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    Published on: November 10, 2008

    The National Chicken Council said last week that it expects US food prices to increase by at least seven percent next year because of the higher cost of feed for chickens, hogs and cattle, making it the third year in a row that food prices rose faster than overall inflation in the US.

    A group of economists brought together by the Chicken Council said that the cost of producing food has not yet been fully passed on to consumers, and so shoppers should expect to pay more in the foreseeable future to feed their families.

    The Reuters story about the Council’s conclusions noted that “although grain prices have declined since summer, this year's corn, wheat and soybean crops are forecast to fetch prices at the farm gate that are double their 2005 levels. Corn and soybeans are major ingredients in feed rations.”

    KC's View:
    It is hard to reconcile this story with the announcement by Wegmans late last week that it was so sure that its costs for food would go down that it was lowering prices in anticipation of the shift, saying that during the current economic tumult it didn’t need to make as much money and that it needed to be sensitive to the hardships being differed by its shoppers.

    Maybe we’re talking about apples and oranges here. But these are mixed messages that are likely to confuse and confound shoppers … and at the very least, retailers need to figure out how to communicate clearly and consistently message with their shoppers.

    Published on: November 10, 2008

    MSNBC has a story about what it calls the “10 healthiest supermarkets” in the US, defining the chains that “are outdoing themselves to deliver the freshest and healthiest food” and that “provide the best tools to help you make smart choices.”

    According to the list, compiled by Health magazine, the winners are, in order:

    1. Whole Foods
    2. Safeway
    3. Harris-Teeter
    4. Trader Joe’s
    5. Hannaford
    6. Albertsons (the Supervalu-owned chain)
    7. Food Lion
    8. Publix
    9. Pathmark
    10. SuperTarget

    The panel making the determinations said that it “reviewed the 35 largest food retailers across the country and selected the absolute healthiest, based on everything from the freshness of produce and taste of prepared foods to the healthiness of packaged goods and availability of supplemental nutritional information.”

    KC's View:
    This obviously a highly subjective list, and you could probably argue with or at least question a number of choices.

    For example, I’m a little surprised that Pathmark would make the list, but not A&P…because it strikes me that the stores operated by A&P under its own name are more progressive in this area than its Pathmark units. The same question could be asked about Food Lion and its Bloom unit.

    Why Safeway and not Kroger? How did Wegmans and Hy-Vee not make the list? And what about Golub Corporation’s Price Chopper?

    I actually think that regardless of the quibbles that one might have with the list, almost more important than the “healthy food” factor is the “best tools to help you make smart choices” component. That’s the thing that stores need to do a better job of focusing on – being not just a source of product, but a resource for credible, useful, relevant information.

    Published on: November 10, 2008

    The New York Times this morning reports that “the old-fashioned school bake sale, once as American as apple pie, is fast becoming obsolete in California, a result of strict new state nutrition standards for public schools that regulate the types of food that can be sold to students. The guidelines were passed by lawmakers in 2005 and took effect in July 2007. They require that snacks sold during the school day contain no more than 35 percent sugar by weight and derive no more than 35 percent of their calories from fat and no more than 10 percent of their calories from saturated fat.”

    While these regulations may seem stiff, even draconian, to some, the Times points out that they are not the toughest in the nation: “From 500 to 600 school districts nationwide now have policies that limit the amount of fat, trans fats, sodium, and sugars in food sold or served at school, with the strictest rules directed at elementary schools.”

    The goal of such regulations, proponents say, is to do for junk food “what smoking bans and taxes did for tobacco.”

    KC's View:
    I take the nation’s obesity crisis as seriously as anyone, but I also fear that we are turning up the heat so high on this issue that we are baking all the fun out of life. And that’s a shame.

    There’s nothing wrong with serving healthier foods in school cafeterias, though I think that schools are only getting it half-right if they don't combine such initiatives with efforts to teach kids about nutrition, proper eating, and the importance of moderation.

    But I have to admit that I get a little verklempt over the desire to control every morsel that kids eat…right down to the notion of banning bake sales or the ability of a parent to bring in cupcakes to the classroom to celebrate a child’s birthday. It’s like we get so focused on political correctness that we can't allow ourselves – or our children – to loosen up a little bit.

    Not to over-analyze this, but maybe that’s because we’re better at imposing rules and regulations than we are at teaching. It is no wonder; imposing laws is easy, while taking advantage of teaching moments is a lot harder.

    Now, I’m not saying there shouldn’t be any regulation. I’m just suggesting that if we try to help our kids make better decisions for themselves, we actually have greater long-term impact.

    Published on: November 10, 2008

    The San Diego Union Tribune has a terrific story about the Japanese convenience store business, which sounds like it defines the idea of “convenience” a little differently than its US brethren.

    Some excerpts:

    “At Happy Lawson, a kid-friendly store that overlooks Yokohama Harbor, customers can buy fresh sushi and carbon offsets, pay income tax and change diapers, book airplane tickets and sip vodka coolers. There's hot soup, cold beer, fresh bread, clean toilets, french fries, earwax remover, spotless floors, and a broadband-empowered machine that will order home appliances, book concert tickets and sign a customer up for driver's education.

    “No Big Gulp, no Slurpee, no mini-pizzas sweating grease under a hot light, but you can drop off luggage for the bullet train and park a stroller beside the bar that abuts the toddler play area.”

    • “At FamilyMart, customers can make appointments for someone to vacuum their home. At 7-Eleven – now run by a Japanese-owned company – there's a drop-off laundry service.”

    • “Nearly any bill in Japan – utility, phone, cable or tax – can be paid at a convenience store. About $80 billion in bills were paid that way last year.”

    • “Food, too, is intensively managed and several cuts above the quality generally found in U.S. convenience stores. The typical Japanese store is visited 10 times a day by delivery trucks, most of them bringing in fresh lunch boxes, pastries, desserts and vegetables – and hauling away perishable food that has failed to sell in the past few hours.”

    KC's View:
    The broader message here is not that US c-stores should emulate the Japanese brethren, but rather that all retailers need to be more innovative about how they define certain terms of the trade. Like “convenience,” which can mean dramatically different things to different people in different circumstances.

    It also sounds like the Japanese stores may be better at serving as agents for their customers rather than conduits for manufacturers…which, as my friend Glen Terbeek probably would say, is one major difference between being a great retailer and an adequate retailer.

    Published on: November 10, 2008

    In the UK, the Independent reports that the Competition Commission there is scheduled to hold a three-day hearing this week at which it will consider an appeal by Tesco against a recommendation that a “competition test” be established that would set criteria preventing any single retailer from gaining a dominant position in any market. Tesco is arguing that the imposition of such a test is a “disproportionate response” to whatever competitive issues may exist in the UK.

    Tesco’s primary competitors in the UK – Marks & Spencer, Waitrose and Walmart’s Asda Group – are in favor of such a test, which they apparently believe would create a more level playing field upon which they could do battle with Tesco, which controls close to one-third of the UK supermarket business.

    However, the Independent notes that even if the Competition Commission rules against the Tesco appeal, Tesco has the option of further appeals…which could delay the implementation of any such “test” until 2010 at the earliest.

    KC's View:
    Just one question here.

    How would Walmart feel about such tests if they were to be proposed in the US?

    Maybe that doesn’t matter, because the US is different from the UK. But it is a question that amuses me nonetheless.

    Published on: November 10, 2008

    • Walmart announced late last week that it will offer new price cuts every week between now and Christmas. Calling the initiative ‘Operation Main Street,” Walmart said that it will be significantly cutting prices on items “vital” to the holiday season, such as food and toys.

    Al Norman, the Walmart critic who speaks and writes often against the world’s largest retailer, already has offered up his opinion on the Huffington Post, suggesting that it is ironic that Walmart would call the initiative ‘Operation Main Street” since it has done its best to destroy Main Streets all over the country with its big box stores. Furthermore, Norman accuses Walmart of having been instrumental in the moving of much manufacturing to offshore locations, which has contributed to the economic problems now facing the country…to which Walmart now is responding with lower prices.

    • Walmart’s Sam’s Club division announced that “beginning Nov. 14, non-members who sign up in any location nationwide before Nov. 26 will receive a $10 Sam's Club gift card. The $10 gift card is good for purchases at Sam's Club starting Nov. 28, the traditional day-after-Thanksgiving shopping day.”

    KC's View:
    One gets the impression that when CEO Lee Scott said recently, referring to the recession, that “this is Walmart’s time,” he was serious. Very serious.

    Ironically, however, in the same press release in which Walmart announced the Sam’s Club gift card program, it also included the following paragraph:

    “Sam's Club is offering several exclusive and one-of-a-kind holiday gifts online at this year that are also featured in its gift guide. For the soap fan this holiday Sam's Club and Secret Flawless are offering a speaking role on As the World Turns in New York City and a Critics' Choice Awards Experience in Los Angeles, $13,500. For the Twilight book series fan, Sam's Club is offering a spellbinding experience to attend the Twilight World Movie Premiere in Los Angeles. This package costs $9,500 and includes an opportunity for purchaser to meet the cast, filmmakers and creators. For the race car enthusiast with a green conscious, there's the first electric super car by Hybrid Technologies, at $100,000.”

    Just on the off chance that there’s anybody left in the country who actually has some leftover disposable income…

    Published on: November 10, 2008

    • The Telegraph reports that when the British monetary authorities decided last week to cut lending rates there by a whopping 1.5 percent, one of the most persistent voices calling for a substantial and decisive cut was Tesco CEO Sir Terry Leahy, who reportedly believes that the upcoming holiday shopping season will be a lean one if economic problems persist, and that some sort of dramatic move was required.

    • In the UK, the Mail on Sunday reports that Tesco is dipping its “toe in the water” of the D-I-Y market, selling a dozen different models of kitchen cabinets for less than the equivalent of about $1500. If the experiment – which is exclusive to Tesco’s online business, and is not being offered in its brick-and-mortar stores – works, the company reportedly has plans to get into bathrooms.

    KC's View:

    Published on: November 10, 2008

    • The Chicago Tribune reports that “Kraft Foods has teamed up with Feeding America to nationally roll out a new hunger-relief program based on the notion of ‘mobile pantries’.” The initiative, according to the report, will “purchase up to 25 mobile pantries to be deployed across the country. The pantries – converted beverage trucks – will dispense food donated by Kraft, as well as produce. ”

    The Tribune also notes that “a recession is likely while food prices are soaring at rates not seen since at least the early 1990s. A recent poll commissioned by Kraft showed that 45 percent of consumers said the economy's sorry state has threatened their ability to provide enough food for their families.”

    • Published reports say that the Food Marketing Institute (FMI) spent more than $1.6 million during the fiscal third quarter to lobby the federal government on food safety, retail crime and other issues.

    During the same period, the United Fresh Produce Association spent $180,000 to lobby the federal government on issues that include energy and agriculture spending.

    • The Jacksonville Business Journal reports that Winn-Dixie shareholders have approved an employee stock purchasing program that will give “company employees the chance to purchase shares of stock at a 5 percent discount to the fair market value through accumulated payroll deductions.” A previous stock ownership plan was disbanded when the company went into bankruptcy in 2005.

    KC's View:

    Published on: November 10, 2008

    • Delhaize reported late last week that its Q3 earnings were the equivalent of $132.9 million (US), up 8.3 percent at identical exchange rates over the operating profit during the same period a year ago. Sales for the company were up 4.8 percent to the equivalent of $5.97 billion (US), with same-store sales up 2.5 percent in the US and 3.7 percent in its Belgium home market.

    • Dollar Tree reported that its third quarter sales were up 11.6 percent to $1.11 billion, on same-store sales that were up 6.2 percent compared to the same period a year ago.

    • BJ’s Wholesale Club reports that its October sales were up 11.6 percent to $738.8 million, from $662.1 million during the same period a year ago. Same-store sales were up 10.2 percent for the month.

    For the just completed third quarter, BJ’s sales increased by 13.4 percent to $2.4 billion, and same-store sales increased by 11.9 percent.

    KC's View:

    Published on: November 10, 2008

    MNB reported last week that Wegmans would respond to two current trends – the economic strife hitting so many families, and anticipated lower costs for raw materials – by imposing price cuts on hundreds of items in its 72 stores in advance of actual cost reductions on the supplier side. Danny and Colleen Wegman released the following statement: “During difficult times like these, it’s okay with us if we make a little less money. And, as always, we are committed to offering the lowest price in the market on the items most important to families.”

    I commented: This is a perfect example of what I’ve been talking about a lot here on MorningNewsBeat in recent weeks – the importance of both value and values, and of communicating both to customers with clarity and consistency. It also correctly anticipates the likelihood that a lot of shoppers are going to wonder why, if costs are going down for raw materials, prices are not coming down for a lot of products. Like it does so often, Wegmans is getting ahead of the curve.

    But one MNB user wasn't buying:

    Am I mistaken, or are you flipping on your opinion regarding lowering prices? In a number of past instances, I seem to recall you expressing doubts about an across-the-board price reduction as a sound tactical maneuver. If memory serves, you've had the opinion that it's a poor move for food retailers because it's too easy for competition to simply follow, creating a price war. It's clear that you have a love affair with Wegmans,

    it seems your opinion is that they can do no wrong, but are you being
    inconsistent here?

    Actually, what I think I’ve said is that while retailers need to pay attention to value in the current economy, they should not lose touch with the core values that define their companies…and that they probably shouldn’t try to be Aldi or Walmart if that isn’t consistent with their culture. And I think that is what Wegmans has done.

    As for having a love affair with Wegmans….well, I’m not sure I would have put it quite that way. Smitten, perhaps, and appreciative of a superlative retailing operation, certainly. And I’m not going to apologize for it.

    MNB user Ted File chimed in:

    Over the many years I have known the company and its leaders, they never fail (at least in my estimation) to lead out as leaders usually do. Now this pricing change has got to wake up the industry. Why haven't the majors stepped on the bandwagon? At this point they sure haven't announced their intentions. Again, a missed opportunity?

    As is my custom, I was fairly critical of the US Food and Drug Administration (FDA) last week, which prompted one MNB user to write:

    Quit blaming the FDA. They do what they are told by whoever is currently in power. All department heads are political appointments. Perhaps you do not want to bash Bush since he has been bashed enough but…Justice Department, SEC, regulation of Wall Street – these are all government bureaucracies that follow the dictates of their leader, in this case Karl Rove, retired, and Dick Cheney, still active, as well as second in command, George W. Bush. Things will change and department heads will change and consumers will have some protections until the Supreme Court gets involved.

    Gosh, that’s cynical.

    Regarding my ongoing criticism of the Federal Trade Commission (FTC) for trying to undo the Whole Foods-Wild Oats deal that was finalized more than a year ago – something I’ve characterized as being like a dog chasing a car without any real plan for what to do if it actually catches up with the vehicle – one MNB user wrote:

    I can’t agree with you more. In this economy, the combined company could not get away with raising prices anyway. I don’t think the consumers would stand for it!

    Couldn’t the FTC be spending their time doing something to help the economy instead of wasting money on a merger that already made it through all (well, most of) the red tape??

    MNB reported last week that People For The Ethical Treatment of Animals (PETA) is calling on Publix Super Markets “to report any progress it has made toward adopting animal welfare policies that pertain to the purchase of eggs and pig, chicken, and turkey meat.” PETA maintains that at the present time, “the limbs of chickens and turkeys purchased by Publix are often broken, and the birds are conscious when their throats are cut during slaughter. The company buys most of its eggs from suppliers that cram hens into cages so tightly that the birds can't even stretch a wing, and it buys pig meat from companies that immobilize pregnant sows in tiny ‘gestation crates’ for months at a time.

    I commented: The problem with statements like these is that it is hard to know the objective truth, especially when one has the sense that the people putting out the statement have their own agenda. Not sure if it can fairly be called a radical agenda, but it certainly is out there on the fringes and some of PETA’s membership pretty much defines the phrase “lunatic fringe.”

    On the other hand, it is hard to read that description of animal treatment and not feel something like revulsion for the situation as it is described…if indeed it is the objective truth. Seems to me that it is up to Publix to come up with a crackerjack defense, or start figuring out how to satisfy PETA’s demands at some level.

    MNB user Amelia Kirchoff replied:

    I feel that you almost always provide an unbiased viewpoint. Not so, in the case of PETA. Perhaps they seem to you to be a radical organization but when there is so much cruelty to animals and so many people that seem not to notice, PETA has to bring attention to these incidents so that we start to pay attention. I am sure that at one time Civil Rights Organizations and Women’s Lib were also considered radicals. But change came, injustices were corrected and we no longer consider them radicals …If PETA says that Publix is buying meat and eggs from such operators I believe them. Their only agenda is the prevention of cruelty for animals.

    Another MNB user wrote:

    On an organizational level I have to admire how PETA can mobilize its members so quickly.

    On a values and beliefs level I have no respect for PETA. Taking any belief to the extreme, as PETA does, is always inevitably negative. They now place animal rights over human rights. Publix owes PETA no explanations or direct response whatsoever. Publix, like any responsible grocer, is answerable primarily to its customers. If the PETA member confronting Publix is a stockholder, he or she has a conflict of interest and should ethically give up one position or the other. There are plenty of animal protection laws in force and the large majority of food producers and purveyors adhere to them. To give livestock human qualities or to glamourize them as cuddly house pets is infantile and irresponsible. I challenge any PETA member to become a large-scale, commercial livestock farmer, saddle themselves with every belief they so vocally espouse, and successfully make a living.

    It's too bad that such a strong organization manifests itself in such a negative way. Consumers and retailers alike resent when they feel that PETA looks down its nose at them. Until PETA loses its holier-than-thou attitude and belief, they will deserve to be perceived as lunatics.

    On the subject of new plastic bag regulations being considered by the Tucson city council, one MNB user wrote:

    Tucson needs to be applauded. This is the proper and the right way to attack this issue. Big cities like New York, Austin, and others are doing it right by understanding that bans and taxes do not work. They only make us consumers use other plastic bags that are not on the ban list or the tax list, that usually do not get recycled at all. And god forbid we move to paper, which by now, everyone understands the bigger issues involved with that move….more energy used, more emission, more water used, harder to recycle, not to mention you still have to cut down trees, even if you use recycled paper…..hello… Walmart and many other large chains have known this all along and are walking the talk every day and it is working…..reduce, reuse, recycle….

    Responding to last week’s MNB Radio piece about my new Kindle, MNB user Mark Thorngren wrote:

    I've had a Kindle for about 4 months and found it was great. Did have a recent "brain freeze" and left it on the seat of a plane I was getting off. When I came back 10 minutes later the Kindle was gone. They are popular.

    Finally, responding to my note last week about the election of Barack Obama, and my comment that no matter how you feel about his politics, one has to concede that his win signifies that we have come a long was as a people, one MNB user wrote:

    I am sorry, but how in the world does the fact that we've elected Barack Obama to President say that we've made 'progress as a people'? Just because he is an African-American? I would think that even he is offended by this! (And believe me, I've heard the same thing in the media all day today!) Wouldn't it be progress if we focused on his morality, his skills, his leadership, his plan, his love and respect of his Country. No, it’s just about the color of his skin.

    I hope and pray that he leads this country in a positive direction. Economically as well as morally. Whether or not he is successful, though, is not contingent upon the color of his skin! One last thought – maybe others around the world approve of this change not because of the possibilities of making our Country stronger, but because of what those
    countries might gain as a result?

    With all due respect, I disagree. I was not suggesting that anyone should vote for him because of the color of his skin. But to ignore the fact that our country has a history of racial tensions, and that it just elected a black man president for the first time, seems a little myopic to me.

    Then again, I’m a member of the media. So you can paint me with whatever broad brush you would like to use.

    BTW, this comment was similar to another email that I got from an MNB user who wanted to respond to my comment that while in Argentina last week, it was extraordinary how much enthusiasm there was for Obama.

    This MNB user suggested that this only added to suspicions that Obama is a socialist, since Argentina’s government is socialist.

    My response to this is simple: most of the people I met in Argentina don't seem to like or respect their government…and their reaction to Obama seemed to be that they saw in his election the kind of democratic freedoms that they do not enjoy. It had nothing to do with being Democratic or Republican.

    But when it comes to what really makes Obama special, my favorite email came from this MNB user:

    History in the making. I believe he is the first White Sox fan in the White House! Our time has come!

    Change you can believe in, huh?

    KC's View:

    Published on: November 10, 2008

    In Week 10 of the National Football League…

    Tennessee 21
    Chicago 14

    Baltimore 41
    Houston 13

    New Orleans 20
    Atlanta 34

    Green Bay 27
    Minnesota 28

    Jacksonville 38
    Detroit 14

    Buffalo 10
    New England 20

    Seattle 19
    Miami 21

    St. Louis 3
    NY Jets 47

    Carolina 17
    Oakland 6

    Kansas City 19
    San Diego 20

    Indianapolis 24
    Pittsburgh 20

    NY Giants 36
    Philadelphia 31

    Denver 34
    Cleveland 30
    KC's View:

    Published on: November 10, 2008

    Just a reminder that I’ll be filing MNB from Europe this week. At the moment, I’m in Spain, and I may find myself in Paris before the week is out. (Tough gig, eh?)

    Which means that the delivery times for the MNB Wake Up Call and the actual posting of MNB may be a little off-schedule. Again, just FYI, I’m traveling for the production of a video project that will be shown at the CIES Food Safety Summit, scheduled for Barcelona, Spain, next February.

    I thank you in advance for your patience….and hope that it won’t actually be necessary.

    KC's View: