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    Published on: June 18, 2008

    AdWeek reports that “In a new survey from Deloitte & Touche released last week, Americans expressed great reservations about foods produced outside the U.S. More than half -- 56 percent -- say they think imported foods are ‘not at all’ or only ‘somewhat’ safe. In contrast, 80 percent of Americans say they believe that domestically produced foods are safe.”

    The story also notes that imported foods “now account for 15 percent of the U.S. food chain, an increase of about 50 percent in the last six years” … which means that simple math suggests that people should be less confident in the foods they eat. Except that for the most part, there is no requirement to disclose where food is from on packaging.

    Which is why Country of Origin Labeling (COOL) is getting new attention.

    AdWeek writes that “wary consumers may be getting some help -- the kind that could create a new vulnerability for marketers, who spend millions to win the public's trust and loyalty in their brands. On Sept. 30, mandatory country-of-origin labeling (COOL) will be enforced for beef, lamb, pork, fruit, vegetables and peanuts. The provision was originally approved as part of the Farm Security and Rural Investment Act of 2002, but special interests have lobbied to delay it since then. (Purveyors of wild and farm-raised fish and shellfish, nonetheless, have had to disclose their origin since 2005.) And as the date nears, COOL is gaining momentum in Washington: Last month, the Food, Conservation and Energy Act of 2008 expanded the list of covered commodities to include chicken, goat meat, ginseng, pecans and macadamia nuts.

    “Of even more concern to marketers: In April, two Democratic congressmen from Michigan, Rep. John Dingell and Rep. Bart Stupak, leaders of the Energy and Commerce Committee, proposed country-of-origin information be extended to include product ingredients, which would be detailed on manufacturers' Web sites. For the first time, consumers would see the extent to which many venerable American brands outsource ingredients around the world.”

    KC's View:
    I know that a lot of MNB users don't agree with me, but I firmly believe in the essential concept of COOL. I’m not saying that the way COOL is structured by existing and potential legislation is the best way…but utter transparency is going to be demanded by shoppers and will be a requirement for food marketers.

    It doesn’t matter whether this is done for scientific purposes or marketing reasons. It will simply be a cost of doing business.

    Published on: June 18, 2008

    The Boston Globe reports on a new study issued by Greenpeace that “grades supermarkets on their sustainable seafood policies and practices.

    “It's not good news,” according to the Globe piece. “The report shows that most U.S. supermarkets continue to purchase seafood with little consideration for the health of fish stocks they sell and even less concern for where or how seafood was caught. No supermarket did well, with the top scorers receiving only four out of ten possible points.

    “The top five markets are: Whole Foods, Ahold USA, Harris Teeter, Wegmans and Wal-Mart. At the bottom of the list are Supervalu, Trader Joe's, H.E. Butt, Price Chopper and Publix.

    “Supermarkets were graded on buying practices, support for sustainability, labeling, transparency and how many Greenpeace-determined ‘Red List’ products - 22 of the world's most destructively fished and farmed species - were for sale.

    “Still, there is some good news. Several large supermarkets are developing seafood policies and are beginning to remove some of the most endangered species from their shelves, the report notes.”

    KC's View:
    I’m not sure how much of a reaction to the Greenpeace study will come from within the industry, mostly because I’m not sure how much these chains will want to extend the story by responding.

    The Los Angeles Times puts the list in some perspective:

    “Dig a little deeper … and you find that the rankings, though admirable in intent, have some drawbacks. For example, among the criteria markets are judged on is whether they have established a seafood sustainability code. But is it fair to assume that the absence of a code is the same as endorsing bad practices?

    “Even more problematic is the emphasis on Greenpeace's ‘Seafood Red List’ of fish that should be avoided. The catch is that the list paints with a very broad brush, and in the confusing world of seafood that can lead to some serious oversimplifications.”

    Which will only serve to confuse more shoppers.

    Published on: June 18, 2008

    Interesting op-ed piece in today’s New York Times by Dan Koeppel, author of “Banana: The Fate of the Fruit That Changed the World.”

    Koeppel writes that once people get used to $4 per gallon gasoline, the next big sticker shock may be as they start paying $1 per pond for bananas: “At that price, Americans may stop thinking of bananas as a cheap staple, and then a strategy that has served the big banana companies for more than a century — enabling them to turn an exotic, tropical fruit into an everyday favorite — will begin to unravel.

    “The immediate reasons for the price increase are the rising cost of oil and reduced supply caused by floods in Ecuador, the world’s biggest banana exporter. But something larger is going on that will affect prices for years to come.

    “That bananas have long been the cheapest fruit at the grocery store is astonishing. They’re grown thousands of miles away, they must be transported in cooled containers and even then they survive no more than two weeks after they’re cut off the tree. Apples, in contrast, are typically grown within a few hundred miles of the store and keep for months in a basket out in the garage. Yet apples traditionally have cost at least twice as much per pound as bananas.”

    The price increase isn’t just related to transportation of a fruit that is, essentially, exotic in nature. There’s also a fungus that could disrupt the world’s supply of bananas. “The fungus is expected to reach Latin America in 5 to 10 years, maybe 20. The big banana companies have been slow to finance efforts to find either a cure for the fungus or a banana that resists it. Nor has enough been done to aid efforts to diversify the world’s banana crop by preserving little-known varieties of the fruit that grow in Africa and Asia.

    “In recent years, American consumers have begun seeing the benefits — to health, to the economy and to the environment — of buying foods that are grown close to our homes. Getting used to life without bananas will take some adjustment. What other fruit can you slice onto your breakfast cereal?”

    KC's View:
    This is terrible news. Can’t imagine a morning without a banana.

    But in its own way, it points up the stark reality that is facing suppliers, retailers and consumers – that old assumptions may be falling by the wayside in view of a transforming world economy, and we may have to get used to things being different in a wide variety of ways.

    Published on: June 18, 2008

    Tesco’s US operation, Fresh & Easy, said yesterday that it is working with its supplies to streamline its distribution model “to reduce direct store deliveries, which saves money on fuel, allowing the company to pass these savings on to customers. This innovative, yet simple, distribution model also helps the environment by reducing the amount of CO2 emissions, fuel consumption, as well as neighborhood traffic congestion and noise that multiple deliveries create … To eliminate extra and unnecessary delivery trips, Fresh & Easy has created a new way of stocking stores with these same products with fewer deliveries by asking the company's suppliers to deliver directly to the company's centralized distribution center.”

    KC's View:
    Sounds like the tweaking taking place at Fresh & Easy HQ is more than just brightening up the stores…

    Of course, cynics will say that this is just another way for the company to slow down its hemorrhaging expenses…

    Published on: June 18, 2008

    Challenging the current food safety apparatus, the United Fresh Produce Association and the Produce Marketing Association (PMA) have sent a joint letter to Michael Leavitt, secretary of the US Department of Health and Human Services (HHS), saying that “in the rare but critical cases where outbreaks do occur, we simply must do a better job to remove any threat to public health as soon as humanly possible, and isolate potential problems quickly to ensure ongoing consumer confidence in the vast supply of healthy, fresh produce available across the country.”

    The letter, signed by United Fresh President Tom Stenzel and PMA President Bryan Silbermann, called for a meeting to explore solutions to speed and streamline outbreak identification and management, noting that with government’s expertise in outbreak identification and industry’s expertise in understanding the produce supply chain, crisis management systems should be reviewed in advance of outbreak investigations, rather than have industry and government reinvent the process each time an outbreak occurs.

    The letter said, “Nothing is more important to the produce industry than delivering to consumers the safest, healthiest and most nutritious fresh produce possible … No one in public health nor industry can be satisfied with an outbreak that went undetected for so long, nor a traceback investigation that has left consumers scared about the safety of all fresh tomatoes and will likely cost more than $100 million to tomato growers, packers and retailers whose produce was never contaminated. We simply must work together to do better.”

    KC's View:

    Published on: June 18, 2008

    Advertising Age reports that major drug manufacturers have agreed to a six-month suspension of direct-to-consumer advertising of new prescription drugs, a deal that falls short of the two year moratorium that was sought by the US House of Representatives Energy and Commerce Committee.

    The companies also agreed to limit the use of doctors in their advertising, following American Medical Association (AMA) guidelines suggesting that actors be used to play doctors instead of using the real thing.

    According to the story, Johnson & Johnson, Merck & Co., Merck/Schering-Plough and Pfizer all agreed to the various steps, and the Pharmaceutical Research and Manufacturers of America agreed to hold further meetings with the House committee.

    KC's View:
    Since these are some of the most annoying ads on television, a six-month suspension is better than nothing. I could make a bunch of jokes about this – especially about all the side effects that have to mentioned - but let me actually make a serious point.

    It seems to me that these ads actually reinforce the magic pill mentality that is so prevalent in America – that we can behave any way we want, and somehow there will always be a magic pill that will solve our problems.

    And beyond that, the ads are annoying as hell.

    Published on: June 18, 2008

    • Wal-Mart said yesterday that it plans to trim its planned capital spending for fiscal 2009, cutting back to between $13 and $14 billion instead of the originally planned $13.5 billion to $15.2 billion. CFO Tom Schoewe said that the projection is based on increased efficiency by the company, not a reduction in its planned capital projects.

    • The Financial Times reports this morning that Wal-Mart “is embarking on a further round of international expansion on the back of a systematic overhaul of the way it runs its business, which is expected to deliver more than $100bn in sales this year.” Wal-Mart’s growth rate in terms of retail square footage is now above its growth rate in the US.

    “The retailer is actively exploring a first move into Russia and neighbouring countries, while preparing to open its first wholesale warehouse stores in India next year in a joint venture with Bharti Enterprises … To support its international expansion, the retailer has set up new systems over the past two years to assess and integrate new international businesses, in an effort to avoid repeating the missteps that led to unsuccessful ventures in South Korea and Germany in the late 1990s.”

    According to Mike Duke, the company’s vice chairman, this approach includes a firm commitment to its troubled Seiyu subsidiary in Japan, which he says has a “clear path to victory.”

    KC's View:

    Published on: June 18, 2008

    USA Today reports that the New York City Department of Health is expanding its ban on trans fats, as of July 1. The original ban, implemented last year, only applied to fry oils and spreads, but now is being expanded to include “baked goods, frozen foods, cannoli and doughnuts.” According to the paper, “Foods served in original, sealed packaging — such as candy and crackers — are exempt.”

    Reuters reports that Starbucks plans “aggressive” expansion in Brazil, which happens to be the world’s second-ranked nation in terms of coffee consumption. The company has opened 10 stores in Sao Paulo since 2006, and plans to open another five there by September and also has plans to open units in Rio de Janiero.

    That may not sound like a lot of stores, but the company said it served more than a million customers during 2007. In addition to coffee, Starbucks also sells traditional Brazilian snack foods in its stores there.

    KC's View:

    Published on: June 18, 2008

    • Schwan Food announced that Greg Flack has been named the company’s president/CEO/COO, having most recently served as president/CEO at Schwan on an interim basis.
    KC's View:

    Published on: June 18, 2008

    • Dollar General reported that its first quarter sales were $2.4 billion, compared to $2.28 billion during the same period a year ago, on same-store sales that were up 5.4 percent. The company also reported Q1 net income of $5.9 million compared to net income of $34.9 million in the first quarter of 2007.
    KC's View:

    Published on: June 18, 2008

    Got a terrific email from MNB user Bob Reynolds:

    I know you are tired of Fresh & Easy stuff. However, maybe this is a bit of a different twist.

    I was in four LA F&E's last week, I had been in some of the same stores in February.

    Some perspectives I have not read from others:

    • Out-of-stocks are a very visible problem. And, the out-of-stocks appear to be concentrated in promotional items.
    • Because the SKU count is small in these stores, out-of-stocks stick out like a sore thumb. Little or no opportunity for a consumer to do a brand switch.
    • Same items were out-of-stock in more than one store, suggesting a distribution problem.
    • While I have no objective data, it appeared that there were more national brand items in the store last week than in February. The product selection is still dominated by F&E brand products
    • Perishables and ready-to-eat, ready-to-cook products are bland and uninteresting. They don't say "buy me." Color is badly needed in this bland environment.
    • Many perishable, code-dated products were at or near code dates. Products dated the Wednesday I was in the stores, were marked 1/2 off.
    • All self-checkouts -- One employee at front end to assist customers -- This system eliminates many non-tech-savvy potential customers.
    • While I did not do an objective price survey, my impression was "no bargains here."
    • All four stores faced nearby competition from conventional name brand supermarkets. So much for the "under-served neighborhood" concept.
    • I saw little reason for a consumer to shop F&E rather than its familiar near-by competitors.
    • Stores were lightly shopped on the Wednesday, midday that I visited.

    I also visited the Safeway/Vons "The Market" small format store in Long Beach. Store has been open about a month.

    This store is right at the beach, 100 yards from the Belmont pier. Looks like a miniaturized version of Safeway's Lifestyle store format with all major perimeter departments. Lots of grab-and-go stuff. Large wine and liquor dept. Good looking deli and bakery. Service meat. Limited selection of dry groceries. Attractive but small produce selection. Good selection of refrigerated non-alcoholic beverages.

    Looked like a great beach store but was lightly shopped at Wednesday, 11 AM.

    I liked this store a lot. Bought my lunch there.

    Thanks for the report. And FYI….I never get tired of this stuff.

    MNB user John Hall had some thoughts about Coke’s new two-liter bottles:

    Although not specified in the article that I read, I wonder if this new packaging uses less plastic. This would be a triple win for Coke, most importantly it is better for the environment, it should lower raw materials cost and thus increased profit and should increased sales. Since it wasn’t mentioned that less plastic was used, only the donation of recycling contains to the test market, I like most others will assume that it does not use less plastic and thus ignores the current trend towards less raw materials and increased environmental stewardship. If they do use less plastic they are missing a great image advantage.

    MNB had a story yesterday about how Tyson Foods is suing the US Department of Agriculture (USDA), charging that the government’s decision to stop it from claiming that its chickens are raised without the use of antibiotics was arbitrary and capricious. Tyson was using antibiotics on its eggs before the chickens were hatched and then claiming that the chickens were raised without antibiotics…which the government first said was okay, and later ruled was inaccurate and misleading. The question is what “raised” means – does it include the time before the chicken is hatched?

    MNB user Michael Freese wrote:

    So if I eat the egg it has antibiotics but not if I eat the chicken? This sounds like "When does conception actually occur"?”

    Not a debate we probably should get into here…

    MNB user Jerome R. Schindler wrote:

    Reminds me of something I often tell clients when reviewing their advertising - "Literal Truth is No Defense". I believe most consumers would feel betrayed if they bought Tyson chicken because it claimed to be "raised without antibiotics" and then discovered that antibiotics had been injected into the eggs a few days prior to hatching. I think Tyson is wasting its shareholders' money by suing USDA over this issue.

    Another MNB user wrote:

    First off the USDA needs to more clearly define what "raised without antibiotics" really means, for the sake of both the vendor and the consumer. As a consumer when I see raised without antibiotics, I'm believing this to mean that this egg came from a chicken that had not been exposed to antibiotics. I don't want to be exposed to antibiotics that are unnecessary, there fore I would buy this product. It seems misleading to me that Tyson has interrupted this phrase to mean between hatching and slaughter, where as a consumer I read this as meaning NO ANTIBIOTICS. There seems to be a serious disconnect, and the consumer will once again suffer. Go figure.

    MNB user Steve Young-Burns wrote:

    It is a great day when the world's largest chicken and egg producers are squabbling over whose "antibiotic free" claim is misleading. I gain new faith in the competitive marketplace when Perdue and Sanderson sue Tyson for "false and misleading" claims about Tyson's in-ovo antibiotic use. Will this suit result in more transparent industry practices where "no antibiotics" means no antibiotics, ever, or will it result in years of back and forthing with each company tries desperately to gain a dubious toehold in their ongoing battle to mislead consumers about their hens' living conditions? Let's hope for transparency, after all, the eggs are going to taste better if living conditions are better, and the eggs are going to be worth more. Everyone's a winner!

    Had a story the other day about how packaging is changing, with one note about how some bars and restaurants are changing from 16-ounce glasses to 14-ounce glasses for their beer “pints”…which prompted one MNB user to write:

    Glad you pointed the issue of profit pours and the whole general idea of companies shrinking their packaging, and either not bringing down the price or actually raising the price.

    Good example happened to me five months ago at Chipotle. Now I love Chipotle, and always appreciated their concept of fast food being served to a higher standard than other chains with nothing but fresh foods in their meals.

    However, 5 months ago I had gone there for lunch and ordered tacos, to which in every previous trip, I received 4 hard shell tacos. However, upon this particular order, I received only 3 tacos, and paid the exact same price as before. I asked if this was a mistake, but was told this was the new policy to combat cost of goods, etc.

    To your point, nothing was disclosed to the customer, I actually had to ask because I thought there was a mistake. The real mistake on their end was actually on a larger scale by failing to communicate to the customer. Needless to say, I felt cheated. In fact, I haven't been back since.

    Good lesson.

    Responding to the nice things I wrote yesterday about golf – a subject I know nothing about, MNB user Pat McCarthy wrote:

    In its purest form, golf is about honor and integrity. It is also about dealing with the bumps and bounces of the ball, much like dealing with whatever you are dealt in life. No do-overs. Make the best of the situation! Great game for anyone!

    No do-overs? Then what’s a Mulligan, anyway?

    Finally, MNB user John Montzingo wrote:

    I know how you love your Mets but wow - what an amazing display of ineptitude in their handling of Willie Randolph’s firing. How does Omar Minaya much less Fred & Jeff Wilpon look at themselves in the mirror after firing Willie in the middle of the night via press release?

    Oh, those Mets are Amazin’ – just in a very sad way.

    The way the whole NY Mets managerial situation was handled was both gutless and classless, and it made it embarrassing to be a Mets fan. It was, however, a great lesson in how not to manage an organization.

    KC's View:

    Published on: June 18, 2008

    •The Boston Celtics last night defeated the Los Angeles Lakers 131-92, and won the NBA Championship for the 17th time…though this is the team’s first title in 22 years.
    KC's View: