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    Published on: March 30, 2006

    While college may be too late to teach someone to engage in ethical behavior, Content Guy Kevin Coupe makes an argument for required ethics courses in business schools that will establish ethical behavior as a priority and put it into historical and cultural context.

    Go now to MNB Radio by clicking on the icon at the left hand side of this page, or go to:

    http://www.morningnewsbeat.com/Radio/Radio_Listen_S.las
    KC's View:

    Published on: March 30, 2006

    The Idaho Statesman reports this morning that Albertsons CEO Larry Johnston saw his compensation double to $16.4 million in salary, bonuses and stock options last year, and stands to make $52.6 million this year if the sale of the company goes through as expected.

    According to the paper, it is common for CEOs to have arrangements for regular raises with their boards, even if the schedule of increases is not published in the company’s annual report. Albertsons is not commenting because it says that it has a policy against discussing executive compensation issues.

    If all goes according to schedule, Albertsons will be broken up and sold later this year to two retailers and a group of private investors. It already has been established that Johnston will not be staying with the company once the sale is completed.
    KC's View:
    On the one hand, we suspect that a lot of people who have committed their work lives to Albertsons are going to be appalled by this. They are going to say that Johnston was tone-deaf to the realities and subtleties of retailing, that he mismanaged the company to the point that a sale was preferable to actually running the company, and that he almost screwed up selling the company. And they will express a certain amount of outrage that Johnston gets wealthy as a grand old food retailing name gets driven into the ground, though many of them will not be surprised.

    On the other hand, most of them probably will suggest that Johnston not let the door hit him in the rear end on the way out.

    Published on: March 30, 2006

    The New York Times this morning reports that Wal-Mart has begun searching for two high-level public relations executives to help it defend itself against critics. “If the language used to describe the positions is any indication, the giant discount retailer is on the PR equivalent of war footing, the Times writes. “One job includes ‘opposition research,’ presumably into Wal-Mart's major critics: Wal-Mart Watch and Wake Up Wal-Mart. The other requires the ability to ‘mobilize resources’ during a ‘crisis situation.’”

    According to the job requirements, the people who end up with these jobs must be on call 24/7, and must have at least a decade of experience.

    The Times writes: “According to the posting for the first job, director of media relations, the successful applicant will oversee Wal-Mart's ‘crisis communications program.’ Rather than simply handling phone calls from the press, the employee must be able to help ‘triage’ those calls, managing messages ‘in rapid response mode.’”

    The second job, according to the NYT, “is senior director of campaign management, an executive who will oversee all corporate communications support staff and the war room. This person must have a track record ‘addressing high- profile political activities,’ according to the posting. Candidates must ‘operate successfully in a campaign mode.’”

    Both positions, the postings say, offer "competitive base salary, bonus opportunity and stock options" plus an unspecified "excellent benefits package.”
    KC's View:
    And, of course, an unmentioned requirement of both candidates will be a willingness to drink the Bentonville Kool-Aid.

    Not that there’s anything wrong with that.

    Published on: March 30, 2006

    Less than a week after a former member of its board of directors suggested that the company would inevitably have to be broken up in order to maximize shareholder value, Ahold announced that its fourth quarter numbers bordered on the dismal and said that it was not going to come close to its 2006 financial projections.

    CEO Anders Moberg said that because of tougher than expected competition and some weakening by the company’s US divisions, Ahold would abandon its financial targets for the current fiscal year. Ahold had projected five percent sales growth for fiscal 2006, but now believes that it could be half that.

    CFO John Rishton concurred that the results are disappointing and said that Ahold continues to have to cut costs in order to improve its performance.

    Asked during a press conference about the suggestion that a breakup of the company was inevitable, Moberg said, “Regarding the break-up of the company, when I came on board, I said my ambition was to keep it together and we will continue to do this. We will not spend any time speculating on the future (though of course) we are always looking into seeing what makes more sense for our shareholders.”

    In announcing its financial results, Ahold said that it plans next week to announce a replacement for Stop & Shop/Giant of Landover CEO Mark Smith, who announced his resignation last month pending the naming of a successor.

    The company also said that it will move away from promotional pricing at Stop & Shop and Giant of Landover, engaging instead on what Moberg called “everyday right pricing.”

    Ahold announced that its fourth quarter profit was down 86 percent to the equivalent of $130.5 million.

    Sales for the period were up 0.3 percent to $13.1 billion.

    For the full 2005 fiscal year, sales fell by 0.3 percent to $55.3 billion (US), as operating profit dropped 73 percent to $308.2 million (US).

    KC's View:
    Moberg’s comments about the suggested breakup of the company sounds like what back in the old Watergate days used to be called a “non-denial denial.”

    What is of more concern to us is Rishton’s apparent belief that prosperity will be found through cost-cutting…which usually is not the case. In fact, it always has been our impression that Ahold ran a pretty tight ship on the cost side, so how much fat that there be to trimmed, especially with all the integration that already has taken place at Giant and Stop & Shop?

    You can’t save your way to prosperity in the retail business. You generate increased sales by selling more stuff to existing customers and creating a compelling enough shopping experience that it appeals to other stores’ customers.

    Simple, and not so simple.

    It requires fresh approaches to marketing and merchandising, as well as innovation and imagination. What Ahold has to ask itself if it is getting enough of all of these to generate the sales increases it desperately needs.

    Maybe “everyday right pricing” will be the answer.

    If not, the folks at Yucaipa probably have some extra cash lying around…

    Published on: March 30, 2006

    The Wall Street Journal reports that the US Food and Drug Administration (FDA) has concluded after initial testing that there is no reason to be concerned about the levels of benzene, a carcinogenic chemical, in certain soft drinks.

    According to the Journal, “the chemical can be found in some beverages that contain ascorbic acid, or vitamin C, and benzoate preservatives, usually listed as sodium benzoate or potassium benzoate on product labels. While some fruit drinks and sodas contain ascorbic acid and benzoate preservatives, it doesn't necessarily mean they contain benzene, the FDA said.”

    While concerns were raised last fall after private lab results showed that certain soft drinks tested positive for benzene, FDA said in a letter posted on its website that “based on currently available results from this limited survey, the vast majority of beverages sampled...contain either no detectable benzene or levels below" the limit set for drinking water” and "do not suggest a safety concern.” FDA said that when its tests are complete it will make all of the data available.

    The statement by FDA comes after a number of public health experts called for a federal ban on the sale of selected soft drinks in public schools until it can be ascertained that these beverages do not contain the carcinogenic chemical benzene. The initial call for the FDA to look into the benzene allegations came from a nonprofit organization called the Environmental Working Group, which said yesterday that it is not reassured by FDA’s findings since it did not publish any data to substantiate its conclusions.
    KC's View:

    Published on: March 30, 2006

    Wal-Mart said this week that it plans to dramatically increase the number of surprise inspections it does at foreign facilities that it uses to manufacture a wide variety of products that it sells. The company said that the move is intended to insure that these suppliers are living up to the company’s standards for labor and environmental conditions.

    The announcement follows up a broad promise along these lines made last year by CEO Lee Scott.

    The company said that roughly 20 percent of all inspections done last year were unannounced, and that it would raise that number to 30 percent this year. In 2004, only eight percent of inspections were of the “surprise” variety.
    KC's View:
    This move is indicative of how Wal-Mart is trying to rehabilitate its reputation in certain areas in the hope that it can reduce some of the legislative pressure and litigation it has been facing over its policies. Of course, not everyone will be satisfied, nor will everyone believe that Wal-Mart is sincere in these efforts.

    The only thing that will satisfy many people will be a track record of consistent and positive performance, not announcements and promises. Rightly or wrongly, when it comes to these issues Wal-Mart cannot really afford any missteps; any mistake will be interpreted as disingenuousness and institutional hypocrisy.

    Which is probably why it needs to put the PR staff on a “war footing.”

    Published on: March 30, 2006

    The tourism committee of the Florida House of Representatives has approved a proposal that would make key lime pie the official state pie.

    However, this proposal – backed by interests that believe key limes reflect positively on the state’s citrus industry – is hardly going to fly through the legislative process. Published reports say that the key lime pie designation is opposed by varying lobbies that are supporting either pecan pie or strawberry pie.

    And, there are reports that there may be support brewing for either the sweet potato pie or the chicken pot pie, according to United Press International.
    KC's View:
    It is these kinds of stories that make us wonder about the absurdity of modern democracy.

    Listen, we happen to be a pie fanatic. And key lime is our favorite kind of pie.

    But the idea that the Florida legislature, or any legislature, would actually spend a moment of time debating this sort of questions is not just disquieting, but dispiriting.

    If these clowns have so little on their plates that they can spend valuable time and money focusing on this nonsense, we have a suggestion that will actually serve both taxpayers and democracy.

    Shut up, turn out the lights, lock the doors, and go home.

    The republic will survive. Trust us.

    Published on: March 30, 2006

    • Penn Traffic Co. has acquired a 58,500 square foot store in Norwich, NY, from Ahold-owned Tops Markets, and plans to convert the unit to a P&C Fresh Market. Terms of the deal were not disclosed.

    This is the second Tops unit bought by Penn Traffic since the Ahold-owned company said that planned to divest its stores in eastern New York and the Adirondack region of the state.

    • Bankrupt Winn-Dixie announced that it is closing its Pompano Beach warehouse, consolidating its activities with those taking place in its Miami distribution center. The 280 employees in Pompano Beach reportedly will be offered jobs in Miami.

    The shift is scheduled to be completed by July 1.
    KC's View:

    Published on: March 30, 2006

    MNB had a story the other day about the rise in young people who are interested in ethical consumption, looking to use their dollars in a way that they hope will help reduce pesticide usage, limit deforestation, and make sure farmers aren't left with a pittance on payday. These aren’t the hippies of old, but rather acquisitive and aspirational people making what they believe to be ethical choices.

    We were actually a little surprised by what seemed like cynicism – or at least healthy skepticism - in some of the emails we received after the piece ran.

    MNB user Bob Stoeckle wrote:

    As the parent of a daughter attending college (and as a former attendee), I think it is easier to pay for the coffee where the wage paid was higher than average ... with SOMEONE ELSE'S MONEY. That includes Mom & Dads', loans (likely subsidized) by tax payers, grants and other scholarship funding. Interesting ... looks like an indoctrination of some sort?!?! ...but then again I remember the feeling of empowerment from tie-dyed t-shirts and bell-bottoms.

    And another MNB user wrote:

    It’s wonderful to see the 20 and under crowd spending their parent’s money so well.

    We also have a college student, and to the extent that we give him money (he’s actually required to work for his spending money, which ought to be a requirement for every college student) we figure he’s going to spend it regardless. If he wants to make ethical consumption choices rather than unethical ones, doesn’t that actually mean that he’s learned something?

    MNB user Gretchen Murdock wrote:

    Speaking as one from the 60s who carried signs and could sing most of the lyrics to “Hair”, I am delighted to see college kids taking a social stand.

    There have been too many years that I feared this type of idealism may have died, or was at the very least MIA. Reality sets in all too soon. And we all have to juggle our social consciousness with our need to put food on the table.

    This may just give me the impetus to dust off my own soapbox!


    We never put ours away.

    In fact, we’re standing on it right now, and do five mornings a week.

    Go figure.




    We got a number of responses from the MNB community regarding yesterday’s story and commentary about Trader Joe’s.

    MNB user Gunther M. Brinkman wrote:

    This is a tough one - we love Trader Joe's, but find that we only go once a month or so.

    Yes, carrying unique items and differentiating through product selection and limited assortment is great, but sometimes you just need a bottle of Hellman's mayonnaise. Someone has to fill that basic pantry shopping list, and they have to do it at very low prices.

    Maybe Wal-Mart can serve that need and everyone else can play a Trader Joe's game, but I think that would cause consumer revolt. I think the reason Trader Joe's is so noteworthy and so successful is exactly because it nailed a niche and, in geographies where they compete, they completely occupy it.

    There is limited capacity in any market for oddball retailers (how many Sharper Image and Brookstone stores can one city support?), and by copying Trader Joe's a supermarket would just marginalize both themselves and Trader Joe's.


    We agree that a glut of stores with a Trader Joe’s approach to food retailing would be as bad as the glut of mainstream, uninspiring stores that currently makes up the marketplace. We’re just surprised that nobody else – with the exception of Stew Leonard’s – is playing a game anything like that being played by Trader Joe’s. You’d think somebody else would give it a shot from a different direction.

    MNB user Mary F. Scott sees Trader Joe’s appeal in these terms:

    Trader Joe's is one of the few stores who really understands how important it is to the consumer to move through the checkstand QUICKLY! Other grocery outlets talk about it, but Trader Joe's DOES something about it. A lot of people shop there because they can get in and out with great groceries at a great price in a few minutes -- literally!




    Responding to yesterday’s story about the hot market for breast milk, one MNB user had a thought:

    Perhaps mothers should be "certified producers", stopping short of some type of ear tag???

    Why stop short? How about an RFID tag for every mother and child?

    Tell you one thing. We’d rather deal with a mad cow than a mad mother any day.



    MNB user Scott Burrill had an idea for people concerned about benzene in soft drinks:

    Let them drink water!

    MNB user Justine Raphael had a somewhat more studied response:

    As a midwife and childbirth educator, I have worked with women on both sides of breast milk donation. The donors are usually moms with an abundant milk supply looking to share a little of this "liquid gold"—no one I have known of was looking for any sort of remuneration. They often have trouble finding a mild bank to accept their milk—the Denver milk bank is actually the only one set up for national collections, with a very simple and elegant system of overnight pickups.

    The recipients are usually desperate to get the best "food" for their baby, often a preemie or a child with health issues. Some doctors will write a prescription for the milk based on family allergies, etc (milk allergy is among the most common in babies--and most formula is cow's milk based--or soy, another potent allergen). Some insurance companies will pay for the milk, which is very expensive even when coming from the milk banks due to the necessary processing (about $3 per oz, plus shipping).

    Do I think the milk should be regulated? Yes, as I think that would ensure a safe and consistent supply to the babies that need it. This is not a vanity item--mothers who can't breastfeed their babies are in great need. It is unusual that a woman cannot breastfeed, but there are some instances. I would hate to see the babies in need denied because there are others who are buying the milk (maybe because they think nursing is difficult or that it restricts a woman's freedom) on a "black market", diverting that milk from the national supply.

    On a related note, my daughter has been the regular recipient of donated blood over the last two years and I can only say that the regulations governing the blood supply help to make me more comfortable with this awful medical need. I know that nothing in this situation is a "sure thing" but I do know that each unit of blood is screened for known pathogens--which is not happening with the "black market" milk. I know many of her blood donors, yet how can I know everything to which they have been exposed? The scrutiny is welcome.





    In our regular diatribe yesterday against wines with screw tops, we wrote the following:

    We keep arguing that for us, the sound of a cork being removed from a wine bottle is one of the great sounds on the planet – it evokes more than just a beverage, but rather suggests romance and magic. It heightens the experience rather than diminishing it or making it common.

    We recognize that not everyone feels this way. However, we think that allowing wine to be opened like a bottle of soda only helps to eliminate one of its differential advantages. It makes the category less special rather than more so.

    Here’s a metaphor that will probably get us in trouble…

    The difference between a bottle of wine with a screw top and a bottle of wine with a cork is the difference between sex and love.


    MNB user Al Imbimbo wrote:

    Your point is right on. However, as we walk the path of life there is a place for both sex and love. To my surprise I have tasted some very good white wines with a screw top, which leads me to believe there is a place for wine with a screw top as well as wine with a cork. The key being, smart people are able to differentiate and use the screw top where appropriate!

    Keep in mind the screw top like sex is for immediate satisfaction; love, like the cork, is made to last the duration under the correct circumstances.


    MNB user Joe Fagan wrote:

    Now there is a marketing thought ”Romance wine, it’s the cork.”

    MNB user Mark Monroe had an interesting take:

    If the difference between screwtop and corked bottles is sex and love, it is no surprise that screwtops are gaining market share in this country.

    MNB user Karen Labenz wrote:

    I'm with you on the cork vs. screw top cap issue. There's just something about the experience of opening the corked bottle that makes it special and a bit more engaging than opening other beverages. Don't give up!

    And MNB user Tim Davis wrote:

    Just wanted to let you know I totally agree with you on the cork situation. It just doesn't seem right to open a bottle of wine in the same manner as you can open a 40oz of malt liquor.

    Y’know, a question just occurred to us.

    When you get breast milk off the ‘black market,” does it come with a screw top or a cork?

    Just curious.

    KC's View:

    Published on: March 30, 2006

    Contemporary supermarkets are filled with tens of thousands of food and beverage products – and virtually each one has a label meant to enlighten them about ingredients and nutritional facts, but often serving only to daze and confuse them.

    Making things worse: not all labels are created equal. It all depends on what the product is and who the consumer happens to be.

    Why certain consumers look for specific things on labels and how these components influence purchasing decisions is something of which CPG companies and retailers should be keenly aware.

    Want to know more? Click on the “Consumer Pulse” tile ad on the right hand side of the page, or go to:

    http://www.hartman-group.com/products/CP/new.html
    KC's View:

    Published on: March 30, 2006

    The Wall Street Journal reports that the US Food and Drug Administration (FDA) has concluded after initial testing that there is no reason to be concerned about the levels of benzene, a carcinogenic chemical, in certain soft drinks.

    According to the Journal, “the chemical can be found in some beverages that contain ascorbic acid, or vitamin C, and benzoate preservatives, usually listed as sodium benzoate or potassium benzoate on product labels. While some fruit drinks and sodas contain ascorbic acid and benzoate preservatives, it doesn't necessarily mean they contain benzene, the FDA said.”

    While concerns were raised last fall after private lab results showed that certain soft drinks tested positive for benzene, FDA said in a letter posted on its website that “based on currently available results from this limited survey, the vast majority of beverages sampled...contain either no detectable benzene or levels below" the limit set for drinking water” and "do not suggest a safety concern.” FDA said that when its tests are complete it will make all of the data available.

    The statement by FDA comes after a number of public health experts called for a federal ban on the sale of selected soft drinks in public schools until it can be ascertained that these beverages do not contain the carcinogenic chemical benzene. The initial call for the FDA to look into the benzene allegations came from a nonprofit organization called the Environmental Working Group, which said yesterday that it is not reassured by FDA’s findings since it did not publish any data to substantiate its conclusions.
    KC's View:

    Published on: March 30, 2006

    Wal-Mart said this week that it plans to dramatically increase the number of surprise inspections it does at foreign facilities that it uses to manufacture a wide variety of products that it sells. The company said that the move is intended to insure that these suppliers are living up to the company’s standards for labor and environmental conditions.

    The announcement follows up a broad promise along these lines made last year by CEO Lee Scott.

    The company said that roughly 20 percent of all inspections done last year were unannounced, and that it would raise that number to 30 percent this year. In 2004, only eight percent of inspections were of the “surprise” variety.
    KC's View:
    This move is indicative of how Wal-Mart is trying to rehabilitate its reputation in certain areas in the hope that it can reduce some of the legislative pressure and litigation it has been facing over its policies. Of course, not everyone will be satisfied, nor will everyone believe that Wal-Mart is sincere in these efforts.

    The only thing that will satisfy many people will be a track record of consistent and positive performance, not announcements and promises. Rightly or wrongly, when it comes to these issues Wal-Mart cannot really afford any missteps; any mistake will be interpreted as disingenuousness and institutional hypocrisy.

    Which is probably why it needs to put the PR staff on a “war footing.”

    Published on: March 30, 2006

    The tourism committee of the Florida House of Representatives has approved a proposal that would make key lime pie the official state pie.

    However, this proposal – backed by interests that believe key limes reflect positively on the state’s citrus industry – is hardly going to fly through the legislative process. Published reports say that the key lime pie designation is opposed by varying lobbies that are supporting either pecan pie or strawberry pie.

    And, there are reports that there may be support brewing for either the sweet potato pie or the chicken pot pie, according to United Press International.
    KC's View:
    It is these kinds of stories that make us wonder about the absurdity of modern democracy.

    Listen, we happen to be a pie fanatic. And key lime is our favorite kind of pie.

    But the idea that the Florida legislature, or any legislature, would actually spend a moment of time debating this sort of questions is not just disquieting, but dispiriting.

    If these clowns have so little on their plates that they can spend valuable time and money focusing on this nonsense, we have a suggestion that will actually serve both taxpayers and democracy.

    Shut up, turn out the lights, lock the doors, and go home.

    The republic will survive. Trust us.