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    Published on: August 20, 2008

    The Wall Street Journal this morning has an interview with Jon Leibowitz, commissioner at the Federal Trade Commission (FTC), who has been outspoken about the need to restrict the kinds of commercials for food and beverages that are seen by children; he has said that if companies don't show greater self-restraint, the FTC will step in and regulate the issue. And, he suggests in the interview that the FTC is taking a comprehensive look at advertising practices – not looking at commercials in a vacuum, but also at the “virtual ecosystem” of ads that envelopes television, print, in-store and the Internet.

    Some excerpts:

    • “I'd like to think that the approach we're taking at the FTC is in some ways a middle ground. It's not the government-mandated advertising restrictions that some foreign nations have adopted. On the other hand, it's not the laissez-faire approach that some industries once supported. What we'd like to see companies doing is real self-regulation -- adopting meaningful, nutrition-based standards for marketing their products to children and applying those restrictions to all forms of marketing. Another thing I'd like to see is the criteria that some companies use to determine what qualifies as a healthy dietary choice. If the standards are lax, and only a handful of TV shows and Internet sites are covered, then the self-regulatory efforts are not going to be terribly effective.”

    • “On average, soft-drink companies spent $20 per American teenager in 2006; that's an awful lot of money for a particular product. The soft-drink companies have made a commitment in the context of the schools. If they could head down the road of making a similar commitment outside the context of the schools, that would be a step forward.”

    • “One of the surprises in the [recent FTC] report was the prevalence of integrated advertising campaigns. They're sophisticated, they're multi-platform, they're cross-promotional … It’s a whole virtual ecosystem, so you can see an ad on TV, you buy the product, you go on the Internet, you enter a code, you collect points, you win a prize, the prize is a T-shirt, the T-shirt advertises the product. So we are seeing a fair amount of cross-promotional marketing. We only found $77 million in Internet advertising, but our guess is that it's very efficient advertising, because it's targeted.”

    KC's View:
    CPG and other food companies would be well-advised to take this very seriously…because if they attempt to finesse this issue, it is only going to end up with government regulation that will really give them something to whine about.

    As a parent, I’m appalled by what I see on television sometimes. I would love to see a return to the “family hour,” in which the stuff shown on television between 8 pm and 9 pm is a lot tamer than some of the stuff shown now. This isn’t censorship – something I am completely against. But it is common sense and good taste.

    Published on: August 20, 2008

    ConAgra Foods announced yesterday that it has begun using post-consumer recycled plastic in its frozen meal trays, which it said would divert eight million pounds of that material each year from landfills to the recycling stream. According to the company, the decision should reduce greenhouse gas emissions by 15,200 tons of CO2 per year, which is approximately the equivalent of taking 2,000 cars off the road each year.

    Full disclosure: ConAgra is a premium and valued sponsor of

    KC's View:
    It is only 2,000 cars and only eight million pounds of plastic, which I guess in the scheme of things isn’t that much. But it is a smart move in the right direction…and part of a broader movement of which consumers will approve.

    Remember what Management Ventures’ John Rand said here last week about the “new premium”? That customers increasingly aren’t just interested in the value of the products they buy, but also in the values of the companies with which they do business.

    Attention must be paid.

    Published on: August 20, 2008

    • The trial begins tomorrow in a civil lawsuit as Walmart looks to void the multimillion dollar retirement package enjoyed by its former vice chairman, Tom Coughlin, who pleaded guilty and is currently serving a sentence for wire fraud and tax evasion.

    Walmart maintains that Coughlin was obligated to disclose that he was stealing from the company when he negotiated his retirement agreement. Coughlin, who is serving his sentence in home detention because of alleged health problems, disagrees.

    KC's View:
    As a civilian, it is hard for me to understand how Coughlin could keep his retirement package. But maybe that’s because the judicial system sometimes seems to have very little to do with justice.

    Published on: August 20, 2008

    In the UK, the Guardian reports that the Advertising Standards Authority (ASA) has ruled that Tesco has been misleading shoppers with a campaign that alleges that its competition, especially Walmart’s Asda Group and William Morrison Supermarkets - are more expensive to shop.

    The ad watchdog agency said that Tesco’s comparisons were inaccurate because they showed shopping baskets full of products and said that Tesco’s was cheaper, but neglected to mention that its basket included sale items while the others didn’t. Even though the ads didn’t say that the baskets represented a shopping basket survey in which oranges quite literally were being compared to oranges, "In view of that likely interpretation, we considered that the comparisons should include a fair and representative selection of goods," said the ASA.

    According to the ruling, the Tesco ads cannot be run again without changes that will make them more palatable to the government.

    KC's View:
    Literal truth in advertising? Fair play among the members of the retailing class? It just all sounds so…I don’t know…British.

    Published on: August 20, 2008

    The Seattle Times reports that as Starbucks encounters the financial and creative pains sometimes associated with meteoric growth, the independent coffee shops that long have feared the giant marketer no longer do so.

    “These small, nimble competitors don't struggle with the high overhead costs and glaring global scrutiny that besets Starbucks,” the Times writes. “Unlike independents up against a big retailer like Wal-Mart, they often thrive when Starbucks is nearby.

    “Collectively, independent and small-chain coffeehouses have the largest share of coffee and doughnut sales in the U.S., with 34 percent of the market in 2006, according to a new report from the Chicago research firm Mintel. Starbucks has the next largest share at 29 percent.”

    While the independents have benefitted by the fact that Starbucks helped to create a national market for upscale cafés, they also have worked hard to develop their own differential advantages, being more connected to local communities and tastes than a national chain could be. And they “roll their eyes at Starbucks' marketing, from price discounts to the way its stores post signs loudly hawking new drinks like Vivanno smoothies.”

    KC's View:
    What really must hurt Howard Schultz is the way one independent dismisses the company: as the “McDonald’s of coffee.” That certainly wasn't the dream…and I’m not even sure it is a fair assessment of the reality.

    But it is a kind of creative marginalization.

    I don't know how Starbucks could have done things differently. Once you get to be a certain size, there are realities that have to be factored into the business. Maybe, at a certain size, a “hand crafted” product that creates a level of intimacy with the consumer just isn’t as possible anymore.

    Every once in a while, I’ll get an email questioning the time and space I devote to Starbucks. But this is an evolving story that continues to fascinate me, and I’m surprised when people don't see the relevancy. Maybe it is because I’m running a little independent, hand-crafted business here that is designed to create a level of intimacy with the reader…and I like to think of my nominal competition as the McDonald’s of the news business.

    Published on: August 20, 2008

    A new survey by the Taylor Nelson Sofres World Panel shows that Tesco market share in the UK declined to 31.6 percent during the quarter ending August 10, from 31.8 percent during the same period a year ago.

    Walmart’s Asda Group saw its market share rise during the quarter, to 17 percent from 16.8 percent a year ago.

    Third-ranked Sainsbury’s market share was 15.8 percent, down from 16.1% in the same period a year earlier.

    And William Morrison Supermarkets’ market share was up to 11.1 percent, from 10.9 percent a year ago.

    KC's View:

    Published on: August 20, 2008

    • PepsiCo and Unilever have struck a deal with Starbucks that will bring the retailer’s Tazo bottled ice tea line national beginning in mid-October. At present, the teas are only available at Starbucks locations.

    • A new study in Australia says that sugar-free Red Bull, the energy drink, “can increase the risk of stroke or heart attack – even in young people – by making the blood sticky, a precursor to cardiovascular problems,” according to a story on

    • Canada Safeway announced that a new five-year collective bargaining agreement has been ratified by its employees represented by the United Food and Commercial Workers (UFCW). The UFCW represents some 8,000 Canada Safeway employees in British Columbia, and the retailer said that the new contract “provides wage and benefits increases for our employees while allowing Canada Safeway Limited to remain competitive in its operating markets.”

    KC's View:

    Published on: August 20, 2008

    • Target Corp. reports that its second quarter net income was down 7.6 percent to $634 million, from $686 million in the year-earlier quarter.

    Revenue rose 5.8 percent to $15.47 billion. Retail sales, excluding credit-card revenue, rose 5.6 percent to $14.97 billion, from $14.17 billion, and same-store sales were off 0.4 percent.

    The company said that it would slow its new store opening plans and tighten its credit card terms to compensate for the disappointing figures.

    KC's View:

    Published on: August 20, 2008

    A question was raised earlier this week about the ownership of Nebraska Beef, the company that has been implicated in the recall of more than a million pounds of beef that could be contaminated with E. coli bacteria. One MNB user directed us to a piece in the Washington Post, which directly addressed this issue.

    An excerpt:

    “The force behind Nebraska Beef is Nebraska businessman William Hughes. Hughes was a top executive at the now-defunct BeefAmerica. In 1997, the USDA yanked its inspectors from BeefAmerica's Norfolk, Neb., plant because of repeated sanitation violations, including contamination of meat with fecal matter. The company had to recall more than 600,000 pounds of beef after the USDA traced E. coli O157:H7-tainted meat from a Virginia retailer to the Omaha packer. It filed for bankruptcy the following year.

    “By then, Hughes was already part of a group of Nebraska Beef investors. The state gave the company additional financial support in the form of $7.5 million in tax credits under its Quality Jobs Act. Then-Gov. Ben Nelson (D), now a U.S. senator, sat on the three member jobs board that approved the tax credits. Nelson's former law firm, Lamson, Dugan and Murray, represents Nebraska Beef.

    “While state leaders welcomed Nebraska Beef and the jobs that came with it, residents who lived near the plant did not, and for more than a decade, they battled the company over manure strewn in the street and workers walking off the kill floor and into the local grocery store covered in cow splatter, said South Omaha resident Janet Bonet.”

    KC's View:
    I repeat what I’ve said before…

    Why is anyone doing business with these people?

    Published on: August 20, 2008

    • Golub Corporation/Price Chopper Supermarkets announced today that Lee E. French, the company’s director of seafood merchandising, has been promoted to the position of Vice President Seafood Merchandising, reporting directly to Mark Brown, Vice President of Perishables.

    The company also announced that that Michael Howard, its director of budgeting and statistics, has been promoted to the position of Vice President, Budgeting and Statistics reporting directly to John Endres, Senior Vice President of Finance.

    KC's View:

    Published on: August 20, 2008

    We got a number of emails yesterday responding to Michael Sansolo’s column about how his local bank sent his going-off-to-college son a booklet explaining the basics of personal finance, like how to write a check. And he suggested that supermarkets ought to be doing the same thing, sending kids booklets about how to cook and feed themselves..

    MNB user Allison Beadle wrote:

    I think you've hit the nail on the head--what shoppers need is a comprehensive guide giving them the ABC's of food. But I do have a question…

    Did your 18-year old son read the book provided by the bank on his own volition? I ask this because I'm started to get very interested in the way Generation Y (and beyond) absorbs information, particularly as it relates to food … I'm afraid that the days of “printed pieces" are numbered and that we're going to have to be increasingly more innovative in the way we communicate with younger generations.

    Another MNB user wrote:

    Thought-provoking article and I love to hear how your family/home life inspires your thoughts.

    However, I will go one step further with the next generation... would a book reach them? I love to read books but as a working mother, if I need to learn something, I go on-line. While I still love to look at the pictures in my recipe books, I tend to go right to a recipe website when I’m trying to decide what to cook for friends or what I can do with my leftover cilantro.

    Just a few thoughts as I read through your interesting idea... Good luck with freshman year!

    MNB user David Zahn wrote:

    Your idea can be classified in the "why didn't I think of that" genre. You are correct and while it seems so simple, it had not occurred to me or anyone I have spoken with about ways that retailers and CPG mfrs. can improve the business.

    BRAVO for recognizing an idea that should be mandatory for all grocers starting at noon today!

    And another MNB user wrote:

    Another insightful lesson on taking what we adults take for granted & providing an alternative use. Nice work & THANK-YOU!!!!

    You’re welcome.

    We had a story yesterday about some of the challenges facing companies investing in the in-store health clinic business, which led MNB user David Livingston to write:

    It doesn't surprise me to see these in-store clinics shutting down. First of all they are not cheap. The price of a flu shot or tetanus shot is higher compared to the county health department. When going to one of these clinics with some illness, they charge you $59 and tell you that you need to see a doctor. They do provide some basic tests but cannot perform any meaningful medical procedures. I've been to an in-store clinic one time but should have known better. I was referred to a specialist. Heck, I could have done that myself. Everyone I've seen I see a nurse sitting at a table reading a magazine bored out of her mind. One area they do get some business is from local schools that will accept the results of physicals for students.

    But another MNB user disagreed:

    My daughter and husband were driving back across country last year from Virginia. They stopped in Tennessee to visit some friends, and my daughter was complaining about pain in her ear. My husband was able to take her to an in-store clinic in a CVS on a Sunday night. She was given copies of all the paperwork, with a recommendation to follow up with our family doctor once she returned home. After being home about a week, she even received a post card in the mail from the nurse who had met with her, checking in to make sure her ear infection had cleared up and she was feeling better. At $40-$50, this was far better than an ER visit—traditionally your only other option on a Sunday night or finding a doctor willing to take in a one-time-only patient. I’d definitely recommend them to my friends and family, especially if they found themselves in a similar situation—miles from their regular doctor.

    And MNB user Bob Vereen wrote:

    A personal experience. Last fall, my wife wasn't feeling well at all, but couldn't get an emergency appointment with our regular physician so we went to one of those new Walk-in Clinics.

    The doctor examined her, did an x-ray and said she had pneumonia and sent us to a local hospital.

    Thankfully, after about 6 weeks in the hospital, she was released, but it caused us to change doctors.

    I think clinics like that serve a genuine purpose.

    I agree.

    They aren’t for everything or for everyone. But they can be a terrific first line of defense.

    KC's View: