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    Published on: October 28, 2008

    Walmart said yesterday at an analysts meeting that it plans to slow down its pace of new store openings – it will open 191 new stores in the current fiscal year and between 142 and 157 in the next fiscal year, down from 218 in the previous year.

    According to the Wall Street Journal story, Walmart’s plans “include fewer 190,000 square-foot supercenters and place a greater priority on smaller stores, notably its Marketside neighborhood grocery, an about 15,000 square foot.”

    And, the Journal writes, “While Wal-Mart reduces new store openings, it is embarking on a more ambitious plan to remodel existing stores. That plan is expected to touch all existing U.S. locations by 2014. The company said it expects to spend $1.6 billion to $1.7 billion on remodeling next year, up from $800 million to $1 billion in the current fiscal year, and $700 million the year before.”

    At the same time, the retailer has reduced its plans for capital expenditures, and will spend $5.8 billion to $6.4 billion this fiscal year for its U.S. division, down from $9.1 billion last year. In fiscal year 2010, it plans to spend $6.3 billion to $6.8 billion.

    In addition, the company’s US president/CEO, Eduardo Castro-Wright, said that Walmart is attracting more higher-income shoppers, with “traffic at stores serving households with income above $65,000 has been growing much faster than at the chain as a whole.”

    Walmart CEO Lee Scott told the meeting that he expects fuel price declines to help the company, since it will give consumers more money to spend…presumably some of it at Walmart.

    KC's View:
    This doesn’t seem to be so much panicky or reactive as it does a matter of Walmart moving its pieces around the board…the strategy is locked into place, which give sit the luxury of making tactical decisions that serve the strategic goals.

    Published on: October 28, 2008

    Business Week reports that Whole Foods is raising objections to plans by the Federal Trade Commission (FTC) to change its methods of reviewing corporate mergers in a way that would expedite the process, “limiting the time frame for the trial and discovery process, as well as changing the role of the administrative law judge in the process.”

    Whole Foods, of course, has a dog in this hunt – the FTC continues to try to stop its acquisition of Wild Oats, a deal that actually was included more than a year ago.

    While Whole Foods said that the rule changes would not affect its specific case, it also said that they would make it harder for some businesses to defend themselves against the FTC.

    "Through these regulations, the FTC is attempting to deprive American businesses of the fundamental principles of due process, the very businesses that believed that mergers should actually benefit the consumer," said Lanny J. Davis, outside counsel to Whole Foods Market. "Even worse, the FTC is trying to push through this radical change of its regulations in a limited 30 -day comment period, just weeks before the Presidential election and in the middle of a national economic crisis. This is not acceptable behavior by a regulatory agency that has such power over American businesses affecting millions of consumers."

    KC's View:
    So if the FTC can't win by playing by the rules, it just changes the rules. Yeah, that sounds about right.

    Whole Foods just needs to run out the clock. The odds are, if the polls can be believed, that there could be a new sheriff in town pretty soon.

    Published on: October 28, 2008

    The Los Angeles Times reports that the United Food and Commercial Workers (UFCW) is planning a major assault on Tesco’s Fresh & Easy Neighborhood Markets stores in California, Arizona and Nevada, hoping to organize the chain’s employees at a time when it has achieved new contracts and a level of labor peace on the west coast.

    “Challenges remain to make that happen,” the Times writes. “When the company opened its first stores in California last year, top executives said workers would be free to decide whether they wanted union representation. But last month, El Segundo-based Fresh & Easy seemed to balk, saying it ‘doubted’ the union's claim that a majority of the employees at its Huntington Beach store had signed cards requesting union representation … Now, Fresh & Easy says it will recognize the employees as part of a bargaining unit only if they vote to become union members in ‘government-supervised secret-ballot elections.’ But its strategy might not work much beyond next year.

    “Labor leaders expect that if Barack Obama wins the presidency and the Democrats retain control of Congress, labor would gain passage of the Employee Free Choice Act. As proposed, it would allow union representation when a majority of employees signs cards requesting it and eliminate requirements for a National Labor Relations Board supervised secret ballot.”

    KC's View:
    If Barack Obama gets elected president, it would be a colossal misstep to focus early on things like the Employee Free Choice Act, which I simply don't see as doing anything to improve the nation’s economic situation. It might help with the base, but if he’s already been elected, Obama should make the base wait and focus on more important things.

    The Employee Free Choice Act is, in my view, the best argument for making sure that the Democrats don't get a filibuster-proof majority in the US Senate.

    Published on: October 28, 2008

    The Washington Post reports that among all the decisions that will be made by voters in the US next Tuesday, California voters will be making a decision in an interesting referendum having to do with animal rights. However the decision goes, experts say it will create a national precedent.

    According to the Post, “California voters will decide next month whether the state's farms must afford more living space to veal calves, egg-laying hens and pregnant sows. Under ballot measure Proposition 2, farmers would be prohibited from confining these animals in a way that does not let them turn around freely, lie down, stand up or fully extend their limbs. Cages and crates now commonly used to house them would be banned.”

    The Post explains the two arguments this way: “Proponents say the regulations would improve food safety, protect the environment and end what they call the cruel and inhumane treatment animals suffer when confined in areas barely larger than their bodies. But opponents say the measure would cost California -- the nation's fifth-largest egg producer -- thousands of jobs, sharply increase production costs and ultimately destroy competition with out-of-state producers.”

    The Post also notes that “a handful of states have passed similar measures. Florida and Oregon have banned gestation crates for breeding pigs. Arizona and Colorado have banned crates for those animals and veal calves. Companies also have joined the growing farm movement: Ben & Jerry's, Whole Foods and Wolfgang Puck are among those using or phasing in the use of cage-free eggs.”

    KC's View:
    Now, I wouldn’t call myself an animal rights activist by any measure. I think you have to treat animals humanely while they are alive, but I also approve of the use of animals as food. (What is unforgiveable, in my view, is when they are used to make food that doesn’t taste good. But that’s another subject that we can debate another time…)

    As a city guy with almost animal husbandry experience – actually, I have no animal husbandry experience – I have a little trouble understanding why making animals a little more comfortable would “cost thousands of jobs, sharply increase production costs and ultimately destroy competition with out-of-state producers.” If you were to give these industries a reasonable amount of time to comply with the new law, if it were passed, then perhaps it could be worked out in a way that satisfies most of the players. (Okay, that’s not likely. But I can fantasize…)

    Maybe it raises costs a little bit more, and I’ll grant you that higher costs can be a real issue at this particular moment in time. But can a little humane treatment for animals actually result in Armageddon for the California egg, poultry, and meat producing industries?

    Maybe it’s true. But it seems a little hard to believe.

    Published on: October 28, 2008

    USA Today carries a story saying that the combination of a tough economy with the upcoming end-of-year holiday season means that consumers can expect to get hit with a barrage of emails offering them deals, discounts and bargains. According to the story, “The frenetic pace of offers comes as Web shopping — which had held up better in the slowing economy than store-based retailing — has been starting to slow dramatically since the financial meltdown intensified in September.”

    Here’s the broader context, according to the story: Forrester Research predicts that “retailers and wholesalers will send 158 billion marketing e-mails this year; that's expected to increase 63% to 258 billion in 2013. At the same time, consumers are becoming turned off with e-mail. Forrester said it is finding that online consumers were annoyed with email volume and are beginning to turn to social networking sites, texting and other communication channels.”

    KC's View:
    So the trick is to cut through the clutter with emails that are meaningful, targeted and relevant … and to be aggressive about identifying how the new venues can work in the brand’s favor.

    Published on: October 28, 2008

    • Published reports say that Walmart’s China stores have pulled all of the Kekeda brand eggs it stocks off the helves, citing concerns about melamine that was found in some of the brand’s eggs in Hong Kong. Melamine has become a major food safety concern in china, with amounts of the carcinogenic compound found in a number of dairy products.

    KC's View:

    Published on: October 28, 2008

    The newest edition of Food Nutrition & Science from The Lempert Report reports that the US Department of Agriculture (USDA) Center for Nutrition Policy and Promotion is launching MyPyramid for Preschoolers, a program it says is designed to foster healthy behaviors in young children.

    According to the story, “At the heart of the preschool MyPyramid.gov section is a customized eating plan that can be modified for a child’s age, gender and physical activity level. Kids can assist their parents in printing out a personalized chart with their individual plan while learning about meals and snack patterns. They can also print out a customized chart to track growth in terms of Body Mass Index and Height-For-Age.
    Other useful features of the preschool edition include a bevy of information on food safety, both general and specific to young children, a section on the development of healthy eating habits, with topics ranging from how to help children know when they’ve had enough to eat to the importance of offering a variety of foods, and a physical activity section with lists of age-appropriate activities. All sections stress the need for parents to serve as role models.”

    For further information about MyPyramid for Preschoolers, and see other stories in Food, Nutrition & Science, go to:

    http://www.foodnutritionscience.com/

    KC's View:

    Published on: October 28, 2008

    • The Los Angeles Times reports that “an executive of the Kroger Co. supermarket chain and three former managers with its Southern California subsidiary Ralphs pleaded not guilty Monday to federal labor fraud charges linked to the 2003-04 supermarket strike and lockout.” The indictment “accuses the defendants of conspiring to rehire locked-out workers using fake Social Security numbers and identification during the strike.”

    • The Coca-Cola Co. has released its fifth annual Sustainability Review, which it says “profiles its commitment to growing its business in an economically, environmentally and socially sustainable way.”

    Among the items mentioned in the review: the company “launched more than 150 low- and no-calorie drinks in 2007, increasing its portfolio of low- and no-calorie beverages to more than 700 beverage products”; “spent $366 million with diverse suppliers … in 2007, a 23-percent increase over 2006”; “invested $40 million to build the world’s largest PET bottle-to-bottle recycling plant,” and “achieved a 2 percent improvement in water use efficiency.”

    • At its 2008 leadership conference in New Orleans, Starbucks yesterday “announced thirteen measurable goals, to be achieved by 2015, as part of Starbucks Shared Planet. As part of this commitment, 100 percent of the company’s coffee will be responsibly grown and ethically traded; 100 percent of Starbucks cups will be reusable or recyclable; the company will significantly reduce its environmental footprint through energy and water conservation, recycling and green construction; and contribute one million community service hours per year.”

    According to the announcement, “Starbucks is taking a major step this week towards meeting the community involvement goal by kicking off its 10,000 partner (employee) strong Leadership Conference, where participants will take part in community service projects to help rebuild the areas hardest hit by Hurricanes Katrina and Rita.”

    KC's View:

    Published on: October 28, 2008

    • Winn-Dixie said that its first quarter losses were $2.3 million, compared to an $800,000 loss reported during the same period a year ago. Total sales for the quarter grew 3.4 percent to $55 million, on same-store sales that also were up three percent.

    KC's View:

    Published on: October 28, 2008

    • Albertson’s LLC announced the promotion of Shane Dorcheus to President of the Southwest Division, which its operations in Arizona, Colorado and New Mexico. Most recently, Dorcheus was the Vice President of Operations for this division and he replaces Bob Colgrove who left the company earlier this year.

    • Winn-Dixie announced that it has hired Mary Kellmanson, formerly the Vice President of Advertising and Marketing at Wegmans, to be its new Vice President of Marketing, succeeding Dave Henry, who is retiring.

    KC's View:

    Published on: October 28, 2008

    MNB had a story yesterday saying that the US Food and Drug Administration (FDA) is being urged by consumer groups and environmentalists to be more vigilant about testing Chilean farm-raised salmon. The move is a reaction to recent reports out of Germany that some banned chemicals had been found in the Chilean salmon.

    According to the story, it wouldn’t take much to increase testing of the fish – last year, the FDA tested 40 samples out of more than 100,00 tons of salmon imported into the US from Chile.

    My comment: Well, at least the FDA doesn’t play favorites. The agency brings the same sense of vigilance to the salmon issue that it has brought to concerns about mad cow disease in the US.

    Got a number of responses to this.

    MNB user Joe B. Meng wrote:

    Just wanted to offer some clarification on your response to the pathetic level of testing that FDA performs on fish. USDA, not FDA, is responsible for BSE testing. FDA is responsible for inspecting fish, but USDA is responsible for the other animal proteins.

    Triad Foods Group created the Creekstone Farms Brand and I managed the lawsuit against USDA when they refused to allow testing. I don’t believe we have BSE issues in the US beef supply and I don’t think testing was necessary, especially at Creekstone where we only slaughtered young cattle, but it would have given access to export markets. Other than an added expense, that was greatly exaggerated by opponents to testing, it would have caused no harm and the archaic 1913 Virus, Serum, Toxin Act did not give USDA authority over test kits. The damages to the beef industry due to the loss of the export market are now being estimated in the billions and several I’ve spoken, with who originally opposed testing, acknowledged that had they thought the ban would have lasted this long, they would have supported testing.

    Although I’m critical of USDA’s catering to the big packers in the case of BSE testing, I’ve spent time in a number of beef and pork packing plants and USDA/FSIS does a very conscientious job of staffing and inspecting all production in these plants. On the other hand, FDA is responsible for fish, eggs, fruit and produce and only does a token inspection of a miniscule portion of these products. While one of the last things I would advocate are more government employees, this agency is probably understaffed.

    I find Morning News Beat very informative and respect and appreciate your insightful, objective and open-minded responses to news items and issues.


    Another MNB user wrote:

    The article points to a gap in FDA capacity (40 samples out of 100,000 tons) that is true in many more places than salmon imports The FDA clearly is not positioned today to regulate food and drug products that flow in the global economy - an unprecedented and daunting challenge. The resources, technology, and systems required to protect Americans all need significant upgrades for the 21st century in an economic environment that compounds the challenge.

    That being said, the USDA is the agency that regulates the beef industry and drives the BSE control efforts.


    And still another MNB user chimed in:

    Wanted to clarify something for you when you wrote in Chilean Salmon article… FDA does not deal with mad cow disease and testing. That is USDA. Is general confusion among the public another good reason to consolidate food safety duties?

    I suspect that there are a lot of folks – including me – who get confused about the FDA and USDA responsibilities. But no excuse – I should have gotten it right.

    If I had just expressed general cynicism about government agencies and their oversight capabilities, it would have been more accurate.




    On the subject of a new nutrition labeling system being subscribed to by Walmart and a host of manufacturers – one of several currently either in place or in development – one MNB user wrote:

    I agree with your comments and would also like to throw in a plug of concerns for manufacturers. Can you imagine trying to create packaging that will adhere to various different labeling systems? It could result in the requirement to handle different packaging inventories for different customers thus increasing the cost of the package (smaller run sizes as they are customer specific), reduction in manufacturing efficiencies (same reason as before) and then ultimately a higher priced product.

    So in principle it is a fantastic idea. The execution and evolution will be tricky.


    MNB user Al Kober wrote:

    The industry that has the most to gain with Nutrition labeling in the meat industry, especially beef. Beef has gotten the brunt of the negative push against meat. The consumer needs to know facts about the nutrition of beef, and all the positive contributions that beef brings to a healthy diet. Many Doctors need to do more research too and stop using old, out dated, information. The most difficult part is getting that true information to the end user. The anti-meat media, and many anti-meat organizations, are more invested in getting their propaganda into the public arena then is the meat industry. There is good news! Beef is good for you! Look at the real numbers! Beef should be part of every healthy diet. Any way consumers can get the true facts about the nutrition of meat will be a good thing.

    Wait a minute….there’s an “anti-meat media?”

    Liberal media bias, maybe. (Though I’m not even convinced about that.) But an anti-meat media bias is a new one.

    Another MNB user wrote:

    Gadzooks! Another nutrition label? What's wrong with the one we already have? More education, not labels. Why not hire a staff nutritionist or dietician for your store to help educate the public on good nutrition and finding value in the current nutrition label? It would help to create jobs, build goodwill with your shoppers, build sales and secure consumer trust.

    An unregulated, profit-driven, program built on public trust, developed and policed by corporate executives. That sounds vaguely familiar . . .





    Finally, chiming in on the continuing discussion about Starbucks, MNB user Steve Panza wrote:

    My neighborhood Tom Thumb is undergoing a remodel and the other day I noticed a kiosk being built near one of the entrances. My heart skipped a beat when I started thinking of the possibilities - a chef demo station or maybe a fresh sushi counter. My heart sank as I took a closer look and saw it was going to be a Starbucks.

    It is a mark of Starbucks’ problems that it wasn’t that long ago when such an installation would have been welcomed.

    KC's View:

    Published on: October 28, 2008

    Baseball fans will have to wait at least another 24 hours before finding out if the Philadelphia Phillies will win the World Series in five games, or if the Tampa Bay Rays win game five and force a game six in the best-of-even series. Last night’s game was suspended in the sixth inning with the score tied 2-2 because of a downpour that would not let up. (The Phillies have a 3-1 series lead.)

    The game is scheduled to resume on Tuesday night, weather permitting.



    And, in Monday Night Football action, the Tennessee Titans defeated the Indianapolis Colts 31-21.

    KC's View: