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    Published on: July 28, 2008

    Published reports this weekend said that the Berry family, which owns The Fresh Market chain that operates 78 stores in 18 southern and southeastern US states, has decided not to sell the company after considering offers over the past three or four months.

    The family had hired Goldman Sachs to help it consider various options for either selling the company or soliciting outside investment in the chain.

    After receiving thoughtful and fair offers to purchase from a number of different companies, we have decided to retain ownership of The Fresh Market," said Brett Berry, president and CEO of The Fresh Market, in a prepared statement. "Simply put, as we went through the process of courting potential buyers and investors we fell in love with the company all over again. We consider ourselves fortunate to continue to own and operate the company founded by our family over 25 years ago."

    KC's View:
    As Jimmy Buffett once said, “indecision may or may not be my problem…”

    Depending on how the economy goes and how the company is able to grow at a time when competition is only going to get tougher and resources are only going to get tighter, ownership may find itself wondering if it made the right decision. However, I never fault independent-minded retailers for wanting to stay independent…they are the soul of the business, and I have enormous respect for them.

    Published on: July 28, 2008

    California Gov. Arnold Schwarzenegger has signed a bill that will phase out the use of trans fats in the state’s 88,000 restaurants. The bill requires that trans fats be eliminated from “restaurant products beginning in 2010, and from all retail baked goods by 2011. Packaged foods will be exempt.”

    Similar bans have been implemented by New York City, Philadelphia, Stamford, Ct., and Montgomery County, Maryland.

    The goal of the bill is to combat the state’s obesity crisis, especially in children.

    “California is a leader in promoting health and nutrition, and I am pleased to continue that tradition by being the first state in the nation to phase out trans fats,” said Gov. Schwarzenegger in a prepared statement. “Consuming trans fat is linked to coronary heart disease, and today we are taking a strong step toward creating a healthier future for California.”

    KC's View:

    Published on: July 28, 2008

    The Wall Street Journalreports that the nation’s tomato industry is looking for the federal government to compensate its members for losses incurred during the recent salmonella-related false alarm – to the tune of $100 million.

    According to the story, Rep. Tim Mahoney (D-Florida) has “introduced legislation Wednesday night that would give the nation's tomato growers and shippers $100 million to compensate for losses they incurred in the outbreak. The Agriculture Department would decide who qualifies, much like the way disaster assistance is carried out.”

    Florida is a major tomato producer in the US.

    The US Food and Drug Administration (FDA) and the US Centers for Disease Control and Prevention (CDC) earlier this month said that they believed tomatoes were responsible for a salmonella outbreak that to this point had sickened more than 1,200 people in 47 states…and then, weeks alter said that tomatoes could be safely consumed and that jalapeno peppers and Serrano peppers may be the culprits.

    Tomato growers reportedly saw their sales go down 46 percent.

    KC's View:
    So not only does the federal government’s approach to food safety cost us in terms of the perception of competence, but now there could be a settlement to boot? Giving the tomato industry $100 million could set an unfortunate precedent…but then again, maybe that’s what’s needed to get the government headed in the right direction in this area when it comes to competence and transparency.

    Published on: July 28, 2008

    Interesting piece in Business Week about Sunflower Farmers Market, which it describes as “the fast-growing chain of grocery stores in five Western and Southwestern states (that) specializes in produce, much of it organic, bought directly from farmers and sold at almost Walmart-like prices.”

    The story notes that Sunflower CEO and co-founder Mike Gilliland – who also founded Wild Oats – wants to do more than just provide a lower cost alternative to Whole Foods: “His prices, and the weekly Sunflower sales advertised in the newspaper beside the local supermarket ads, are an attempt to lure consumers at the middle-to-low end of the market. The potential genius of Sunflower is its appeal to consumers at both ends of a market that's increasingly split between low-cost big-box stores and wholesale clubs on one end, and high-end retailers at the other.”

    The chain’s tag line: “Serious Food, Silly Prices.”

    Business Week writes: “There's a reason Gilliland thinks Sunflower will do well against his longstanding rival. The company's farmers-market format is based on a California chain called Henry's Market, one of the many companies Gilliland had acquired when he was Wild Oats CEO. As his company and Whole Foods expanded, he increasingly found his stores under pressure … But stores based on the Henry's Market format competed well because they were less intimidating to the casual natural-foods shopper and appealed to the demographic that didn't want to pay for the glitz of a natural-foods superstore.”

    KC's View:
    If, as expected, organic and natural foods continue to make the transition from being a niche segment to being more mainstream, it seems likely that Sunflower will reap the benefits. And while a tightening economy seems likely to help the company maintain a level of price leadership that could be tough for Whole Foods to attain, it seems to me that the company also has to specialize in a kind of thought leadership – finding ways to help new shoppers find and appreciate the organic/natural foods segment.

    Published on: July 28, 2008

    A couple of examples emerged over the weekend of Starbucks seeming to do an about-face on established strategic decisions.

    The Boston Globe reports that Starbucks, which only weeks ago announced that it would be closing 600 of its US stores that were not performing up to expectations – in many cases because of cannibalization because of stores placed too close together – is likely to sign a deal with Ahold-owned Stop & Shop to open as many as 130 cafés in the retailer’s stores beginning next year.

    According to the story, the move will come as Stop & Shop has decided not to renew its lease with Dunkin’ Donuts, which currently operates cafés inside the stores.

    The Globe writes, “Stop & Shop appears poised to expand a relationship with Starbucks it first began two years ago. Starbucks has 93 coffee stands operating inside Stop & Shop and its sister grocery chain Giant Food. Mark Espinosa, president of UFCW Local 919 in Connecticut that represents Stop & Shop employees, yesterday said he had been told by the grocer's labor relations executives that Starbucks would be taking over the Dunkin' sites.”

    As of this posting, however, neither Stop & Shop nor Starbucks is commenting officially on the report.

    While the change comes at a curious time – while Starbucks has been retrenching, Dunkin’ Donuts has been engaged in a national expansion effort – analysts say that the rationale may be Stop & Shop’s desire to eke out as much sales per square foot as possible, and the average transaction at Starbucks tends to be higher than at Dunkin’ Donuts.

    “The Stop & Shop deal may also prove to be an exception for Starbucks,” the Globe writes. “The majority of its stores are company-operated, though in cases where it partners with a supermarket, the stores are jointly operated. On its website, Starbucks said it will ‘enter into licensing arrangements with companies who provide access to real estate which would otherwise be unavailable,’ listing national grocery chains as an example of this exception.”

    Meanwhile, Retail Week reports that Starbucks has decided not to stop selling warm breakfast sandwiches at its US stores, but rather to reformulate them so that the smell does not overwhelm the aroma of coffee that CEO Howard Schultz determined to be more important to the Starbucks experience.

    Schultz, however, positioned the move not as a reversal but rather as an evolution.

    “We are not reversing our decision to replace the breakfast sandwiches, but rather we are continuing to evolve our food offerings,” he said. “We have found small ingredient changes that address the aroma issues of our current breakfast sandwiches, and have implemented these already.”

    KC's View:
    While I would concede that Starbucks has to grab opportunities when they emerge, the Stop & Shop deal just doesn’t seem to make sense. After all, how many Starbucks cafés are located near Stop & Shop supermarkets, providing even greater cannibalization of sales and possible diminishment of the brand?

    As for the sandwich decision, as long as the low-fat turkey bacon breakfast sandwiches taste the same, I’m happy with this move…and I suspect that the dozens of people who wrote MNB bemoaning the original decision to eliminate the sandwiches will feel the same way.

    However, the other question is whether Starbucks gets perceived as thinking tactically rather than strategically. I’m not sure at this point, but it could be that the company will get a reputation for dithering and desperation that it may not deserve, but that decisions like these will create.

    Published on: July 28, 2008

    • The Arkansas Democrat-Gazette reports that the judge who will hear the case about whether defrocked former Walmart vice chairman Tom Coughlin should get his retirement benefits has said that he is unlikely to let any current Walmart employees sit on the jury. “A jury must not only be fair, but it must appear fair,” said Benton County Circuit Judge Jay Finch.

    Coughlin has been convicted of wire fraud and tax evasion after being accused of using company assets for personal purposes; Walmart is suing Coughlin to prevent him from collecting on his multimillion-dollar retirement agreement.

    KC's View:

    Published on: July 28, 2008

    Marketing Daily reports that “the Simmons Kids National Consumer Survey … says a significant majority of kids express concern for environmental issues, and that nearly three-quarters of them believe in buying recycled paper products.

    “Furthermore, more than half of 6- to-8-year-olds encourage their parents to buy green products--with Hispanic children leading other demographics by a wide margin. The Hispanic kids' environmentalism, in turn, may be the reason why the Pacific region—with its large Hispanic population--leads all other areas in numbers of kids pushing their parent to go green.”

    KC's View:
    Young people don’t tend to make excuses or rationalize excesses when it comes to the environment. They tend to see things in black and white. Which, I think, is a good thing. We all ought to pay more attention.

    Published on: July 28, 2008

    • Published reports in the UK say that Tesco has gotten the required government approvals top build that country’s first straw-powered energy plant, which will create enough electricity to run eight Tesco superstores. The plant is part of the company’s overall goal to reduce its carbon footprint by 50 percent by 2020; the technology for the new plant makes it essentially carbon neutral, and the company estimates it can recoup the $20 million (US) cost of the plant within six years.

    Tesco reportedly has at least five other sites picked out where it could build and operate similar power plants.

    • In the UK, the Telegraph reports that Tesco plans to unveil the new décor package for its US Fresh & Easy format when it opens a store in Fresno, California, later this year. The goal of the new design strategy is to make the stores less austere, which has been a common complaint about the first 60 units opened by the company in Southern California, Arizona and Nevada.

    KC's View:

    Published on: July 28, 2008

    • As expected, Georgia’s commissioner of agriculture said over the weekend that tests of the state’s jalapeno pepper farms have come back negative, with no indication that any of the peppers grown there are contaminated with salmonella. Commission Tommy Irvin said that based on the results, supermarkets should put Georgia-produced jalapenos back on store shelves, despite the Food and Drug Administration (FDA) call to avoid all jalapenos because of salmonella concerns.

    The Atlanta Journal-Constitution reports that Kroger and Publix have both said that they'll continue to follow the federal guidelines.

    • The New Jersey Courier-Post reports that “ready-to-eat smoothie sales are up 139 percent since 2002 and could pass $4 billion by 2012, according to a new study from Mintel, a research specialist.” The result is that a wide range of companies – including Starbucks, Taco Bell, Jack in the Box and Dunkin’ Donuts – are in varying stages of rolling out smoothies programs designed to jump on a business that currently generates more than $2 billion in sales a year.”

    • The Wall Street Journal this morning reports that Dr Pepper is unveiling a new $35 million ad campaign designed to get people to drink the soda more slowly, building on research saying that “people who drink Dr Pepper slowly enjoy the taste more than people who drink it at regular speed.”

    • New competition for the at-home dining business could be coming from The Cheesecake Factory. Nation’s Restaurant News reports that the restaurant chain “plans to expand a six-market test of delivery service to 62 units” while it reconsiders “the value perception of its namesake chain.”

    KC's View:

    Published on: July 28, 2008

    Randy Pausch, the Carnegie Mellon University who turned his battle with pancreatic cancer into a lesson about how to live, died over the weekend. He was 47.

    Pausch’s approach to life and death has been well-chronicled over the past year or so because of his “last lecture” given to his Carnegie Mellon students and associates after his diagnosis; made available on the Internet, the 70-minute talk was not maudlin, but rather was an enthusiastic lesson from a natural teacher about hopes and dreams and turning those two things into realities. Subsequently turned into a book, “The Last Lecture” has become a kind of cultural touchstone for many of us – people of all ages have read the book and watched the video and thought about their own relationships and priorities.

    Pausch leaves a wife and three children, but he also leaves a legacy of grace, equanimity, and boundless enthusiasm for life and learning. Even among those of us who never met him, he will be missed.

    KC's View:
    I’m rethinking my headline. My 14-year-old daughter is reading the book, and was watching the video last night, so Pausch’s voice has not, in fact, been stilled.

    Which is the real value of a great teacher.

    Published on: July 28, 2008

    There were numerous reactions to last week’s “MNB Radio” commentary about what we viewed as the stunning possibilities of space solar power for changing the game when it comes to energy production and independence.

    One MNB user wrote:

    Excellent commentary this morning. The idea of "space solar power" is really exciting. I agree with your comment for big oil companies to "play by the changed rules" or don't play." That statement isn't exclusive to the oil industry. It has certainly applied to virtually every other industry. Companies have had to embrace technology and change with the times in order to survive and thrive. So too should oil companies.

    Another MNB user wrote:

    I am absolutely in favor of solar power, and I think roofs should sport solar panels instead of shingles wherever it makes sense. That said, it seems to me that having a significant amount of our power generation hanging in orbit where it could be shot down by bad guys is a pretty, but unwise option. I’m with you in spirit, though!

    I don't know. I think there is plenty of proof out there that our buildings aren’t all that safe from bad guys, either….at least in space they’d be a moving target, tougher to hit.

    But the bigger point is this. We can always find excuses not to do something. What we need to do is stop looking for excuses and start being innovative. Or fall into inevitable irrelevance.

    Another MNB user chimed in:

    Seems like a promising concept . . . so long as the investment-spending is done by the energy companies and not us taxpayers. Let's keep the government far, far away from this one.

    I can go either way on this. I don't want to give carte-blanche to private energy companies, because you end up with some of the same problems we have now with the oil companies. But I agree that governmental bureaucracy isn’t the way to go, either.

    MNB user Bill Drew wrote:

    You're right on, Kevin. Developing and utilizing solar space technology would mean we would be using a safer, cleaner, and more abundant energy source.

    However, I have to say that if either McCain or Obama were to stake claim that because of this new technology the U.S. would no longer be held hostage by foreign governments that control the flow and price of oil, I'd know then and there who I was NOT going to vote for, because I'd know which candidate is most ignorant. This technology is an electricity play; therefore, it won't materially decrease U.S. dependency on oil unless every house that is currently heated with oil converts to electricity, and even then, I'm not sure, given our endless appetite for gasoline.

    If it made sense, why not convert houses to electric heat? And only sell cars that run on electricity?

    I disagree that this is only an electricity play. As I said last week, I think it can be a much bigger game-changer.

    MNB user Richard Lowe wrote:

    What is to prevent solar junk from punching holes in this system and what are the maintenance requirements. Seems like we should do something more down to earth! Where we can afford to pay people to maintain it.

    Down-to-earth thinking only gets you down-to-earth solutions. I believe we have to begin thinking and dreaming big, because that’s the only way you really innovate.

    MNB user Rush Dickson wrote:

    Interesting. Hopefully it will not take a disaster to propel such an initiative (the Lunar program was conceived as a way to recover from Bay of Pigs invasion fiasco).


    Regarding the suggestion – often repeated here – that stores ought to post signs in their parking lots reminding shoppers to bring their reusable, non-disposable bags with them instead of leaving them in the car, one MNB user wrote:

    They could place the signs over the cart storage area if allowed by local ordinance. I’m a member of the county zoning committee and stores are limited to the amount of signage that they can have. If a store is at the max, they would have to ask for a variance, which would add costs to doing business. I get some additional exercise when I have to walk back to my vehicle to retrieve the canvas bags.

    There always will be reason not to do something. I can't imagine that the increased cost of doing business – getting a zoning variance – would not be offset by the overall savings if customers stopped using disposable bags.

    BTW…Stew Leonard’s, where I shop every week, put up the signs in the parking lot. On Saturday, despite the fact that I am a religious user of canvas bags, I was on my way into the store when I spied one of them…and realized that I’d left them back in the car. And I was grateful for the reminder.

    It works.

    Got some reactions to our piece last week that reflected on the impact that Starbucks’ closings may be having on inner city neighborhoods where the existence of the store was more important that just coffee, but rather reflected that these neighborhoods were sharing in a mainstream American experience.

    One MNB user wrote:

    I appreciate your view here on Starbucks, and retail stores in general thinking of "being something more"...of course businesses need to be profitable, that is a given – but to me, Starbucks means - a safe place, a great cup of java, internet access (if I want to pay), a clean bathroom, a 'cool hip" environment, with atmosphere and unique music, and eclectic group of people as clientele - and familiarity in a new environment; travel frequently with my work. I often visit them on my travels all over the country, and the brew is consistently good everywhere…

    All of which add up to, in my view, a mainstream American experience. There are neighborhoods in this country where none of these things you describe exist.

    MNB user David Livingston wrote:

    I agree that if the stores are not making money then close them. However if the community knows that even a low volume Starbucks adds value to the neighborhood and the local community wants them to stay then they should offer Starbucks and economic package the same way larger factories and even Wal-Mart are given corporate welfare. If I were at Starbucks I would go back to those cities and ask for some financial incentives to stay. I'm not a Starbucks fan but I do know their brand has value. I wonder if Starbucks is using that brand value to negotiate free rent and cash subsidies?

    On another note, it seems a shame that when a community changes the name of a street to Martin Luther King Boulevard, it like giving a death blow to local businesses. The name is widely associated with "bad neighborhood" and renaming the streets had backfired terribly. I was at a nice hotel recently that was on MLK Boulevard in a nicer downtown metro area, however the hotel went the former street name, the highway name, and would emphasize the side streets when giving directions. Nowhere on their stationary, web site, or promotional literature was MLK listed. They were not being racist, they were trying to maintain the reputation of their business.

    If that’s true, it is a sad commentary indeed.

    MNB user Marc Priebe wrote:

    I agree with you completely. The places we congregate, live our lives, and get our sustenance for our physical, mental and spiritual (yes, this includes food!) needs are important to every community. As a diverse, fragmented nation it is in our communities that our culture evolves or dies. It’s apparent to me that those retailers who don’t embrace the social role they play will be left behind culturally or sadly lumber along like soulless machines never truly realizing their potential and stunting the growth of us as a people. …Or they could just offer free Wi-fi like everyone else does and then maybe people would go to Starbucks again!

    I wrote last week that I find product placement – the insertion of sponsored products into non-commercial programming – annoying. Which led MNB user Jerome Schindler to write:

    Not nearly as "annoyed" as I get when an unstoppable pop-up ad from your beloved NetFlix (among others) gets in my way when checking local news. Here is the response to my complaint that I received from the General Manager of TV4 in Columbus.

    "I apologize for the trouble you are having with pop-ups on We are part of a larger media organization called Media General. We receive our pop-up ads through a national vendor. Unfortunately they are writing a script into their code so when a user clicks on the page, it triggers the pop to display even if you have pop-up blocker. Again I apologize for the inconvenience. We are working to control the situation."

    I wonder if the CEO of NetFlix is aware that his marketing genius' are spending money on ad techniques that have minimal chance of success in attracting new subscribers and in fact might cause some people (like me) to add them to my "don't do business with" list.

    You’re right. It is annoying. Very.

    Got the following email from an MNB user after I bemoaned the sale of a pioneering California winery to a French company:

    Last September I moved from the United States to England because I married an Englishman (what can I say, I was a sucker for the accent). In both countries, I've worked in customer marketing for food companies. But now that I've moved to England, getting paid in pounds and have the unique feeling of feeling rich when I go back home to America and poor when I go to Europe, I have a different opinion about your continuous bemoaning of the fact that recently some US companies have been purchased by foreign companies. I can't believe you don't see the potential benefits and strengths these could add to the US companies. Take this California winery, for example. Do you know how poor the selection of California wines is over here? It's shelves and shelves of Gallo, maybe the occasional Mondavi. I would bet anything that French ownership would increase distribution in Europe, and that's what California wine really needs, and could be why this winery sold to the French. Maybe it was still in the spirit of enhancing California's wine image, as this winery apparently has.

    On another point, recently you claimed that the Budweiser Clydesdales don't have long to live if they are under foreign ownership. Budweiser will always be considered an American brand (which actually was ripped off from a Czech beer, don't forget). But they won't get rid of the horses if the horses work and can keep the brand growing. In the current economic climate, sometimes a foreign company has the stable stream of funds that can support and invest in growth, both in the US and abroad. In fact, the US needs as much foreign money as possible, to fill where US companies and consumers cannot.

    Over here in Britain, a lot of our banks are in trouble, partly because they had bought up the sub-prime US mortgages. So who is stepping in (besides the government, of course)? Well, in a recent case, it was a Spanish bank, because the Spanish economy is stable and the bank is in a position to acquire and keep the British banks afloat. So, don't always despair when a foreign company buys a US company. That doesn't mean that it will lose its national identity. Heck, when Ford bought Jaguar, did you stop thinking of it as a British brand? Did it suddenly become American then (not the best example, because then Ford sold it). But, in short, California wines need to globalize further, and Budweiser, for good or bad, will always be associated with America. Foreign ownership isn't the end of the brand, and may be a new beginning.

    Sorry, this was a long ranting email, but obviously your comments have been stewing in my brain for a while and the pot needed to bubble over a bit!

    First of all, I was kidding about the Clydesdales…mostly because it gave me the opportunity to work in a “Young Frankenstein” joke.

    Second, when I express concerns about US companies being acquired by non-US companies, it is mostly because it sometimes seems to go just one way. How come so few US retailers other than Walmart play on the global retailing scene? It’s a concern, but I don't get hysterical about it. Long before last week’s events in Berlin, I thought that the phrase “citizen of the world” – especially because it has been uttered by people as varied as John F. Kennedy and Ronald Reagan in describing themselves – was the ultimate compliment. I think people and companies have to be citizens of the world…and my concerns more have to do with US companies that don’t look beyond their borders.

    And finally, one MNB user disagreed with my review of “Wall-E” last Friday in OffBeat:

    An hour of Eva…..Wall-E, Wall-E…… Eva, I can do without anytime again real soon. I don’t need an Al Gore-esque cartoon to offer up social awareness brain washing disguised as kid’s entertainment. The best part was the roach eating the Twinkie.

    One man’s “brain washing” is another man’s “thought-provoking.”

    We’ll have to agree to disagree.

    KC's View: