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    Published on: July 21, 2006

    The US Department of Agriculture (USDA), having completed an internal study of testing procedures for bovine spongiform encephalopathy (BSE), better known as mad cow disease, plans to proceed with its previously announced intention of cutting back on testing, to about 40,000 cattle per year – or 110 per day - with ongoing re-evaluations to make sure the testing levels are correct.

    Since the first case of mad cow disease was discovered in the US in late 2003, USDA has been testing about 1,000 cows a day – or about one percent annually of the 35 million cattle slaughtered in the US. Before that, USDA tested about 55 cows each day.

    There have been three cases of mad cow disease identified in the US, and USDA Secretary Mike Johanns has said that he believes that there are no more than seven cases in the US in total. In a prepared statement this week, Johanns said, “It’s time that our surveillance efforts reflect what we now know is a very, very low level of BSE in the United States.” And, he said, "There is no significant BSE problem in the United States, and after all of this surveillance, I am able to say there never was.”
    KC's View:
    We’ve about exhausted the number of ways in which we can call these conclusions ludicrous.

    Just because they’ve only found three BSE cases doesn’t mean there aren’t many, many more. We continue to believe that we ought to be looking harder, not reducing testing levels.

    It will be interesting to see what happens if another case is found, or if a nation like Japan were to ban imports of US beef because of what it perceives as insufficient testing. Would USDA change its mind? And could USDA be fairly criticized then for responding to economic realities, as opposed to the legitimate concerns of citizens and some in the scientific community?

    Published on: July 21, 2006

    Forbes reports on the so-called “hidden costs” of the nation’s obesity crisis, which it describes as “immense.” According to the story, “Direct medical costs are easiest to calculate, coming in at $93 billion, or 9%, of our national medical bill. But there are other costs as well that are harder to pin down.”

    Among the most noteworthy costs – an estimated $4 billion lost each year when overweight and obese people miss work because of health problems related to their weight. And while most people don’t know it, overweight people get worse mileage from their cars, which costs them money, and airlines have to spend more money on jet fuel when their planes carry overweight people.

    “There's a tremendous social cost to obesity,” David Allison, an obesity researcher at the University of Alabama at Birmingham, tells Forbes. “Obese people are less likely to be given jobs, they're waited on more slowly, their less likely to be given apartments, they're less likely to be sent to college by their parents.”

    Researches tell Forbes that there doesn’t seem to be much incentive for employers to deal with workers’ weight problems, simply because “the average employee only stays at a job for 4.5 years, and it actually takes far longer for health problems due to being overweight to emerge.”

    At the same time, USA Today reports that “women who are overweight or obese at 18 are at a greater risk of dying in middle age than women who stay at a healthy weight in their teens,” with “the most common medical cause of death was cancer (including breast, colon, endometrial and kidney cancer), followed by heart disease.”
    KC's View:
    We’d like to say something profound about these stories, but we can’t get past the fact that a 400-ton airplane actually gets worse mileage because of the weight of the people on board.

    Published on: July 21, 2006

    The Boston Herald reports that certain truisms of competition may, in fact, be more illusion than fact.

    A new study conducted by the Center for the Study of Services in Washington, D.C., and reported in the Herald slams New England’s new biggest chains – Stop & Shop and Supervalu-owned Shaw’s – as being significantly more expensive on average than smaller chains owned by Delhaize-owned Hannaford Bros. and Demoulas Super Markets.

    Hannaford and Demoulas were said to be 12 to 25 percent cheaper than either Stop & Shop or Shaw’s.

    In addition, the center criticized Shaw’s and Stop & Shop for zone pricing differences that it said went beyond the usual.

    “This is quite unusual to have this much variation within a metropolitan area,” Robert Krughoff, president of the consumer center, tells the Herald. “The safe message here is, no matter which Shaw’s or Stop & Shop you’re shopping at now, you’ll save a lot by shopping at Demoulas or shopping at Hannaford.”

    The sole bit of good news for the big chains was that Whole Foods was said to be even more expensive than either of them, by more than 25 percent on average.

    Of course, grocery shopping in Boston is no picnic. In a study of multiple cities, only San Francisco was said to be more expensive to shop for food in than Boston.
    KC's View:

    Published on: July 21, 2006

    The Sacramento Business Journal reports that the US District Court in San Francisco has sided with Albertsons in the ongoing battle with Grocery Outlet over the Lucky brand name.

    The battles began last April when Grocery Outlet used the Lucky banner on one of its newly renovated stores in Rocklin, California, saying that because Albertsons hadn't used the name for six years it no longer had legal rights to the name. Grocery Outlet cited federal law, saying that companies that do not use trademarked names for three years then lose exclusive rights to those trademarks.

    A federal judge in San Francisco denied Albertsons a temporary restraining order that would have kept Grocery Outlet from using the name, and Grocery Outlet has filed a lawsuit against the larger retailer charging it with trademark infringement and unfair competition.

    Now that a court has agreed with Albertsons’ argument that it never intended to abandon the Lucky brand, Grocery Outlet has covered up the “Lucky” banner on the Rocklin store, though it has said that it intends to file an appeal.
    KC's View:
    We’ve said from the beginning that regardless of the legal decisions, Albertsons’ cavalier treatment of the venerable Lucky brand name has been a reflection of the company’s seeming contempt for a brand that had real resonance for consumers….and, by implication, for consumers.

    It is a sad legacy for a proud retailing name.

    Published on: July 21, 2006

    • The Atlanta Journal-Constitution reports that while there has been considerable controversy and even a lawsuit over Coca-Cola’s willingness to abandon direct store delivery (DSD) in favor of warehouse delivery in isolated cases, in fact there are a number of examples of Coke making such a shift.

    The case that generated the lawsuit was when Coke agreed to ship Powerade to Wal-Mart warehouses, but there also reportedly are cases of Coke delivering Dasani water to various Costco warehouses, and Minute Maid juices to Valero Energy warehouses that service the company’s c-stores.

    HealthDay News reports that there seems to be little evidence that nutritional supplements and changes in diet can help cancer patients influence the course of their diseases, though it stresses that it is difficult to draw definitive conclusions based on studies done to this point, and that common sense seems to suggest that healthy eating is always better for you that unhealthy eating.

    The sole exception appears to be breast cancer, which seems to respond to certain dietary changes.

    CBS-4 in Commerce City, Colorado reports on a new grocery store there, Rancho Liborio, that says it will offer the freshest poultry by slaughtering live chickens in front of customers at the store. “It is a service to the customer,” says Anthony Trujillo, co-owner of the Rancho Liborio, noting that the killing will take place via electric shock.

    According to CBS, “the USDA and the Tri-County Health Department have approved the poultry department. Officials with Commerce City's Planning Commission must give approval in September with the City Council set to take up the issue in October.
    KC's View:

    Published on: July 21, 2006

    • The Wall Street Journal this morning focuses on the pressures that are mounting on Wal-Mart senior management as they attempt to makeover the chain, an effort that seems to resulting in a decline for the company’s stock price.

    According to the Journal, “The world's largest retailer by sales is attempting a sweeping makeover aimed at paring its inventory and labor costs while enticing affluent customers, some of whom now buy groceries in its stores, to spend more in other areas. As part of that effort, Wal-Mart will remodel nearly half its U.S. stores over the next year. Pulling this off will be no small feat for a retailer with more than $300 billion in annual sales. Even Chief Executive Lee Scott has acknowledged that missteps may occur.”

    The problem for Wal-Mart is that all this activity creates a level of uncertainty, especially among stock analysts who question whether the chain is moving in the right direction – which, by their estimation, is anything that drives up the stock price. There is a split in the analyst community, according to the Journal, with some convinced that Wal-Mart is making a mistake by trying to remake so many stores at the same time and inevitably hurting same-store sales increases in the short term. Others, however, seem to feel that there is no good reason for Wal-Mart’s stock price to be declining – other than an overreaction by some analysts.

    • Published reports in India say that Wal-Mart is negotiating with a local real estate company to possibly franchise its retailing format there, allowing the opening of perhaps as many as 100 stores that would be owned by the Indian company but with Wal-Mart handling logistics and operations.
    KC's View:

    Published on: July 21, 2006

    • Safeway Inc. reported second quarter net income of $246.2 million, up from $134 million during the same period a year ago. Sales for the quarter were up 6.4 percent to $9.4 billion, with same-store sales (excluding fuel sales) up 4.2 percent.

    • The Great Atlantic & Pacific Tea Co (A&P) posted a first quarter net loss of $6.1 million, a major improvement over the net loss of $89.2 million posted during the same period a year ago. Sales were down to $2.13 billion, compared to $3.38 billion a year ago, though the year-ago figures included sales by A&P Canada, which has since been sold. Q1 same-store sales were up 1.5 percent.
    KC's View:

    Published on: July 21, 2006

    Yesterday’s MNB Radio commentary referred to a minor league baseball team that is polling the fans via the Internet to manage the team on a day-to-day basis – a pure example of listening to customers. But MNB user Murray Raphel reminded us that this was a decision with a history:

    As the French say, "Plus ca change plus c'est la meme chose" And for those non Francophiles it's says, "The more things change the more they remain the same.”

    The originator of this idea was Bill Veeck, the non-traditional owner of major league teams including the Cleveland Indians, St. Louis Browns and Chicago White Sox. He did many zany ideas to increase attendance at his ballpark and we wrote a chapter on him in our first book "The Great Brain Robbery.”

    Among his innovative achievements: Signing Larry Doby as the first African-American in the American League. He received 20,000 letters complaining of this decision -most violent and obscene. He answered each one including a paragraph congratulating each correspondent on being wise and fortunate enough to have chosen parents of correct color and beyond prejudice. He was the first to use the exploding scoreboard, the first to have player's' names printed boldly on the
    back of their uniforms and will be forever remembered as the owner who sent a midget up to bat. AND..he was the first to have the grandstand attendees used as managers to call the plays. Veeck provided huge hand held billboards saying, "Yes" or 'No" which fans held aloft to direct the player to hit, steal, bunt.

    By the way--the team won that night.





    Responding to the decision by the courts to invalidate the Maryland law requiring employers with more than 10,000 employees to pay at least eight percent of their payroll costs in health benefits or be fined by the state. The Maryland law was pushed by organized labor and pro-labor activists who complained that by not providing adequate health care coverage, certain employers were forcing workers to go on public assistance, which was costing the taxpayers money. There are only eight companies in Maryland with more than 10,000 employees, and only one – Wal-Mart – reportedly fell beneath the eight percent threshold. Ahold-owned Giant Food, which has more than 10,000 employees in the state but pays more than the requisite amount in health care benefits, had supported the Fair Share Health Care Fund Act, saying that it created a level playing field.

    MNB user David J. Livingston responded:

    Employers with more than 10,000 employees had to pay at least eight percent of their payroll costs in health benefits or be fined by the state." So what is Wal-Mart suppose to do to with the difference between their actual health care costs and the 8%? Send their employees out of a weekly massage? Why punish Wal-Mart just because Ahold can't keep their costs in line? Why should Wal-Mart be fined because Ahold has mismanaged their health care costs?

    While we’re not sure we favor laws like these, we’re not sure we accept the premise that Ahold can’t get its health care costs in line – mostly because “in line” is a matter of perception. Ahold would argue that it provides its employees with decent and appropriate health care benefits and that companies like Wal-Mart are costing taxpayers – and Ahold – money.




    We continue to get email about the Senate investigation into Visa’s and MasterCard’s business practices.

    MNB user Frederic Arnal wrote:

    Adding to the list of outrageous business practices foisted on retailers by Visa & MasterCard is what is coyly referred to as "non-qualified sales". When a purchase is made using a business or a rewards card, the retailer is charged nearly double the normal processing fee... 4.6% versus 2.7%. What a rip! The merchant is subsidizing the extra benefits received by the card sponsor, the consumer and the credit card companies. This couldn't happen in a competitive climate.

    We wrote the other day that retailers should try to inform consumers about the hidden costs of MasterCard and Visa cards, and heard back from a number of people in the same vein.

    One MNB user wrote:

    Current M/C Visa agreements restrict the retailer from identifying and charging the customer using the card directly for the interchange , hiding the charge from the consumer and effectively passing these fees on to all customers whether or not they pay with a Master Card or Visa product. If the interchange charge had to be added to the bill, the banks could not hide the charges and customers could pass on using the card if they wanted to save a little money. The banks would be motivated to keep costs down.

    Another MNB user wrote:

    I like your idea, but the credit cards are one step ahead of you. Over the years, as they have gained more power they have added language to their agreements that prohibit retailers from offering cash discounts and revealing transaction fees to consumers.

    It is absurd that these companies have been allowed to create a business model that depends on keeping information from the customer. At the very least, the US Congress ought to force complete transparency on the credit card companies so that everyone knows what the charges are.

    In an open debate, could there possibly be a compelling argument against full disclosure?




    Every once in a while, we get an email that details for us a specific shopping experience, and that illustrates industry-wide problems that need to be addressed. This is just such an email:

    Last night I visited the Hen House in Leawood KS on the way home from work They had a new promotion in the store called “What’s for Dinner”. They had a meat loaf, salad, potato salad and a bag of rolls for $14.99. There was a very personable lady promoting the meal in a bag to customers passing her. I would say this is a weapon against fast-food suppers. I was impressed with the innovative idea. Wonder if they publish menus ahead of the day to help people with picky eaters decide before they come to the store.

    However, the rest of the shopping experience put me over the top in frustration. I went in to buy two items, a bag of mini-chocolate chips and a bottle of maraschino cherries for an office ice cream party today. I walked the store three times trying to find the cherries OR an employee to ask (I do not regularly shop at this store). I finally asked an ice cream vendor who was kind enough to go to the back room and ask someone there and return to me with “Aisle 4” information. Would you believe they were shelved above the olives? I looked near ice cream toppings, and also in the aisle where ice cream was stocked and found nothing. I tried fruit shelves and even walked in the condiments aisle where they were and had missed them.

    This is an extremely lovely, clean, pleasant store with a huge inventory and very helpful, courteous staff. If I had had the time, however, I would have left the store and shopped somewhere else to find the needed item.

    Stores need to address the issue of how to help a customer find needed items. I have recently made comments regarding this and they were published in your column. The problem continues.





    We also got an email regarding our coverage of Albertsons LLC’s decision to abandon online shopping:

    This article is EXCELLENT !!!! As a contractor whom job it is to lay off approximately 80 drivers who started in this three years ago working with Albertsons, the lack of commitment from store directors was a direct reason this failed.

    They still to this day, have not contacted the online customers letting them know what is going on.





    On the subject of “artificial aging” of wine and whether it should be clearly labeled on wine bottles (we think it should), we have received a number of emails.

    One MNB user wrote:

    Kevin, I am a proponent in all cases of proper product labeling, whether it be poultry from India or wine from Italy.

    BUT, anyone who purchases wine solely based on the label doesn't get it. They should be making their selection based on the flavor and enjoyment derived from the experience. That will be the ultimate test on this rush to maturity. If the public truly enjoys vintage wine, the tale will be told in sales and if successful, you can expect to see "August" rather than "2002"...


    Another MNB user wrote:

    I’ve come to know that you are a purest on all things wine and baseball. But come on… who wouldn’t want to spend half as much on a great tasting bottle of wine? Wood chips vs. a wood barrel seems like a very short jump in technology that will bring down costs by reducing the time spent aging, and after all isn’t barrel aging a process even if traditional?

    What might be next on the horizon?!?...Oak Barrel Extract? Gives lesser quality wines the customized flavor you’ve been looking for! Turns your 6-year old’s Welches into a gourmet affair! Next up “Helpful Hints” of Blackberry, Cherry, Black Pepper and Chocolate…

    Can’t we all just get along? They still sell Boones Farms that last time I checked.


    MNB user Glenn Ring wrote:

    I'm usually all about all things traditional where wine, beer and spirits are concerned. However, The nerd side of me says "I'd like to know more about this process and actually try some of the wine" before passing judgment. Seems to me they are merely speeding up the infusion process by suspending the chips in wine rather than just letting the wine set in a cask. Thereby increasing the contact area of the wine to wood ratio. Do we know this is a bad thing or do we just take offense to a change in craft technique? I say we go into full scale research, I'll bring the cheese.

    At the risk of sounding like a grumpy old codger, the problem with the modern world is that we don’t have standards – we accept the notion that everything can and should be done faster and bigger, that immediate gratification is better than patience. It’s why there is a designated hitter rule in the American League, and it is why crappy mindless movies get big audiences.

    We are reminded of the great scene (and there are many) in James L. Brooks’ “Broadcast News” (1987), in which Albert Brooks’ character of Aaron Altman explains why William Hurt’s handsome-but-dumb anchorman, Tom Grunick, is the devil:

    “Tom, while a very nice guy, is the Devil…What do you think the Devil is going to look like if he's around? Nobody is going to be taken in if he has a long, red, pointy tail. No. I'm semi-serious here. He will look attractive and he will be nice and helpful and he will get a job where he influences a great God-fearing nation and he will never do an evil thing... he will just bit by little bit lower standards where they are important. Just coax along flash over substance... Just a tiny bit. And he will talk about all of us really being salesmen. And he'll get all the great women.”
    KC's View:

    Published on: July 21, 2006

    Not to complain about the weather, but the heat in the New York-New England area has been beastly the past few weeks, punctuated by some of the most spectacular thunder/lightning/hail storms that I can ever remember. (Like the biggie that is happening outside my kitchen window right now…) But the best thing about such heat, other than it makes margaritas the perfect evening refreshment, is that it forces me to try new white wines that I’ve never had before…

    For example, my wine guy turned me on to two wines from St. Supery in the Napa Valley….

    • A 2005 Sauvignon Blanc, which had everything I love about this wine – a robust citrus flavor that goes great with spicy food.

    • And a 2005 Chardonnay, which was described to me as “oak free,” meaning that it was aged in stainless steel barrels instead of oak. This results in the chardonnay being less creamy and little more delicate – which I like.

    I haven’t abandoned red wines for the summer completely, though. I had a business dinner earlier this week at the Mesa Grill in New York City, and enjoyed a wonderful 2001 Artesa Pinot Noir from the Carneros district of California with my appetizer of a Blue Corn Pancake with barbecued duck and habanero chile sauce, as well as my Ancho Chile-Honey glazed Salmon with a spicy black bean sauce and roasted jalapeno crema.

    Yummm….

    Have a good weekend. I’ll see you Monday.

    Sláinte!
    KC's View: