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    Published on: September 12, 2008

    The Indianapolis Star reports that Sun Capital Partners, which bought Marsh Supermarkets two years ago for $88 million and the assumption of $285 million in debt, may be considering the sale of the chain.

    The possibility of a deal is said to be only a rumor at this point, albeit a plausible one in the minds of some observers. One company mentioned as likely to be interested in Marsh is Giant Eagle.

    Both Sun and Giant Eagle deny the rumors.

    According to the story, “Sun doesn't churn its portfolio of companies as much as some investment firms. A partner told Marsh executives it will hold them as little as three years and as many as seven years. So at just under two years, it's a little early in the cycle to sell. Then again, it's always time to sell if a buyer offers the right price.”

    KC's View:
    It’s fair to say that Sun is probably going to sell Marsh at some point, but it is my understanding that we’re not all that close to that point. Not yet.

    While Marsh’s operations have been improved since Sun took over, it makes sense for the investment group to wait for the economy to improve before making a sale for what inevitably would be a higher price.

    Published on: September 12, 2008

    BrandWeek reports that Safeway’s two new brands – “O Organics” and “Eating Right” – have the potential of generating $1 billion in sales over the next two to four years, and that the company believes that it could be onto something “magical.”

    According to the story, “Introduced in 2006, the O Organics food line generated sales of $300 million last year and is expected to bring in $400 million in 2008, per Safeway. Eating Right, which bowed last spring, is on track to hit $200 million in sales this year. With expanded distribution that includes the company's plan to begin selling the products in rival U.S. supermarkets this fall (they are already in retailers overseas), these healthy numbers could be just the beginning.”

    While other retailers are pursuing similar strategies, Safeway is perceived as having the edge in repositioning “its vast array of private label products under a unified brand message (and) setting an example for the entire industry.” And the company’s timing is nothing if not propitious – the economy is down, and people are looking for products that meet their financial circumstances but also provide a measure of nutrition and taste.

    KC's View:
    In so many ways, Safeway seems to be pursuing a strategy of developing products that will build sales in places other than its own stores. That’s what it is doing by selling these two lines of foods, and by developing a line of gift cards that are being sold everywhere, and by working on health care solutions that go beyond its own labor force. That’s fascinating…and CEO Steve Burd deserves kudos for looking around the corner and trying to see what other people may not be seeing.

    Now, I think there is a pretty good argument for why Safeway’s rivals should not be selling any of these products, from organic foods to gift cards. But that doesn’t mean that Safeway shouldn't keep working this side of the tracks.

    Published on: September 12, 2008

    USA Today reports that baby formula manufactured in China has been found to contain melamine – the same contaminant found to be in china-manufactured pet food that poisoned and killed thousands of U.S. dogs and cats last year.

    That’s the bad news.

    The good news, if it can be called that, is that the US Food and Drug Administration (FDA) says that no formula approved for sale in the US is manufactured in China.

    KC's View:
    What’s scary is that these stories don’t surprise us anymore.

    Published on: September 12, 2008

    Meijer Inc. announced that it has launched a new service called Grocery Express, described as “a service that combines the convenience of online shopping with the ease, speed and attention offered by a personal shopper,” allowing customers to “select grocery and health & beauty care products online … and then have them delivered to their car at a designated location within the store's parking lot.”

    The charge for an individual order is $6.95. The program also offers a $24.95 monthly subscription for unlimited orders.
    KC's View:
    It is the personalization of the service that intrigues me … and that potentially will be the differential advantage for Meijer. It is an interesting tactical move by an always interesting company.

    Published on: September 12, 2008

    FreshDirect, the New York-based pure play online grocer, announced that it has partnered with LaGuardia Community College to offer 60 of its plant workers – who do everything from cutting fish to preparing and packaging food for delivery - free weekly English classes.

    There isn’t just altruism at work here. Crain’s New York Business notes that “the company has been trying to heal from a public relations debacle last December when labor organizations accused it of discouraging union activity and of inviting an investigation by the Federal Government into whether it hired undocumented workers. Some 150 FreshDirect employees lost their jobs as a result of the subsequent investigation.”

    KC's View:

    Published on: September 12, 2008

    USA Today reports that Procter & Gamble “is testing a product line that actually gives slackers an excuse to put off doing the dreaded wash.” The product is called Swash, described as “a four-product line that, with a spray or wipe, removes wrinkles, stains and odors from clothes within minutes. Without washing.”

    The paper notes that P&G is putting itself in the unique position of trying to eat into the laundry detergent business – where it has a 60 percent market share.

    "This is not meant to replace the wash, but to enhance the re-wear experience that is a big habit with consumers," Kevin Crociata, marketing director of North American laundry at P&G, tells USA Today.

    The “re-wear” market is defined as “folks who grab stuff from the closet hook — or pick it up off the floor — and wear it again without washing it. There are a lot of those folks: Some 75% of consumers do it three to four times weekly, according to P&G research.”

    KC's View:
    There is a truism in business that every company should have people on staff who are trying to put it out of business…because other people are trying to do it, and you might as well get there first. Trying to put yourself out of business means that you are always looking for the next innovation…which eliminates or reduces complacency.

    So P&G gets points for moving in this direction.

    That said, I’d just like to go on record as asking these people to wash their clothes more often. You wear something all day, you should take it off, toss it in the hamper, and put something fresh on the next day.

    Wearing fresh clothes is like taking a shower – something that people should do daily. (At least once daily.)

    To me, the alternative to doing laundry isn’t Swash. It’s Stink.

    Published on: September 12, 2008

    • The Boston Herald reports that Upromise has launched “what’s billed as the grocery industry’s first national paperless coupon program. But instead of receiving a dollar off Huggies diapers at the register, the e-coupons’ values are credited toward Upromise members’ free college savings accounts.

    “Early next year, however, Upromise will extend the offer to shoppers who’d rather have that money deducted from their grocery receipts and not become members.”

    • The Penn Traffic Co., which operates and supplies more than 200 stores, has come to an eight-year supply deal with C&S Wholesale Grocers, which will save it approximately $20 million a year and eliminate about a dozen corporate jobs. The move came as Penn Traffic announced continuing losses and it looks to stabilize its financial situation.
    KC's View:

    Published on: September 12, 2008

    • Penn Traffic said that it had a $3.4 million loss in the fiscal second quarter, compared to a $4.9 million loss during the same period a year ago. Sales fell to $594 million from $616 million compared to last year.

    • Krispy Kreme reported Q2 loses of $1.9 million, a dramatic improvement from the $27 million lost during the same period a year ago. However, revenue fell 9.5 percent to $94.2 million as same-store sales fell 4.1 percent.

    • Campbell Soup said that its Q4 profits were $89 million, up 46 percent from $61 million during the same period a year ago. Sales rose 13 percent to $1.72 billion during the quarter from $1.52 billion a year ago.

    For fiscal 2008, profits were $1.17 billion, or $3.06 per share, up from $854 million a year earlier. Sales rose to $8 billion from $7.39 billion a year ago.
    KC's View:

    Published on: September 12, 2008

    • Gregory Mcdonald, the former Boston Globe reporter who achieved fame with his series of “Fletch” novels, two of which were turned into movies starring Chevy Chase, died this week. The cause was cancer; Mcdonald was 71.
    KC's View:

    Published on: September 12, 2008

    Had a bit of a dust-up here yesterday as MNB user Dustin Stinett argued against the MNB policy of endorsing canvas bag usage. He wrote, in part:

    Isn’t it fabulous that, someday, plastic bags—the vast majority of which are made in the United States—will be banned throughout the country thus saving the planet from certain doom! Isn’t it fabulous that, soon, they will be replaced by canvas bags—the vast majority of which are imported from China! Isn’t it fabulous that the environmentally concerned folks behind this initiative are the same people who claim to be concerned about the outsourcing of American jobs! Isn’t it fabulous that these people don’t see the hypocrisy of their own warm-fuzzy feel-good actions!

    My response:

    I happen to think that cutting back on the amount of crap that goes into landfills is a worthwhile enterprise…not to be derided with the obviously sarcastic “saving the planet from certain doom.” Not only does it have environmental advantages, but it also can save retailers money, which goes to their bottom line.

    Furthermore, one can be concerned about the outsourcing of American jobs and come to the conclusion that what this really means is that we have to do a better job here about being competitive. But it strikes me as oxymoronic to suggest that one of the ways to save American jobs is to follow policies that result in more crap in landfills.

    This isn’t an exact science. People are trying to do the right thing, and sometimes that’s complicated by a kind of domino effect…and you have to start making choices and examining repercussions.

    But that doesn’t make these people “hypocrites,” and it certainly doesn’t mean that their efforts ought to dismissed as “warm-fuzzy feel-good actions.”


    Now, Dustin Stinett follows up (these are just excerpts; the actual email was well over a thousand words):

    Boy, you sure told me, didn’t you?!?

    Too bad your comments are based on feelings and not facts. Sadly (and I take no joy in writing this, but I will not sugar-coat it—you certainly didn’t and your soapbox is a public one), that makes you either ignorant, disingenuous, or both. I suspect the latter.

    Clearly you honestly believe the hysteria—launched in the ‘90s and still perpetuated today by the irresponsible media—that we are going to run out of landfill space soon. This notion is unsupported by the facts. Rudimentary math disproves this canard. We have plenty of landfill space. Professor A. Clark Wiseman calculated that the waste produced in the US over the next millennium will fit into a space 120 feet deep and 44 miles square (U.S. Wastepaper Recycling Policies: Issues and Effects). And how have the extremists answered Prof. Clark? With hard-hitting facts like, “He’s anti-recycling.” (He’s not, by the way.) That’s pretty much the best they can do because there is no refuting the math (which does take into consideration population growth, etc.). Damn those pesky facts!

    Apparently, though, you—and the local councils jumping on the anti-plastic bag bandwagon—choose to believe the rhetoric of environmental extremists like David Wood who calls landfills a “cancer” and believes in the absurdity of “Zero Waste”—an absolute scientific and economic impossibility; except perhaps in Fantasy Land. Mr. Wood—and you—need to spend some time with Dr. J. Winston Porter, the man who pushed the US toward recycling in the 1980s when he was an administrator at the EPA. His knowledge of this subject is above reproach, and he even argues that higher than 50% recycling is economically and, yes, environmentally unsound.

    The problem is that extremists do not care about an economic balance. I know this firsthand since I was a card carrying member of Greenpeace, the Sierra Club, as well as other environmental organizations. I went to the meetings and I read the materials; their agenda is anti-business. You often write about government transparency; these groups need to be looked at with a critical eye as much if not more so. Regardless of what you might think, I do care about this planet; I’m just not an idiot who takes these people’s word at face value. This is because I have a background in science and I know that they purposely distort the facts to fit their plan. That’s why I left them …

    Here is just some of what the man who founded Greenpeace has to say about environmentalism today:

    “Compromise and co-operation with the involvement of government, industry, academia and the environmental movement is required to achieve sustainability. It is this effort to find consensus among competing interests that has occupied my time for the past 15 years.

    “Not all my former colleagues saw things that way. They rejected consensus politics and sustainable development in favor of continued confrontation and ever-increasing extremism. They ushered in an era of zero tolerance and left-wing politics … Environmental extremists are anti-human. Humans are characterized as a cancer on the Earth. To quote eco-extremist Herb Hammond, "of all the components of the ecosystem, humans are the only ones we know to be completely optional". Isn't that a lovely thought?

    “They are anti-science and technology. All large machines are seen as inherently destructive and unnatural. Science is invoked to justify positions that have nothing to do with science. Unfounded opinion is accepted over demonstrated fact.

    “Environmental extremists are anti-trade, not just free trade but anti-trade in general. In the name of bioregionalism they would bring in an age of ultra-nationalist xenophobia. The original "Whole Earth" vision of one world family is lost in a hysterical campaign against globalization and free trade.

    “They are anti-business. All large corporations are depicted as inherently driven by greed and corruption. Profits are definitely not politically correct. The liberal democratic, market-based model is rejected even though no viable alternative is proposed to provide for the material needs of 6 billion people. As expressed by the Native Forest Network, "it is necessary to adopt a global phase out strategy of consumer based industrial capitalism." I think they mean civilization.

    “And they are just plain anti-civilization. In the final analysis, eco-extremists project a naive vision of returning to the supposedly utopian existence in the Garden of Eden, conveniently forgetting that in the old days people lived to an average age of 35, and there were no dentists. In their Brave New World there will be no more chemicals, no more airplanes, and certainly no more polyester suits …”

    The bottom line here is that this hysteria about landfills is a myth, and weakening and perhaps destroying an industry in this country in the guise of “environmentalism” is misguided and dangerous. These actions are playing right into these extremists’ plan for America.

    Congratulations!

    Now, where I believe you are being disingenuous is in your comment that the US needs to “do a better job here about being competitive.”

    Oh, please! How can US workers compete with a country that allows its workers to be paid slave wages, has virtually no environmental restrictions on its manufacturing (and you can bet that the dyes and other chemical waste in making those bags there are just wonderful for the planet you care so deeply about), and a currency that is kept artificially devalued by its government? (Double digit growth and the yuan remains weak? How does that happen?)

    How about YOU give ME a break on that one; I’m not as stupid as you clearly think I am.


    Gosh. I thought that I was advocating the use of canvas bags because less garbage is a good thing – no matter how much landfill space there may be, it has to be finite, right? – and it ends up I was being anti-trade, an environmental radical, anti-science, anti-business and even anti-civilization.

    For the record, I did not object to your opinion, nor did I suggest that you were stupid. I cheerfully admit to not being smart enough to be able to be the ultimate judge of what is the ‘right” decision; I don't think I’m ignorant or disingenuous or even a hypocrite…but I’m probably not the best judge of that. Maybe I’m all three and just too dumb to know it.

    (I’ll be reinforcing my stupidity this weekend when I dive into the new Thomas L. Friedman book, “Hot, Flat and Crowded: Why We Need A Green Revolution And How It Can Renew America.” God knows how dumb I’ll be by the time I get to page 421 of this screed by a prominent member of the irresponsible media.)

    I suspect that there are as many respected scientists who would disagree with your conclusions as would agree. (Maybe more. Who knows?) I objected to the way you put down people who disagree with you.

    On this same subject, another MNB user wrote:

    Obviously Mr. Stinett was being very sarcastic, yet pointed, in his expressed views, saying basically that with any eventual "win" of canvas over plastic, there will inevitably also come the "loss" of more imports to be coming our way from China, and more American manufacturing jobs being given up as a result. The gist of your reply, I think, included the thought that maybe what we (Americans) need to consider to make this transformation a win-win for America is simply to "do a better job here about being competitive." In a "what-if sense", I agree entirely; why not, in fact?! In what seems to me to be the more likely real-world sense, however, I don't think we, as Americans, ever will do a better job at becoming competitive, and so in the end, if the canvas-over plastic conversion is ultimately successful, it will indeed have come about with the by-product being some loss of domestic jobs. Not saying here, net net, that this is necessarily a good thing or a bad thing. Just a thing.

    While I agree with your dusting Mr. Stinett off a little bit over his sarcastic tone on the issue, I also feel your "let's just compete better" suggestion is a little ivory tower in nature. (For example, we have had 35 years lead-time to wean ourselves off foreign oil imports, and clearly have done a deathly job there; same deal with domestic auto production.) Your comment about competing better reminded me of an old joke about how an economist without a can opener might go about opening a can of beans on a deserted island. Punch line goes, "Well, let's first assume we have a can opener...."


    And MNB user D. Bruce Frazier chimed in:

    Before accepting that ‘plastic bags’ are as bad as they seem, I would think you would first need to look at the carbon footprint of the alternatives. Their heavier weight alone (even factoring in multiple uses) of the reusable bags would require significantly greater output of diesel exhaust from the trucks and ships that move them. The number of bags that fit into a case causes far more cardboard to enter landfills (if it is not recycled) not to mention the water used in recycling the fibers the reusable bags are made from and the dyes used to color the canvas like (most probably with a high plastic content) material.

    I also believe that most plastic bags used today are made from waste resins used to make other plastic products so they are stopping those resins from being otherwise discarded. Eventually, those reusable bags wear out and are tossed in the landfills (no recycling is available unlike plastic bags) and it would not surprise me if their larger total mass more than makes up for the number of plastic bags they replaced.

    “The God’s honest truth is it’s not that simple.”

    You get points for quoting Jimmy Buffett. Big points.

    Look, I’m not saying there aren’t divergent points of view. Part of the challenge of trying to do the right thing is that there can seem to be legitimate arguments on both sides, and those of us who are not scientists can have a hard time figuring out what our priorities should be.

    For me, it is an easy choice. I’m trying, where possible, to be responsible in ways that seem to make sense. I’m hardly pure, and I’ll admit to probably even being hypocritical sometimes. But like a lot of people, I’m trying to do my best.

    And at some level, that ought to be respected. Not ridiculed.




    We’ve reported over the past few days about two Walmart Marketside stores scheduled top be opened in different parts of the San Diego market, which led MNB fave Glen Terbeek to weigh in:

    Vista, CA (outside of San Diego) and the downtown San Diego baseball park location are very different markets. It will be interesting to see how or even if Walmart will vary their offerings in the two stores. Obviously, the smaller the store, the more selective the offerings need to be; small stores can't hold all the items for all the people, like a big store can.




    Got the following email from MNB user Michael A. Levin:

    Thank you for the blurb on Agribusiness' possible loss of the Orthodox Union kosher label.

    After reading the New York Times piece, I thought about OU's responsibility in this mess. Where were OU's inspectors? Do they not know what children look like? Can they not spot unsafe working conditions? In a broader context, why do we expect Nike to know every detail about its contract manufacturers yet we (Jews) do not expect OU to know every detail about the products it certifies.

    To turn a tag line from another Kosher product, shouldn't we hold the kosher labels to a higher standard?

    Any one can create a kosher label including you or I. However, for a kosher label to gain acceptance by the community, it must create and maintain trust in the brand. If Jews do not trust your kosher brand, then your brand will lose legitimacy in the marketplace. In a secular context, many brands including Nike's face the same issue over trust and legitimacy. So, why not OU?

    In the Times piece, another kosher label found nothing wrong with Agribusiness' business practices. Technically, that kosher label appears correct because they are sticking to the letter of the law. Agribusiness is slaughtering and processing their cows in accordance with the kosher laws set in the Torah.

    However, the Torah carries additional laws about employee relations as well as how you treat your fellow man. Based on everything I have read about Agribusiness starting with the INS raid indicates that Agribusiness, at best, ignored the Torah on these commandments. In other words, the cows were treated more humanely than the employees.

    That is not kosher! That is not Jewish! Shame on OU because they should know better. Shame on the media who fail to give OU the same scrutiny as Nike.





    On the subject of the Corti Brothers store in California, and its viability in a changing marketplace, one MNB user wrote:

    This is a unique niche store in an interesting old Italian neighborhood of Sacramento. The old fashioned nature of the store gives it a charm of sorts, and the staff and product quality/variety cannot be duplicated anywhere else in Sacramento. To those who do not quite understand this store, I really think a visit to the store might be in order. Visit the store, talk with the employees, observe their interactions with other customers, enjoy a sandwich from the deli, and perhaps you will learn why so many others have identified this as a very special store.

    A store does not have to be "flashy" to sell. The performance over at Whole Foods as of late should be sending that message to the industry. Looks may be important, but they aren't everything. Taste and service are awfully important, and Corti has the taste and service cornered far better than any of the "flashy" operators.


    I’m not sure anyone is arguing that Corti Brothers isn’t special. The question is whether enough people who think so also are doing their shopping there…and whether the store has done everything necessary to remain competitive for the 21st century.

    KC's View:

    Published on: September 12, 2008

    There is a common belief that obesity can be the result of genetics, and that many people may have little choice about whether they are overweight.

    But now comes a study saying that even people who have the obesity gene don't have to be overweight…as long as they engage in frequent and vigorous physical activity.

    What’s interesting about this study is the people who were tracked. It wasn't folks who went down to the gym three or four days a week, or jogged 20-30 miles a week, or even warehouse employees who do manual labor for a living.

    No, the study looked at the Amish – for whom physical activity means things like barn raising, milking cows at 4:30 in the morning, and agriculture without benefit of things like tractors.

    I have to be honest here. I want to be in shape. I don't want to be obese. But if I get up at 4:30 in the morning to milk a cow, I’m not sure it’s worth it.

    That said, I do think that part of the problem we have in this country is not that we don't raise barns in our spare time, but that we have a culture that almost always chooses the car over the bicycle or walking, that we’d rather watch the Olympics than go outside and shoot baskets. We have a society that, it seems to me, is just waiting for a magic pill or diet that will guarantee a slim waistline and good health with no muss, no fuss.

    That’s a delusion. No matter what your genetic makeup.




    I don't know about you, but I’m relieved that when the Large Hadron Collider went online this week in Europe, it didn’t swallow up the entire planet into a black hole.

    The New York Times reports that the Collider is “a technological marvel built by physicists and engineers, and described alternatively as heralding the next revolution in our understanding of the universe or, less felicitously, as a doomsday machine that may destroy the planet.”

    According to a Los Angeles Times story, the particle accelerator “will send particles crashing into each other at just a wink shy of the speed of light, generating energies more powerful than the sun” and may allow scientists to “peer into a looking-glass world that could contain entrances to extra dimensions and super-massive partners of the familiar particles that make up our world.” However, critics “think the collider could also spawn a black hole that will swallow Earth. That could be just an appetizer. Once the collider got going, according to the doomsday scenario, it could gobble up distant stars like a child popping Skittles.”

    At least for the moment, the black hole worries seem to have been put to rest.

    However, I found fascinating a story in the Dallas Morning News saying that two decades ago, a Collider project was on track to be built in Texas. In fact, $2 billion was spent to lay 15 miles of tunnel…but then Congress killed the project in 1993, and it “moved to Europe, and eventually ended up on a rural patch of land used for dairy farming on the French-Swiss border.”

    Go figure. A major scientific project that promises to expand human understanding of the universe, and the US cannot or does not support it.




    The new television season is upon us, and there aren’t a lot of new shows that I’m particularly interested in watching. But I did turn on the debut episode of “Fringe,” the new series from JJ Abrams, who has brought us such terrific shows as “Alias” and “Lost.”

    I wasn't disappointed. The 96-minute premiere was a convoluted but always fascinating drama about a young FBI agent who finds herself dragged into an investigation of paranormal occurrences. It sounds a lot like “The Night Stalker” and “The X-Files,” and with good reason – Abrams has cited those landmark shows as part of his inspiration in creating “Fringe,” though he also has given the new show its own texture and context, with enough twists and turns to keep any viewer on the edge of his or her seat. (You can catch up with the debut episode on iTunes, among other places.)

    There are some wonderful performances, especially by Anna Torv as the FBI agent, and John Noble as the mad scientist who, I suspect, is going to be her guide into some pretty scary places.

    I have no idea if “Fringe” will be able to maintain the level of suspense that it achieved during the premiere episode this week. But if it does, “Fringe” has the potential to be something special.




    My wine of the week is the 2007 Pine Ridge Chenin Blanc-Viognier blend, which is fruity and crisp and is worth tasting on a warm evening before the summer weather fades into memory.




    That’s it for this week. Have a great weekend, and I’ll see you Monday.

    Sláinte!!
    KC's View: