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    Published on: May 8, 2007

    Southern California-based Unified Western Grocers has signed a letter of agreement to acquire Associated Grocers of Seattle. Terms of the deal were not disclosed, is conditional on the successful completion of due diligence, and is expected to close by the end of the third quarter. When concluded, the deal will create an entity with more than $4 billion in annual sales.

    "This transaction benefits both organizations," said Alfred A. Plamann, president/CEO of Unified Western Grocers. "Both companies are structured as cooperatives, both have a long history of successfully serving and supporting the growth of independent grocery
    retailers throughout the Pacific Northwest and both organizations and their shareholders can greatly benefit from the efficiencies and synergies that will result from a combination of these two companies.”

    John Runyan, president/CEO of Associated Grocers, said, "The changes and progress we have made in strengthening both retail and wholesale businesses will now be enhanced by bringing together the best of both companies. Combining AG's and Unified's strengths will create a very competitive grocery industry force for independents in the Western United States."

    Since joining Associated almost two years ago, Runyan and his staff have been engaged in the process of evaluating the various strategic options available to the wholesaler. The company recently concluded a sale/leaseback of its headquarters and warehouse facilities as part of that process.
    KC's View:
    If this is indeed a move that strengthens the competitive position of independents on the west coast – and we have no reason to doubt it – then we applaud the move. And if one thing seems sure, it is that the estimable Runyan drove a hard and strong bargain for Associated Grocers.

    Published on: May 8, 2007

    Published reports say that the management team that was interested in making a bid to acquire the 66-store Farmer Jack chain from the Great Atlantic & Pacific Tea Co. – which has been trying to sell the Midwest chain in order to focus on its core east coast business – has decided not to pursue a deal.

    The reason: market conditions simply made an acquisition unpalatable.
    KC's View:
    It is tough to sell damaged goods. Of course, that creates issues for A&P as it tries to divest certain operations, because pretty much all it owns these days is damaged goods.

    Published on: May 8, 2007

    Bloomberg reports that departing Ahold CEO Anders Moberg has tried to defuse speculation that the company will merge with or be acquired by Delhaize by saying that the company plans to remain independent. Furthermore, he says, Ahold hasn’t received any offers for its US businesses – except, of course, for its US Foodservice division, which has been sold to a private equity group.

    “Our main objective is of course to stay independent and try to create as much shareholder value as we can that way,'' Moberg tells Bloomberg, though he concedes that the company would “consider” offers if they created more shareholder value.

    Moberg says that some of the proceeds from the US Foodservice sale may be used to make an acquisition, though he declines to be specific about targets.

    Finally, Moberg confirms to Bloomberg that when he leaves Ahold in July, he will become CEO of Majid Al Futtaim Group, a Dubai-based shopping-mall developer.
    KC's View:
    We still think that at the very least, Ahold’s US businesses are going to be sold at some point. It just seems to make sense, and with the right new ownership, the US operations could get some revitalizing.

    As long as they’re not sold to, say, A&P.

    Published on: May 8, 2007

    Whole Foods announced yesterday that it will launch a weekly online cooking show entitled “Secret Ingredient,” which will be available on its website as well as on iTunes and The program will feature foods that are exclusive to Whole Foods Market or are special because they meet the company’s quality standards

    "We hope to deliver inspiration," said Scott Simons, the new program’s host. "Because we focus on only one ingredient per episode, viewers really get to know the featured item and take away practical cooking tips and recipes. Top that off with easy yet tasty meal solutions and Secret Ingredient is a home cook's treasure."

    The first episode, for example, features farm-raised catfish, raised without antibiotics in a pristine, controlled environment. Using the fish, Simons delivers a recipe for Thai-inspired fish tacos.
    KC's View:
    We love the concept and we love the multitude of channels through which it can be downloaded. We also wouldn’t be surprised to see it playing on flat screens in Whole Foods stores around the country…which would be a smart and individualized use of such technology to build the brand.

    Published on: May 8, 2007

    As previously reported here on MNB, Al Gore – the former vice president of the United States, environmental advocate, Oscar winner for his “An Inconvenient Truth” documentary, and a possible candidate for the 2008 Democratic presidential nomination – decided at the last minute to bail out of his long-scheduled keynote address to the annual Food Marketing Institute (FMI) Show in Chicago on Sunday morning.

    Specifics were not given for the cancellation, except for “personal reasons.”

    Well, the San Antonio Express-News reports on where Gore was…at least, on Saturday, when he spoke to the American Institute of Architects national convention there.
    KC's View:
    We checked, and it is only about 1200 miles from San Antonio to Chicago. There are plenty of flights, and you can actually drive it in less than 18 hours. (Fourteen hours if you have NJ Gov. Jon Corzine’s driver, and 12 hours if you can get that crazy woman astronaut to do the driving.)

    FMI’s Michael Sansolo joked from the stage on Monday that, perhaps referring to Gore’s size, the former vice president couldn’t give the speech because he had to run in the Kentucky Derby and had come in 16th.

    We think he got it wrong. If Gore had run in the Derby, he would have come in first, but it wouldn’t have mattered.

    By the way, big applause to the Express-News, which writes: “On the request of Gore's media handlers, Saturday's event was closed to the media. Because of the importance of the issue and Gore's status, the San Antonio Express-News chose to cover it anyway.”

    Good for them.

    Published on: May 8, 2007

    Promo reports that PepsiCo has launched a new advertising campaign in which it is promoting Diet Pepsi, and timed it to coincide with “a massive sampling campaign during the day that put 3 million cans of the updated Diet Pepsi into consumers’ hands in cities across the U.S.” The theme of the campaign is the claim that Diet Pepsi has more taste than Diet Coke.

    And Newsweek reports that this week, Coca-Cola is rolling out “a new version of Diet Coke with added vitamins and minerals. Blue-capped bottles of Diet Coke Plus will begin showing up in stores this week, empty of calories but containing 10 to 15 percent of the daily requirement of niacin, zinc, magnesium and vitamins B6 and B12. It isn't meant to replace Diet Coke, now the third best-selling soft drink in America, after Coke Classic and Pepsi; it's just a part of Coke's plan to conquer the world by making so many kinds of soda that stores won't have room for anything else.”
    KC's View:
    For the record, we tasted Diet Coke Plus this week at the FMI Show, and thought it was good…and also guilt-free. So we’d judge that a win.

    As for Pepsi, we don’t know what products Pepsi might have wanted to sample, because for the first time in memory, the company did not have a booth at FMI.

    Published on: May 8, 2007

    • Wal-Mart announced that it is investing in a pilot project that will determine the feasibility of using solar power for its stores. The test will buy solar power from three solar providers and use it to provide as much as 30 percent of the power for 22 stores in California and Hawaii.

    "We are taking aggressive steps towards our goal of being supplied by 100 percent renewable energy," said Kim Saylors-Laster, vice president of energy for Wal-Mart. "The pilot project is yet another example of Wal-Mart's commitment to making decisions that are good for business and the environment."
    KC's View:

    Published on: May 8, 2007

    The East Bay Business Times reports that Safeway CEO Steve Burd is saying that the company’s O Organics private label line generated sales of $162 million last year.

    The line consists of 200 SKUs, and Burd says that the company is happy with the performance of the products.
    KC's View:

    Published on: May 8, 2007

    The Chicago Tribune reports that Sears/Kmart chief Edward Lampert has told his investors that “he's serious about being a retailer and for the first time outlined a marketing vision for his two store brands, a basic step forward for any chain trying to remake itself.”

    Lampert, a hedge fund billionaire who acquired and combined the two storied retailing names two years ago, until now has been believed to be more interested in the companies’ real estate than in actually being a retailer.

    The Tribune writes, “Sears is aiming to be a one-stop shop for the home, while Kmart is turning its discount stores into a ‘marketplace of discoveries,’ Lampert's chief marketing officer, Maureen McGuire, said as Lampert looked on.

    “Sears unveiled a new TV advertising campaign called ‘Sears. Where it Begins.’ that taps into the store's legendary Big Book catalog heritage. In it, actors walk among the pages of Sears catalogs, looking at larger-than-life images of everything from diamond rings to dishwashers, set to sunny, upbeat music.

    “Kmart's new ad campaign likewise delves into its past. The discount chain has resurrected its ‘blue light special,’ turning the famous tagline into a talking blue light bulb called ‘Mr. Blue Light.’ The bulb advises shoppers to ‘turn on’ to something new.”
    KC's View:
    We don’t want to be overly harsh here, especially because we haven’t seen the ads.

    But this just sounds awful.

    If we have to pit Mr. Blue Light against Mr. Smiley Face, we’re guessing the fight doesn’t go three rounds.

    And while we understand the impulse to mine both companies’ histories in marketing campaigns, we think that the problem for both Kmart and Sears has been that they are mired in the past, as opposed to creating stores and strategies that are relevant for the future.

    One good sign, though, is that Sears plans to double the number of Lands' End stores within Sears this year to 200. We think that this is a smart move, and that Lands’ End has far more consumer credibility and relevance than either the Sears or Kmart names.

    Published on: May 8, 2007

    Starbucks announced yesterday that it will eliminate all artificial trans fats from the foods and beverages sold in its US stores by the end of the year.

    Not that these products will be exactly trans fat-free. The company said that when uses ingredients with trans fats, they will be naturally occurring trans fats, such as whipped cream, eggs, butter and whole milk.

    "No longer using artificial trans fats in products sold in our stores allows us to take out ingredients like partially hydrogenated oils that have no health benefit, while retaining high quality and great tasting natural ingredients," Denny Marie Post, senior vice president of Starbucks ' global food and beverage unit, said in a statement.
    KC's View:

    Published on: May 8, 2007

    Redux Beverages, the Las Vegas company that markets an energy drink called “Cocaine” that features a label spelling out the name of the product in what appears to be white powder, said yesterday that the beverage will be pulled from store shelves nationwide.

    The decision follows a warning issued by the US Food and Drug Administration (FDA) that the drink was being illegally marketed as a street drug alternative. Redux already had agreed to pull the drink off the market in Illinois and Connecticut, and a Texas judge had ordered its removal there.

    "What we would like to do is continue to fight to keep the name because it's clearly the name that's the problem," says Clegg Ivey, a partner in company. "What we can't do is distribute our product when regulators in the states and the FDA are saying that if you do this, you could go to jail."

    The company reportedly will come up with a new name for the beverage and try to get it back on store shelves within a few weeks.
    KC's View:
    These guys are so tone-deaf that the new name will probably be something like “Heroin.”

    But for the moment, at least, the right result has been achieved…even if the guys who own the company are only doing it because they’re being forced to.

    Which sort of makes the whole “tone-deaf” argument.

    Published on: May 8, 2007

    CNN reports that the US Department of Justice has concluded its antitrust investigation into the proposed acquisition by Smithfield Foods of Premium Standard Farms, which would merge the nation’s two biggest hog producers. Investigators said they would not object to the deal, noting that there was plenty of competition in the category and that the deal shouldn’t hurt anyone.

    BrandWeek reports that PepsiCo is licensing its Aquafina brand name to a cosmetic company that will develop a skincare line called Aquafina Advanced Hydration RX.

    • Published reports say that Aldi plans to open in Rhode Island with its first store there, to be located in Cranston.
    KC's View:

    Published on: May 8, 2007

    …will return.
    KC's View:

    Published on: May 8, 2007

    When Sun Capital needed a new CEO for Marsh Supermarkets, it turned to Samuel J. Associates – the best kept secret in the executive search business and a firm that is committed to an intimate understanding of retailing and manufacturing.

    Food industry companies looking for thought leaders at virtually all levels turn to Samuel J. Associates.

    Companies such as Price Chopper, Weis Markets, DVDPlay, and Dole. And so should you.

    Samuel J. Associates’ consultants are food industry executives who manage each assignment personally, and who have fostered relationships that go beyond the “placement process”.

    We don’t just place “titles” – we place PEOPLE.



    For more information, go to:
    KC's View: