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    Published on: June 26, 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:

    Hi, I’m Kevin Coupe, and this is MorningNewsBeat Radio, brought to you by Webstop, experts in the craft of retail website design.

    There are days, I must admit, that I am fascinated by the extent to which people will defend the old way of doing things, seemingly unwilling to accept or believe that change is inevitable, immutable, unstoppable. They call it “progress” for a reason – it is about moving forward, not looking backward.

    I think this happened this week with all the emails about the Ikan system, which allows people to scan their used-up CPG products at home, creating an online shopping list that they can use to replenish their larders at will by using an Internet connection to their local retailer.

    Some people said that they simply didn’t see the need for such technology, that it was easier to keep a note pad next to the phone or posted on the refrigerator door. “What’s the point?” seemed to be the reaction from some folks.

    Now, you are entitled to your opinion. But I think you are wrong.

    This has nothing to do with the Ikan system itself. This particular iteration of replenishment technology could crash and burn next week, for all I know. But the concept, it seems to me, is sound. It is a logical next step for the food business – there is scanning, there is e-commerce, and there is home-delivery. In-home scanning and replenishment simply combines these facets of the business…and the next generation of shoppers not only will be willing to use it, will want to use it, but actually may spurn retailers that don't offer some version of it.

    (By the way, I was thinking about this the other night, and I’m petty sure that the old Smart Store exhibit in Chicago back in the nineties predicted this technology.)

    It’s possible. It may even be probable. And I wouldn’t bet against it. In fact, when I think about it, maybe the more amazing thing is that we’ve taken so long to get to this point.

    But here’s the thing. This may not even be the most amazing and revolutionary thing that could happen to food shopping in coming years.

    I’m a huge fan of the concept of automatic replenishment. I use Amazon’s “Subscribe and Save” service for a variety of product categories, and it works extremely well.

    To the best of my knowledge, though, there are almost no traditional retailers working the automatic replenishment business. They all depend on the old model – people make a list or don't, drive to the store, fill their carts, go through the check outs, use coupons or not, often forget a couple of items that they meant to buy, transport their purchases home, put them away, and then repeat the process as needed.

    Sort of sounds like the same way people did it in the fifties.

    I have to wonder if an enormous business opportunity is being missed here, and if someone is going to step into the breach and make a killing.

    Imagine if a bunch of CPG companies – such as Procter & Gamble, Kraft, General Mills, Coca-Cola, and maybe some others – decided to get into the automatic replenishment business. They could create a nationwide business that would disintermediate traditional retailers and by its very nature would create de facto loyalty to their products, reducing the likelihood that customers would choose a competitor’s items. It might be expensive, but on the other hand, these manufacturers could actually take some of their promotional moneys away from traditional retailers and apply it to this model. And probably at least break even.

    If the CPG companies didn’t want to create a new and separate business, they could create an alliance with an existing entity –, for example – that would serve as the distribution system. If the CPG companies put their muscle behind such an effort, it could have enormous horsepower.

    Now, I’m not predicting that this is going to happen. But I wouldn’t bet against it.

    It is hard for me to believe that there aren’t going to be paradigm-breaking, revolutionary business models that will change the face of the business. There have to be, if only because the human capacity for innovation dictates that such models emerge. We can't stay stuck in the nineteen-fifties forever.

    In-home scanning and automatic replenishment are actually modest advances compared to what is possible.

    It is all about inevitable, immutable, unstoppable progress. All it requires is a willingness to innovate, challenge convention, and demonstrate real leadership.

    Who will step forward? And what will the next great revolutionary advance be?

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: June 26, 2008

    The Financial Times reports that Sen. Barack Obama (D-Illinois), the presumptive Democratic nominee in the presidential election, “has again called on Tesco, the UK supermarket group, to let unions represent workers at its new US chain,” and has written a letter to this effect to Tesco CEO Sir Terry Leahy.

    The letter comes as Obama looks to shore up his support from organized labor. He is scheduled to accept the official endorsement of the AFL-CIO later today.

    FT writes that “Tesco, which plans to roll out hundreds of Fresh & Easy stores in California, Arizona and Nevada, has become a bugbear for the UFCW, which represents more than 1.3m employees at US supermarkets.

    “The union launched the campaign against Tesco after being spurned by its US management. It includes a lawsuit against Tesco’s distribution centre and work­ing with local activist groups.”

    KC's View:
    Without judging whether Obama or McCain is a better candidate, I’d like to suggest that when either of them talks about not being a typical politician, it’d be refreshing if they’d reinforce the point by actually taking sides against one of their traditional constituencies.

    Here’s the question that ought to be posed at the debates: Tell us one thing that you will do that will infuriate your base, and explain your rationale for making that decision of taking that position.

    Published on: June 26, 2008

    Kroger said yesterday that it is recalling all ground beef sold by its stores in Michigan and central/northern Ohio between May 21 and June 8, saying that federal regulators have established a link between some beef products sold by the company and E. coli illnesses reported during that time period.

    Business First of Columbus reports that the Ohio departments of health and agriculture used genetic fingerprinting to link an E. coli-tainted beef sample traced back to Kroger “to the outbreak that has investigators looking into 19 cases statewide that have been linked genetically to cases in Michigan. In Central Ohio, there are 15 confirmed E. coli cases and two probable cases.”

    Kroger said it is asking customers to check their freezers for ground beef products - regardless of packaging - with sell-by dates of May 21 through June 8 and return them to stores for a full refund or replacement. And, the company said it is working with local, state and federal health authorities to identify the supplier of the specific type of ground beef that may have caused the illnesses.

    KC's View:
    “Why” and “how” will be extremely important here, but it seems to me that in some ways the biggest concern is the fact there is yet another headline questioning the safety of products in which people thought they could have confidence.

    Published on: June 26, 2008

    The New York Times reports this morning that Anheuser-Busch’s board of directors is expected to reject an unsolicited $46.4 billion acquisition bid from Belgium-based InBev, which the paper says “is likely to become a bitter fight that may even spill over to a political debate about Anheuser-Busch, the maker of Budweiser and one of the nation’s most prominent family-run companies.

    “In an effort to justify rejecting InBev’s $65-a-share bid, Anheuser-Busch is expected to announce an extensive reorganization aimed at bolstering profits that will include cutting more than $500 million in costs … The savings will come from reducing marketing expenses and possibly shedding assets like its Busch Gardens theme park business and its packaging unit. The reorganization, which is expected to include scores of job cuts, may anger some residents and politicians in St. Louis, where the company’s headquarters is located, who had been pressing Anheuser-Busch to reject the bid in part to save local jobs.”

    It is anticipated that InBev could attempt a hostile takeover of the company, possibly going directly to shareholders and bypassing management.

    And, the Times writes, “The wild card in the takeover battle remains Grupo Modelo, the Mexican maker of Corona, which is 50 percent owned by Anheuser-Busch. Anheuser-Busch has sought to acquire the other 50 percent of Modelo to bolster its defense. But Modelo has indicated it will not sell to Anheuser-Busch and has even held discussions about a deal with InBev.”

    KC's View:

    Published on: June 26, 2008

    The Chicago Tribune reports that “in an effort to get New Yorkers to eat better, the city is preparing to issue licenses for 500 food carts that will be allowed to sell only fresh fruit and vegetables. The carts, which are expected to start appearing on the streets later this summer, are restricted to low-income areas that have the fewest sources of fresh produce in the city.”

    This is yet another part of the city’s broad efforts to create a healthier population. As the Tribune notes, the move comes in the wake of an indoor smoking ban, restrictions on trans fats, and an ingredient labeling requirement imposed on the city’s fast food restaurants.

    The story says that “of the estimated 4,100 street vendors in New York, city officials say that only about 10 percent currently sell fresh produce and most are limited to Midtown, where they cater to lunch-hour crowds, or relatively affluent neighborhoods.

    “To boost demand for fruit and vegetables, the city is launching a public-education campaign to raise awareness of the benefits of eating more produce.

    “Health officials hope that at least 75,000 New Yorkers will eat more apples, carrots and other produce as a result of the cart program. That could potentially reduce diabetes, heart disease, cancer, high blood pressure and other maladies associated with poor diets.

    “ A 2004 survey found that 90 percent of New Yorkers said they had eaten fewer than the recommended minimum of five servings of fruit and vegetables on the previous day, and 14 percent said they had eaten none at all. And the city was jolted this spring by a report that New Yorkers had packed on a combined total of 10 million pounds in just two years, with a 17 percent increase in the obesity rate. ”

    Meanwhile, at the other end of the country, the Seattle Times reports that the home to Amazon, Boeing and Starbucks also increasingly is “a burgeoning paradise for those who steer clear of meat (vegetarians) and those who avoid meat, eggs, milk and other animal products (vegans) … There's a vegan doughnut shop (Mighty-O), vegan bakery (Flying Apron), vegan grocery (Sidecar for Pigs Peace), vegan-friendly bar and ice cream parlor (Georgetown Liquor, Molly Moon's), a vegan deli (Hillside Quickie) and nearly a dozen vegan restaurants. And that's just in Seattle proper.

    “Restaurants that cater to vegetarians and vegans keep sprouting around Puget Sound, particularly in Seattle, the Eastside and Olympia. Many others offer vegetarian or vegan options. Most of those that don't are willing to omit or add a few ingredients, or at the very least, have a working knowledge of common no-nos. VegFest, an annual festival of vegetarian cuisine and lifestyle organized by the advocacy group Vegetarians of Washington, drew 15,000 this year.”

    KC's View:

    Published on: June 26, 2008

    The Orlando Sentinel has a piece about the burgeoning supermarket competition in central Florida, where “stores seem to be dividing into three distinct groups: those that serve affluent shoppers, those that sell to price-sensitive consumers and those that specialize in ethnic or hard-to-find specialty foods. … The down economy has spurred a major shakeout. Strong players such as Publix are becoming more dominant and weaker ones such as Albertsons and Winn-Dixie are selling stores or revamping locations to survive.”

    Things are expected to get tougher soon, as Aldi opens 13 stores there and Costco and Sam’s continue to aggressively “siphon away customers,” even as Whole Foods opens a new store designed to appeal to the upper end of the market and Publix looks to expand its appeal to Hispanics and shoppers interested in organics.

    KC's View:

    Published on: June 26, 2008

    The Detroit Free Press reports that a new study by the University of Texas suggests that people with a healthy weight – as opposed to being obese – tend to eat more fruit and fiber.

    According to the story, “Overweight and obese subjects consumed more total fat, artery-clogging saturated fat and cholesterol. Calorie intake between overweight and leaner participants was about the same; the groups just ate different foods.

    “As researchers and health professionals continue to seek answers for safe and effective weight-loss options, one thing remains clear: Enjoying a healthy diet, especially one that includes fruit and fiber-rich foods such as whole grains, vegetables and legumes is key to a healthy life.”

    KC's View:
    Good news, at least in my house…where I’m afraid I simply don't eat enough veggies (though I consume enough V-8 to make up for it), but certainly eat enough fruit…especially bananas, watermelon and mango. So I’m feeling good…

    Published on: June 26, 2008

    The Nielsen Company is out with new research suggesting that while food prices may be rising, they may not have an enormous impact on July 4 consumption habits.

    According to the research, during the four weeks surrounding the Independence Day holiday consumers are expected to spend $215 million on more than 110 million pounds of hot dogs, $117 million on 25 million pounds of ground beef, not to mention will purchase 23 million cases of beer and more than 240 million cases of soft drinks.

    KC's View:
    Count me in as being responsible for at least some of this. Because, as you all know, I like mine with lettuce and tomato, Heinz 57 and French fried potatoes, big Kosher pickle and a cold draft beer…

    Published on: June 26, 2008

    • The Los Angeles Times reports that, as expected and noted earlier this week on MNB, Kroger-owned Ralphs “unveiled a lower-price policy Wednesday in what it said was a nod to beleaguered consumers struggling to pay rising food and gasoline prices. But the new plan also appears to be part of a wider business strategy to grab market share from rivals that has worked successfully for Ralphs' corporate parent in other regions.

    “The chain, which operates 262 supermarkets in Southern California, said it would lower the prices of thousands of goods that its customers buy most often. Additionally, it will retool its loyalty card program so that shoppers gain points based on purchases and collect cash rebates. The grocer has also changed its double coupon program, capping the savings a shopper can garner.”

    • Food Lion has launched a “Gas Guzzler Giveaway” promotion, saying it wants “to help ease customers’ financial pain at the pump and encourage them to sign up for its electronic newsletter to find out about weekly specials. Each week during the 10-week promotion, 10 subscribers to Food Lion’s Shoppers’ Companion weekly e-mail newsletter will be selected at random to be given $50 Visa gift cards, which they can use to purchase gas.”

    USA Today reports that General Mills has announced that it is raising its cereal prices and may raise other prices as it sees its supply chain expenses rise nine percent in the current fiscal year.

    • The Financial Times reports this morning that Carrefour plans to rebrand its Champion supermarket chain in France, recasting all of its thousand stores as Carrefour Market. The company said that a rebranding test in 13 stores led to a 10-15 percent sales increase.
    KC's View:

    Published on: June 26, 2008

    Bloomberg reports that Rick Dobry, president of Cott Corp., is departing the company as part of its overall strategy to cut costs and refocus on its private label soft drink business.
    KC's View:

    Published on: June 26, 2008

    Yesterday, MNB reported that Tesco’s Fresh & Easy plans to hire 250 people as it ends its self-imposed three-month time out to tweak its small store format in Southern California, Arizona and Nevada.

    We sorta got that wrong, because of an wayward finger that hit the “2” instead of the “7.” It is actually 750 people being hired by Fresh & Easy.

    MNB apologizes for the error, which can only be blamed on too little sleep and too little caffeine.

    KC's View:

    Published on: June 26, 2008

    Yesterday, commenting on a piece about produce “safety myths,” I wrote: “Traceability. Transparency. The case for both is compelling, and I simply do not understand why some people and organizations resist.”

    To which one MNB user responded:

    Do you ever get tired of saying the same things over and over and over and over…?

    Funny, my kids often have said the same thing to me. To which I always have pointed out that if they’d listened to me the first time, I wouldn’t have to repeat myself.

    Sort of the same deal goes here. I promise you that when the US food industry becomes totally transparent and with complete traceability, I’ll shut up about it.

    By the way, MNB user Robin Richardson responded to the same commentary thus:

    You are right. Your are right. You are right. Stop fighting traceability!

    A story yesterday about Peapod prompted MNB user Ellen Ornato to write:

    I recently placed and received a Peapod order and there was a fuel surcharge on there. Even at $8 for delivery I still benefit from the savings of my time and gas (not to mention spontaneous spending). However, it wasn’t until I received my order that I remembered how many plastic bags they use; often they pack one item in a bag. It honestly made me rethink using this service.

    Excellent point. All home delivery services ought to be thinking of ways to burnish their “green” credibility.

    Or, as my daughter would say, “street cred” instead of “street crud.”

    Commenting on projections yesterday that China will be the world’s second largest retail market on the planet by 2012, I suggested that it’ll probably be number one by 2013.

    One MNB user commented that this was unlikely to happen as long as his wife was in the US with credit cards. (This user’s name is being withheld to protect him…but I have to admit that he made me laugh out loud.)

    Another MNB user wrote:

    I think your prediction of 2013 is pretty spot on. I think it might accelerate for a couple of reasons:

    • The current US economy: Consumer confidence is at an all time low along with this recession.

    • Technology boom in China: China's investment in technology, especially in their infrastructure, lays the ground work to the retailers advantage.

    • The Summer Olympics: The world is about to see more of China than ever before, truly giving global access to an under-tapped market place - how many people in that country? Advertisers, CPGs and the like are scrambling to get commercial airtime in a market (TV) that has seen ad space dwindle with the Internet based ad growth. This will give, be it short, a resurgence to TV ad space, hence increasing retail growth.

    And even with their devastating earthquake, a country and people like China will rise above it, build a strong economy, and again retailers will be ready to introduce themselves to untapped markets within China.

    So, 2013 is a great prediction. I'm thinking more 2011...

    Another MNB user wrote:

    Forget about China’s growing retail size and when it will surpass the US. What scares me the most is the SALE of the US economy to China and other foreign countries!!

    With the devalued dollar and the growing economies of China and India, the excess money in the oil rich Middle East and the strong Euro, our companies are being bought up like a cheap yard sale…….evident in Del Monte’s recent sale of Starkist to an Asian company among many, many more.

    Who knows, by 2013, it might be China declaring war on the US for our resources, but not with guns and bombs. They will appear and say “P.S. We happen to OWN you.”

    Another MNB user wrote:

    Let’s take defective and poisonous products out of the equation for a second and consider:

    • US manufacturing lost to China
    • US jobs lost to China
    • US quality of life lost to China through increased gas prices, food prices, etc.

    Now, is all this worth losing for cheap trinkets and products that poison our children, the vulnerable, and the earth? Shouldn’t each of us boycott “Made in China”. AND, please don’t make me out to be an isolationist or protectionist.

    On the subject of locavores, MNB user David Carlson wrote:

    There's one infallible way to determine the "real" food miles of an item: Price. The more fossil fuels burned transporting it, the higher the price is going to go. When you're dealing with commodities like produce, it's pretty simple, and will only get more pronounced as fuel prices continue to go up.

    MNB user Liz Schlegel wrote:

    Thanks for this coverage. Here's the thing - it isn't JUST about food miles. It's about supporting local agriculture and keeping green space green. Here in Vermont, green fields and dairy farms are a critical part of the landscape - not just for tourists, but for locals too. If we don't buy the products they produce, they will be in trouble - and so will we.

    And, as you say, it's about quality and flavor. To which I would add relationship and community - I know what our local dairy farmer contributes to our community (one's a film-maker, actually) - and I know what the lettuce grower, apple growers, salsa makers, flour company, cheesemakers and the beer brewers do to make Vermont special. I'm proud to show my appreciation - and my good taste - by buying their products.

    Another MNB user demurred:

    Locally grown is wonderful concept. The problem is, it is virtually impractical. There are not enough consumers to eat all the apples, cherries and walla-walla onions grown in Washington and Oregon. Although that would probably change in about 5 years when all the growers went out of business and you could buy individual trees from the bank that got the orchard back in bankruptcy. Plus it cut off the need for immigrant labor…we’d have so many skilled unemployed orchardmen that would be anxious to work.

    The Midwest can produce shiploads of corn and beans during about 100-120 day season, but this is dent corn not really suitable for human consumption at least in the ordinary sense. We have lots of milk and wheat as well.

    The program would work in southern California, large population, large groups and nearly all year growing season…try it in Kansas City.

    I don’t know, but I would guess you could haul a railcar load of apples across the country for about the same or less as a bunch of truck farmers hauling 5-10 bushels at a time to the farmer’s market.

    But MNB user Lisa Malmarowski wrote:

    Leave it to the media and 'thinkers' to make eating local really really complicated... Simply put, I want to know where my food comes from. I want to be able to ask and get a clear answer about the tomato on my plate... and most often that means it came from somewhere smaller and closer to my hometown.

    Do your elaborate calculations about carbon foot prints and fossil fuels - it just confuses the issue. And those calculations often don't figure in the impact of pesticide use (and the petroleum involved in that)... but that's a whole 'nother issue!

    On the subject of the makers of high fructose corn syrup launching a promotional campaign, Ash Byrnes wrote:

    My dad sent me a link to the "HFCS Fights Back" article. As the molecular basis of nutrition is an interest of mine, I really wanted to share a few thoughts on high fructose corn syrup.

    To start off, I will give the corn refining companies the benefit of the doubt. After all, stating "Since HFCS consumption is correlated with obesity; therefore obesity is caused by HFCS consumption" without stating how this works would be a Cum hoc, ergo propter hoc fallacy.

    But even setting these scientific studies aside, the amount of fructose in our diet is still alarming.

    Firstly, fructose is more likely to be in the more reactive open chain form rather than glucose. This is because the 5-membered ring of fructose is more constrained than the 6-membered ring of glucose. All monosaccharides spontaneously react with proteins, which is extremely problematic as it alters the structure and therefore function of proteins in the body. These can lead to age-related chronic disorders and is particularly harmful in diabetics.

    Secondly, the body is not equipped to uptake as much fructose as it is glucose. The first step in metabolism of any monosaccharide is adding a phosphate group. The enzymes that perform this step specifically for glucose can handle up to twenty times the sugar concentration than those responsible for phosphorylating only fructose. Additionally, glucose metabolism can take place anywhere in the body, whereas fructose can ONLY be metabolized in the liver. Humans simply haven't evolved (or "weren't created to have," take your pick) to consume large amounts of fructose.

    So, pairing the increased reactivity of fructose with the human body's innate inefficiency to metabolize it, we have a serious problem. Essentially, consuming HFCS "spikes" the fructose content in the blood stream, where it travels who knows where throughout the body, reacting with who knows what.

    So true, we may only be able to point out "links" between HFCS and obesity at this point. But, for me at least, I don't want to place excess fructose in my body if I have a choice in the matter. Sure, it may turn out that HFCS may not be as bad for us as we think, but I can't see anyway that it could be good for us either.

    I’m not sure what gives me the bigger thrill, knowing that fathers are sending MNB to their daughters, or having those daughters use Latin in their emails.

    BTW, I have no idea what “phosphorylating” means. I clearly should have paid attention in chemistry class. (Or did they cover that in biology?)

    And on the same subject, MNB user Chelle Blaszczyk wrote:

    Interesting that the Corn Refiners Association is spending money on advertising. In our local newspaper, I made a comment in an article about us using crystalline fructose and evaporated cane juice because they are better for our bodies than HFCS. Within 3 days (including mailing from Washington DC) a packet of information on HFCS and why it isn’t bad for you along with a letter from the President telling me that I was misleading our customers by saying that in the newspaper. And the journalist who wrote the story also received the same information… I know it is easy to keep up what is being printed; but for the Corn Refiners Association to send information out that quickly was amazing to me. Makes me believe that there is some money being made somewhere…

    No doubt about that. They must have their own war room…

    Let’s test it out.

    I’m happy to say right now that as much as possible, we avoid all products made with HFCS in our household. And I’ve got my kids looking at labels to make sure that what we’re buying doesn’t have this ingredient. We’re working on the assumption that it isn’t good for us…and I think, no matter how many publicity campaigns get launched, more and more people likely are to be doing the same.

    KC's View: