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    Published on: January 17, 2008

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    Hi, I’m Kevin Coupe and this is MorningNewsBeat Radio, now available on iTunes.

    MorningNewsBeat Radio s brought to you by Webstop, your first stop for retail website design services.

    It was an interesting week at the Food Marketing Institute (FMI) Midwinter Executive Conference, especially because certain issues were addressed in a timely fashion.

    For example, there was a discussion of cloning, which happened as the Food and Drug Administration (FDA) was issuing its long-awaited, 968-page “risk assessment” saying that there is no evidence to suggest that consumption of cloned animals – or the progeny of cloned animals – will be harmful to human beings.

    And, there as a discussion of “aquaculture,” which does things like allowing scientists to adjust one gene in an Atlantic salmon and then breed fish that can grow to the point where they can be harvested in just 18 months instead of three years, which will help satisfy a growing need for fish even as the oceans are less able to satisfy needs. This discussion took place just as a story broke in the New York Times saying that fish has become so popular in Europe that a black market for fish as evolved.

    My biggest concern about such technologies has more to do with how the information is communicated to consumers. I know the presentations at FMI this week were designed to be business-oriented, but as I wrote earlier this week, they sort of reminded me of science classes that I had trouble passing 35 or more years ago. The food industry, not the scientists and technologists, has to be responsible for communicating with consumers about these advances. In the final analysis, consumers are going to hold retailers responsible, and likely will make buying decisions on such items based on how much they trust the retailer…so the retailer had better get it right, making sure its messages are transparent, complete and relevant.

    But let’s put technology aside for a moment. One of the reasons that I have enjoyed writing about the food business for the past two decades is that I love food – probably too much for my own good. And I think that most people love food, and associate food with memorable moments in their lives.

    One evening I was at a dinner, and the conversation turned to foods that people remembered and loved. One such place – Haven Brothers, which apparently is a hamburger joint housed in a truck that pulls up to City Hall in Providence, Rhode Island, every night of the year, departing in the early morning hours, serving burgers, hot dogs, lobster rolls and something called coffee milk – and has been doing so, in one form or another, for more than a century.

    Or Petridis Hot Dogs of Bayonne, New Jersey, which was described to us in loving enough terms to make me want to drive across the George Washington Bridge to New Jersey right now.

    Michael Sansolo was sitting at our table, and he had similar gastronomic memories. In fact, we share some of those memories because we grew up in the same town at the same time...though we didn’t know each other until we were in our thirties. For Michael, it is Sal’s Pizza in Mamaroneck, NY…which was never my favorite, but he still goes there when he’s in the area. We both have great memories of the great Walter’s Hot Dogs, which has been in Mamaroneck, NY, for more than 90 years. And I have extremely fond memories of the crumb cakes made by Mueller’s Bakery in Bay Head, NJ, where I used to go during the summer when I was a kid. In fact, just saying the word “Mueller’s” makes me smile and daydream a bit. The same goes for the cinnamon buns I used to buy for my kids at a place called Coffee An’ in Westport, Connecticut.

    My message here is simple. Cloning and aquaculture are terrific, and certainly are components of an ever-evolving future. But the food industry never should forget the magic – the primal, emotional connection that certain foods have for shoppers, that keep these same shoppers connected – often for a long, long time – to certain retailers.

    Because science can do a lot of things…but they’ll never be able to clone a really great hot dog, burger, or crumb cake.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    Did you know that you can subscribe to MorningNewsBeat Radio and have it delivered weekly to your computer? Just go to iTunes and type either “MorningNewsBeat” or “Kevin Coupe” in the subject bar…and then click on “subscribe.”

    KC's View:

    Published on: January 17, 2008

    Safeway Inc. announced yesterday that it has converted its entire US truck fleet – more than a thousand trucks - to cleaner-burning biodiesel fuel, a move that the company says will help it reduce carbon dioxide emissions by 75 million pounds annually, the equivalent of taking nearly 7,500 passenger vehicles off the road each year.

    “Safeway is proud to lead by example to help protect the environment,” said Safeway chairman/president/CEO Steve Burd. “Using biodiesel to power our transportation fleet will prevent millions of pounds of carbon emissions from being released into the environment. Our biodiesel program is just one of many initiatives underway that will make a positive impact on the environment.”

    According to a statement released by the company, “Safeway’s biodiesel program is just part of Safeway’s extensive Greenhouse Gas Reduction Initiative and the company’s overall effort to manage its carbon footprint, address climate change and reduce air pollution. The company has been recognized throughout the country for its dedication to using solar power, wind power, alternative fuels and construction strategies in conjunction with employee education and consumer outreach to reduce carbon emissions in the communities Safeway serves. In September 2007 the company was awarded the California Governor’s Environmental and Economic Leadership Award in the area of climate change.

    Safeway also took note of its other sustainability initiatives:

    • Being one of the largest retail purchasers of renewable wind energy in the US, purchasing 87,000 megawatts annually, enough to power its 300 fuel stations and over 50 stores.

    • Launching a solar power program to convert two dozen California stores to solar energy, which will help remove 10.4 million pounds of carbon dioxide from the air, the equivalent of taking 1,000 cars off the road annually.

    • Implementing unique energy-saving strategies in stores by installing new energy-efficient refrigeration technology and freezer systems and utilizing LED lighting to significantly reduce electricity usage.

    * Operating an extensive recycling program in which nearly 500,000 tons of materials are recycled each year, including cardboard, plastics and compostable materials. This is the equivalent of filling six football fields stacked 35 feet high. The company also offers reusable canvas bags to customers and has plastic bag recycling programs at many stores.

    KC's View:
    It seems to me that this is related to Safeway’s health care initiatives, because it is silly to nurture one’s personal wellness without tending to the health of the planet. These are issues best dealt with holistically – I think consumers respect it, and it is, quite simply, the right ting to do. Kudos to Safeway.

    Published on: January 17, 2008

    • In Arkansas, the Morning News has an interesting follow-up to the story about how Wal-Mart has decided to cut back on its once-weekly Saturday managers meeting - part entertainment and part hard-core business reviews - that dates back to the Sam Walton era. The frequency previously had been cut back to twice a month, in part because there were too many managers to fit into one meeting, and now it will be once a month, and managers “will gather down the road at Bentonville High School where a larger auditorium can house the growing crowd of department managers required to attend.”

    Not everybody thinks this is a bad idea, and there is considerable sentiment that Wal-Mart has outgrown the weekly meeting.

    However, the Morning News did an interview with Michael Bergdahl, who has written about Wal-Mart, and he said: "I believe if you want to understand Wal-Mart, the Saturday morning meeting is the culture personified. It's really larger than life. The Saturday morning meeting equals competitive advantage … I think the Sam Walton recipe for that culture is something nobody should mess with, and (Lee Scott, chief executive officer) messed with it, and it's done and changed forever.”

    KC's View:
    This is a tough one, and it in part reflects some of the cultural discussion we were having here on MNB last week after the management shakeup at Starbucks. It is one of the central challenges that leaders who at the top of growing companies must face – the need to keep positive corporate cultures intact, and yet still meet the demands of the marketplace. At the same time, cultures have to evolve, and they can do so without sacrificing essential values.

    It is a cliché, but in fact, only time will tell whether this decision reflects a larger dilution of corporate values, or whether it is a simple bow to the realities of size and scale.

    Published on: January 17, 2008

    PepsiCo announced yesterday that its Naked Juice division has signed a deal with Starbucks that will have its smoothies and juices sold in some 7,000 Starbucks coffee shops later this year.
    KC's View:
    One of the reasons this is worth noting is because of yesterday’s story about the Coca-Cola Research Council’s study drawing a road map for retailers to connect food with health and wellness. Paul Boyer, a member of the council and vice chairman of Meijer Inc., told the Food Marketing Institute (FMI) Midwinter Executive Conference that one of the reasons that supermarkets need to embrace this initiative is that other stores will try to do the same thing.

    Boyer warned: “Other people are going to try to get there first. What would happen if health clubs decided to start selling the 10 superfoods? We have to make sure that we don't sit back and take our time.”

    Seems to me that the Starbucks-Naked Juice deal is an example of how other companies and other channels are going to try to draw the lines between foods and health and wellness.

    Published on: January 17, 2008

    MSNBC reports that a new study of consumer brain scans by the California Institute of Technology (CIT) says that “the more we believe an item is worth, the happier we are with our purchase — at least for a short time,” that “brain scans showed increased activity in the medial orbital frontal cortex, the area of the brain that registers pleasure” when people thought a product was more expensive than other options.

    “It’s very weird, I know,” CIT professor Antonio Rangel, lead author of the study, tells MSNBC. “But people believe that more expensive prices are correlated with higher quality. So if you believe something better is happening to you, that affects the way your brain handles the experience.”

    However, it is not a lasting high. MSNBC reports that “it’s a fleeting kind of glee. The brain scan study showed that the brain's pleasure centers only reacted to the enjoyment of the pricey wine for a few seconds, or just a few beats longer than it took to swallow. After that, your retail joy is gone. And so is your money.”

    KC's View:
    I think I’ve told this story before here, but it is worth recounting.

    When I was working my way through college in an upscale men’s clothing store in Marina del Rey, California, called the British Stock Exchange, we once had a table full of men’s cotton lisle knit shirts that were selling for $25. Actually, they weren't selling at all.

    My boss, Tim Dyckman, came in one day an ordered me to re-price the shirts, and I asked him how low I should go. But Tim shook his head, and ordered me to mark them up to, if memory serves, $35 or $40. “At $25, they’re just cotton shirts,” Tim said. “If they’re more expensive, they’re something special.”

    I marked them up, and they were gone in a week. Good lesson, and one I’ve clearly never forgotten … though I didn’t know (and I suspect Tim didn’t know) that biology and chemistry were at work.

    In an economy where people are going to be more price-conscious than ever, it will be difficult for many retailers to pursue this sort of pricing strategy, but I think that retailers definitely need to find ways to convince customers that what they are selling is something special. Sure, there will always be commodities and products that everybody sells. But the profits and differences almost always are in the margins, in the special products that nobody else carries. (Think of Dorothy Lane Market’s “Killer Brownies” as a perfect example.)

    It’s art…but, apparently, it also is science.

    Published on: January 17, 2008

    Interesting and observant column in Forbes by Jack Trout, who ruminates about the management shakeup at Starbucks and wonders if the once and current CEO, Howard Schultz, is focusing on the right problem.

    “I find it interesting that Schultz is not too concerned about competition,” Trout writes. “He feels that the problem is with Starbucks itself and all he needs is to fix it. In many ways he is right but I'm not sure that he is focused on the right problem.”

    But Starbucks and Schultz now face two issues – the fading economy means that some people may not be as willing to spend four bucks on a latte, and there suddenly is new and less expensive competition from the likes of Dunkin’ Donuts and McDonald’s.

    Now, Trout argues, Starbucks has to get very aggressive about promoting the coffee – explaining why it is better than the competition, why it is worth more money, and being more proprietary about a products that should never – can never – be thought of as a commodity.

    KC's View:

    Published on: January 17, 2008

    WTNH-TV in Connecticut reports that Stew Leonard’s recently got a check for more than a million dollars from the Connecticut Energy Efficiency Fund for its environmental initiatives. According to the story, “The store has installed everything from motion sensor lights in their warehouse, to sky lights to utilize natural light to help reduce energy costs … installed insulating screens that are pulled down every night when the store closes, giving them energy savings of about 30-percent … (and) recycles old produce to a local pig farmer and baked goods get distributed to local food pantries and soup kitchens.”

    • “Popcorn lung” is at issue in a lawsuit filed against Kroger by a Denver man, who reportedly has developed the malady after eating two bags a day of microwave popcorn that used the flavor chemical diacetyl. Major popcorn manufacturers have stopped using the chemical because it was found to be sickening factory workers, and there reportedly have been hundreds of lawsuits filed on behalf of such workers; the chemical has been approved for use as a flavoring by the federal government.

    The Denver man is believed to be the only consumer to have contracted “popcorn lung, which is clinically known as bronchiolitis obliterans.

    KC's View:

    Published on: January 17, 2008

    It was reported yesterday that while the US Food and Drug Administration (FDA) has approved the used of cloned animals, or the progeny of cloned animals, for meat and milk consumed by humans, even as the US Department of Agriculture (USDA) called for a continued voluntary moratorium on putting such products into the food chain. The situation was made even muddier when the Washington Post reported that it may be a moot point, with some suppliers saying that products from cloned animals already have entered the food supply.

    One MNB user wrote:

    Conflicting statements from FDA and USDA on sending/not sending cloned protein to market ?! I can hardly contain myself. The urge to go all snarky is overwhelming. Like the barely-revised 2007 Farm Bill that's been sent for final approval, it gives me that ol' warm fuzzy feeling that our government really is looking out for the American family farm way of life.

    Capping payments to the largest producers?

    More research money and marketing assistance for sustainable and organic production?

    Acknowledgment of recent studies that show organic ag as equally capable of feeding the masses?

    Nah, let's figure out new ways to help the biggest of the big producers. We are on our own here, kids!

    MNB user Andy Casey wrote:

    I don't know that I have a strong opinion about eating cloned food, although I agree it should be labeled. But it concerns me that the powers that be don't seem to have completely thought through the implications of what will likely (or at least, possibly) become over the next 20 years a more genetically homogeneous food supply. Genetic diversity is nature's way of driving both improvement and most importantly, survivability in species over generations. As cloning becomes widespread, dwindling genetic diversity in cows, pigs and even grain strikes me a sure route to biological disaster over the long run as all the viruses, germs and other nasties in our world continue to change but the genetics in our food supply have become less dynamic, more of a static target for diseases.

    And another MNB user wrote:

    Cloning animals for public consumption is equally as scary as GMO food, and will probably soon be as pervasive. Unfortunately, while as a vegetarian I can avoid cloned meat, it's virtually impossible to avoid GMO food, which is not labeled as such either.

    It is almost impossible to understand why certain producers seem to have already violated the voluntary moratorium, and have been doing so for some time. They may have made some short-term profits, but they undermine trust and even have the potential of hurting the long-term prospects of the nascent cloning industry.

    On the subject of “smart shopping carts,” which MNB suggested could be a good way for retailers to completely transparent, providing complete and relevant information for consumers, MNB user Al Kober wrote:

    This could be the answer to the ever-growing need for information on the packages of fresh meat. There is a new for information. COOL, nutrition, quality statements recipes, whatever information the consumer needs to know. The labels on meat packages are becoming so large and so numerous, that the consumer cannot see what they are buying. We need to put the needs of the consumer first, and that includes giving them the full view of the meat they are buying. It seems reasonable that this can be done electronically and still provide a clean package for consumers.

    Regarding Wal-Mart’s decision to cut back on its weekly Saturday managers meetings, one MNB user wrote:

    I worked for the guys in blue for 11 years. At first you got one Saturday per month off. Then it was changed to two Saturdays off. It was made very clear that those two months a year with five Saturdays, you only got TWO off. Now they are reducing to one meeting per month. This decision has nothing to do with finding a place large enough to meet. This has everything to do with quality of life. Many spouses both work at WM. On Saturday one must stay home with their kids while the other works. This means you will NEVER both get the same Saturday off. Nothing put a damper on your lifestyle like six-day work weeks and no time to spend with your family. The fact is that people are leaving WM because it sucks to work an extra two to three days per month without being compensated in addition to a reduced quality of life. Today’s workplace is changing. Wal-Mart needs to let go of this anachronism completely.

    MNB user Mike Spindler had some thoughts about Safeway CEO Steve Burd’s health care presentation at the FMI Midwinter Executive Conference:

    Interestingly, some other “alternative” outlets or channels are poking their heads into this arena. Seattle Sutton is one such example. Healthy meal preparation and delivery, completely by-passing the traditional grocer with purpose. There are other combined attempts such as the Tesco/e-diets program in Britain. While this doesn’t necessarily by-pass grocery, it does leave up for grabs just who owns the customer. And there are some very interesting online approaches that seek to gain significant traction in helping the customer manage their health, which; partner with, subsume or by-pass the grocer altogether.

    According to a recent GFK study of the American Consumer, grocers are the second most trusted source for H&W advice and help. Far above manufacturers, and ….government. So Grocers appear to have the opportunity to establish the high ground in participating in this health economy, particularly when they combine their efforts with nutrition or H&W “gurus’”. As you know there are fledgling H&W full product ratings programs from Hannaford and now Topco/Yale. There are at least six additional ones that I know of on the drawing boards. Done correctly I believe these offer the best approach to success for grocers. There are however, significant hurdles to success in this arena. The biggest one involves the integrity and interpretation of the product information, which can make or break the backbone of this consumer trust upon which grocer participation in this health economy is based. More on this soon!

    And, one more email about Safeway’s approach to healthcare:

    As a corporate Safeway employee who sees Steve Burd in our gym regularly working out on the same machines as the rest of us, I can confirm that he does indeed practice what he preaches. However, I can lift more weight than he can.

    I’m sure you can. I don't think I’d want to mess with either of you.

    KC's View: