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    Published on: June 23, 2008

    MUNICH – A year ago, during an interview with Gareth Ackerman, chairman of South Africa’s Pick’n Pay Holdings, at the CIES World Food Business Summit in Shanghai, he told me that that the 2008 edition would be a real test for the organization and the industry. The Shanghai edition, he noted, was focusing on how Asia was reshaping the world’s economy, and when the annual conference returned to Europe, it would be time to find out if “the old world could meet the challenge of the new world.”

    A year later, at the Summit here, it was remarkable in some ways how little time and attention were focused on the challenges being posed by economies like China and India. That’s certainly because the world has changed in unforeseen ways since those Shanghai meetings….a food crisis, an energy crisis, an economic crisis, perhaps even a crisis of confidence…..

    It was a good reminder that sometimes we have very little control over the circumstances in which we find ourselves. “Growth & Sustainability” was an apt theme for the summit, since the industry is faced with dual challenges – how to continue to grow during a time of so many crises on so many fronts, and yet how to create business models that can be sustained over the long haul, not just reacting to this situation or that emergency.

    “Sustainable companies have not been built and will not be built, on quarterly earnings,” Pierre-Olivier Beckers, president/CEO of Delhaize Group and the incoming chairman of CIES, told the assemblage. It was a clear message that the sustainable enterprise has to be about something different, something greater, than just the short-term sale.

    Something different, something greater. That also was key to the message that Rob Reid, co-founder of RipCam Media, and Andrew Robertson, president/CEO of BBDO Worldwide, delivered to the audience on Friday – that the ways in which we communicate with shoppers is changing in profound ways. Consumers “are choosing control over passivity,” Reid said, noting that this means marketers have less control than ever over how people receive their messages.

    Robertson put it another way, suggesting that media no longer “is a means of distribution that we buy, but rather a point of access that consumers can choose to use if they want to.” And with so many choices available to consumers, he said, it becomes harder and more challenging to find and engage this audience.

    But not impossible. Both Reid and Robertson said that marketers in both the manufacturing and retailing segments do have the ability and means to identify and engage this audience…but that it requires an entirely new mindset about who these shoppers are and what they want.

    In other words, a change of mind, a change of direction, even a change of heart.

    It is an institutional recognition of these changes that led CIES to announce that it is changing its organizational structure an governance from that of a retailer-driven body to one that gives parity to the supplier community – a recognition that the kind of collaboration necessary to meet the challenges of the future can only come through the creation of a more organic community.

    "Following the subprime crash, many of the world’s banks wrote off hundreds of billions of dollars and inflation developed into a major issue,” said Roger Corbett, the outgoing chairman of CIES, as he looked to cast the changes in the broader light of global change. “Last June, crude oil was selling at around 65 US dollars a barrel. Yesterday, the price was 141 dollars. Corn is up 31% from June to June. Rice is up 74% and wheat is up 130%. Never before have input costs escalated so quickly in so short a time. Developing countries are demanding their place on the world stage. The UN is warning of hunger, malnutrition and social unrest on an unprecedented scale.

    “The challenge of the cost of energy and the sustainable use of energy is a critical part of preserving the world’s resources for those who will follow us, and for whom we are trustees. We have agreed to make these changes in order to ensure that CIES remains relevant and remains in a position to play a significant role in providing for the needs of the world."

    And so these changes will be made, but more than a few questions remain. One that occurs here is this: what will the world look like in June 2009, when the CIES Summit convenes in New York City?

    KC's View:
    Not sure what the world will look like when CIES comes to NY, but one thing is sure. As we have every year since 1999, we’ll be there to cover it. (It is a matter of some pride that among those covering CIES, MNB was pretty much the only US entity to be there.)

    The CIES announcement about institutional parity between retailers and manufacturers is said by insiders to be just the first step in a broader consolidation expected to take place among various global trade organizations…and eventually, in the US. Which makes me wonder…if it makes sense for CIES to give manufacturers an equal number of seats at the table, does the same logic suggest that FMI and GMA ought to be thinking about some sort of merger? Or that FMI and CIES ought to finding more ways to work together? And to what extent are such discussions already taking place?

    Published on: June 23, 2008

    Interesting piece in the Los Angeles Times over the weekend that endeavors to tell shoppers how to save money on groceries. (Pretty much every newspaper and local television station is doing a variation on this theme these days.)

    What caught our attention was the advice attributed to Michael Ainslie, the development chef Tesco’s LA-based Fresh & Easy chain. For one thing, he suggests buying seasonal products, which usually are cheaper than items out of season that have been transported long distances and usually are not as flavorful. But for another way to save, he suggests patronizing farmer’s markets.

    KC's View:
    This may be some sort of evidence that Fresh & Easy is doing better than some critics say…because why else would the company’s development chef send customers elsewhere to save money.

    On the other hand, this isn’t Kremlinology…and it is entirely possible that his first line was “shop at Fresh & Easy,” but that the reporter cut that out of the story.

    Published on: June 23, 2008

    The board of directors of the National Association for the Specialty Food Trade has announced that it will discontinue its Chicago Fancy Food Show, held in Chicago for the past nine years. The organization will, however, continue to hold its summer show in New York and winter show in San Francisco.

    The organization blamed lack of exhibitor support for the decision.

    The Chicago Fancy Food Show has been co-located with the annual Food Marketing Institute (FMI) show until this year, when FMI moved its event to Las Vegas and said that it will rotate the event to different venues, along with scheduling a traditional exhibit floor only on alternating years. The Fancy Food Show remained in Chicago along with All Things Organic and the US Food Export Showcase.

    KC's View:
    Many trade associations may find that traditional exhibition/education models may be heading toward obsolescence. It is how they meet that challenge that will define how and if these organizations survive.

    Published on: June 23, 2008

    The Los Angeles Times reports that the US Food and Drug Administration (FDA) has identified “several farms in Florida and Mexico” has having been responsible for at least some of the tomato-related salmonella cases that have caused so much concern across the country. However, the investigation continues, and the FDA says that it could have been caused not on a farm but rather at a packing station.

    As reported by the Times, “The number of victims has soared from 169 cases to 552 across 32 states and the District of Columbia, making this outbreak one of the most, if not the most, extensive of the country's 13 tomato-borne salmonella episodes since 1990, according to the Centers for Disease Control and Prevention. The strain has left at least 53 people hospitalized since mid-April and may have contributed to the death of a 67-year-old Texas cancer patient.”

    KC's View:

    Published on: June 23, 2008

    Wal-Mart announced last week that it is recalling 39,000 key chains that were manufactured in China after testing showed that they had high levels of lead, which is toxic if ingested. The key chains have button, clover and leaf charms, and were sold by Wal-Mart between April 2005 and June 2008.

    The recall is similar to one of 12,000 key chains announced by Wal-Mart back in April after a similar discovery was made.

    No illnesses have been reported in connection with the key chains.

    KC's View:

    Published on: June 23, 2008

    While European retail stocks have taken a beating over the past six months, losing on average 30 percent of their value, Reuters reports that at its annual Retail and Consumer Summit experts said that they fully expect that once the credit crunch eases the market is likely to see another round of mergers and acquisitions. Of course, these same experts said that they expect the current financial tightening to last at least through the end of the year and possibly longer, so it isn’t like the sun will be coming out tomorrow or next week.
    KC's View:

    Published on: June 23, 2008

    The Wall Street Journal reports that the Corn Refiners Association is launching a major advertising and public relations campaign designed to rehabilitate the reputation of high fructose corn syrup, which has been linked by many scientists to the nation’s obesity epidemic.

    According to the story, “The group is running full-page ads in more than a dozen major newspapers around the country saying its product is no worse for you than sugar. The ad, which features a stalk of corn, carries the headline: ‘And Now a Little Food for Thought.’ The ad goes on to tell readers that lots of foods and beverages are sweetened with ‘sugars made from corn, such as high-fructose corn syrup’ and that it has the ‘same natural sweeteners as table sugar and honey’.”

    Indeed, there may be some limited support for this message. The American Medical Association, according to the Journal, has said that “HFCS doesn't appear to contribute more to obesity than other caloric sweeteners. Still, the AMA called for further independent research to be done on the health effects of HFCS and also said that consumers should limit the amount of all sweeteners they use.”

    KC's View:
    It is this last line that is most important – that we all should cut down on our use of sweeteners.

    What the HFCS campaign doesn’t address, by the way, is the fact that many people say that sugar simply tastes better. Or that right now corn has gotten so expensive that HFCS may become a less attractive alternative. But maybe those are issues for another day.

    Published on: June 23, 2008

    The Washington Post reports that Ahold-owned Giant Food has “lowered the price of 350 commonly prescribed generic drugs to $9.99 for up to a 90-day supply,” a decision that follows a similar move by Wal-Mart, which was then followed by Food Lion and Safeway.

    According to the story, “Andrea Astrachan, Giant's consumer adviser, said the new prices were designed to attract customers who want to shop for groceries and fill their prescriptions at the same time. The move is an important one for Giant. The chief executive of parent company Ahold attributed part of the chain's sales decline at stores open at least a year in the most recent quarter to lower pharmacy sales.”

    KC's View:

    Published on: June 23, 2008

    The Cincinnati Enquirer reports that Procter & Gamble and ConAgra have announced a deal that will allow Con Agra to license some of P&G’s packaging technologies and food ingredients.

    The two items being licensed, according to the story, is the bottle technology used for Febreze fabric deodorizing spray, and Calsura, a P&G-developed calcium.

    The Enquirer writes, “The deal is a first for P&G, which under CEO A.G. Lafley has emphasized licensing deals but until now had not allowed outside companies access to its packaging know-how. That should boost ConAgra, given the level of research and development P&G puts into the design of its products.”

    KC's View:
    Just as a matter of full disclosure, ConAgra is a sponsor of MorningNewsBeat and its daily Wake Up Call.

    Published on: June 23, 2008

    The Washington Post this morning reports that Wal-Mart opened a store in Landover Hills, Maryland, last year “in a storm of controversy … bred in part by its reputation for running small businesses … out of the rural towns and suburbs that for decades were the retailer's breeding ground. There was concern that the so-called Wal-Mart effect would be replicated, if not magnified, once it moved into more urban areas, such as Landover Hills.

    “No comprehensive study has been done on Wal-Mart's impact on this stretch of Annapolis Road, the heart of this redeveloping neighborhood. But local proprietors and community leaders say the fears have not panned out. Some say the dour economy is a bigger threat than Wal-Mart. Other store owners credit Wal-Mart for boosting their sales, through both its proximity and community outreach programs.”

    While not everybody is satisfied with Wal-Mart’s efforts to support small businesses and the local community, there seems to be a general feeling that the retailer has taken steps not just to address its image problem, but to spur broader economic development around its stores.

    KC's View:
    That “large oak” line used in the headline isn’t mine…it is a quote from a local retailer down in Maryland. And it is a point worth noting – that by offering products and services different from what Wal-Mart offers, competitors can survive. Thriving may be a little tough, especially in the current economic environment…but right now, survival can be a major victory.

    Published on: June 23, 2008

    The New York Times this morning reports that Costco has secured site approvals for its first Australian store, in what is called Docklands, in inner city Melbourne. As the Times notes, Costco has been seeking sites for more than a year as it looks to challenge the dominant grocery chains in Australia, Woolworths and Coles, which are seen as having a virtual lock on real estate deals there.

    The Times reports that Woolworths and Coles are facing a government investigation into pricing and competition issues. And, the paper notes that “two other international grocers, privately owned Aldi and Franklins, owned by South Africa's Pick 'n Pay Stores Ltd, said they have been blocked from gaining access to new shopping centre sites because of landlord agreements with the big two players that discourage rivals from existing malls.”

    KC's View:

    Published on: June 23, 2008

    • In the UK, the Sunday Telegraph reports that Tesco’s reputation has taken a hit after reports surfaced that it used the name of a local retailer to “front” an application for a proposed supermarket in Devon, never mentioning that planned to use the location for one of its own stores.

    The independent company, Brian Ford’s, was acquired by Tesco a year ago, and competitors in the region are saying that while Tesco’s submission of an application in that chain’s name was not illegal it was “underhanded.”

    Tesco has said that because the new store would affect an existing Brian Ford’s store, it used the smaller company’s name so as not to alarm its employees, but had every intention of being more forthright if it appeared it would get the required permissions.

    KC's View:

    Published on: June 23, 2008

    • Halfords Group, the British automotive and leisure retailer, has hired David Wild, currently senior vice president for new business development for Wal-Mart’s US operations, to be its new CEO. Wild used to be president/managing director of Wal-Mart Germany, and also spent 18 years at Tesco.
    KC's View:

    Published on: June 23, 2008

    George Carlin, who started working as a comedian in 1960 and who became over the next five decades one of the leading practitioners of edgy, subversive humor, die yesterday of heart failure in Santa Monica, California. He was 71.

    It was just five days ago that Carlin – who produced 23 comedy albums, 14 HBO specials and three books – had been announced as the winner of the 11th annual Mark Twain prize for American Humor, awarded each year by the Kennedy Center in Washington, DC.

    KC's View:
    When I read of Carlin’s death this morning, I immediately listened to perhaps his most famous stand-up routine – “Seven Words You Can't Say On Television” – which I keep on my iPod for those moments when I need a laugh. And as usual, Carlin didn’t fail me – that seven-minute bit is among the funniest things I’ve ever heard as he runs roughshod over a culture that demonizes seven words that “will infect your soul, curve your spine and keep the country from winning the war.” (It was also that routine that got him arrested for indecency, a case that ended up in the Supreme Court.)

    If you want to see Carlin at his best, watch ‘The Aristocrats,” which is the hysterically funny (and really, really dirty) documentary made about the funniest and most vulgar joke in the history of the planet. Essentially, the movie features dozens of comedians doing their own version of the joke…but Carlin, more than the others, tells the joke while deconstructing it, giving a master class in humor.

    Much of Carlin’s stuff was not for people with delicate sensibilities. But he was enormously, infectiously funny…not to mention sharply observant and, perhaps most importantly, truthful. He’ll be missed.

    Published on: June 23, 2008

    There was some debate last week about the Ikan system, which allows shoppers to scan at home the products that they finish and construct an online shopping list that can easily be sent to a local store for fulfillment. For some people, this seemed like a peek into the future; for others, it appeared to be a useless or even frivolous purpose for technology.

    It is the latter folks to whom MNB user Glen Terbeek responded:

    Your readers' views of the Ikan system are that it is a replacement to or in competition with a store. I argue that it should be complimentary, not one or the other, but both. Think of smaller value added stores that create a reason to shop, supported by an Ikan type system for replenishing staples, capturing shoppers’ interest in ad items. Maybe the shopper could pick up these pre ordered items when they do their in-store value added shopping at a convenient time to shop.

    The industry needs to quit protecting the current way of doing business (started in the 50's) and start to accept new ideas that meet future shopper needs and technology trends.

    I agree completely.

    MNB user David Brewster, not so much:

    Once upon a time I lived in NYC. Gristede's Supermarket then had a wonderful system for cliff dwellers, and anyone else, who c/wouldn't go out much ... Customers could phone their Gristede's with a shopping list. The clerk would write it down onto paper and read back. List checked, s/he would shop the store, load up bags into a big tricycle with a huge basket and have the order delivered to the customer's place. (The delivery guy hoped for a tip.) They did this without whiz-bang technology, and with great personal kindness and personal service, both good things, at no extra cost to customers. And it was a miracle for shut-ins and old folks.

    That was then. This is now.

    I KAN not help but believe that our primordial, pre-verbal hunting instincts are being insulted and further sublimated by this machined re-shopping. We still have some of the basic stuff, I hope, and we need the tactility and entertainment and attainment of the hunt. Call me a Luddite. In this case I'd be proud.

    All that said, we really are deeply into a brave new digital world out there where our lives and our human physical reality have been largely reinterpreted in terms of new technological wizardry - whose digital language is foreign to and frightening for many of us.

    As you often observe, our retail environments (our total environment, actually) is changing with stunning rapidity. While most of us can glimpse at these new technologies, we rarely understand the basic impacts, often unintended (for good and for ill), these have on the whole physiological make-up of most of us. Indeed, we are only recently beginning to accept that these fundamental changes exist, let alone that they are a basis of our new everyday reality.

    Retail business evolves, changes each day - new retail components and formats entering the market, new product offerings being launched, customers being more closely defined, new channels being created… all of which change faster and faster. These pressures compel retailers to continuously redefine themselves to stay at the leading edge of their business niches, or lose market share. All these underpinnings, all of them potentially dimensions of customer-centric retail innovation and growth, are part of the now and future retail environments we live in. Can IKAN be part of this?!

    Okay, you’re a Luddite.

    Just kidding.

    Listen, the Ikan system isn’t for everyone, and certainly won’t be targeted at people unfamiliar or uncomfortable with technological approaches. (I was going to write “technological solutions,” but I’m not sure what the specific consumer problem is that it is solving. That doesn’t mean that it isn’t a cool idea that young consumers won’t cotton to.) It certainly won’t be targeted at what I would perceive as Gristedes’ core consumer. (Though I could be wrong about that…)

    The Ikan isn’t a strategy. It is merely a tactic – a technologically adept tactic – designed to keep customers from shopping at the competition. Which strikes me as pretty smart.

    MNB had a piece the other day about how hotel chains are coming up with entirely new formats to attract Gen Y travelers, on the premise that the things that appealed to Baby Boomers may be considered quaint but ultimately irrelevant by their elders.

    This story generated a bunch of emails.

    MNB user Al Kober wrote:

    Print a list of these so I can be sure never to go there.

    MNB user Jackie Lembke wrote:

    Maybe I started traveling for business later in life than most boomers, but my hotel room doesn’t need to be more luxurious than home, I want the fun and comfort the Gen Y traveler is getting at a fair price. And I much prefer self check-out, would love self check-in.

    MNB user Kevin Nolan was amused by one of the words used in the original Time story that I referenced:

    Seriously, if they’re going to cater to the Gen Y crowd they’ll need to stop using the word “Hip”!

    Good point. When I want to get a laugh out of my 14-year-old (or maybe it’s a chortle), all I have to do is refer to myself as a “hip, happening guy.”

    I understand that not everyone is going to find these new-style hotels appealing…but I want to reiterate the point I was really trying to make – that food retailers need to be thinking about how to restyle their stores, their products and their services for the next generation of consumers. To not do so, I fear, is to risk being irrelevant when they become the center of the target for marketers.

    MNB user David Minns seemed to concur:

    I agree with your comments. You’re not alone. I’m in my 40’s, and I prefer that Gen Y experience, too. A good example I would recommend to try is the Hyatt Place. They currently operate about 100 of these hipper, comfortable and convenient hotels that are also priced competitively with a Marriott Courtyard type alternative. They’re also located in less urban, hipper type spots like Cincinnati and Sacramento, where you = won’t find a W (or could afford one based on what I want to pay for travel, for that matter).

    Thanks for the tip.

    And then, there was this email from MNB user Clayton R. Hoerauf:

    I have been waiting for years for the appropriate time mention these two subjects in the same context. I thought you were finally going to present me with the opportunity when I saw the headline. I like you am way past this target audience however my wife and I have found a way of combining your reviews and comments on various supermarkets with my love of cooking and travel. We stay exclusively at Residence Inns, Towne Place, Staybridge etc. where every room has at least a small kitchen. The main criteria are they must be located in close proximity to a supermarket that has been favorably reviewed by the content guy. Thanks to you we have discovered Whole Foods, (with a little help from Alton Brown) Trader Joes, Hy-Vee, Publix, just to name a few. I have a dedicated suitcase with various pans, spices, cutting board & knives (we don’t fly much) that is larger than the one for my clothes. I have often wondered if any of the other MNB followers have developed this strange travel habit. It has turned the boring drive to Florida to visit the family into an adventure along the Interstate in search of the exit with the best chance of “bed and dinner”.

    One of the nicest emails I’ve gotten…and I appreciate it more than you know.

    I made note on Friday of a Washington Post story about the apparent death of the sentence, and suggested in my commentary that companies ought to make the ability to communicate in clear and lucid English a prerequisite for getting or keeping a job.

    MNB user Steven Ritchey responded:

    I agree with the premise that we are becoming a society that cannot communicate effectively. While I was completing an MBA several years ago, I had more than one professor tell us that increasingly their students were not good at writing, and lacked basic math skills. That even with grammar check and spell check their grammar and spelling were atrocious, and these kids were high school graduates. I had a finance professor tell me personally that the majority of his students in his introductory, overview finance class couldn’t do algebraic manipulations, stuff I learned in 9th grade, and these were college Juniors, I’m not talking Calculus or high level Algebra here. When my girlfriend’s kids were younger I used to tell them that there were three skills they had to have, no option. They had to be able to write coherently, be able to do basic math functions without a calculator (add, subtract, multiply and divide) and be able to speak effectively. One of them just graduated from Virginia Tech, the other is starting her Sophomore year at Oklahoma State University. The older one has a degree in Political Science with a minor in Business Administration, the younger one wants to end up being a Child Psychologist. Both are good kids who are articulate and well spoken, I wish I could take credit for it but sadly I cannot.

    Take some of the credit. Feel free.

    KC's View: