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    Published on: July 24, 2008

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

    I was thumbing through the New York Times yesterday and I was astonished to read the following on the Op-Ed page, in a column authored by O. Glenn Smith, the former manager of science and applications experiments for the International Space Station at NASA’s Johnson Space Center:

    “As we face $4.50 a gallon gas, we also know that alternative energy sources — coal, oil shale, ethanol, wind and ground-based solar — are either of limited potential, very expensive, require huge energy storage systems or harm the environment. There is, however, one potential future energy source that is environmentally friendly, has essentially unlimited potential and can be cost competitive with any renewable source: space solar power.

    “Science fiction? Actually, no — the technology already exists. A space solar power system would involve building large solar energy collectors in orbit around the Earth. These panels would collect far more energy than land-based units, which are hampered by weather, low angles of the sun in northern climes and, of course, the darkness of night.”

    That’s pretty amazing…but here’s where the piece really caught my attention:

    “Once collected, the solar energy would be safely beamed to Earth via wireless radio transmission, where it would be received by antennas near cities and other places where large amounts of power are used. The received energy would then be converted to electric power for distribution over the existing grid. Government scientists have projected that the cost of electric power generation from such a system could be as low as 8 to 10 cents per kilowatt-hour, which is within the range of what consumers pay now.

    “In terms of cost effectiveness, the two stumbling blocks for space solar power have been the expense of launching the collectors and the efficiency of their solar cells. Fortunately, the recent development of thinner, lighter and much higher efficiency solar cells promises to make sending them into space less expensive and return of energy much greater.”

    I don’t think I am understating the case when I say that this is amazing. My only question is this: Why aren’t we doing this already?

    It sounds to me like space solar power could be a real game changer. Harness that kind of electric power, and the nation becomes far less dependent on fossil fuels. Electric cars become a much better investment for both car companies and consumers. (And, by the way, there were stories out yesterday saying that Mini plans to have electric cars in the marketplace next year, and that Nissan will have them by 2010.) The economic impact, the geo-political impact, the environmental impact – all of these would be enormous. Think of the employment that would be created by such a project. Think of the ability to coalesce often-divergent interests around a noble and worthy goal. In fact, the only people I can think of who would be against it would be oil-rich nations and the big oil companies. I don't care much about the former, and the latter certainly could get involved in this enterprise…but that would be up to them. Play by the changed rules, or don't play.

    Think about how it would change your business – from how you light and power your stores to how you fuel your fleet of trucks. Think about how nice it would be to have a confident, employed and better empowered (in a number of senses of that word) customer base.

    Seems to me that no matter who prevails in the US elections this November – John McCain or Barack Obama – the winner ought to make a commitment on January 21, 2009, the day after his inauguration, that a space solar energy project will be tested and, if viable, completed and in place by January 19, 2017…which would be the day before the next president is inaugurated, assuming that McCain or Obama serves two terms. By 2017, the president ought to say, the US will no longer be held hostage by foreign governments that control the price and flow of oil.

    According to Smith’s piece, we’ve already spent more than $100 billion on the space shuttle and space station programs…and this would be a perfect way to convert the knowledge and expertise that we’ve developed in outer space into not just a program that will have enormously positive geo-political and environmental implications, but one that could lift the spirits and inspire the nation and the world in the same what that President Kennedy did when he set out traveling to the moon as a goal back in the early sixties.

    I don't know about you, but I am astounded by the notion that the technology exists today to make energy travel from outer space to the Earth’s surface via radio waves. That’s extraordinary. And again, I don't know about you, but pursuing this technology – while it would be what Jim Collins would call a “big, hairy, audacious goal” – strikes me as a way to get back on offense. Lately, it seems like we’ve been spending time playing defense on a wide number of fronts. I’m tired of it.

    It’s time to shoot for the stars. Literally, not just metaphorically.

    For MorningNewsBeat Radio, I’m Kevin Coupe.

    KC's View:

    Published on: July 24, 2008

    The Chicago Tribune reports that the inspector general at the US Department of Agriculture (USDA) has concluded that despite concerns about Canadian cattle afflicted with bovine spongiform encephalopathy (BSE), better known as mad cow disease, the USDA “has failed to properly track hundreds of Canadian cattle coming into the United States.”

    According to the story, “An audit, completed in March but only recently made public, said that some of the imported cattle did not have proper identification or health records despite federal regulations requiring them. The audit did not say how many cattle were improperly brought into the U.S. and inspector general spokesman Paul Feeney said auditors are not sure of that number. The report said that a lack of records meant that ‘it cannot be determined’ whether shipments other than those discovered ‘have bypassed inspection or whether this is a systemic problem.’ About 1 million cattle were imported into the U.S. from Canada in the fiscal year ending in September 2006, the period covered by the audit.”

    It is believed that people who eat meat that comes from a BSE-infected cow can contract a human variant on this disease, which is fatal.

    The Tribune writes: “When mad cow was first discovered in Canada in 2003, the USDA cut off all Canadian cattle imports, as did many other countries. But despite years of precautions, Canada continues to discover cases in which cows have BSE. In June, Canada discovered its 13th BSE case. The U.S. also discovered a case of mad cow in late 2003. It was found in a Washington state dairy cow that had been imported from Canada. Two more U.S. cases of the disease have since been confirmed — one Texas-bred cow and one in Alabama whose origin is not known. The American beef industry also suffered a financial setback after many countries banned U.S. beef. The USDA began testing suspect cattle in 2004, and about 400,000 cattle a year were tested. But in 2006 top USDA officials argued that the risk of mad cow disease was minimal, and testing was scaled back to about 40,000 head a year. About 97 million head of cattle are in the U.S. In 2005, the Agriculture Department began to allow imports of Canadian cattle, which are cheaper than U.S. cattle, in part because so many countries prohibited importing Canadian beef. There were import restrictions, though. The USDA first allowed only Canadian cattle younger than 30 months old, since mad cow is believed to fully afflict only older cattle. But in November the department also began to allow older cattle, arguing that no new mad cow cases have been discovered in the U.S. since 2006 and that safeguards were in place to minimize the risk.”

    KC's View:
    The inspector general may not be able to say whether there is a systemic problem, but I’m willing to go out on a limb and say that there is one – and it seems to exist at USDA, which rarely seems to do anything to prove that it has its act together regarding mad cow disease.

    The USDA response to mad cow problems always seems to have been to say “it is a Canadian issue,” but now we find out that it isn’t even doing a good job tracking Canadian cattle coming into the US.

    Something has to give here. And I’m beginning to wonder what it is going to take to force the kind of real and profound change that is needed in the US food safety apparatus.

    Published on: July 24, 2008

    The investment group that acquired Minyard Food Stores from the founding family in 2004 announced that it is selling 37 stores and its Hispanic-focused Carnival brand to Grocers Supply Co., which owns Fiesta Mart.

    Terms of the deal were not disclosed.

    The Dallas Morning News writes that Minyard’s “market share has been shrinking in the face of growing pressure from larger chains, including Walmart Stores Inc. and Kroger Co. Minyard president and chief executive Mike Byars said the company faced a challenge in running three brands: Minyard, Carnival and Sack 'n Save.”

    According to the story, “The deal involves 23 Carnival stores, five Minyard stores and nine Sack 'n Save stores. Minyard retains 21 stores, and it will convert the remaining Sack 'n Save stores and a Plano Carnival store to Minyards … Houston-based Fiesta, Carnival's main competitor, will take on 11 of the 37 acquired stores, and it plans to maintain the Carnival brand, Mr. Byars said.

    “Fiesta operates 15 stores in the area.

    “Other members of Houston's Grocers Supply Co., a food wholesaler that owns Fiesta, will get the rest of the stores. Grocers Supply was unavailable for comment.”

    KC's View:
    There is a sense about this story that only one shoe has dropped.

    Published on: July 24, 2008

    Interesting analysis in the Minnesota Star Tribune about the impact of the current economic decline on how people shop for food. The paper notes that many believed that consumers looking to save money would simply eat out less and spend more of their money at supermarkets for eat-at-home meals … and that price increases at retail would be absorbed by these shoppers without too much resistance, mostly because they pale compared those occurring in restaurants.

    But it hasn’t happened that way. As consumer prices have increased - five percent in the past year – “in response, people are buying cheaper, generic products instead of the more expensive national brands. They're also buying more items on sale, and using more coupons,” the Star Tribune writes.

    This “trading down” means that retailers are having to focus more on value brands and private label products – and companies ranging from Supervalu to Safeway to Costco are warning financial analysts that they will not be meeting expected and projected profit numbers for the year.

    KC's View:
    I continue to believe that even as retailers shift their focus to products that seem more appropriate to a recession-minded consumer base, it will still be the products and services that differentiate them – not just their prices – that will prove to be the long-term key to viability. After all, even when people have less money to spend they don't lose their aspirations…and good retailers will figure out how to speak to those aspirations while keeping issues like value in balance. Not easy, but retailing isn’t for the weak of heart.

    In an interview with the Star Tribune, Supervalu CEO Jeff Noddle said this week that “the company is working more closely with food manufacturers to design innovative promotions and coupons. However, he said that foodmakers are struggling with higher commodity costs and also are pressuring retailers to show better results. At the same time, Noddle made it clear that he won't allow current economic constraints and a recent slowdown in Supervalu's sales growth to disrupt the company's long-term strategy.”

    There are tactics and there are strategies. The tactics have to serve the strategies. This seems to be what Noddle is saying, and it makes sense.

    Published on: July 24, 2008

    Ahold-owned grocery chains Stop & Shop, Giant Food of Landover, Md., and Giant Food Store of Carlisle, Pa., yesterday announced their support of the Conservation Alliance for Seafood Solution’s Common Vision to help keep their selection of seafood sustainable. According to the prepared statement, “Companies that support the Common Vision make a commitment to work towards buying environmentally responsible products, making information on their seafood products readily available, and supporting policy changes that have positive environmental impact.

    The partnership with the Conservation Alliance, the statement said, “has enabled seafood buyers from these chains to use a unique system tool that ranks and compares different species in habitats around the world. A number of factors are taken into account—how plentiful the species is, how it is caught, and what effect fishing has on the species’ natural habitat. This helps them purchase seafood with an emphasis on marine conservation and sustainable fisheries.”

    The Conservation Alliance is described as being “made up of more than a dozen conservation organizations ranging from the World Wildlife Fund to the New England Aquarium to the Blue Oceans Institute. Its goal is to protect the health of the oceans and the long-term seafood supply by working with companies to develop and implement corporate sustainable seafood policies.”

    KC's View:

    Published on: July 24, 2008

    The Grocery Manufacturers Association (GMA) announced yesterday that
    C. Manly Molpus, who served as president/CEO from 1990 until his 2006 retirement, will return to the organization as interim President and CEO.

    The move follows the resignation last week of Cal Dooley, who joined GMA as president/CEO after leaving the US Congress in 2005. Dooley will become president/CEO of the American Chemistry Council, an organization significantly larger than GMA. One report said that GMA reports revenues, from membership fees and other sources, of about $24 million, while the American Chemistry Council reports revenues of about $122 million.

    One news report said that in his first year at GMA, Dooley earned just shy of $760,000 a year; that same year, the president/CEO of the American Chemistry Council made $2.1 million, and the National Journal says that this pay level makes it one of the highest paid trade association jobs in Washington, DC.

    Molpus, who became a consultant after his retirement, will return to GMA on September 2 and stay until a successor is named.

    KC's View:

    Published on: July 24, 2008

    BrandWeek reports that as meat sales begin to decline in the face of economic declines, Cargill “has launched its ‘Beef up your menu’ campaign, introducing a line of eight value-priced beef cuts with brand names more appetizing than traditional labels for cuts … Instead of merely labeling some meats as top round or flank steak, the Cargill Meat Solutions unit is dressing up store meat cases with packs of Savran roast and Maranada steaks. The beef cuts are being introduced through POP and in-store recipe cards.” This branding, it is hoped, will help to revive sales.

    KC's View:

    Published on: July 24, 2008

    • PepsiCo said yesterday that its second quarter profits were up nine percent to $1.7 billion, from $1.56 billion during the same period a year ago. Q2 revenue was $10.95 billion, up 14 percent from $9.61 billion a year ago.

    • McDonald’s said yesterday that its second quarter profit was $1.19 billion, up from a loss of $711.7 million during the same period a year ago. Q2 sales rose 4 percent to $6.08 billion from $5.84 billion.

    • Amazon.com announced that its Q2 net income more than doubled to $158 million, from $78 million a year ago; net sales rose 41 percent to $4.06 billion.

    • Anheuser-Busch, soon be to be acquired by Belgian brewer InBev, said that its Q2 net sales increase 4.6 percent to $4.72 billion, as profit rose almost two percent to $689 million.

    • Hershey said that its second quarter profit was $41.5 million, a huge increase from the $3.6 million reported during the same period a year ago. Sales rose five percent to $1.1 billion.

    KC's View:

    Published on: July 24, 2008

    MNB had a story yesterday about various initiatives that have been taking place around the country regarding the banning of plastic and paper disposable shopping bags, which prompted a number of emails from MNB users.

    Len Abeyta wrote:

    I am all for the use of reusable bags and other things that retailers can do to go to more environmental friendly packaging. What I am not in favor of is government stepping in to regulate all of this every step of the way. Every day we read where another city bans plastic or tries to. I think it would be much better to let the retailers regulate themselves, which seems to be happening, and yes the fact that it will help the bottom line doesn't hurt either.

    And Dian Tucker took note of one thing I wrote about and chimed in:

    The entire Wegmans chain has large signs at the door, reminding consumers to use their canvas bags. This sign has sent me back to my car on numerous occasions to retrieve the bags.




    Responding to yesterday’s commentary calling for a greater emphasis on retailing that delights and surprises shoppers, Steven Ritchey wrote:

    Want to wow me, or delight me when I go to the store?

    Have a clean, well-lit, well-organized store.

    Have a product mix that works in my neighborhood.

    Have people in each dept. who understand their product and can suggest different ways to cook old standards or what I can do with an unfamiliar or new product. Have people in the produce, market and deli who can explain the differences in similar products and what can be done with each one, you know, professionals, not glorified stockers. You don’t have to hit people over the head, but you can gently educate them about your products.

    Have checkers and package clerks whose focus is on the customer, not their social plans for that evening / weekend.

    Get the store managers and dept. heads out of their offices and on the sales floor to meet the customers. This should be mandated by the ownership during peak business hours. Managers need to see how their employees interact with customers, and it doesn’t hurt for management to interact with the customer also, after, don’t forget, I’m helping pay your salary. You need to know what pleases me and others so you can do more of it, and what displeases us so you can do something about that too.

    Market your products, put someone on the front sidewalk in the Spring and Summer on weekends grilling up some chickens and ribs. Have the bakery making breads and cookies throughout the day, make sure the market guy is doing his rotisserie chickens when people are in the store. All those aromas help sell product, they make you hungry. I used to love it when people would tell me (in a joking manner), I hate coming here, all the wonderful smells make me buy more than I came in for. I took it as a real compliment to my store.

    Have as many demos as you can afford on weekends. This is something I think Costco does really well. I plan my trips there for weekends to sample the demos in the store, and often buy what they are showing.

    This is not new stuff, it’s not rocket science, and it’s not expensive, and it works. Do your advertising over the internet, market to the twentysomethings in ways they understand and embrace, but don’t forget how to treat people when they come to your store. People are shopping online now more than ever, but many of us still go to the grocery store. These are not hard things to do, none of them are large, except the staffing, but they add up to a memorable shopping experience.


    Well, that is as close to marching orders as we’re likely to see. And he’s right on all counts.




    Jeff Folloder had a unique take on the salmonella situation:

    I've got a relative who was hospitalized in Texas with Salmonella during this outbreak. He's fine now, but the docs still aren't sure how he got it. I've got jalapenos (and four or five other kinds of chiles) growing alongside of the last of my tomatoes and other veggies in the back yard. I read on your website how the FDA has attempted to manage this incident. I'm left with a very libertarian agitation on this: our government is woefully incapable of effectively dealing with this issue and I'm growing tired of funding the bureaucracy that really does nothing other than cost money. I never liked the "nanny state" but am even less inclined when the nanny doesn't really know how to take care of the kids.

    Perhaps this is an issue of expectations? We expect that the stuff that we buy at the grocery store is going to be safe. The supply chain is aware of this expectation and trusts that the general population will let this expectation override the market dynamics of not accepting inferior product. The supply chain knows that the FDA, USDA, and other alphabet soup bureaucracies are inept and ineffective. So we actually think that a salmonella outbreak can be contained by the government, that pulling or not pulling jalapenos off the produce stand will have an effect, that it's safe to eat that hamburger, or that the dairy manager really wouldn't go and retrieve the out of date butter from the dumpster that was just tossed out by the sales rep who forgot to douse it with bleach.

    BTW, the fresh pico de gallo that I made has only one ingredient that didn't come from my garden: the onions. And I'm a little phased because I know the produce guy regularly strips off the outer moldy layers of the onions on display. But I cannot grow everything I eat and certainly don't even try. I trust that the food I buy is mostly safe. I find that trust dissolving over time...


    You may have a lot of company.




    Steve Lutz had some thoughts about another story:

    Thank you for reporting on the whitepaper issued by the American Council on Science and Health (ACSH) on organics. I had not seen this study and I was able to download it after reading your comments. I appreciate the tip (another good reason to read MNB).

    That said, I was disappointed in your observations. The ASCH report is a review of the earlier work from the Organic Trade Associations’ Organic Center which funded a “scientific” evaluation that found organic produce to be “25% more nutritious.” I was surprised that you essentially implicated a peer review by a well-credentialed professor simply because of his affiliation with ACSH. You essentially imply that because Dr. Rosen (professor emeritus, Rutgers University) is affiliated with ACSH he should be suspected of compromising his integrity and scientific principles. While I accept the fact that because Dr. Rosen is affiliated with ACSH, the funding of that organization is relevant. However, you did not raise the same warnings regarding the funding and affiliations of the organic group that sponsored this original “organics are more nutritious” report. If guilt by association is the standard, then you should raise the issue equally.

    Which brings me to a larger observation with the commentary on the organic foods movement. That is, information that supports organics are usually given a pass on critical judgment. A report from the Organic Trade Association saying organic foods are more nutritious is accepted, no questions asked and appears in news reports across the county. When individuals raise contrary viewpoints they are implicated as being tools of industry and the information is buried. Your reporting was the first publicity of any kind I’ve seen on the ACSH whitepaper.

    Using your words in MNB, “So when I hear a scientist arguing against a position that I think makes sense, I tend to be a little skeptical and to question their motives and judgment.” Fair enough. But wouldn’t it be better to evaluate the merits of the scientific questions being raised by Dr. Rosen?


    Fair enough. You certainly are right about the fact that the OTA study supporting the notion that organic food is more nutritious than conventional food comes from an organization that has its own agenda. I thought that was implied in my commentary, but I should have been more specific.

    I try to be honest about the fact that I’m not nearly smart enough to be able to make a scientific judgment about these issues. I’m just an ordinary guy…but the following email from an MNB user rings true to me:

    Please thank Mr. Rosen for me, for letting me know that a plant stuck in sterile soil and given a chemical enema until it springs forth a vegetable is as good for me as an organically grown vegetable.

    As does this one from Jessica Duffy:

    Here! Here! If the soil is healthier and filled with more natural nutrients (and not chemical fertilizers, etc), then the plants can take up more of those nutrients and be more nutritious. Common Sense! Duh!

    Sue DeRemer had some thoughts about the same story:

    The point of difference for organically grown food has nothing to do with nutritional content. Organic food is grown without the use of pesticides or chemical fertilizers. That's it. Some people wish to avoid ingesting pesticides and chemical fertilizers, for various reasons, so they choose organic foods.

    So what is this study actually saying? That organic food shouldn't be labeled as such, because the nutritional content is the same?

    It always amazes me that when an industry's business is threatened due to changing consumer paradigms, they so rarely evolve with the times. Instead they dig in their heels and fight to the very end against the new paradigm. Kind of like the record companies...


    And when was the last time any of us bought a record?

    Point taken.

    And Michael Sommers wrote:

    I was recently camping with my family and my older sister, who is in her late 20s, brought along her own organic cereal for breakfast. My dad asked her what was so great about her organic cereal compared to his non-organic cereal after he looked at the nutritional labels. Without skipping a beat she replied that there are less ingredients used in her cereal than his and that organic food is better for the environment because no pesticides or other chemicals are used in the production of the product. She said that she eats organic vs. non-organic more for the fact that it’s better for the environment vs. because it’s that much better for her…which we learned through this new study, no matter which side skewed the results, isn’t that much better for her vs. non-organic foods anyway.




    Finally, MNB reported yesterday that Napa Valley’s Chateau Montelena wine estate will be acquired by France’s Chateau Cos d'Estournel. Terms of the deal were not disclosed. And, we provided some context to this deal…

    In 1976, at the famous Paris Tasting – where local wine critics were shocked when some California wines won top honors – it was Chateau Montelena’s wines that transformed the image of California’s then unimpressive wine industry. Chateau Montelena has been owned by the Barrett family…and its struggles to improve the quality of California wines is the subject of a new movie, “Bottle Shock,” that is scheduled to be released in the US on August 8.

    Not sure why the Barrett family decided to sell, but it can't have helped that the US dollar is in the tank. Chalk up another victim of the current economy.

    Steve Riessen had a problem with our analysis:

    I love your column and am impressed with your insights (at least most of them). However, please revisit your basic economics course in college. The weak dollar has helped Chateau Montelena, because it's cheaper for a foreign company to buy them.

    Stick to baseball, buddy.


    First of all, I’m no smarter about baseball than I am about economics.

    You’re right, though. I carried a bias with me into that analysis – that it isn’t necessarily good when US companies are sold to foreign concerns. And how is being cheaper a good thing?

    But I could be wrong about that.

    I am right, however, about the role that great wine can play in our lives. Which is reflected in this wonderful email from David R. Schools:

    My father-in-law treated me to my first experience with Chateau Montelena Cabernet Sauvignon just after I married his daughter in 1987. I have been hooked ever since and, though usually above my budget, a bottle will find its way to my table when I know I want something memorable. I had not heard about the pending transaction involving the winery and appreciate you including it in MNB. It is a wine that has been a part of some of the best times of my life... I hope it doesn't change.

    Me, too. And I’ve never enjoyed this wine…but I may have to look for a bottle.


    KC's View: