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    Published on: February 28, 2008

    Numerous press reports confirm that Safeway has decided to eliminate hundreds of jobs in divisions throughout the country, including about 70 at the company’s headquarters in California.

    Spokesman Brian Dowling said yesterday that the company has decided to “streamline a number of functional areas,” and called the cuts “very modest staff reductions.”

    One estimate put the cuts at 400; Safeway employs some 200,000 people nationwide.

    KC's View:
    This story answers the question that MNB posed in its lead story on Monday … and probably will establish a pattern that other chains will have to follow.

    In a time when rising energy and food prices are going to cause hardships for the US consumer, retailers are going to have to adjust to a time during which people are going to have far less to spend.

    At the same time, it seems to me that retailers need to not just focus on cuts, but also need to find new ways to be innovative in offering customers new products and services that will meet their changing circumstances.

    Published on: February 28, 2008

    Now available on iTunes…

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    http://www.morningnewsbeat.com/Radio/Radio_Listen_S.las



    Hi, I’m Kevin Coupe, and this in MorningNewsBeat Radio, now available on iTunes and sponsored by Webstop, experts in the art of retail website design.

    It was interesting this week to note that on the same day, Tuesday, the Washington Post ran two different stories about the issue of nutrition labeling for food products sold in supermarkets. The stories looked at the increasing number of alternatives out there:

    • The Guiding Stars program created by Hannaford Supermarkets, now being licensed to other retailers and manufacturers, which only rates foods as good for you, better for you and best for you.

    • The Overall Nutritional Quality Index, or ONQI, which has been adopted by retailers such as Hy-Vee, Wegmans and Harris-Teeter, and which rates virtually every food in the store on a scale of 1 through 100.

    • And Safeway’s FoodFlex program, an online system designed to show you the nutritional content of purchases made with your club card and point you to healthier alternatives.

    While I suppose it is possible that all these systems could end up confusing customers – one can imagine that in the Washington market alone, a customer visiting Safeway, Harris Teeter and then Hannaford’s sister company, Food Lion, on the same day, might get a form of the informational bends trying to keep all the data straight. However, the position here long has been that there really is no such thing as too much information…and that retailers and manufacturers are far better off being utterly transparent and letting shoppers figure out which information is useful and which is not. (Because, as we all know, the standards will vary for different shoppers on different days…and they might even vary for the same shopper at various times on the same day.)

    I will admit to one concern about all this labeling, however…not a concern that diminishes the importance of it, but rather a kind of cautionary note…

    I would hate to see us get to the point where all the fun gets drained out of food, where as a culture we are so concerned about this ingredient or that level of fat that we cease to be able to enjoy a really good meal.

    This is, of course, complicated by the fact that there are so many issues involved with food these days. It isn’t just nutrition labeling. There’s the obesity crisis, which doesn’t seem to be getting any better. There are worries about contaminated meat from downer cattle. There are headlines about seafood from China that has been raised in polluted ponds and then shot full of antibiotics. There are news stories about high levels of mercury in sushi. Entire cities have banned trans fats. There’s local vs. organic vs. natural – whatever these things really mean, and I’m guessing that most people don’t have a clue. Some studies say that diet drinks make you want to eat more, other studies say that eating chocolate is healthy for you, and it seems like almost every other day there is a story saying that this food will help prevent that illness and then the next day there is a story saying that the same food will make you more susceptible to this other illness. And this doesn’t even count all the tangential stories that spring to mind when food shopping – like the carbon footprints of each of the products in the store, and what the hell you’re supposed to carry the products home in (paper, plastic or cloth).

    Oy.

    Now, maybe I’m more aware of this stuff because I spend a good part of my working life writing and speaking about it. But certainly consumer consciousness of these problems and issues is higher than ever. What I don't know is whether the food industry and the media are sort of grinding people down by focusing so relentlessly on all these stories. The Catch-22, of course, is that neither has a choice – the media writes about these issues because, well, they are news and that’s what we do. And the food industry has to address issues that may be on the minds of consumers. Turning a blind eye is never an option.

    More than ever, it seems to me, it is critical for the food industry to counterbalance all this noise with an approach to food that stresses the sensual, fun, energizing, and romantic qualities of great food. And I mean great food…not mediocre food, not food as fuel, not stuff that passes through the body without leaving any impression other than caloric.

    The older I get, the less patient I am with food that simply isn’t very good. It simply is a matter of math. If I live to be 80, I’ve got something like 9,000 dinners ahead of me…which may sound like a lot, but it pales next to the almost 20,000 dinners that I’ve eaten so far.

    I can't help but think that as many of them as possible ought to be memorable. And I think it ought to be up to the food industry to help people make them so. Not that we ought to ignore the basic tenets of good nutrition, moderation, and, of course, exercise. Living long enough to enjoy a minimum of 100,000 meals is actually an important part of the equation.

    But whenever possible, meals ought to make memories.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: February 28, 2008

    Tesco said yesterday that it has identified 17 locations in the Sacramento, California, market where it will open its Fresh & Easy Neighborhood Market format, beginning in 2009.

    The company also said that this would be just the first wave of stores opened in the area, though it declined to say what the eventual number is likely to be.

    There currently are a total of 55 Fresh & Easy stores operating in California, Arizona and Nevada.

    KC's View:
    Doesn’t sound like a company about to turn tail and head for the hills.

    Published on: February 28, 2008

    The Wall Street Journal reports that “Food and Drug Administration Commissioner Andrew von Eschenbach is under fire from an array of critics who say his agency isn't up to the job of regulating more than a fifth of the consumer goods sold in America. Now, Dr. von Eschenbach says the critics have a point: The agency needs more money than the Bush administration has proposed, and it requires a revamped organization to better oversee drug safety and other issues.

    “The FDA's leader, in an unusual public departure from Bush administration policy, says in an interview that he requested more than the 2.95% increase in overall agency appropriations proposed in the president's 2009 budget, though he declines to discuss specific figures. An outside advisory panel yesterday suggested the agency needs about 150% added to its appropriated base budget, phased in over five years, to cope with challenges such as inspecting a rising tide of imports.”

    Ironically, of course, as the Washington Post reports, US lawmakers want the food industry to do more to prevent food recalls and other food safety problems.

    And, according to the Associated Press, Grocery Manufacturers Association (GMA) Vice President Robert Brackett – who used to be at FDA as food safety director - has “chided both the Bush administration and Congress for not giving the Food and Drug Administration more funding to inspect food safety at company plants.”

    According to the Journal, the FDA is trying to develop new approaches within the existing budget to make its operations both more effective and efficient, but “with the FDA caught in the crossfire between a budget-squeezed White House and a mistrustful Democratic Congress eager to score election-year points,” it appears unlikely at best that the FDA will be able to make any significant changes before the end of the Bush administration.

    KC's View:
    It would seem logical that the FDA needs to be better funded, and that the current 2.9 percent increase called for by the Bush administration simply won’t cut it. However, the math doesn’t work – because the current federal budget seems to be fairly well stretched, and I’m not sure where the money would come from. And with all the bad news about the economy…well, it wouldn’t appear that things will get better any time soon.

    It seems to me that this means that it is a perfect time for the food industry to get ahead of the game – to be aggressive about food safety issues in a way that leaves the federal government in its wake. It also could leave the federal government with nothing to do … because industry will have found better ways to take care of the consumer.

    Published on: February 28, 2008

    In the UK, the Guardian reports that in the wake of revelations that Tesco has been using what is termed “an elaborate corporate stricture involving offshore tax havens” that enable it to save well in excess of the equivalent of $1 billion (US)billions in taxes, members of the government are calling “for a crackdown on tax avoidance.”

    Based on the story in the Guardian, it appears that the criticism of Tesco is fairly bipartisan, with members of various political parties suggesting that Tesco’s practices have put the tax burden disproportionately on low and middle income citizens; one official tells the paper that “such tax avoidance runs in contrast strikingly to a company that says it is committed to a corporate social responsibility agenda.”

    Tesco’s position seems to be that everything it has done has been legal, that it pays an enormous amount in taxes, and that it has always consulted with federal tax officials in constructing its various fiscal strategies.

    KC's View:
    While it seems obvious that companies are going to endeavor not to pay taxes that they don't have to, it is a little hard to maintain an image of being socially responsible while doing so. Wal-Mart has had similar problems, and they create real image problems.

    Published on: February 28, 2008

    In a memo to employees this week, Winn-Dixie CEO Peter Lynch announced that the company will sell its dairy manufacturing plants in Hammond, Louisiana, and Plant City, Florida, to Southeast Milk, Inc.

    According to the memo, “Negotiations have been completed and the sale is expected to become final in 30 to 90 days … It is important to note that this is a strategic decision and not a reduction in force or footprint.” Lynch also said that when the sale closes, “all Associates who are currently working in the plants will become employees of SMI.”

    KC's View:

    Published on: February 28, 2008

    USA Today this morning reports that “the California meat plant where allegations of cruelty to cattle and improper slaughter led to the nation's largest meat recall this month drew complaints about abusive treatment of animals going back at least 12 years, according to documents provided by two animal-rights groups.”

    “The plant ‘has a long, documented history of abusing downed cattle,’ said Michael Greger, director of public health for the Humane Society of the United States, in testimony before Congress this week.

    However, the US Department of Agriculture (USDA) disagrees with that characterization; a spokeswoman said that the plant had a ‘substantial period of compliance’ and ‘rather unsubstantial non-compliance’ through the years. The USDA has inspectors inside the plant.”

    KC's View:
    Here’s a good rule of thumb. Never entirely trust anyone or any government that would use a phrase like “rather unsubstantial non-compliance.”

    Published on: February 28, 2008

    • In its annual meeting this week, shareholders of Unified Western Grocers approved a proposal to change the company’s name to Unified Grocers…a name that it has been using since June 2007, but only now becomes official.

    • The New Jersey Township of Manalapan has honored Wegmans for its decision to stop selling tobacco products.

    "I'm hoping it's the start of a trend for the major supermarkets that don't have to rely on tobacco sales to make their profit," said Manalapan health officer Dave Richardson. "I think I can speak for all of the interested agencies in Manalapan and I know we're all very satisfied that a large corporation like Wegmans took such a proactive step. It's a great thing for the kids in the community and the community in general. They did a great thing."

    Crain’s Chicago Business reports that the French Competition Council is looking into accusations that nine US and European CPG companies have been colluding on prices. The companies under investigation include Procter & Gamble, Unilever, Sara Lee, Colgate-Palmolive, SC Johnson, and Reckitt Benckiser Group.

    According to the story, companies found guilty “could face fines of up to 10 percent of their annual worldwide revenue,” which could reach billions of dollars.

    • Walgreen announced that it will expand the number of its stores featuring the Redbox DVD rental kiosk from the current 250 to another 1,800, all of which will be installed over the next two years.

    Redbox is owned by Coinstar and McDonald’s.

    • The Wall Street Journal reports that Burger King may soon add a new menu item – Kraft’s macaroni and cheese.

    KC's View:

    Published on: February 28, 2008

    • Whole Foods reported that its first quarter net profits were $$39.1 million, down 27 percent from the $53.7 million generated during the same period a year ago; the company blamed the downturn on costs associated with its acquisition of Wild Oats. Q1 sales were $2.4 billion, up from $1.8 million a year ago.
    KC's View:

    Published on: February 28, 2008

    William F. Buckley, Jr., the conservative philosopher who also was a sailor, raconteur, prolific author of both fiction and non-fiction, television performer and the conscience of an entire political movement, died yesterday at his desk in Stamford, Connecticut. He was 82.
    KC's View:
    I haven't read all of Buckley’s books, but one of my favorites – and you should try to find it if you can - is “Overdrive: A Personal Documentary,” which he wrote back in the early eighties. It essentially was him writing about eight days in his incredibly busy and productive life…it was tantalizing and fun and just a delight to read. And you couldn’t help liking this guy, who was an American original.

    Published on: February 28, 2008

    Responding to our stories about Starbucks closing its US stores this week for three hours so its employees could be retrained, MNB user Pete Healy wrote:

    It's been interesting to see Howard Schulz return to the helm at Starbucks, and nice to know about their refresher course on making espresso shots.

    More interesting: Is this just Starbucks' first step in rehabbing their brand experience for customers?

    Starbucks arose as the spread of other mass retail (including fast-food chains) decimated many older, independent cafes, diners, and coffee shops where people traditionally hung out with friends. Starbucks thrived because it filled that void in the new retail landscape, providing millions of people a place where they could once again relax with friends or family. The coffee, while better than the often thin, stale brew served elsewhere, was a vehicle to that broader brand experience: the warm and intimate decor, the hints of Europe in the product offering, the controlled use of visually appealing "farmers market" merchandising, and other elements that caused customers to relax, linger, and leave with a good feeling (that many would deepen with return visits).

    The problem, though, may lie in how that brand experience began to decay with Starbucks' phenomenal growth. Longer lines, longer waits (especially for coffee "purists" stuck behind five people all ordering customized dessert drinks), more noise, unwiped tables: the in-house brand experience was feeling more and more like an airport terminal. And outside the house, you could now buy Starbucks from their drive-thru window, off the supermarket shelf, or jammed between two other passengers in coach on United. Where's the brand experience in that? It devolves into little more than an incrementally better cup of coffee--or maybe not even that, as dark roast coffee steadily becomes the new standard, whether it's Folgers or (gasp!) McDonalds.

    Starbucks has come dangerously close to commoditizing its brand by detaching the tangible product (coffee) from the deeper and more powerful emotional bond that customers developed through the full in-store brand experience. Can Starbucks restore those bonds by stepping back from the "airport terminal" effect, and return to providing customers with a "home away from home" to enjoy with friends and family?


    MNB user Rick Marcum wrote:

    I love Starbucks and am, as you, a loyal customer. My wife and I visited one here in Carlisle, PA, a couple of Saturday’s ago and spoke to the manager about a new coffee, Black Apron, and how it tasted. While we were enjoying our coffees the manager brewed up the Black Apron in a French press and offered us samples that also included samples of the black bottom muffins. We ended up purchasing the coffee and a new French press and will continue to patronize Starbucks here and as we travel. Their move to close and retrain can only strengthen the Starbucks position as a leader.

    Starbucks promoted a new quality promise this week when it reopened its stores, prompting one MNB user to write:

    "Your drink should be perfect, every time. If not, let us know and we'll make it right." – What is so special about this concept? Don’t you have them “make it right” whenever they make your drink wrong?

    The bottom line is Starbucks has lost their reputation of being a quality establishment. They are now just another coffee purveyor that makes a wrong cup of every once in a while. They need to do something greater than just - “Your drink should be perfect, every time. If not, let us know and we'll make it right."


    MNB user Henry Stein – who, it should be noted, is a Caribou Coffee executive – wrote:

    It should be noted that we display such a sign in all Caribou stores and also have it printed on all our pre-packaged coffee. "If for any reason you are not satisfied with your drink, we will gladly make it again."

    Perhaps they are benchmarking us!!


    Perhaps.




    An MNB user wrote in yesterday and suggested that in view of some reports that the industrial agriculture system is causing greater numbers of outbreaks of diseases such as E. coli, what really needs to happen is a shift away from this system. I asked exactly what this meant, and what we would shift to…and got a number of answers.

    MNB user Liz McMann – who made the initial comment - elaborated:

    I am proposing a system of local farmers and producers that provide for their communities. I am also proposing a system where animals are not merely machines with corn as the input and meat as the output. I am proposing a system where our regulatory agencies are able to make the holistic connection between the health of our environment, animals, and humans. The better we treat the Earth, its creatures, and its resources, the more sustainable our food and environment will be.

    For example, we know that cows are “made” to eat grasses. When we feed them corn and soy we are disrupting a system that extends far beyond the cow. It affects the proliferation of E. coli, impacts farmers’ decisions of what to grow, encourages use of pesticides and GMOs to constantly increase commodity crop production, encourages food products filled with high fructose corn syrup and soy isolates, and discourages production of the very things that we are supposed to be eating more of: fruits and vegetables.

    I’m sure that some will say that this proposed system is idealistic, but it worked for centuries before the age of industrial agriculture and petroleum based farm products. Already there are examples all over the country of a resurgence of local farmers feeding their communities. The Twin Cities Natural Foods Co-ops are a great example of a system of retailers working together to partner with local farms, producers, and distributors to keep our food system sustainable. Eat Local, Go Co-op!


    One MNB user said in an email that cattle are not supposed to eat corn, which led another MNB user to write:

    Couldn't keep my mouth shut on this one -- since when aren't cattle supposed to eat corn?

    When I was a kid growing up in the cornfields of northern Indiana, the fence fell down between the meadow where the cattle were grazing on grass and the neighboring cornfield. The cows were easy to find -- they were all stuffing themselves in the cornfield. Guess they never read that email. (Deer and horses will do just about anything to get into a cornfield, too. Guess they don't read, either.)


    Another MNB user wrote:

    Every time you venture into agriculture I smile. And I'm far from being an expert. I just live in a rural area.

    Cattle are ruminants, they were designed to get nutrition through grazing. They have multiple "stomachs" to aid in processing roughage. Cud chewing is a mechanism to further break down fibers such as grass stems. But grazing takes space and time. Think of the land wars in old westerns over grazing rights and the incursion of smelly sheep onto cattle lands.

    Grain is highly concentrated food and it was discovered that you could confine the animals in feedlots and get the cattle to gain weight more quickly, thus reducing your time to market and investment in land. The higher cost of feed was offset by faster yield. Remember a time when "grain-fed" beef was a positive adjective? The texture and flavor of the meat is also different, and more consistent.

    Enjoy your next hamburger!


    You’re right … I tend to be way out of my comfort zone in these discussions. I’m essentially a city kid, with little knowledge of where food actually comes from. My idea of agriculture is a vineyard…but the closest I want to get to it is sitting in the tasting room that overlooks it.

    MNB user Philip Bradley wrote:

    I agree with the e-mailer. The increasing number of E. coli infections, etc., are largely due to the nature of the beast itself. When food is increasingly produced like widgets in a factory, I feel that these problems will get worse, not better. The epidemiologist at the U of Minnesota thinks that all our food should be irradiated, ignoring numerous scholarly journal articles that observe side-effects (smell, taste, and others that are worse) with the use of irradiation. His solution would take our food system one step further down the "factory" road.

    Ideally, the system should be scaled back, with less emphasis on "efficiency" and "progress" (is it "efficient" to produce food that increasingly causes infection?), Worse, the factory food system does terrible things to the soil (chemical fertilizers) and nearby living things (chemical pesticides). Consider the "dead" area, many square miles of ocean at the Mississippi delta, caused by runoff of these chemicals, as well as countless other unfortunate by-products in our environment.

    As for cost: why is it the major criterion for our food system? Food is not a "product," it's what we put in our bodies. As I recall, food only costs about 6% of the average American's budget. That seems insignificant considering its importance. In countries where food is truly valued for what it is, and not treated like a factory product (i.e., France and Italy), consumers are happy to pay a lot more. I must say that I think the attitude about food in both countries is a lot more sensible and life-supporting.

    My personal gripe is that I don't care if 90+% of Americans want to eat factory food. That's fine with me. I simply want the freedom to eat food that is grown with care for the food itself, the soil, and the environment. But big agribusiness is not content with the current situation, they want to jam more of the same down everyone's throat. I am speaking of genetically-modified foods, irradiation, etc.

    I would like the farm bill to include money for farmers transitioning to sustainable agriculture, as well as more money for conservation, and less for subsidies to corn and soybeans; and I'd like the freedom of choice of buying GMO-free food--and having GMO food labeled as such. Is this all too much to ask? Apparently it is, when you consider the attitude of Monsanto, Cargill, ADM, etc …

    If you want to know more about the drawbacks of the industrial food system, read Michael Pollan's “The Omnivore's Dilemma,” and Barbara Kingsolver's “Animal, Vegetable, Miracle” - both superb books, surprisingly even-handed, and extremely informative. As an authority on the retail food business, you really should understand this point of view even if you don't agree with it.


    I’m not at all sure I disagree with many of your statements. I just don't know if it is workable in 2008 America…but that doesn’t mean you are wrong.




    Finally, here’s a great idea from an MNB user:

    I have a suggestion for grocery store owners, large and small, that want to encourage shoppers to use reuseable bags in their store: Put signs in your parking lot reminding shoppers to bring in their bags! I have a few canvas bags and I always MEAN to use them but just forget I have them, and am not likely to go back outside once I’ve entered the store. A sign in the parking lot would be a great reminder. (They could be added to the signs on cart-return corrals or something...)

    Excellent idea…and if any of you adopt it, please let me know.

    KC's View: