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    Published on: September 8, 2008

    In Minnesota, the Star Tribune reports that there seems to be a lot of speculation in Minneapolis/St. Paul that the market soon could be seeing a new competitor – Coborn’s, the family-owned company that currently operates 34 stores in central Minnesota and on the periphery of the metro area.

    The reason? Last week’s acquisition by Coborn’s of the assets of the defunct SimonDelivers e-grocery service, which services the metropolitan area, is seen as a possible stalking horse for future expansion. One theory suggests that Coborn’s could be interested on acquiring the Rainbow stores operated by Roundy’s in the Twin Cities; Roundy’s reportedly has been looking for a buyer in the face of declining market shares there.

    Another theory advanced by the Star Tribune is that “the SimonDelivers acquisition may be less about generating profit for Coborn's than about gaining new volume-purchasing discounts from grocery suppliers. By selling to 19,000 online customers, the new CobornsDelivers might boost Coborn's purchasing volume to the point that the firm saves more on buying grocery store products than it loses on an unprofitable Internet grocery-shopping business.”

    KC's View:
    Not sure what Coborn’s acquisition plans are, but I find it hard to believe that the e-commerce business is the only thing that the company wants to focus on in the Twin Cities. It probably all depends on availability and price…

    Published on: September 8, 2008

    The Los Angeles Times chooses not to believe the optimistic face being put on Tesco’s Fresh & Easy Neighborhood Market operation in the western US by the company’s leadership, noting that Piper Jaffray senior analyst Mike Dennis has released a report saying that the stores aren’t generating enough shopper traffic and that “the ones that do come don’t buy very much.”

    According to the story, “The chain, which is based in El Segundo, also is falling behind on store openings in California, Nevada and Arizona that are needed to leverage the huge investment the company has made in a distribution center and kitchen facility in Riverside, according to Dennis.

    “What’s more, nearly one year after opening its first U.S. stores, the retailer hasn’t established much brand recognition and has been forced to offer deeper-than-expected discounts to generate even sluggish store traffic … Dennis said his research shows that most Fresh & Easy shoppers limit their purchases to produce and a few other items.”

    The assessment by Dennis concludes that “Fresh & Easy needs a partner that better understands the U.S. market. He suggests that Tesco cut its losses by merging Fresh & Easy into a joint venture with an established American retailer with brand identity.”

    KC's View:
    I suspect that the inevitable denial from Fresh & Easy will come sometime this week, and they’ll attempt to put to rest any speculation that things are not going swimmingly. And there will continue to be strikingly divergent opinions about whether the stores are any good, about whether they are generating sufficient revenue, and whether they have a future.

    Published on: September 8, 2008

    The Associated Press reports that while a number of food manufacturers, including Kraft and Sara Lee, “pulled back on their spending as the economy soured,” they now plan major ad campaigns as they worry about consumers moving to private labels or simply buying less in the face of the nation’s economic decline.

    According to the story, “Many major food makers are promising boosts to their advertising in the new fiscal year or reporting their spending is up in the most recent one. Their ads seem to be hitting a variety of outlets, including print, television, in-store promotion and the Internet -- which marketers say helps them hone in on consumers and get the most bang for their advertising buck.

    Analysts say it makes sense, even as these companies grapple with high prices for oil, corn and grains.”

    KC's View:
    While I understand the need to cut costs in tough times, it also seems logical to amp up advertising and promotional efforts at such points because that is when the consumer may be more susceptible to appropriate messages.

    Published on: September 8, 2008

    Tough words from New York Times columnist Joe Nocera this weekend as he assessed the challenge facing Starbucks, stemming from CEO Howard Schultz’s reversal of a previous decision to eliminate hot breakfast sandwiches from the company’s stores because the aroma was detracting from the smell of coffee. This was part of a broader initiative that Schultz has been pushing, as he said he wanted to return the company to its coffee-driven roots.

    The decision to keep the sandwiches, according to the company, was made because they were reformulated so that they didn’t smell so much. But beyond the fact that Nocera doesn’t like the sandwiches very much, the columnist also points to core internal conflicts and inconsistencies that may be corrupting the Starbucks culture:

    “As much as Mr. Schultz wishes it, Starbucks is never going to be the easygoing, hang-around-for-a-few-hours place it once was,” Nocera writes. “It is just too big, and there is too much pressure from Wall Street. The only way Starbucks’ stock is going to get moving again is by selling more non-coffee items like, well, lousy egg sandwiches. Indeed … the company announced that it would soon introduce yet more breakfast items, including oatmeal, a ‘grain breakfast pastry’ and something it is calling its ‘Power Protein Plate’ (‘a hearty combination of a cage-free hard-boiled egg, 100 percent whole wheat bagel, peanut butter, cheese, and fresh fruit.’)

    “Whenever Mr. Schultz has had to choose between returning Starbucks to its roots and trying to ignite growth, he has chosen growth. That is one change Starbucks is never going to be able to make.”

    KC's View:
    As often pointed out in this space, there is an inevitable disconnect between the feeding of the monster called Wall Street and the nurturing of the cultural soul of a company. It is almost impossible to do both…and once one has started feeding Wall Street – where some people would eat their own children if they thought it would net them a dime more in profit – it is damn near impossible to backtrack.

    Published on: September 8, 2008

    • Here’s a wake up call for advertising/marketing departments: Advertising Age reports that Kellogg’s is saying that “its return on online investment for the Special K brand has surpassed that of broadcast TV over the past 18 months.” While the company hasn’t been specific about how it is measuring ROI, Mark Baynes, chief marketing officer for Kellogg’s, told a consumer conference that the results are "obviously very encouraging," and he predicted they would help "drive stronger adoption across the business."
    KC's View:

    Published on: September 8, 2008

    The Washington Post reported over the weekend that in tough economic times, “we have traditionally turned to the three big vice industries -- gambling, smoking and drinking -- to help ease our pain.

    “But this time around is different. Smoking has fallen into such ill repute that many municipalities ban it. Fuel costs have made driving or flying to a casino a pricey proposition, and gambling has become almost an afterthought at many of the lavish new ones. Now it seems the only acceptable -- and affordable -- sin left is alcohol, namely beer.”

    While the beer industry has not been experiencing a lot of growth in recent years, analysts say that the current economic doldrums could be good for the industry, becoming a “go-to” drink for a lot of people. “More than 16 million barrels of domestic beer were sold in the United States in July, and annual sales through that month are up 1.4 percent, the largest increase since 1990, when the economy was headed toward a recession,” according to the Post.

    And, the Post has a great quote from beer historian Maureen Ogle, author of Ambitious Brew: The Story of American Beer: "Beer will get you through times of no money better than money will get you through times of no beer."

    KC's View:
    We’ll drink to that.

    Published on: September 8, 2008

    America’s Second Harvest announced last week that it has changed its name to Feeding America, a move that it believes will allow it to better focus on its objective of mobilizing public support in the fight against hunger.

    "This change to Feeding America represents a deep commitment to our mission and public engagement on the issue of hunger," said Vicki Escarra, president and CEO of Feeding America. "From the research, we know that our new identity also invites the public to understand and commit to fighting hunger, clearly acknowledging that each of us is connected to it. It motivates the public to take action and become educated on the issue.
    KC's View:

    Published on: September 8, 2008

    The Promotion Marketing Association has released a new study on coupon usage that reports:

    • 89 percent of the overall population report that they use coupons when shopping (for grocery, household and healthcare items at supermarkets).

    • 97 percent of primary shoppers report that they use coupons at supermarkets.

    • Coupon users report an average of seven percent savings on their grocery bill with coupons.

    • Studies have shown that consumers who spend 20 minutes per week clipping and organizing their coupons can save up to $1,000 per year. (With an average annual family grocery bill of $5,000 that means 20 minutes could result in a 20 percent savings from coupons); those who spend 10 minutes or less per week clipping and organizing their coupons (46 percent of consumers) still achieve an average $7.00 weekly savings on their grocery bill.

    • The typical family saves between $5.20 and $9.60 per week using coupons.

    KC's View:
    It still amazes me that in this technological age of database-driven targeted marketing, how many coupons send up in the hands of shoppers for whom they are completely irrelevant and even annoying.

    Still, there seems to be little question that coupon usage is seeing something of a resurgence in a time of economic difficulties.

    Published on: September 8, 2008

    • In the UK, the Observer reports that William Morrison Supermarkets is spending the equivalent of several million dollars to develop a “Let’s Grow” educational campaign designed to get kids to grow their own vegetables.

    What prompted the effort was a study that showed that 10 percent of British kids didn’t know that carrots and potatoes could be grown in a garden.

    Morrison’s is engaged in a broader effort to upgrade its image as a discounter.

    • The Wall Street Journal reports that Wendy’s international is testing a variety of new coffee programs in several markets, with an eye toward bolstering the chain’s beverage credibility.

    USA Today reports that the Mexican Meat Council expects that shipments of meat from Mexico to the US will resume next week once sanitation control problems have been corrected. It was reported late last week that the Mexican government has “voluntarily suspended shipments of meat and processed poultry to the United States after U.S. officials raised concerns about the quality of Mexican food processing and inspections.”

    KC's View:

    Published on: September 8, 2008

    In the new edition of Facts, Figures & The Future, Phil Lempert writes that despite all the conversation in the food industry about self-regulating so that food safety could be better assured, virtually nothing has been done. “We talked too long,” Lempert writes, “and now it’s too late.

    “Last week, Senator Sherrod Brown (D-Ohio) introduced legislation for the National Food Tracking System to create a mandatory tracking system for food manufacturing and retail. The Ohio Democratic Senator said that, ‘We must ensure the federal government has the ability and the authority to protect the public, especially given the global nature of our food supply.’ And goes on to say he also wants both the FDA and the Agriculture Department to have power to declare mandatory food recalls, when necessary (a power they currently do not have).

    “Many have feared that if the Federal Government got involved in such a system, that it would tie up the industry in red tape, additional costs, and probably not meet the objectives for what is truly needed. But as trade groups vied for political power ...and new revenue streams, the momentum was lost and the opportunity shifted into the hands of the Legislature. The message to our shoppers is that food companies can't solve the problem, and the government has to step up.

    “Shame on us.”

    In addition, Anne-Marie Roerink, director of research at the Food Marketing Institute (FMI), notes that as the nation’s economic situation worsens, “shopper interest in private label is growing along with the quality and variety of offerings. No less than 60 percent of shoppers say they purchase more store-brand or private label products as opposed to national brands to save money. Similarly, 66 percent of retailers have noted an increase in their private label sales over the past six months, especially in grocery, paper good and canned vegetables. Others say private label growth is exceeding national brand growth in almost every category. Private label will grow increasingly important as a way to save money for shoppers and an avenue for retailers to operate under slightly better margins. Several retailers noted they are planning on expanding their private label offerings and being more aggressive in promoting these products.

    And there’s much more…

    To get your copy of F3, go to:

    F3 is a joint production of the Food Marketing Institute (FMI), ACNielsen, and Phil Lempert.

    KC's View:

    Published on: September 8, 2008

    We reported last week about Supervalu’s new line of Culinary Circle products, and commented that this sounds like a great idea as long as they taste good. To which MNB user Delos Walton responded:

    I've had several of these, found at my local Albertson's. Overall, they taste very good. My favorites so far are the grilled vegetable medley - actual grilled vegetables that are warmed up in the microwave, and the stuffed peppers with Turkey and wild rice.

    The only draw back I see in this line at the moment would be the caloric content. But if you keep the portions small by spreading these entrees out over a family of four, and add a quick salad or other vegetable side, you got a great meal that's easy to make and taste's pretty good. Costs are reasonable too, if you spread it out over the number of mouths within a family too. They retail at about $7, so if you add in a bagged salad, you're looking at dinner that cost's about $2.50-$3.00 per head for a family of four. Not too bad for a dinner that will take about 10 minutes or less to make once you get home.

    And MNB user Todd Conrad wrote:

    I have purchased a number of the Culinary Circle products and they have exceeded expectations on quality!! Smart move by SV and I think they have delivered on the product as well!

    On the subject of “diets” vs. “lifestyle changes,” (we like the latter here at MNB) one MNB user wrote:

    I agree. I lost a significant amount of weight after college due to a major life style changes: Beer (less of). I did increase my take of wine though! It just wasn't healthy, less pizza and junk food, and more healthy fruits and veggies.

    Weight Watchers I think has the best idea, but they miss such a valid point (I've been on weight watchers before), or the people on the program miss the point I should say. They use a point system, so you can have say 21 points in a day, and every food you eat have a point value based on fat, calories and fiber. That's great, except I've noticed that
    people tend to put the good foods aside and eat junk until they are out of points. Also there are certain items that have a zero point value!?

    How is this? Gummie Bears are a great example. I think 12 or 15 have a zero point value, so they eat 45 throughout the day, without a thought that the have just consumed 175 calories. You get my drift. They are missing the "change".

    Chiming in on an ongoing MNB discussion stream, MNB user Matt Wicker wrote:

    Just had to comment on Richard Layman’s comments about organic foods not being that much better for you than fresh or frozen foods. Organic foods are not only healthier for you due to the fact you’re not ingesting pesticides and other harmful chemicals, but the environment is also not being abused by these chemicals. There are also numerous studies showing the nutritional contents of organic foods to be much greater than their conventional (chemically treated) counterparts. I’ve seen studies showing that 3 organic apples have the same nutrients as 7 conventional apples. While the organic apples cost much more, doesn’t it make sense to eat 3 for the same price?

    I wrote with some disappointment last week about the new Jerry Seinfeld-Bill Gates commercial for Microsoft, and MNB user Kate Kelley agreed:

    I was expecting the commercial to be some kind of 'blow my socks off'. But it was lacking and made me wonder what the ad was even for. I have been a die-hard Apple fan since the mid 90s, and think that they produce more creative ads and products than Microsoft can even begin to imagine. I still believe that there is no better sound, than the sound my Mac produces when I turn it on.

    Another MNB user wrote:

    I saw the Seinfeld/Gates ad…until the end, I thought it was for American Express (since Jerry was their pitchman at one time).

    Microsoft? Huh??

    No, the Amex ads had Seinfeld and Superman, not Seinfeld and Gates.

    And there’s a big difference between Gates and Superman.

    Kryptonite doesn’t affect Gates.

    There was a story last week on MNB about a study saying that older people seem highly committed to “green” shopping – and the only thing that we found alarming was the idea that “older” started at age 55 (which seems dangerously close at the moment).

    MNB user David Jenkins responded:

    Had to chuckle at your view. Did you think 55 was elderly when you were in your late 20s and early 30s?

    Not elderly. Ancient.

    And MNB user David Richard wrote:

    This made me laugh when I realized that getting irritated about being called old is the first sign of getting old. And, (of course), I don't remember the second sign.

    KC's View:

    Published on: September 8, 2008

    In Week One of play in the National Football League…

    Cincinnati 10
    Baltimore 17

    Kansas City 10
    New England 17

    Jacksonville 10
    Tennessee 17

    Seattle 10
    Buffalo 34

    St. Louis 3
    Philadelphia 38

    Carolina 26
    San Diego 24

    NY Jets 20
    Miami 14

    Houston 17
    Pittsburgh 38

    Detroit 21
    Atlanta 34

    Tampa Bay 20
    New Orleans 24

    Dallas 28
    Cleveland 10

    Arizona 23
    San Francisco 13

    Chicago 29
    Indianapolis 13

    KC's View: