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    Published on: October 17, 2006

    PORTLAND, Oregon – In his keynote address last night to the Portland State University Food Industry Leadership Center (FILC) 2006 Executive Forum, Supervalu president/COO Mike Jackson drew a direct line between the health of his company and the increasing need to offer consumers healthy choices.

    Describing consumers as alternately – and sometimes simultaneously – as discerning, demanding, distracted, more price conscious and increasingly interested in organic, natural and ethnic foods, Jackson said that “determining the right mix is critical.” And noting that “nearly eighty percent of shoppers say they have shopped five-plus banners in the past three months,” Jackson said that in acquiring most of Albertsons’ retail operations across the country, the company is “actively shaping its future and positioning itself to succeed.”

    Sustainable success, Jackson said, “requires a multifaceted approach” that includes diversity of format, a strong supply chain, and empowered people – and he said that achieving and maintaining all three form the essence of Supervalu’s strategy.

    In doing so, Jackson said, Supervalu will continue to offer health solutions in its new and remodeled stores, offering health-related information services, products and convenience through innovations such as its Sunflower Markets limited assortment and value-driven natural/organic format, its “Wild Harvest” store-within-a-store format that was developed by Shaws and now is being expanded throughout the company, and its use of in-store health clinics, which Jackson said was a concept that Supervalu actually began using back in 2000.
    KC's View:
    Hard to argue with anything that Jackson said. We actually think that it is fairly enlightened for a company the size of Supervalu to draw a direct line between the long-term health of its retail operations and providing healthy solutions for customers.

    The biggest challenge, we expect, will be the people side. Building new stores, remodeling old ones and making sure that the supply chain is both strong and efficient will be easier to do than hiring and empowering the right people who can really make a difference to the in-store experience. It’s not impossible – just harder. Because we think that to really compete in the health solutions arena means adopting, at least to some degree, the approach taken by companies such as Whole Foods, where the workers live the life, seeing their jobs in grander terms than just a place to pick up a paycheck.

    Published on: October 17, 2006

    According to estimates by the US Census Bureau, the population of the United States this morning passed the 300 million mark.

    It is, of course, just an estimate.

    But the event comes less than four decades after the nation’s population passed 200 million. Because of a slight slowing in the birth rate, it is expected that the nation will pass the 400 million mark in about 44 years.

    According to the US Census Bureau, there is one birth in the United States every seven seconds, one death every 13 seconds, and one immigrant coming into the US every 31 seconds.
    KC's View:
    The good news for the food industry - all 300 million have to eat.

    The bad news is that checkout lines are only going to get more crowded.

    But seriously, the nation has to think about the continued stresses that this growth is going to put on the nation’s health care system…especially if obesity rates continue to be what they are.

    Published on: October 17, 2006

    Advertising Age writes that “after a stupendous start, organic foods are looking suspiciously like a sensation sizzling out,” suggesting that it is a short-term fad without the consumer support that would be necessary to make it a long-term trend.

    The reason: price. Ad Age writes, “Organics are a $14 billion business with a brisk growth rate, but they account for only 2.5% of total food sales despite hundreds of millions spent by major marketers in the past 12 months to make them mass. Some marketers are spending more to introduce organic versions of mainstream foods than they are earning from sales of organics, as consumers balk at paying double the price for organic versions of their favorite products. It's all mounting evidence that the trend, like the low carb craze before it, is hurtling toward a crash.”

    Ad Age argues that only Wal-Mart has tried to make organics affordable to the masses, and that many other players seem to be operating under the premise that consumers can be induced to spend significantly more money for organics, when what shoppers really want are organic options that are affordable.

    Meanwhile, Advertising Age also reports on the backlash against Wal-Mart because of its stated commitment to organic foods, with opponents saying that the retailer is only interested in having products on the shelf that say “organic,” and has no real commitment to organic standards. It is, essentially, a David vs. Goliath argument, with some saying that “real” organic farmers and retailers need to be small, and that large companies will only subvert and eventually destroy the category.
    KC's View:
    It is an interesting argument advanced by Ad Age, though we think it is way too early in the process to suggest that a segment of the business generating annual sales increases in double digits is essentially flawed. We’re also not buying that small is necessarily better or purer than big. We do think, however, that marketers have to be careful not to kill the golden goose/cow/whatever, and that standards must be adhered to religiously.

    The Natural Marketing Institute has said that its research indicates that consumers are far more interested in organic attributes than in the organics themselves. Which would suggest that the broad consumer commitment to organics is hardly a bedrock principle, and needs to be carefully nurtured by retailers and manufacturers. No matter what their size.

    Published on: October 17, 2006

    The Chicago Tribune reports that the chic Andersonville neighborhood on Chicago’s North Side is considering pushing for a ban on all chain retailers. While there are some in the area right now that would be grandfathered – like a Starbucks and an Einstein Bagels – the concern is that as the =neighborhood gains in popularity, it could bring an inevitable influx of stores with names like Gap and Borders…which some feel would hurt both the feel and the reality of the historic neighborhood.

    Mayor Richard Daley has not yet taken a position on such an ordinance – which theoretically would make it possible for any and all neighborhoods to seek such protection from chain stores. But Chicago has been a hotbed of debate about the role of chain stores in recent months. It was only last month that Mayor Daley vetoed legislation that would have created by the year 2010 a $10 per hour minimum wage and $3 per hour in mandated health benefits for employees of big box stores – a veto sustained by a vote of the Chicago City Council in the face of enormous political pressure from both sides of the issue. Wal-Mart plans to build at least five and perhaps as many as 20 stores in the city…though this new proposal suggests that it isn’t out of the woods yet.
    KC's View:
    Complicated place, Chicago. This story is not going to go away, as the various parties keep looking for angles.

    Published on: October 17, 2006

    Wal-Mart reportedly is close to acquiring the Chinese hypermarket chain Trust-Mart for $1 billion (US), a deal that, if approved by Chinese regulators, would give the company ownership of the biggest food and department store company in China.

    Wal-Mart currently has 66 stores in China, and has said that it plans to add between 18 and 20 in the coming year. But this new deal will allow the company to make a quantum leap – according to the Wall Street Journal, Wal-Mart would acquire 31 of Trust-Mart’s 100 stores immediately, and then will get ownership of the remaining units over a period of three years.

    Wal-Mart is not commenting on the reports.
    KC's View:
    Wal-Mart is sort of like a shark. It has to keep moving forward, or it dies.

    And it has no intention of dying.

    The importance of China in Wal-Mart’s plans is highlighted by a point made this morning by the Wall Street Journal, which notes that expanding in China means that the retailer will have to accept that dealing with organized labor is a fact of Chinese life.

    Published on: October 17, 2006

    A US District Judge has approved an agreement between Kroger-owned Ralphs Grocery Co. and the government that will have the retailer paying $70 million to settle charges that it rehired hundreds of striking workers during the 2003-2004 labor action and then paid them under fake names and Social Security numbers.
    KC's View:

    Published on: October 17, 2006

    The Washington Post reports that the US Food and Drug Administration (FDA) is expected by the end of the year to approve the marketing and human consumption of food products made from cloned animals.

    The decision, according to the Post is consistent with both past studies and new data “indicating that milk and meat from cloned livestock and their offspring pose no unique risks to consumers.”

    If the decision indeed is rendered by FDA, it would come just weeks after the Humane Society of the United States petitioned FDA to establish a moratorium on the development of food made from cloned animals, saying that too many questions remain about ethical, cruelty and public health issues.
    KC's View:
    As long as products from cloned animals are clearly labeled, we have no problem with them coming on the market. But in the interest of truth in marketing, they must be clearly labeled.

    Published on: October 17, 2006

    The Walt Disney Co. announced yesterday that it will begin serving more nutritionally balanced meals in its theme parks, adhering to the following standards:

    • A cap on calories that results in appropriate kid-sized portions.
    • Total fat will not exceed 30 percent of calories for main and side dishes and 35 percent for snacks.
    • Saturated fat will not exceed 10 percent of calories for main dishes, side dishes and snacks.
    • Trans fats will be banned from all foods served in the company’s theme parks
    • Added sugar will not exceed 10 percent of calories for main dishes and side dishes and 25 percent of calories for snacks.
    • Disney will continue to license special-occasion sweets such as birthday cakes and seasonal candy as part of its product range but will limit the number of indulgence items in its licensed portfolio to 15 percent by 2010. • In addition, most special-occasion sweets will be available in single-serving packets.
    • Kid's meals at Disney theme parks will be served with low-fat milk, 100 percent fruit juice, or water, along with side dishes such as apple sauce or carrots in place of French fries and soft drinks.

    Disney CEO Robert Iger described the move as “the right thing to do,” and said that the child-friendly company is “well aware of the huge responsibility we have, given our reach and our ability to impact people's behavior and opinions.”

    In addition, Iger said that Disney will in the future only sign movie and other endorsement deals with restaurants that limit fat and sugar content in menu items.
    KC's View:
    This is a smart, “get ahead of the wave” move. It accepts responsibility, and we think, in the long run, it will be good business.

    Published on: October 17, 2006

    The Pittsburgh Post Gazette reports on the increasing popularity of energy drinks, which have been around for a decade but now have created a jam-packed category. “Last week, there were almost 100 brands of these sugary, highly caffeinated concoctions on display at the Las Vegas convention of the National Association of Convenience Stores,” the Post Gazette writes, noting that “new brands are popping up constantly, some containing 100 or more milligrams of caffeine, as much as a 6-ounce cup of brewed coffee, and three times as much as a cola soft drink. Energy drinks also contain stimulants such as ginseng and taurine.” In addition, “Not only is the number of drinks growing, so is the size of each container. They're often found in 16 and 20 ounces, packing an even more potent punch of caffeine and sugar.”

    The other reality is that as more such drinks come onto the market in bigger and bigger containers, the age of the people drinking them is getting younger and younger…creating health concerns about what all these adrenaline-generating drinks may be doing to young bodies.
    KC's View:
    We continue to believe that this category is headed for an enormous crash when somebody completes a scientific study examining the long-team health impact of energy drinks.

    That said, there is an appeal. While we’ve never had a Red Bull, there have been times during the past 10 or 12 days during our travels that having one seemed awfully good tempting.

    Published on: October 17, 2006

    Arkansas Business reports that Wal-Mart “plans to revamp its in-store advertising network with advertising targeted to specific departments within its stores.” The upgraded in-store TV network reportedly “will include more than 100,000 flat-panel, eye-level plasma screens that will deliver product messaging tailored to key departments and customer segments. And endcap display channels will demonstrate the benefits of the products carried on specific aisles.”

    • The Associated Press reports that Dee Breazeale, who managed the luxury goods division for Wal-Mart’s Sam’s Clubs when it was hit with a lawsuit charging it with selling counterfeit Fendi handbags, has left the company for undisclosed reasons.

    Breazeale’s name was in the press recently when she was named by the retailer to serve on the advisory council to the National Gay and Lesbian Chamber of Commerce, which Wal-Mart recently joined even though it annoyed some of its core constituencies.
    KC's View:

    Published on: October 17, 2006

    Drug Store News reports that Costco has pledged to match Wal-Mart’s $4 price on monthly supplies of selected generic prescription medicines in its Florida stores.

    • Lester Crawford, the former head of the US Food and Drug Administration (FDA), reportedly has agreed to plead guilty to a pair of misdemeanor charges saying that he failed to disclose stock ownership that violated the FDA’s conflict of interest rules.

    Crawford resigned in September 2005, just two months after the US Senate confirmed his appointment by President Bush to the job.

    • The Wall Street Journal speculates that after a rough patch that has lasted several years, Coca-Cola Co. seems ready for a rebound…and that its immediate prospects may be tied to the reception given to Enviga, the new green tea-based beverage developed by Coke and Nestle that burns calories and that will be introduced to the public early next month.

    Advertising Age reports that PepsiCo “is readying a big-budget, epic ad campaign themed ‘Feel the Pepsi’ that aims to recapture the flavor of the iconic ‘Catch That Pepsi Spirit’ ads of the late 1970s.”

    • Published reports say that Supervalu Inc. has agreed to grant CEO Jeff Noddle 305,157 in restricted stock options as "an incentive to retain his services with the company” through 2011, based on his meeting “certain performance conditions.”

    • Published reports say that the British government, concerned about binge drinking especially among young people, plans to mandate that all bottles of alcohol carry tobacco-style health warnings.
    KC's View:

    Published on: October 17, 2006

    Interesting story on about what to wear to a job interview. “We may work in a world of corporate casual, but that doesn't extend to all job interviews,” Forbes writes. “Despite a recent Yahoo! Hot Jobs survey that reported 25 percent of HR managers think wearing a suit to a job interview is too formal, the bosses and experts we talked to strongly disagreed,” and said that a jacket and tie is a requirement if a prospective executive wants to be taken seriously and hired.

    This isn’t always the case, of course, and job applicants are encouraged to ask about appropriate attire before going to the interview. But the intriguing thing is that human resources managers aren’t necessarily in tune with the top executives for whom they work.
    KC's View:
    We probably found this story to be more interesting because we’re at Portland State University right now, preparing to serve as moderator/emcee for the Food Industry Leadership Center (FILC) 2006 Executive Forum…and looking forward to spending plenty of time with the students.

    While we would tend to agree with the idea that it always is better to err on the side of caution when going for a job interview, dressing too formally rather than too casually, we also think that the people doing the hiring need to lighten up about such issues.

    Someone told us recently about a guy who interviewed with a major chain for a job working in an in-store wine department. He was a veteran who had served with distinction in Iraq, he was educated in the subject of wine and was passionate on the subject, and he demonstrated a finely-honed sense of responsibility. He did not, however, get the job – because he was reluctant to shave his goatee, and the company has a policy of no facial hair. In other words, this major chain would rather hire someone who was less knowledgeable and passionate about the subject if he or she did not have a beard.

    While a company has a right to maintain standards about personal appearance, we’re living in the 21st century here, and we think there ought to be a room for a little more latitude.

    Published on: October 17, 2006

    …will return.
    KC's View:

    Published on: October 17, 2006

    In Monday Night Football action, the Chicago Bears recovered from a 20-point deficit at halftime to defeat the Arizona Cardinals 24-23.
    KC's View:

    Published on: October 17, 2006

    Looking for a sure-fire recipe to differentiate your produce department from the next guy’s?

    Pro-Health Potatoes are healthier and plumper than the average potato, because we grow the majority of our potatoes on virgin soil. Pro-Health Potatoes offer shoppers consistent sizing and consistent quality – and, by moving beyond a commodity-based approach to this category, Pro-Health offers retailers the ability to differentiate their produce departments by addressing the twin issues of health and convenience.

    And now, exclusively for MNB users from Pro-Health Potatoes – recipes that you can use for in-store fresh food offerings, or that you can offer to your shoppers for at-home use.

    Just send an email to Alan Bradshaw - - and write “Recipes” in the subject line, and we’ll shoot you back some dynamite recipes that are proven winners.

    And, for more information about Pro-Health Potatoes, go to:

    Pro-Health Potatoes: The Official Potato Of!
    KC's View: