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    Published on: June 30, 2008

    The Wall Street Journal reported over the weekend that Wal-Mart plans to change the logo that it has used for two decades, converting all of its stores to what the paper describes as “white letters on a burnt-orange background followed by a white starburst.” And, the Journal reports, “In a change, the name will appear as one word: Walmart. When the company first started in 1962, the name was hyphenated by a dash. But in the past decade, the dash has been replaced by a star on stores and the corporate letterhead.”

    Wal-Mart hasn’t officially unveiled the new logo and isn’t even commenting on the Journal report, but it apparently has been seen in documents filed for a new store in Memphis, Tennessee.

    “The store signs on Wal-Mart's approximately 3,600 existing U.S. stores won't be taken down wholesale, but they will be changed over time, says a person close to the company,” according to the story. “Wal-Mart's new starburst logo mimics the cleaner, brighter sign of competitor Target Corp., with its iconic red-and-white bull's-eye.”

    And, the paper writes, this is part of broader effort by Wal-Mart to contemporize both its operations and its image: “In the past decade, as Wal-Mart ramped up store growth and moved from rural areas into suburban and urban markets, it encountered increasing opposition from neighborhood groups and city planners who objected to what they contended was the uniformly ugly look and size of the stores, which averaged about 200,000 square feet.

    “In recent years, Wal-Mart has tried to assuage neighborhood groups, making concessions on size and offering facades that better blend into the surrounding neighborhoods, from timber gables in Colorado to pastel stucco in Florida.”

    KC's View:
    Listen, you have to give the folks at Bentonville a lot of credit. They don't seem to rest on the laurels very often, and always seem to be looking for ways to maintain their momentum…Some of it is image, some of it is actual, and some of it is an alchemy of the two.

    Biggest problem with this logo/name change is that all of us who have set up “Wal-Mart” in our spell-check will now have to change it to “Walmart.”

    Published on: June 30, 2008

    The Washington Post reports that the US Food and Drug Administration (FDA), after weeks of searching for the tomatoes contaminated with salmonella that have sickened more than 800 people, now is saying that it may not just be tomatoes that are causing the problem.

    "We continue to see a strong association with tomatoes, but we are keeping an open mind about other ingredients," said Patricia Griffin, a top epidemiologist with the US Centers for Disease Control and Prevention (CDC).

    "We have to re-examine the whole thing,” David Acheson, the FDA’s top food safety official, tells the Post. "We are concerned there is something out there still exposing people to this salmonella saintpaul strain."

    Meanwhile, the FDA also is saying that despite all the recalls during the past few weeks, some of the tomatoes that could be causing salmonella poisoning may still be on the market.

    The Post describes the process of tracking the problem – and the difficulties in nailing down the specific cause, this way: “Investigators have focused their attention on Southern Florida and Mexico, the main suppliers of tomatoes to the United States when the outbreak began in mid-April.

    “Teams including microbiologists and other experts have spent the past week in both places, scouring farms, packing sheds and warehouses for evidence of the outbreak strain. They have collected more than 1,700 samples from fields, irrigation wells and storage containers, Acheson said, but so far none have tested positive.

    “Acheson said the investigation has proved especially difficult because of the timing of the outbreak and a common industry practice called repacking. The illnesses began just as the main source of tomatoes shifted from Mexico to Florida.

    “After they are picked, tomatoes are often repacked to meet the customer specifications. In the process, tomatoes from many farms are combined, making it harder to trace a shipment to a particular restaurant, for example, back to where it was grown. In the spring, tomatoes from Mexico are shipped to Florida for repacking and vice versa. Acheson said they have no evidence linking the outbreak to the mingling of tomatoes from those places.”
    KC's View:
    Nobody knows anything. And, at the risk of repeating myself (which, I know, annoys some folks), it highlights the need for improved transparency and traceability.

    Published on: June 30, 2008

    The New York Times reports this morning about a new milk jug design being adopted by Wal-Mart and Costco, one that reportedly is cheaper to ship, better for the environment, keeps milk fresher and costs less.

    Which sounds like a win-win-win-win proposition.

    Except that customers don't like it.

    “The jugs have no real spout, and their unorthodox shape makes consumers feel like novices at the simple task of pouring a glass of milk,” the Times writes, noting that several consumers that it talked to absolutely hate the thing. “But retailers are undeterred by the prospect of upended bowls of Cheerios. The new jugs have many advantages from their point of view, and Sam’s Club intends to roll them out broadly, making them more prevalent.

    “The redesign of the gallon milk jug, experts say, is an example of the changes likely to play out in the American economy over the next two decades. In an era of soaring global demand and higher costs for energy and materials, virtually every aspect of the economy needs to be re-examined, they say, and many products must be redesigned for greater efficiency.”

    Even if customers don't like it.

    KC's View:
    Because I buy virtually all my milk at Stew Leonard’s, which only sells it one way – a half-gallon cardboard container – I have no personal experience with these new jugs. But I promise to pick one up next time I’m either at Costco or Wal-Mart, and report back.

    It seems to me that this is an instance where shoppers need to be educated about why the change is taking place. Tell me why the new jugs have been adopted – and all the reasons cited in the Times story sound like good ones – and I’ll be more willing to go along. But just make the change and don't give me an explanation, and I’ll be less accepting.

    Published on: June 30, 2008

    Big piece in USA today this morning about food-borne botulism, which the paper notes “is so rare that only about 30 cases are reported in the U.S. each year — almost all from home-canned foods, says the Centers for Disease Control and Prevention. Commercially canned foods are one of the safest foods because they're cooked long and hot enough to kill bacteria, unlike fresh produce, in which there is no processing ‘kill’ step.

    “Even so, botulism is a concern because it's so deadly, claiming 8% of victims, often because breathing muscles become paralyzed. The toxin flourishes in the low-oxygen environment of a sealed can or jar in low-acid foods, such as vegetables, meat, poultry, fish, milk and olives.

    “Proper canning prevents botulism. But undercooking, and leaky can seams that let in bacteria after cooking, may cause it.”

    And, the paper reports, new evidence suggests that last summer’s alert about botulism toxin in hot dog chili sauce made by Castleberry's Food occurred because of “poor maintenance” and a failure of management to deal with the issue – which now has led the US Food and Drug Administration (FDA) to increase its inspections of other canning plants around the country.

    KC's View:
    It is worth noting both that Castleberry's disputes the specific FDA findings about its practices…and, perhaps more alarmingly, that Castleberry's management hadn’t even seen the FDA report until USA Today obtained it from sources and then showed it to the company.

    That’s the piece I don't understand – that findings about an event that is a year old haven't even been shown to the company about which the findings were made.

    How is this system supposed to work? Maybe there is a rationale, but I don't get it.

    Published on: June 30, 2008

    Terrific piece in the New York Times over the weekend about Ohio-based Heinen’s Foods that looks at the specific challenges facing food retailers in a time of economic stress.

    According to the paper, “It’s a tricky time to be selling the high-quality foods Heinen’s offers. Egg prices in May were up 18.2 percent from a year ago, while bread rose 15.9 percent and milk was up 10.2 percent, according to Consumer Price Index data. With those kinds of spikes, the big question most consumers are asking is whether it’s time to switch grocers.” While Heinen’s customers are indeed complaining a lot about prices, the Times writes, most seem to be remaining loyal.

    “Their loyalty suggests a couple of things about the kind of middle- and upper-class shoppers Heinen’s tends to attract,” the Times writes. “While they are concerned about price, they’re increasingly thinking about their foods’ origins and quality. So they would just as soon not trade down from a store like Heinen’s that offers handsome local radishes and an excellent stir-fry station.”

    Tom Heinen tells the Times about the strategies that his company is employing to keep customers coming back, and the paper then frames these efforts as questions that more customers ought to be asking when they go food shopping. Among them:

    • “Does (your supermarket) offer fair prices on unique products? Is there a conscious effort to stock interesting and inexpensive wines? Good olive oil for under $10? If not, ask why.”(Heinen’s is doing this…and finding out that unique products give it a differential advantage.)

    • “One way to keep prices low is to buy local produce, since it travels fewer miles to the store and tends to pass through fewer hands. Heinen’s now has a produce buyer whose primary job during the warm months is to shop the local produce auctions. The chain buys from 45 farmers, most of whom are no more than two hours away … Local products aren’t always less expensive. Heinen’s carries a goat cheese, for instance, that costs about $24 a pound. But grocers generally promote such items anyway, since many shoppers like the idea of supporting nearby businesses and buying items that didn’t consume too much diesel fuel to get to the store.”

    • “This is what you have to ask yourself: If you are patronizing a grocer that doubles your coupons, discounts your gasoline or runs other expensive promotions, how exactly are they staying in business? Are they gouging you on the second most popular brand when the most popular one goes on sale? Do prices bounce around so frequently that it’s impossible to keep the baseline in your head?

    “Shoppers can play the discount game and win by shopping six different stores, buying only the sale items and products they have coupons for, buying in bulk and then cooking from the pantry and freezer. But if you don’t want to live that life, you shouldn’t beat yourself up. Demanding more from a single store on price — and quality —may be a better way to fill your belly.”

    KC's View:

    Published on: June 30, 2008

    The New York Times this morning reports that “at least 29 countries have sharply curbed food exports in recent months, to ensure that their own people have enough to eat, at affordable prices.

    “When it comes to rice, India, Vietnam, China and 11 other countries have limited or banned exports. Fifteen countries, including Pakistan and Bolivia, have capped or halted wheat exports. More than a dozen have limited corn exports. Kazakhstan has restricted exports of sunflower seeds.

    “The restrictions are making it harder for impoverished importing countries to afford the food they need. The export limits are forcing some of the most vulnerable people, those who rely on relief agencies, to go hungry.”

    And, the Times reports, “The new restrictions are just an acute symptom of a chronic condition. Since 1980, even as trade in services and in manufactured goods has tripled, adjusting for inflation, trade in food has barely increased. Instead, for decades, food has been a convoluted tangle of restrictive rules, in the form of tariffs, quotas and subsidies.

    “Now, with Australia’s farm sector crippled by drought and Argentina suffering a series of strikes and other disruptions, the world is increasingly dependent on a handful of countries like Thailand, Brazil, Canada and the United States that are still exporting large quantities of food.”

    KC's View:
    Meanwhile, of course, the cost of exporting virtually anything is going up.

    One gets the sense in reading all these stories of a kind of domino effect taking place, as in one of those enormous displays where they push one domino over and it causes this cascading effect on thousands of pieces that creates a specific image.

    Except in this case, we don't yet know what the final image will be. It’s not looking good, though.

    Published on: June 30, 2008

    Interesting piece on Slate.com about Costco, essentially asking why that company has a reputation for being more generous with its employees than Wal-Mart, and if the reputation is indeed deserved, does it make good business sense?

    At least according to Slate, the answer to both questions seems to be “yes.”

    “It's not hard to make a case that Costco pays employees more,” Slate writes. “The most relevant comparison is between Costco and Sam's Club, Wal-Mart's membership warehouse, since both business models rely on membership fees for a large percentage of revenues. A Sam's Club employee starts at $10 and makes $12.50 after four and a half years. A new Costco employee, at $11 an hour, doesn't start out much better, but after four and a half years she makes $19.50 an hour. In addition to this, she receives something called an "extra check"—a bonus of more than $2,000 every six months. A cashier at Costco, after five years, makes about $40,000 a year. Health benefits are among the best in the industry, with workers paying only about 12 percent of their premiums out-of-pocket while Wal-Mart workers pay more than 40 percent.”

    Beyond the math, Costco makes the argument that because it takes better care of its employees, these workers tend to be more productive and are less likely to leave the company – which saves money when it comes to training new workers. However, there is always the other argument – that Costco could trim its wages and benefits a little bit and increase its margins without much impact on productivity, but with a big boost to profitability. There is also the implication in the piece that Costco could be a bit high-end for current economic times:

    “Take a look at the two retailers' summer offerings: While Wal-Mart sells a $199 swing set, at Costco we find a "summer fortress play system" for $1,499.99. A set of patio furniture at Wal-Mart was $199 in early summer; a patio heater at Costco is the same price. Costco's Web site promotes a $5,000 hot tub with a stereo. On Wal-Mart's site last week, the most prominent item was a $48 bike—after all, its impoverished customers can't afford gas these days.”

    However, what’s interesting about the piece is the suggestion at the end that because Costco’s corporate values reflect the beliefs of its CEO, Jim Sinegal, this approach will not necessarily survive him…and certainly won’t be adopted elsewhere:

    “Sinegal's kindliness is impressive, but he's also 72 years old and thus won't be around forever. Perhaps he's created a corporate culture strong enough to outlast him, but that's impossible to predict. And until Costco boosters can make a concrete case that the company's generosity—however welcome—has a duplicable effect on the company's bottom line, it seems unlikely that a crowd of Jim Sinegals is going to emerge in the nation's executive suites.”

    KC's View:
    I could be wrong about this, having only met Sinegal once and then very briefly. But it is my impression that while Costco may reflect his personal values, these values are rooted in hard-nosed business sense, not kindness. (I’m not suggesting that he isn’t a kind man, but that’s not the primary motivation here.)

    I would also be surprised if he hasn’t done his best to create a succession plan that will honor the company’s long-held approach to business and employees. In a lot of ways, that may be the best measure of a CEO’s success – the creation of a sustainable corporate culture that outlives him or her. Which, if you are a retailer, means managing not for Wall Street, but for Main Street.

    Published on: June 30, 2008

    The Times of London reports that German discounter Aldi plans to ramp up its expansion plans in the UK, opening one store per week this year and eventually having 500 stores in Britain and Ireland within five years.

    The company is said to be convinced that the global economic crisis gives it an advantage in the marketplace, and that it can exploit people’s need for discounted groceries to its own advantage.

    KC's View:

    Published on: June 30, 2008

    CVS Caremark and Microsoft said Friday that they plan to collaborate to offer consumer health care solutions that will allow people to manage their health and wellness, and control their health information.

    The application, called Microsoft HealthVault, permits consumers to download a comprehensive list of prescriptions filled at CVS/pharmacy or through CVS Caremark by mail as well as save copies of their health records, including laboratory tests, from visits to MinuteClinic, the retail-based health clinic subsidiary of CVS Caremark, into their individual HealthVault record. It will also be possible to upload personal health data, such as blood pressure or glucometer readings, from HealthVault into CVS Caremark applications for use by pharmacists or nurse practitioners in providing care.

    These services are expected to be available to consumers beginning in the fall of 2008.

    KC's View:

    Published on: June 30, 2008

    The Washington Post reports this morning on the bottled water marketing phenomenon, noting that “the bottled-water industry is engaged in an intense effort to convince Americans that the stuff in bottles is substantially different from the stuff out of the tap.

    “But empirical tests have repeatedly shown that they are generally the same. In blind taste tests, many people who swear they can differentiate between bottled-water brands and tap water fail to spot the differences, and studies have shown that both are fine to drink, and both occasionally can have quality problems.”

    And, the Post writes, “There is abundant irony in such marketing: The supply of clean drinking water across America and in many other countries is an underappreciated scientific and technological achievement that in many ways rivals putting a man on the moon. Trillions of dollars have been spent to get clean drinking water to people at virtually no cost -- and it is people in precisely these countries who seem willing to pay premiums of 1,000 percent to 10,000 percent for bottled water.

    “As the wealthiest billion people on the planet increasingly turn to bottled water, moreover, the poorest billion have no little or access to clean water.”

    And there are additional ironies. For example, in Fiji the bottled water business helps to fund efforts to develop an infrastructure that will bring better quality water to local residents. In many American cities, however, consumer preferences for bottled water over the tap variety means that confidence has been eroded in the local infrastructure that puts free water into the pipes.

    KC's View:

    Published on: June 30, 2008

    Dow Jones reports that at Tesco’s annual shareholders meeting last week, CEO Terry Leahy said that the company is “confident of sustaining strong growth in the future. I'm confident the business is well placed to meet the challenges ahead."

    Leahy made the statement just two weeks after the company warned that it expects the sale of both food and nonfood items to slow.

    • The Times of London reported over the weekend that, as expected, Tesco will “lodge an appeal against the findings of the Competition Commission after the latter’s two-year probe into the grocery sector.

    “Tesco is expected to say that while it accepts some of the broad recommendations of the report, it does not agree with its ‘competition test’.

    “This forms one of the key recommendations of the report and has huge implications for the industry. The test would be applied to planning decisions on large stores and includes action to prevent land agreements restricting competitors from entering the market. The test has been proposed in an attempt to ensure that consumers in areas dominated by one retailer do not lose out.”
    KC's View:

    Published on: June 30, 2008

    The media is filled with stories that include the phrase “young adults are engaging in risky behaviors,” and they usually involve sex and/or drugs.

    But not the newest edition of Food, Nutrition & Science from The Lempert Report, which contains the following sentence: “Young adults are engaging in risky behaviors like eating raw or undercooked foods of animal origin…”

    But this is no joking matter. FNS reports that a recent study by the American Dietetic Association suggests that while “young adults are often overlooked as a population to be concerned with because they are typically not considered to be at risk for foodborne illness,” the strong belief is that “symptoms of foodborne illness are often mistaken for flu symptoms. In conducting this survey, researchers found that young adults aged 18 to 29 – and with education beyond high school – are in fact more likely to engage in risky eating behaviors than individuals in other groups.”

    And, there is more alarming news: “Of the 4,548 students surveyed, 53% consumed raw, homemade cookie dough, 33% consumed fried eggs with runny or soft yolks, 29% consumed sushi, 29% consumed raw sprouts, 11% consumed raw oysters, clams or mussels, and 7% consumed raw hamburger. Men ate significantly more risky foods than women. White participants engaged in significantly more risky eating behaviors than non-white participants.

    “Interestingly, the majority of young adults surveyed had little exposure to food safety education. Sixty percent of them had never held a job serving food; 76% had never held a job preparing food. Seventy-seven percent had never completed a course in nutrition, and 88% had never completed a course in food science.”

    The new edition of FWS has some suggestions for how best to address this situation, along with numerous other science-related food industry stories…including an update on the tomato/salmonella situation.

    For further information about Food, Nutrition & Science, go to:

    http://www.foodnutritionscience.com/

    KC's View:

    Published on: June 30, 2008

    • Caribou Coffee said last week that it plans to offer exclusive La Minita Peaberry coffee, while supplies last. The company purchased the entire year's harvest of the high-quality, hand-sorted bean, from growers in Costa Rica.

    • In London, a food purveyor apparently has scored a public relations coup by selling a gourmet burger made out of varying ingredients from seven countries for the equivalent of $185 apiece. The burger was only available for two days, and sold out the 100 available patties during that period of time.

    The name of the purveyor: Burger King.

    All proceeds from the sale of the burger were donated to the charity, Help a London Child.
    KC's View:
    Both of these stories are about differential advantages…about making a statement in the marketplace. MNB approves. (Even if MNB dos not approve of Burger King in general…)

    Published on: June 30, 2008

    MNB posted a long and scientifically phrased email last week from Ash Byrnes about the relative merits of Hugh Fructose Corn Syrup, using a lot of words I didn’t understand…and expressing views that not everybody agreed with. MNB user Jerome Schindler, for example:

    I wonder what qualifications Ash Byrnes has to review HFCS beyond having an interest in the molecular basis of nutrition. Why should I pay more attention to her theories than the expertise of organizations such as the Corn Refiners Association, FDA etc.

    Individuals can say/write anything they want and (with limited exceptions) are shielded from legal responsibility by the 1st Amendment. Entities such as the Corn Refiners Association can be held responsible for any false, deceptive or misleading statements they make.

    The same people saying HFCS is bad for us are telling us fruit is good for us. What is in fruit? Fructose, that's what.

    I'll stick with the main line nutritionists who say that it makes no difference to the human body whether you consume sugar or HFCS. Either one should be consumed in moderation.


    The thing is that there would appear to be plenty of nutritionists on both side of the issue – not all the so-called “main line” nutritionists believe that HFCS is harmless. So I guess you choose your poison, and I choose mine.

    Another MNB user had a similar reaction as me to her scientific dissection of HFCS:

    I absolutely agree with her…I think!




    On another subject, I got the following email from MNB user Kyle Potvin:

    As a regular reader of MorningNewsBeat, I was happy to see your mention of resistant starch. One of our clients is National Starch Food Innovation, makers of Hi maize resistant starch, a natural form of resistant starch made from corn (non-GMO). We share your view that resistant starch is not a silver bullet and encourage consumers to include all three types of fiber (insoluble, soluble and resistant starch) in their diets as all three types provide different health benefits. Hundreds of scientific studies have shown that including natural resistant starch in a healthy eating plan can help weight control, maintain healthy blood sugar levels, balance energy and promote digestive health. And the best news is that foods with resistant starch can easily be added to the diet by consuming more legumes, grains and even bananas. Also, Hi-maize is found in a growing number of supermarket foods such as bread, cereal and pasta, providing the health benefits without changing the taste or texture of the products. Some experts advise Americans double their current intake which is about 5 grams to get closer to the target 15-20 grams per day to obtain these optimum health benefits.




    And, on the subject of Chinese-made generic prescription drugs being imported into US, MNB user Richard Thorpe wrote:

    Given that the FDA will not allow Americans to buy American and Canadian drugs in Canada it will be absolutely amazing if Chinese made pharmaceutical drugs are allowed in. Perhaps the amount of our debt that China owns is making our government fearful of saying no or demanding safety.




    Finally, we got the following email from Beatrice Orlandini, an MNB user from Italy:

    I like your comments about the CIES World Business Summit. I appreciated your positive views on European diversity. It helps our self-esteem.

    It strikes me to increasingly hear and read about recession in the USA. We've been coping with it for years now. We haven't recovered. Maybe we've gotten used to it. Who knows.

    But, as all things, there is a great opportunity in a recession, too. It's a great opportunity to shift your lifestyle and find a different beacon. Ethics can be a very powerful one.
    It comprises so many parts of your life! The kind of clothes you wear (says who that it all "has" to be designer?), the kind of car you drive (says who it has to be the fastest, biggest, sportiest?), the kind of food you buy and cook, the way you recycle, the way
    you shop (a few weeks ago I realized I could not force myself to buy a huge bottle of laundry detergent on promotion because there was so much, too much, useless plastic). Each and every one of us could find surprising examples.

    So if it helps us all, consumers, manufacturers and retailers, to increase our level of awareness then it is not all bad.


    I love that phrase: Find a different beacon.

    So many of us have been sailing in one general direction using a specific set of assumptions, and now we have to change course because of new storms and patterns.

    It’s changes in latitudes, changes in attitudes, but in even more profound ways than Mr. Buffett suggested.

    And, as always, it is both challenge and opportunity.

    Find a different beacon.

    I love it. If I knew how, I’d turn that phrase into a song…
    KC's View: