a number of emails responding to the decision by the state of Massachusetts to force Wal-Mart to carry emergency contraception pills – better known as “morning after pills” - in its stores that have pharmacies in the state. Three women had sued the company, saying that Wal-Mart was in violation of state regulations by not carrying the medication.

    MNB user David White wrote:

    I read the news that Massachusetts has ordered Wal-Mart to carry the "Morning After" pill and was outraged.

    I have no love in my heart at all for Wal-Mart, but I have to defend them on this one. My stance has absolutely nothing to do with whether pill is right or wrong from a moral or religious perspective. This is simply a government telling a private business what to do.

    Wal-Mart, and every other private business, should never be forced into carrying a particular product or providing a service if they choose not to do so. It is THEIR business. If they choose not to carry the pill and business suffers, so be it. If they choose to sell the pill and get boycotted by some outrageous anti-pill zealots, so be it. The bottom line is that it is there business and they have the right to decide what to sell.

    As for the women suing Wal-Mart - find someplace that does carry the pill, give them all your business, and stop shopping at a store that does carry the products you need or want.

    Government involvement at any level in this scenario is ludicrous.


    MNB user Harold Sargent wrote:

    I don't think Wal-Mart or any other pharmacy should be made to stock the morning after pill or any item that they wish not to stock. The accounts that I call on do not stock all of the SKU's that I represent.

    Then you need to look at were it is coming from. One of the most liberal states in the US.


    Another MNB user wrote:

    Ridiculous! How can the government mandate what a retailer chooses to sell. If Wal-Mart doesn't want to carry a particular product, the shopper merely has to shop somewhere else. She doesn't have a "right" to buy it wherever the hell she wants to.

    The same goes for handicappers. Instead of suing to make a store "accessible," why don't they just give their business to stores that have chosen to attract their business?


    Well, for one thing, there is a little law called the Americans with Disabilities Act (ADA) that says it is illegal not to provide access to handicapped persons. A law that we happen to agree with. After all, we are supposed to be an enlightened society…not ancient Sparta, where they would leave less-than-perfect children out in the mountains to be killed since they would have diluted society’s perfection.

    Also, we’re not sure how disabled folks will take to being referred to as “handicappers.”

    MNB user Richard Layman disagreed with this approach:

    My view of Wal-Mart not carrying a duly licensed prescription drug in 49 states is very simple. They should lose their pharmacy licenses in those 49 states. A professional license is a privilege, not a right, and said license includes the duty to prescribe all legally available drugs.

    This is, at a minimum, what a citizen should expect from a business licensed by the state to conduct business in their state.

    I think this is how this issue should be handled generally. If a licensed pharmacist refuses to fill a legal prescription, then they should lose their license.


    This is an interesting point. Since a pharmacy is licensed by the state, should it be required to carry all legal medicines?




    Continued reaction to proposals in a number of states that companies be required to spend a prescribed amount on health care for employees.

    MNB user Philip Herr wrote:

    While I am sympathetic to the retailers who have "played by the rules" and benefited their employees with health insurance, I cannot agree with the economics that state or local legislators cite: specifically that Medicaid is forced to pick up the difference between what Wal-Mart pays and what families need. I think what has not been entered into this equation is the cost to local governments of welfare, or other forms of assistance that may be necessary if these people were not working at all. Once the cost of other assistance is calculated I'd have to believe that Wal-Mart generates more income than it drains.

    Another member of the MNB community wrote:

    If all the lib (blue) states stay on this junket to get Wal-Mart to conform to their wishes, they will only hurt themselves in the long run. Think it through,... Wal-Mart owns the property they are on. Real estate will only escalate in value. If they close the doors in all the blue states, they will only be in red states. Oh and they (Wal-Mart) will still make money when they sell the land/buildings.

    The rich will get richer by saving at Wally World. While the poor will be subsidized by the gov't (state if not nat'l) welfare programs, eventually costing us more money. It's not just poor folks that shop at Wal-Mart, in case nobody else has put it together, rich folks are that way for a reason. Most of them are frugal. When I was contracting, the most tight fisted customers were the ones that had the most.

    I say give the big companies a better tax break for participating in a better health care program in the work place. You have to give something back, or they will close their doors and all move to red states. Wal-Mart has already demonstrated they are willing to do that rather than be pushed around.

    Maybe the federal/state gov't could learn from Wal-Mart's business model and actually make some money. Lord knows we give them more than enough tax money to address all the financial needs and then some.


    Another MNB user wrote:

    You've already received many comments on the idea of mandating a percentage of an employer's payroll to health care, whether in Maryland or Washington. Let me only add this.

    I think there is a debate to be had. But it is not about mandating employers' take up the burden of health care necessarily. It is about how we, as a country, not any one state, will address an issue that can no longer be ignored. The health care system in this country needs a serious review and fresh thinking. The Social Security problem looks like pocket change compared to the Medicare burden if we do nothing.

    Do I know what to do? No. But I do know, as a baby boomer, I do not wish to leave the mess to those who come after me. If we want to have a chance to be a great generation, let us take up serious issues with serious intent to do more than grandstand and mouth platitudes about the poor and helpless or diatribes against the rich and greedy. Such approaches have led us to the gridlocked, blue-red country we live in now. The Founding Fathers would be ashamed.


    And yet another MNB user wrote:

    I work for a financial institution. We see many individuals with poor credit or bankruptcies because of medical bills. You can't imagine how fast your life can spiral downward when you aren't covered by adequate health insurance. The climb back up is even tougher. There is a cost to the individual, to the medical community and to everyone else when health care isn't available. This is an issue that needs attention and ultimately resolution.
    KC's View: