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    Published on: January 13, 2009

    Notes and comment from “Content Guy” Kevin Coupe…

    ORLANDO – Coming in the middle of perhaps the greatest financial crisis to hit the United States since the Great Depression seven decades ago, it was noteworthy to a number of attendees that day one of the annual Food Marketing Institute (FMI) Midwinter Executive Conference focused not on the strategic and tactical challenges of doing business in the current economic climate, but rather featured the following:

    • FMI and the Grocery Manufacturers Association (GMA) signed a “Joint Memorandum of Understanding Collaboration Agreement,” which said that the two organizations have as an objective “to significantly enhance manufacturer/retailer collaboration to achieve greater supply chain efficiency, better ways to serve the consumer, and more efficient use of association and member company resources.” (Despite the use of the words “efficiency” and “consumer,” this apparently is not the same thing as Efficient Consumer Response.)

    The agreement said that FMI and GMA “agree to a new integrated and jointly developed annual industry agenda to eliminate duplication and maximize each organization’s strengths in order to achieve a new collaboration model. While the thrust of this effort focuses on industry affairs, we are also committed to improved joint work in public policy and science.” The agreement forms a Joint Industry Relations/Industry Affairs Council, or Trading Partner Alliance (TPA), which will develop an annual work plan for the trade associations, and calls for consistent auditing of the associations’ efforts as a way of reducing duplication and building on synergies.

    (After the signing of the memorandum, there were a number of attendees who seemed to think that it was a precursor to some sort of FMI-GMA merger, and who wondered why the agreement didn’t explicitly call for the exploration of such a possibility. Others, however, suggested that here were too many conflicting interests to make such a merger likely or even possible.)

    • Peter Lynch, chairman, president and CEO of Winn-Dixie, began the conference by detailing how his company is working its way back to health. Lynch talked about the improvements made to stores and increased focus on improving operations in affluent, resort, Hispanic, urban and Jewish areas. But he emphasized that the key to success is building talent. "It takes great leaders in tough times," he said, adding that store managers are the key to sustained improvement by the company.

    • Douglas Conant, president/CEO of Campbell Soup Co., said that even in tough economic times, “fundamental leadership challenges remain the same,” and that the keys to leadership success are “a high trust, high performance culture” that is “wrapped around an advantaged business proposition.” Conant described his philosophy of leadership by using his own career (moving from General Mills to Kraft to Nabisco to Campbell) and Campbell’s revival since the turn of the century as examples, and noted that “engaged people” are critical to any and all success.

    • Leslie Sarasin, the new CEO of FMI, laid out some of her priorities for the organization, saying that she wants to “build on the many strengths of this organization and, candidly, to fix the portions that need repair.” She said that her goal is to “develop a high-performance business model – one that can be sustained, one that is fiscally responsible, and one that can manage change to maintain our position as an indispensible industry leader and business partner.”

    • Neil Golub, president and chief executive officer of the Golub Corporation, received the 2009 Glen P. Woodard, Jr., Public Affairs Award, recognizing his leadership in helping the supermarket industry address important government issues.

    • Rich Niemann, Sr., chairman of Niemann Foods, received the 2009 Sidney R. Rabb Award today for his community involvement and strong advocacy on behalf of the supermarket industry.

    • Milton Sender, chairman and co-founder of Daymon Worldwide, Inc., received the Food Marketing Institute (FMI) 2009 William H. Albers Industry Relations Award for industry relations.

    • Supervalu Chairman/CEO Jeff Noddle was honored with the 2009 FMI Herbert Hoover Award for his personal and professional excellence in serving the food retail and wholesale industry.

    • Tim Hammonds, the recently retired CEO of FMI, was honored for his more than three decades of service to the trade association.

    • David Gergen, senior correspondent at CNN and professor of public service at the Harvard Kennedy School, analyzed the incoming Obama administration, reassuring the audience that it would be primarily made up of “mainstream appointees” and that food regulations and food safety would not be high on the new administration’s agenda. Gergen said that this “is a good time to be engaged in constructive dialogue” with Democratic leaders, since, “for Democrats, these people are willing to listen.” And he urged the attendees to begin considering “what an integrated food policy would look like.”

    In his presentation, to be accurate, Gergen did talk about the recession, noting that the general feeling is that it will not be “V-shaped,” but rather will resemble a soup bowl, with a prolonged decline, a long plateau (of uncertain duration) and, finally, a slow emergence from economic hardship. And he said that unlike past recessions, it is probably that the jobs that are being lost right now “are not coming back,” and that the nation and private industry “will need to invent new jobs” more in synch with how the nation has changed.

    But also to be fair, there seemed to be a tangible dissatisfaction – at least among attendees with whom MNB spoke - with the fact that for the most part, consideration of the economy’s impact on the food industry seemed to be limited to gratitude that nobody in the audience was selling cars or in the financial services business, and that even in hard times, people have to eat.

    Of course, it wasn't that long ago that the US automobile business and the financial services industry thought that they were in fine shape, untouchable, invulnerable to the ebbs and flows of the marketplace. If the last few months have taught us anything, it is that there is no such thing as an unassailable position, no such thing as an impregnable advantage. And as Day One of the FMI Midwinter Executive Conference wore down, there were those in attendance who wondered why these basic truths had not yet been addressed, why the conference had not seized the day.

    KC's View:

    Published on: January 13, 2009

    by Michael Sansolo

    ORLANDO -- There’s probably no detail less important to articles in MNB than the location where we write them…most of the time. Every now and again, however, the location tells a story.

    This week’s column comes to you from the Food Marketing Institute (FMI) Midwinter Executive Conference just outside Orlando. And while the conference itself always bears attention as a major gathering of industry leaders, this story is about the hotel. More correctly, it is about the hotel where it isn’t taking place.

    For years, FMI’s Midwinter had the same Florida home - the Boca Raton Resort and Club. Likewise, the Grocery Manufacturers Association (GMA) ran its annual executive event at the Greenbrier in West Virginia. But both meetings have moved and, in the case of the Greenbrier, the hotel itself is the subject of financial woes and mounting speculation on its future.

    The reason for the changed locations provides an object lesson on the difficulty of staying on top. Over the past decade, both hotels suffered the indignity of losing their coveted rating status. As one who was lucky enough to stay at both hotels for meetings, the problems were evident. There was no doubt that something was amiss and that suddenly both properties seemed awfully expensive and far less attractive than in the past. While both hotels are spending money to improve their facilities and gain back their status, the Greenbrier, at least, is finding the return trip to the top may be incredibly challenging.

    (As an aside here, one recent upgrade made by the Greenbrier was adding wireless Internet, clearly an overdue improvement. But why is it that expensive hotels continue to charge for this service, when lesser hotels provide it for free? But that’s another column…)

    So the questions become: what can we learn from this and how do we avoid the same fate of seeing our glory and our reputation slide? Luckily, we get lessons almost daily.

    We watch the once Big Three of autos slide deeper into troubles and irrelevance.

    We read about the on going troubles Microsoft is having with its operating system and the gains being made by upstarts like Mozilla’s Firefox into an area Microsoft seemed destined to dominate forever.

    We see NBC switch from “must see TV” to “Deal or No Deal” and Jay Leno every night in prime time.

    Republicans out there watch their party drift deeply into the minority just a few short years after controlling both the White House and both houses of Congress. (Democrats shouldn’t snicker. In 1994, long-time Democratic control of Congress was lost for many of the same reasons.)

    It’s hard to tell what really goes before a fall. Is it pride, hubris, arrogance or complacency? Is it a combination of all three? Is it inevitable that we must fall or can we stay hungry?

    Those are questions that we have to hope the industry leaders gathered at the FMI meeting are no doubt asking themselves in the various discussions held throughout the Midwinter meeting. Those are questions that should be asked by every part of their businesses back at home.

    Because while history suggests the mighty always eventually fall, the length of time it takes reflects heavily on the culture within the company. And that culture should include the ability to adapt to changing times while never forgetting what made the company great in the first place.

    Back in 1989, Robin Williams starred in a Peter Weir movie called “Dead Poet’s Society,” in which he played a prep school teacher who invoked a simple Latin phrase – carpe diem, which translates to “seize the day” – in urging his students to make every moment count.

    In business today, perhaps the better phrase would be sic transit gloria mundi (thus passes the glory of the world.)

    In short, glory fades unless you fight back very, very hard. And, while you’re at it, carpe diem, too!

    Michael Sansolo can be reached via email at .

    KC's View:

    Published on: January 13, 2009

    Dow Jones reports that the US Federal Trade commission (FTC) has asked a federal judge to force Whole Foods to “rebrand all former Wild Oats Markets Inc. stores that have been integrated into the Whole Foods chain since the two rivals merged in 2007.

    “The FTC also said it has asked Whole Foods to voluntarily halt further integration of the two companies while the FTC continues its legal challenge to the merger.”

    In addition, the FTC wants the courts to appoint a trustee to manage Wild Oats’ assets until its legal challenges have been exhausted.

    The $565 acquisition of Wild Oats by Whole Foods was completed more than a year ago, after a district court judge said that the FTC’s antitrust-related objections were specious (MNB’s word, not his). The FTC argued that Whole Foods and Wild Oats were the two biggest players in the organic/natural foods retail industry and that a merger would result in less choice and higher prices. The retailers argued, and the judge agreed, that they only dominated one segment of the broader food retail business, and that a merger would not be anti-competitive.

    Once the merger took place, an appeals court revived the case at the FTC’s behest and forced the district court to reconsider the case.

    In a related story, Whole Foods CEO John Mackey reportedly has sent a letter to a number of regional natural and organic retail competitors saying that the FTC’s continuing assault on its acquisition of Wild Oats has forced it subpoena financial and marketing documents from the competition that it believes will bolster its case, proving that it has not created a monopoly that has resulted in higher prices and less choice.

    A number of the competitors have been fighting the subpoena, saying that it would give Whole Foods access to proprietary information that would, in the long run, be anti-competitive. But Whole Foods continues to maintain that “competitors’ documents will be kept secret and not seen by Whole Foods Employees - only outside attorneys - under special order agreed to by Whole Foods Market and FTC, with potential contempt if violated by either.”

    KC's View:
    This is one of the dumbest, most moronic uses of federal resources and taxpayer dollars that I can imagine. And if the regional players have to give financial and marketing information to Whole Foods, it could well end up being far more anti-competitive than the merger itself.

    Beyond the fact that the FTC is essentially trying to get the toothpaste back in the tube, none of the facts seem to support the FTC’s case. The natural and organic segments of the business are more competitive, not less so. And Whole Foods has had competitive issues because of the recession.

    Maybe the FTC would like to bankrupt Whole Foods? Because forcing the two companies to de-merge might actually have that kind of impact.

    I can only hope that once the Obama administration takes over next week, they toss the clowns at the FTC responsible for this fiasco out on their rear ends. Because this is an utter crock.

    Published on: January 13, 2009

    Interesting confluence of stories about the area typically referred to as the “lifeblood of the business” – new products.

    Advertising Age reports that there are signs “suggesting that package-goods players are creating fewer new products and concepts as the economy falters – and ironically, one indicator may be a sharp decline in sales for Bases, which is the dominant service for testing new package-goods product concepts. Another is the fact that Schawk, a publicly held business that does extensive prepress, packaging and retail point-of-sale design work for package-goods marketers, has reported sliding sales in the past year.”

    This decline in new product development is occurring, Ad Age writes, despite its own research showing that “the recessions of the '30s, '70s and '80s spawned many of the most successful innovations of the 20th century, including the soap operas, synthetic laundry detergent, the personal computer and MTV. But the question might be whether marketers are brave enough to keep the new products coming.”

    There seems to be a range of opinions about whether this trend will continue or subside…which leads to the other story about new products that is intriguing.

    The Cincinnati Enquirer reports that Procter & Gamble has essentially published a “wish list” on its website for new ideas, making its needs and desires available to “scientists, entrepreneurs, marketers, in fact, anyone with a good idea and the ability to prove it works. P&G's list … is one way the company, once known for a culture where new products were only developed in-house, is throwing open its doors to the outside world, hoping to capitalize on ideas, inventions and innovations developed elsewhere.

    “The company that once thought nothing of spending years in costly researching, testing and refining of products before bringing them to market, now says more than half of its new product ideas came about with help from outside the company walls, even from competitors. That exceeds a goal set by A.G. Lafley, who shortly after he took over as chief executive in 2000 declared that P&G was ready to do business with anyone with a good idea.”

    This doesn’t mean that P&G is outsourcing all of its new product development. Far from it, writes the Enquirer. “P&G still spends more than $2 billion a year on research and development, employing 9,000 scientists and researchers worldwide, many of them in Cincinnati. But the company has built a corporate culture that encourages so called ‘open innovation,’ by, for example, creating a network of technology entrepreneurs who hunt for new ideas around the world, and overhauling its employee evaluation system to include rewards for innovation.”

    KC's View:
    It is amazing how many times you sit down to talk to people about new ideas, and the primary reaction seems to be negative. Some of the phrases you hear are: “I don’t understand the business model.” “We can’t make money that way.” “Who else is doing it?” “I wouldn’t use it.”

    (And then there is always my favorite: “I’ll be retired before we have to deal with this issue. That’ll be the next guy’s problem.” Oy!)

    Michael Sansolo quoted one line from “Dead Poet’s Society” in his column above, so I’ll quote another one. At one point, Robin Williams’ teacher says to his students, “No matter what anybody tells you, words and ideas can change the world.”

    Or, we can quote Jean Luc Picard of “Star Trek”: “Things are only impossible until they’re not.”

    It seems to me that in so many places (and I’m not just talking business here), ideas are the enemy. That’s because ideas can threaten the status quo.

    I’d be willing to bet that as you read this – no matter what time you are reading it – at some point in the last 12 hours you have used at least one product that 12 years ago had not even been conceived…and, in fact, would have been thought impossible if anyone had actually thought of it.

    It would be a shame if new product introductions were to fall off because of our recession. Hell, this could be the perfect time to innovate…to set the world on fire with an idea. That’s my idea of a stimulus package.

    Published on: January 13, 2009

    The Dayton Business Journal reports that Kroger plans to close one of its stores in the market at the end of the month and convert it to the Fresh Fare concept, which offers more fresh foods, prepared meals, a wine cellar, and a coffee shop.

    This is the second Fresh Fare store to be opened by Kroger in Ohio, according to the story, with the other one having been unveiled recently in Cincinnati.

    The renovations are expected to last into the summer.

    KC's View:
    Always interesting when the big chains diversify and change up their offerings to specific markets. This one intrigues me since the new Fresh Fare will be just five minutes from the estimable Dorothy Lane Markets, which as far as I am concerned has pretty much set the industry standard for things like fresh foods, prepared meals, a wine cellar, and a coffee shop.

    Published on: January 13, 2009

    Forbes reports that Trader Joe’s is suing Gristedes owner John Catsimatidis for trademark infringement after he redesigned one of his Manhattan stores and called it “Trader John’s.”

    Trader Joe’s called it a “blatant attempt to confuse consumers and capitalize on Trader Joe's hard-earned goodwill,” and Forbes notes that Trader John’s is just a few blocks from a Trader Joe’s on 14th Street, uses a logo similar to that of Trader Joe’s, and features "wood paneling, wagon wheels and baskets" to create a look that "mimics the familiar decoration scheme of one of Trader Joe's stores."

    "We take seriously any attempt to infringe on our trademark, and we are taking the necessary action to stop this particular attempt,” said a spokesman for Trader Joe’s.

    Catsimatidis, who said that if his new store is successful he will remodel 10 other Gristedes along the same lines, defended his move by saying, “My name is John. I've been a trader all my life, and we don't think we've done anything wrong. We're on the other side of Fifth Avenue. It's a different world.”

    KC's View:
    Catsimatidis has said in numerous interviews that he has every intention of running in 2009 to be mayor of New York City. Using his Trader John’s logic, I fully expect him to improve his dubious chances of winning by changing his name on the ballot to Rudy Giuliani.

    Give me a break.

    Published on: January 13, 2009

    The Wall Street Journal reports that when Barack Obama is sworn in as president of the United States next Tuesday, it is expected to take less than three weeks for a new head of the Food and Drug Administration (FDA) to be named.

    At the same time, the Journal writes, Julie Gerberding will step down as director of the Centers for Disease Control and Prevention (CDC), “ending a controversial tenure of more than six years. She will be replaced by William Gimson III, the agency's chief operating officer, until a permanent successor is named.”

    If the new administration seems to have a priority for the two health-related posts, it seems to have been stated by the nominee for secretary of the Department of Health and Human Services, former Sen. Tom Daschle, who told a Senate panel during his confirmation hearings, "I want to take ideology and politics as much as humanly possible out of the process and leave the scientists to do their job."

    KC's View:
    I would suggest that just letting scientists do their jobs may not be enough. The systems have to be speedy, efficient, effective and transparent. The protections have to be there for the consumer, not industry. (Which, by the way, ultimately will be best for industry.) And, perhaps most importantly, there has to be a mechanism in place to explain health-related decisions to the nation in a way that makes sense.

    Published on: January 13, 2009

    Outgoing Walmart CEO Lee Scott told the annual convention of the National Retail Federation (NRF) yesterday that he expects the first half of 2009 to be “extraordinarily challenging,” and that he is not even convinced that shoppers will go back to old consumption levels when the economy recovers.

    Some people are giving up eating out; some people are giving up movies; some people are giving up other things like shopping,” Scott said. “And they were talking about how good they felt about doing that. Those are fundamental changes that will continue.”

    Scott said he remains guardedly optimistic that the second half of 2009 will improve and be “modestly better.”

    In addition, Scott said that even in this time of economic hardship, retailers need “to tackle the hard issue … as businesses we have a responsibility to society. We also have an extraordinary opportunity.”

    KC's View:

    Published on: January 13, 2009

    Put down that bagel, throw out that cinnamon bun, and go for a jog,

    New numbers released by the National Center for Health Statistics say that more than 34 percent of Americans are obese, while 32.7 percent would be classified as overweight.

    This is the first time since such numbers have been compiled that the obese population has outnumbered the overweight citizenry.

    The numbers for children aren’t quite as bad…perhaps because they just haven't been eating for as many years. The CDC has reported that 32 percent of US children are overweight, and 16 percent are obese.

    KC's View:

    Published on: January 13, 2009

    The United States Department of Agriculture has announced details of the final regulation for the mandatory country of origin labeling (COOL) program required by the 2002 and 2008 farm bills, regulations that become effective on March 16, 2009, 60 days after the date of publication.

    According to the announcement, “The rule covers muscle cuts and ground beef, lamb, chicken, goat and pork; wild and farm-raised fish and shellfish; perishable agricultural commodities (specifically fresh and frozen fruits and vegetables); macadamia nuts; pecans; ginseng and peanuts. Commodities covered under COOL must be labeled at retail to indicate its country of origin. For fish and shellfish, the method of production -- wild or farm-raised, -- must be specified. Commodities are excluded from mandatory COOL if the commodity is an ingredient in a processed food item.”

    The announcement goes on: “The definition of a processed food item remains unchanged from the Aug. 1, 2008, interim final rule. Excluded from COOL labeling are items derived from a covered commodity that has undergone a physical or chemical change -- such as cooking, curing, or smoking -- or that has been combined with other covered commodities or other substantive food components such as chocolate, breading and tomato sauce.

    “Also exempt are food service establishments, such as restaurants, lunchrooms, cafeterias, food stands, bars, lounges and similar enterprises.”

    KC's View:

    Published on: January 13, 2009

    • BIGresearch has come out with the results of a new survey saying that consumers entered 2009 “with relatively renewed hope for the future of the economy…in January, 24.7% indicated they were confident/very confident in chances for a strong economy, rising from last month’s dismal 20.0% and the highest reading since September ’08 (28.3%). The recession has taken its toll, though…this month’s figure is almost ten points lower than a year ago (33.5%) and less than half of the January ’07 reading (50.5%).”

    • The Wall Street Journal reports that Aldi is cranking up its US expansion plans “and seizing on the economic downturn to lure consumers to its spartan stores and cheap groceries. The discount chain will open at least 75 U.S. stores this year, well above its typical pace, including its first Aldi store in New York City. The company is counting on the economic downturn to crash a traditional barrier to the U.S. grocery business: Americans tend to be loyal to big-name brands.”

    Newsday reports that Penn Traffic Co. will close seven stores in upstate New York and one in Vermont “as part of its ongoing consolidation.” The units will close on or before February 7; the announcement comes a month after Penn Traffic sold its wholesale business to C&S Wholesale Grocers.

    • Campbell Soup Co. has announced that it is lowering the sodium levels in a dozen soups designed for children, which will allow the reformulated products to meet government standards to be labeled as “healthy.”

    Including in the reformulation list are Double Noodle and Chicken & Stars. The company said it now has 78 soups at healthy levels of sodium.

    KC's View:

    Published on: January 13, 2009

    • Tesco reportedly has named former Unilever CEO Patrick Cescau to its board of directors, a nonexecutive position that the company said will nonetheless boost its expertise regarding both developing and emerging markets.
    KC's View:

    Published on: January 13, 2009

    …will return.
    KC's View:

    Published on: January 13, 2009

    In the National Football League, Tony Dungy, head coach of the Indianapolis Colts, announced his retirement, ending a seven-year tenure with the team that resulted in a Super Bowl win two years ago. In the various pieces about Dungy, he was lauded as an uncommonly decent man with a strong commitment to faith, family and his community.

    In Major League Baseball, Rickey Henderson and Boston Red Sox slugger Jim Rice were elected to the Hall of Fame, as former pitcher Roger Clemens was said to be the subject of a federal grand jury investigation into whether he perjured himself in front of the US Congress regarding the use of steroids.

    KC's View:
    This may be a little harsh, but my impression is that Henderson and Clemens are unlikely to see their names linked to phrases like “an uncommonly decent man with a strong commitment to faith, family and his community.”

    But I guess that’s not what gets you into the Hall of Fame.