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    Published on: October 7, 2008

    by Michael Sansolo

    In the age of Facebook, there’s nothing more valuable than teen-aged children. Although I use Facebook, I understand the culture like an alien. My kids are the real deal.

    Now the odds are that many of you have no use for Facebook, although the MNB audience usually boasts unusual technological savvy. However, I promise you there are parts of Facebook none of us understand - and that is to our peril. Facebook (and the other social networking sites exploding on the web) is not about business, or at least not yet. But it’s coming closer every day.

    Consider the case of the Baltimore Symphony Orchestra (or BSO.) Orchestras and classical music may not seem the best use of Facebook, but the BSO has good reason to ignore conventional wisdom. My son, who is studying to be a classical musician, told me about a major North American symphony that recently sent out renewal notices to its loyal subscriber base. The return mail told a sad story: a large percentage of the audience had died. Classical music has a demographic challenge.

    The BSO isn’t taking this lying down. As my son explained, the BSO formed groups on Facebook to talk to students about classical music, about upcoming concerts and about the deals and discounts they offer for students. In short, the BSO is trying to build that next generation of fans and it’s not something they are doing lightly.

    The BSO is the most prominent American symphony conducted by a woman. The BSO has two home concert venues about 50 miles apart to expand its reach. And the BSO plays unusual concerts, such as the music of the Grateful Dead to win over Baby Boomers and the music of video games to win over their children.

    In other words, the BSO isn’t just fighting the demographic wave; it is diving in headfirst.

    Understanding how to do the same seems a critical issue for every business, but we have to start acting now. I have no doubt that every reader of MNB has access through work or home to a young person who knows how to use Facebook. Well, it’s time to ask them to give you a tour to help you speak the language of this new age.

    Ted Leonsis, one of the founders of AOL, discussed the power of the Internet in a short address to the CIES Future Leaders Conference this past weekend. Leonsis talked about how the Internet has changed the way we do nearly everything, whether it is a child using Wikipedia for a school paper or how adults make purchases. Leonsis told a story about how his interest in a topic led him to a book recommendation on Amazon.com, which of course led to additional recommendations and therefore more purchases.

    (As an aside, Leonsis explained that in the world of the Internet, increased usage has meant cheaper pricing or virtually free services. It led him to question why the interchange fees charged retailers for credit and debit cards manage to rise despite increased use. Considering the anger retailers have on this issue, it might be time to visit Leonsis’ Revolution Money web site to see the alternative he is trying to launch.)

    Now when it comes to Facebook, don’t just jump in blindly. For while the new realities of the new world mean powerful new choices, new opportunities and new avenues to pursue success, they do come with peril. The world of Facebook is also ready to evaluate you like never before. If you aren’t authentic, they’ll figure it out and blast it widely in no time.

    But dive in you must, because just like the Baltimore Symphony, you have to get out there and build that new audience. It won’t be easy, but nothing really good ever is.

    See you on Facebook.

    Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com .

    KC's View:

    Published on: October 7, 2008

    The Washington Post reports that despite all the concern about Chinese dairy products tainted with melamine - the poisonous industrial chemical that can artificially inflate the protein levels of products to which it is added – the US Food and Drug Administration (FDA) says that consuming small amounts of melamine poses no serious health risk.

    According to the Post, “The exception, officials said, is melamine in baby formula, which has sickened more than 54,000 infants in China. The agency said it was unable to determine what a safe amount of melamine in formula might be. The FDA set 2.5 parts per million as the maximum ‘tolerable’ amount of melamine that could be safely consumed in other foods.” Higher-than-tolerable levels of melamine have been found in items ranging from candy to yogurt that contain Chinese dairy products and that are sold in the US.

    Melamine sickened or killed thousands of pets before it was discovered in a number of brands of pet food.

    The Post reports that Rep. Rosa DeLauro (D-Connecticut), who heads up a House of Representatives subcommittee overseeing FDA funding, is not happy with the FDA statement on melamine safety. "While other countries throughout the world, including the European Union, are acting to ban melamine-contaminated products from China, the FDA has chosen to establish an acceptable level for melamine in food in an attempt to convince consumers that it is not harmful. Not only is this is an insult to consumers, but it would appear that the FDA is condoning the intentional contamination of foods.”

    KC's View:
    I rarely say anything nice about the FDA, and I’m not exactly going to break that streak here. But in all fairness, if the science says that one can ingest tiny amounts of melamine without significant health risk, it isn’t exactly the same as saying that one should ingest tiny amounts of melamine, or that melamine products shouldn’t be banned.

    Published on: October 7, 2008

    Meijer Inc. announced that it has begun offering grocery and dry goods in bulk on its website, saying that “the new Grocery By The Case program will feature more than 2,000 products available for purchase. Meijer estimates that shoppers will save at least five percent when buying items by the case as opposed to purchasing them individually.”

    Meijer said that “in addition to groceries, the program will include household and cleaning supplies, laundry products, pet food and hundreds of other items. On the grocery side, shoppers will find a wide assortment of products available, ranging from salsa and sports drinks to pasta and pancake mix. The product categories include baking; beverages; cereal and breakfast foods; condiments, salad dressings and sauces; pasta, grains and side dishes; snacks and candy; and soup and canned goods.

    Meijer launched its e-commerce site just a year ago, but the last few months have featured a lot of activity in the segment. The company noted that “last month, Meijer began test-marketing a personal shopping program called Grocery Express that enables shoppers to order groceries online and have them personally delivered to their car at the local Meijer parking lot. In July the company launched Meijer Mealbox, a web-based widget that allows customers to plan a week's worth of meals in minutes by providing access to thousands of Meijer recipes, ingredients, coupons and special promotions.”

    KC's View:
    Smart move. Companies can interpret their mandates narrowly or widely…and in the current environment, I think it makes sense to broadly try to gain share of stomach.

    Published on: October 7, 2008

    The Brattleboro Reformer reports that C&S Wholesale Grocers plans to lay off 250 employees, a decision made in the wake of the decision by Big Y Foods to switch wholesalers from C&S to Bozzuto’s Inc. “While most of the people who have lost or will lose jobs worked in C&S' North Hatfield, Mass., facility, 20 employees in the Brattleboro warehouse were given their walking papers,” the paper reports.

    According to the story, “’Due to the loss of Big Y as a customer, C&S notified New England Division employees, which includes the Brattleboro warehouse, that some reduction in force was necessary,’ said Bryan Granger, spokesman for C&S.”

    KC's View:

    Published on: October 7, 2008

    The Chicago Tribune reports that Kraft Foods announced that it will eliminate 400 jobs at its various divisional headquarters – cuts that will amount to less than one percent of its total 46,000 workforce in North America.

    According to the company, the cuts are aimed at increasing efficiency and are part of the company’s ongoing turnaround plan – not a reaction to the current tumult in the stock market.
    KC's View:

    Published on: October 7, 2008

    ABC News reports that Starbucks is being attacked by conservationists in the UK over local media coverage of the company’s policy of running water constantly into a sink called a dipper well, which is used to clean utensils used to make espresso drinks. One report said that the water wasted in this process is as much as six million gallons a day, or “enough to quell the thirst of a small African nation.”

    Starbucks responded to the story by saying that the system is used to ensure customer safety, and that it has to balance food safety issues with conservation concerns.

    KC's View:

    Published on: October 7, 2008

    • The Food Marketing Institute (FMI) yesterday released its Transportation Benchmarks 2008 report, saying that “wholesalers and self-distributing retailers are taking aggressive measures to reduce fuel consumption trucking food from distribution centers to stores throughout North America … The chief reason is spiking diesel fuel prices, which peaked this June at an average of $4.64 per gallon, according to the federal Energy Information Agency.

    “These price increases drove up transportation costs to 1.84 percent of sales for wholesalers in 2007, up from 1.59 percent in 2004, the last time FMI gathered this information. Among self-distributing retailers, this figure increased to 2.06 percent, up from 1.66.”

    According to the report, “These figures explain why the ‘cost of fuel’ is cited among the top five issues by 99.1 percent of the transportation executives surveyed for this report. The other top issues mentioned were far behind: fleet costs (64.4 percent), on-time deliveries (50.6 percent), driver availability and retention (46.2 percent) and compliance with government regulations (37.2 percent).”

    • FMI also issued its Independent Operator Insights into Wholesaler Relations and Services report yesterday, saying that “most independent retailers have had a long relationship with their primary grocery wholesaler, averaging 19 years, and would recommend this company to others ‘absolutely’ (60 percent) … Another 34 percent would recommend their wholesaler, but ‘with reservations.’ This qualified endorsement reflects less than full satisfaction with many wholesaler services, including support that independents need to compete effectively with larger retailers.”

    This report is the second in a series of three on the future of food wholesaling, conducted in a partnership with Saint Joseph’s University; Richard J. George, Ph.D., Saint Joseph’s professor of food marketing, performed the research for the first two reports. According to George, “Wholesalers recognize that independents can outflank supercenters with value-added strategies that emphasize organic products, foodservice, catering, fresh perishables and products and services tailored to a specific ethnic community,” he said. “As a result, wholesalers must tailor their services to the specific needs of each customer. Meeting this considerable challenge requires innovations in technology and logistics, which wholesalers are striving to achieve.”

    • The Grocery Manufacturers Association (GMA) yesterday announced the formation of a new Chief Financial Officer Committee, which it described as “comprised of financial professionals from top food, beverage and consumer products companies. The group will meet semi-annually and maintain an ongoing dialogue regarding financial realities, trends and business challenges in the domestic and global economic landscape … In its inaugural year, the committee will consider issues including cost management, financial reporting, taxation, executive compensation benchmarking and sustainability investments and practices, among other topics. The committee currently boasts 19 members and is lead by Chairman Donal L. Mulligan, executive vice president and chief financial officer, General Mills, Inc., and Vice Chairman Humberto Alfonso, senior vice president and chief financial officer, The Hershey Company.”

    • The Associated Press reports that Mars Inc. has closed on its $23 billion deal to buy Wm. Wrigley Jr. Co., creating the world’s largest candy manufacturing company.
    KC's View:

    Published on: October 7, 2008

    Dorothy Haggen, a co-founder of Washington State’s Haggen grocery chain, died last Sunday at age 99. She co-founded the company with her husband and brother; her sons, Don and Rick Haggen, remain as co-chairmen and primary shareholders in the company, which is the largest independent grocer and sixth-largest private company based in the State of Washington.
    KC's View:

    Published on: October 7, 2008

    • Jean Coutu Group, the North American chain drugstore company, reported that it had a second quarter loss that was the equivalent of $36 million (US), compared to a profit of $7.5 million during the same period a year ago – a drop that the company blamed on losses as its US Rite Aid chain. Q2 revenue was $515.4 million (US), compared to $490.5 million a year ago.
    KC's View:

    Published on: October 7, 2008

    MNB had a story yesterday about what high-end retailers have to do to compensate for the tough economic circumstances, which led MNB user Sue DeRemer to write:

    I don't have a Whole Foods nearby, but I wish I did. Here's one way that my local grocer could provide incredible added value, though:

    I dream of a service whereby I could tell my local grocer "there are 4 people in my household, 2 adults, 2 kids, we eat 5 dinners, 2 lunches and 2 breakfasts a week at home, and some of us are sensitive to gluten.". In my dream, my local grocer would send me an email with a list of suggested recipes for the week, and a shopping list, arranged by aisle in the store I normally shop at. That would rock…

    It would also be nice if the shopping list items were color-coded to the menu recipes, so if I didn't want to make a particular recipe, I would know which ingredients not to purchase.

    I know there are software and online programs that provide this service, but they still require a lot of time. I know because I did this for a while using a software program, and it took about 4-5 hours every 2 weeks for menu selection and shopping list creation. And so I eventually stopped doing it.





    I love these kinds of emails, which report on people’s shopping experiences. This one is from MNB user Chris Esposito:

    Over the weekend, I drove to the Wegmans in Easton/Palmer, PA, which is about 40 minutes from where I live. I hadn't made the trip in a while, due to trying to be a little more frugal. However, since I was planning two nice meals for the weekend, decided it was time for a trip. I'm writing in response to some comments made in today's Your Views section about customer service. While in the produce section just looking for some fresh herbs, I had an employee ask if I needed help and then later when confronted with two empty trays of Mission Figs, I asked another employee if they had any "out back". He checked the store room, came back empty handed and then checked the order log to see if any had come in or were expected (unfortunately not). Later in the meat section, I had trouble finding skirt steaks and an employee not only said yes, but walked me to the exact location. Overall the service was wonderful.

    By the way, we had a nice Riesling (2005 Bert Simon Auslese) with gnocchi with a Gorgonzola sauce on Saturday, and on Sunday, Aida 2004 Zinfandel with the skirt steaks, roasted potatoes and an onion gratin. All wonderful stuff.


    Sounds like it.




    MNB took note yesterday of a story in Advertising Age suggesting that as in-store marketing becomes an ever-greater component in the branding strategies of CPG companies, as they shift spending to the environment that is close to where the shopper actually makes the decision, the broader transition may be to a climate in which food retailers may be able to improve their profit margins significantly.

    My comment:

    If supermarket retailers indeed own the most valuable real estate when it comes to communicating brand messages to the shopper, then these retailers should be compensated for the use of that space. If that results in the improvement of profit margins, then good for them.

    However, I would urge retailers not to think of this real estate as a place to simply be rented out to the highest bidder, with the cash simply going to the bottom line. Because this real estate can be used as a place on which to build something – a retail experience with a solid foundation, something that could have long-term implications for the viability and vitality of a retailer.

    I don't want to stretch the metaphor too far, but simply renting out the space to people and companies that are more interested in their own brand than the retailer’s – as they should be – can result in the devaluation of the space’s value.


    MNB user Simon Haddad wrote:

    The retailers get it. They understand that their space is valuable in building brand equity for their banner as well as the manufacturer's brand. Part of the idea behind shopper marketing is to get the consumer to choose you for their shopping trips.

    Certainly success will come behind creating solutions for the consumer in shopping mode, creating a "Point of Experience" that differentiates the banner from others. The opportunity is built on collaborative efforts where manufacturers and retailers are looking at specific shopper insights to develop viable plans — In fact, demanding true integrated thinking and solutions. That was not really the case before...Retail was commonly viewed as an after thought.


    But MNB user Philip Herr disagreed:

    Surprised and somewhat disappointed in your comment on treating retail space as "rentable". Isn't this just another way of describing slotting allowances? My clients (primarily marketers) are actively engaging with retailers to try to develop programs that become a win-win-win -- shopper, retailer and marketer. To embrace a mindset of "them versus us" is counter-productive and takes us back to the place where retailers are driven to enhance their revenues and profits based on the buy and not on the sale.

    I believe the bigger picture with respect to shopper programs having greater ROI than other investments, comes from its novelty. I have seen waves wherein "new" marketing approaches have greater ROI than established ones. Most recently I have witnessed online investment show greater ROI than TV and now shopper programs do the same.

    Two things to consider here: Shopper activities are very new and fresh ideas on the sales floor will get attention from shoppers, while "old" media, such as TV tend to be taken for granted by shoppers and consumers, hence less effective. So money will continue to migrate from TV to in-store and that's a good thing. However, it will be a lot harder to build a brand purely on in-store activities (unless you are a store such as Starbucks). So there will continue to be a role for mass media (even if the mass bit gets smaller and smaller).





    Had a story yesterday saying that Starbucks is trying to give fewer of its baristas more hours, theorizing that this will increase consumer loyalty because customers like to see friendly faces behind the counter that are more likely to remember their beverages of choice.

    Which led MNB user Lance Hollis McMillan to write:

    The baristas at my Starbucks of choice know that I order the exact same thing (and begin preparing it as I walk in) every morning. Maybe it’s because I come in early. All I know is that when I don’t make the stop I feel guilty. Maybe it’s because of Catholic guilt or maybe, just maybe, because of a sense of loyalty not to the brand, but to the baristas.

    The great Pete Hamill once said that there is no such thing as an ex-Catholic, and he probably could have added that there is no such thing as completely relieving oneself of Catholic guilt.




    Finally, I reacted to the appointment yesterday of Leslie G. Sarasin, president/CEO of the American Frozen Food Institute (AFFI), as the next CEO of the Food Marketing Institute (FMI), by suggesting that she will have her hands full: She’ll have to prove that despite a career spent largely in the trade association world, she’s capable of looking beyond that world for new ideas, new solutions, and new approaches that will distinguish FMI in the new century.

    MNB user Warren Thayer responded:

    All your points about the challenges facing trade associations are well taken. For what it's worth, having known Leslie Sarasin for about 20 years, she's up to the task of running FMI. She's an innovative, fair, hard-working "people person" who inspires loyal followers. I say none of that lightly, and I'm a pretty hard grader. She's tough when she has to be, but since she is so up-front and honest with people, she defuses many "tough situations" before they even start. She'll do a great job for FMI.

    Good to know.

    MNB user Brandon Scholz wrote:

    You are spot on with your analysis of what associations like FMI have to do to figure out where they are going to be next year, and every year after that.

    And MNB user Steven Ritchey wrote about my questioning the value of annual exhibitions:

    It is true a lot of the functions can be done via electronic means, but don’t underestimate the power of face to face presentations. I do a lot of my work via email, but still use the phone a great deal, why, so my customers can have a voice to link the name on the email to, to make it more personal. Let’s not let electronic communications take all the personality out of our work, it has its place, but let’s keep it in its place.

    I take your point, but it may not matter. The next generation will, I suspect, see such get-togethers as obsolete and reflective of earlier generational concerns.

    See Michael Sansolo's opening column today for additional thoughts on this issue.
    KC's View:

    Published on: October 7, 2008

    In Monday Night Football action, the Minnesota Vikings defeated the New Orleans Saints 30-27.

    And the Major League Baseball Divisional Series came to a close, as the Boston Red Sox defeated the Los Angeles Angels 3-2 and the Tampa Bay Rays beat the Chicago White Sox 6-2. The Sox and the Rays now advance to the best-of-seven American League Championship Series, where they will compete for the right to go to the World Series. (Where the survivor will meet the winner of the National League Championship Series, the Philadelphia Phillies or the Los Angeles Dodgers.)

    KC's View:
    There is part of me that is rooting for a Sox-Dodgers World Series, simply because it would be fun to see Joe Torre and Manny Ramirez return to Fenway Park for face off with the Sox.

    But the Rays are growing on me. After all, how can one not root for a team on which total salary figure is lower than that of the left side of the New York Yankees’ infield?