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    Published on: January 26, 2009

    Interesting piece in Marketing Daily about a new study from the Center for Culinary Development (CCD) and Packaged Facts about how Generation Y – people born between 1980 and 2000 – eats.

    Among the conclusions:

    • Generation Y is “perhaps the most savvy, brand-sensitive consumer group in history.”

    • Generation Y has a “penchant for eating and socializing in casual, communal spaces. Gen Y's love hanging out at communal tables in bar lounges, college dining halls and other informal settings. Dining venues that offer a wide collection of foods, particularly with ‘far-flung global inspiration,’ are favorites.”

    • “Gen Y is of course wired to the max. These young people are not only hooked on socializing in communities on the Web; they see even eating as ‘a deeply wired activity.’ Their markedly social self-identities and need to be constantly entertained drive them to use networking technologies in food-centric ways, ‘from downloading menus and placing orders to subscribing to wireless recipe and ordering information services’.”

    • This demographic also has a “penchant for customizing foods through adds-ons or mix-ins (the reason they love fajitas and other ‘build-it-yourself’ foods); their dedication to local, organic, fair trade and vegetarian/vegan foods (reflecting their belief that food choices can make a positive difference in the world at large); and their firm belief in the value of health/wellness and functional (including anti-aging) foods and beverages.”

    One other interesting note from the study: Generation Y is resistant to marketing messages that actually look or sound like marketing messages.

    KC's View:
    The oldest of the Generation Y group is 29 years old…and is approaching the center of the marketing bulls eye for food manufacturers and retailers, if they aren’t there already. Their expectations and demands, it seems to me, are completely different than those of their elders…they hardly remember a world without cell phones and Amazon.com, they believe that Starbucks is the center of the universe (even if they cannot afford to order as many lattes as they used to), and they will not lose their aspirations even if the recessionary economy make them less easy to achieve.

    So the question, quite simply is this. What are you doing to appeal to this generation of shoppers?

    Because even in the current downturn, you can’t afford to wait, to think that this is something to get around to tomorrow or next week or next month. Because by then, the competition may be better positioned – in terms of accessibility and product availability – to cater to this consumer group.

    Published on: January 26, 2009

    The US Government Accounting Office (GAO) has issued a report saying that the US Food and Drug Administration (FDA) is one of the “high risk” areas of the federal bureaucracy that may be inadequate for its role of maintaining a safe food and drugs supply in the US.

    According to Reuters, the FDA is “being hampered by globalization, more complex products and laws that have made it more difficult for the FDA to ensure the safety of pharmaceuticals, biologic drugs and medical devices … GAO investigators said the FDA needs to have better data on its inspections of facilities in other countries and conduct more inspections.”

    The GAO report is issued annually to help Congress establish priorities; the FDA, to be fair, has been looking for the US Congress to give it greater resources with which to accomplish its meeting.

    According to its website, the GAO “is an independent, nonpartisan agency that works for Congress,” and its mission is “to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people. We provide Congress with timely information that is objective, fact-based, nonpartisan, nonideological, fair, and balanced.”

    KC's View:
    Not exactly reassuring, but in the FDA’s defense, at least it knows that it doesn’t have the resources to do its various jobs.

    But one hopes that at some point in the not too distant future, somebody actually comes up with an idea to make the food and drug safety infrastructure in the US both efficient and effective.

    Published on: January 26, 2009

    The New York Times reported over the weekend about Walmart’s environmental and sustainability efforts, saying that “the company that democratized consumption in the United States — enabling working-class families to buy former luxuries like inexpensive flat-screen televisions, down comforters and porterhouse steaks — has begun to democratize environmental sustainability.

    “For decades, many consumers felt that going green was a luxury, too, reserved primarily for those with enough money — and time on their hands — to buy groceries at natural food stores and organic clothing from specialty retailers.

    “Today, the roughly 200 million customers who pass through Wal-Mart’s doors each year buy fluorescent light bulbs that use up to 75 percent less electricity than incandescent bulbs, concentrated laundry detergent that uses 50 percent less water and prescription drugs that contain 50 percent less packaging.”

    The story notes that the initiative emerged from CEO Lee Scott’s determination to both improve the company’s bottom line and its reputation, and that he has been convinced from the beginning that “it wasn’t a matter of telling our story better. We had to create a better story.”

    A big part of the effort was Walmart doing something that it was not used to doing – listening to its critics and even embracing their ideas.

    The Times writes that Scott “began meeting with minority groups, politicians and environmentalists. Some meetings were awkward; others were punctuated by tirades. But as it turned out, most critics did not want Wal-Mart to disappear. They wanted it to be better. Mr. Scott used some of his opponents’ ideas to make that happen, believing that sustainability could become an advantage — saving the company money, reinvigorating its culture, allowing it to sell better merchandise and attracting and retaining talent.”

    KC's View:
    This reiterates the point that Michael Sansolo made last week in his column, and that I made the week before in my coverage of a session at the FMI Midwinter Executive Conference…and that, to my amazement, people keep arguing with.

    Being “green” can make good sense for business. Walmart has proved it. And yet, people keep arguing that environmentalists are bad for the economy.

    I was at the airport last week, and I saw one of those inspirational advertisements that quoted Paul Volker, of all people, saying that until we fix the environment, we cannot fix the economy. (I’m paraphrasing.)

    And I continue to believe that ignoring these issues, or protesting too much that they do not matter, is a mistake with potentially serious repercussions.

    Published on: January 26, 2009

    The Nielsen Company said Friday that it is suspending its PRISM initiative, which was designed to provide syndicated data about in-store shopper traffic and marketing activity. The company blamed the uncertain economy for the move, saying that “given the nation's serious economic state, Nielsen and its clients have decided this is not the right environment to launch a national syndicated service. While the industry as a whole is very supportive of a syndicated service, many clients, in the face of the current economic environment, are not in a position to fully fund a syndicated service at this time.

    The PRISM project was launched in 2006, spearheaded by the In-Store Marketing Institute and supported by a number of retailers and CPG companies, and it was originally expected that it would be rolled out by the end of 2007. In addition to delays, Walmart, which had supported PRISM from its inception, announced last month that it would not participate in the program from that point on.

    KC's View:
    It can’t help when the biggest retailer in the world decides to drop out of a new program. But the instinct here is to take Nielsen at its word when it blames the economy for suspending PRISM, if only because it seems entirely credible considering the economy is doing so much other damage.

    Published on: January 26, 2009

    The Seattle Times reports that Starbucks may be planning to cut 1,000 jobs, in a move that could be announced later this week when the coffee company unveils its first quarter financial results. The cuts, according to the report, are a response to an increasingly tough economic environment that is hurting Starbucks’ performance, and the cuts are expected to affect managers and headquarters personnel, but not the in-store staffers who take care of customers.

    Starbucks is not commenting on the report. However, it did announce late last week that its top management would not be getting any raises in the current fiscal year, and that CEO Howard Schultz will not be getting a bonus in 2009. And it was recently announced that Starbucks is not guaranteeing that it will match 401 (k) retirement contributions this year.

    The company said last year that it would close 600 underperforming stores throughout the US.

    KC's View:
    I feel bad for the folks at Starbucks headquarters in Seattle. After all, it wasn't that long ago that everything they touched turned to gold. These days, it must seem like no matter they do, things just don't work out the way they’d like, and the news is almost never good.

    I will say this, though. If this Seattle Times report is accurate, the best news is that in-store personnel won’t be affected. Because if the company were to start cutting back in its retail locations, it would be starting down nine miles of bad road, as the late great Bob Murphy used to say.

    Published on: January 26, 2009

    The US Court of Appeals has ruled that the Federal Trade Commission (FTC) can go ahead with its administrative trial designed to determine whether Whole Foods’ $565 million acquisition of Wild Oats should be unraveled.

    Whole Foods sought to delay the administrative hearing on the grounds that the FTC already has made a judgment in the case, and it was unfair for the FTC to hold such a hearing even as it is taking the company to court to challenge the acquisition. But the court said that the retailer “has not shown that it has a 'clear and indisputable' right to the extraordinary remedy."

    The FTC maintains that the merger needs to be unraveled because it has the potential to reduce choice and raise prices for consumers, contentions that Whole Foods has rebutted successfully to this point. However, the FTC has been unwilling to let the case go, despite having lost the original court case more than a year ago and despite the fact that virtually all of Wild Oats’ operations have has been integrated into Whole Foods’ structure.

    KC's View:
    I almost feel silly continuing to comment on this story…though MNB does get 50-75 new subscribers each week, so it is possible that some readers haven’t seen my rants on the subject.

    So let me, as succinctly as possible, put my feelings about the FTC’s actions in this case into one word suitable for a family website:

    Hooey.

    Published on: January 26, 2009

    USA today reports that “health officials say the death of a Minnesota woman has been linked to the nationwide salmonella outbreak and now the infection may have contributed to seven deaths.”

    This latest salmonella outbreak, which has been attributed to peanut butter and peanut paste made in a Georgia plant owned by Peanut Corp. of America and included as an ingredient in a wide variety of products, has sickened close to 500 people – though the specific cause has not been determined.

    KC's View:

    Published on: January 26, 2009

    The Tampa Tribune carries an interview with Mike Vail, the new president/COO of Delhaize-owned Sweetbay Supermarkets. Excerpts:

    On the impact of Aldi’s aggressive store opening program… “They're establishing their brand in an economy that's perfectly suited for what they offer, which is low price. In terms of their impact, we're ahead of where we expected to be in terms of impacts.

    “We talk about Aldi being sort of death by a thousand paper cuts. You know, one Wal-Mart can open in one of my markets and it can have a pretty big impact on two or three of my stores. But one Aldi opens and we might barely feel it. But five years from now, there might be 15 Aldis around five of my stores and together they have an impact.”

    On the impact of food prices… “I think like a lot of things, it feels like the manufacturers quickly tack on price increases and fuel surcharges as costs go up and as the market goes down they're slow to pull prices back down. We're seeing a slow reduction in commodity prices.

    “One of the things you're seeing now is that as people trade from name-brand to store brand, the national manufacturers aren't doing the business they need to do. That helps to accelerate the decrease in costs, as they get their costs in line so that customers come back to the national brands.”

    KC's View:
    One of the things that Mike Vail and Sweetbay have to do, it seems to me, is to avoid being trapped in the mushy middle between Publix on one end and Walmart and Aldi on the other.

    Tough to do, I’d guess. But I also have tremendous respect for the Delhaize Group, and its ability to innovate in tough times.

    Published on: January 26, 2009

    • Walmart said Friday that its offer to acquire a 58.2 percent stake in Chilean food retailer D&S, which operates 180 stores in that nation.
    KC's View:

    Published on: January 26, 2009

    • The Staten Island Advance reports that King Kullen is closing a Staten Island store that it took over from Pathmark a year ago, saying that the economic downturn caused the store to be “hard-hit.” The paper suggests that tough competition from Stop & Shop and ShopRite also contributed to the decision to close the store.

    • The New York Times reports that some California farmers, responding to a crippling drought that is the worst in 20 years, have begun abandoning their fields…moves that could result in higher prices for some fruits and vegetables later this year.

    • The acquisition of George Weston Limited’s US fresh bakery business by Grupo Bimbo has been completed.

    "This transaction is the most important in Grupo Bimbo's history and one of the largest in the bread industry. Size alone, however, is not our main objective. Rather, our vision is to become the best baking company and we furthered that goal today by demonstrating a commitment and dedication to serving our consumers and customers in the most effective way possible," said Daniel Servitje, Chief Executive Officer of Grupo Bimbo.

    Barron’s reports that HJ Heinz is a likely target for acquisition – possibly by larger entities such as Unilever or Nestle – once credit markets become unstuck. The company is said to have a market value of around $11 billion.

    KC's View:

    Published on: January 26, 2009

    • Walgreen Co. has named Gregory D. Wasson, its president/COO, as its new CEO, succeeding Jeffrey Rein, who left the company under pressure last October.

    Alan McNally, who has been serving as chairman and acting CEO since October, remains as chairman, but there are no plans to name a new COO.

    KC's View:

    Published on: January 26, 2009

    On the subject of climate change and global warming and whether business needs to recalibrate to take these issues into account, MNB user Jeff Reinartz wrote:

    KC, you're very intelligent and I agree with you on most issues, but I believe you are dead wrong on the man-made global warming issue. Last winter was globally the coldest the planet had experienced in years, but you'd have to dig to find any news about that, because it doesn't paint a doomy and gloomy enough picture for the mainstream media to want to pursue.

    That's what this is all about in my opinion, making news and keeping research dollars coming in for the scientists who have been deemed credible on the issue.

    This winter in Minnesota has also been the coldest I can remember, so if the chicken littles can point to a couple unusually large hurricanes and some ice melting in the summer as proof of man-made global warming, why can't I point to the past two winters as proof that it's the fraud I believe it to be?

    Let's be good stewards of the Earth yes, but let's also let the Earth do what the Earth does: cycle through warm and cool periods. Who made the current global temperature the ideal temperature anyway? Maybe it should be a little warmer. Frankly, if temperatures warm a couple degrees in Minnesota you won't be hearing much complaining. Shorter, warmer winters and a longer crop growing season.


    In his email, Jeff made a caustic reference to Al Gore, and I’ll repeat something I’ve said here before. In some ways, the worst thing that the global warming awareness brigade has going for it is Al Gore’s participation – because while he has been eloquent and persuasive and has won the Nobel Prize for his efforts, he also has given some people license to assume that his efforts are political and partisan.

    And for the record, New England, where I live, is having one of the coldest and snowiest winters that I can remember…and this doesn’t make me doubt even a little bit the science that supports global warming and climate change. Because we’re not talking about what happens in the 90 days or so that make up a single season, but of broader =, more sweeping changes that I believe are happening, and that I believe people are hastening.

    Another MNB user wrote:

    This is a debate that may go on forever on your site, so I understand if you want to limit discussion.

    It seems to me most of the population mixes up Facts and Implications. Implications are assumed, and can be questioned.

    Fact: Due to human behavior in the industrial age the level of Carbon Dioxide in the atmosphere has increased.

    Implication: The temperature of the earth is increasing.

    Measuring the temperature of the entire earth seems akin to taking the average of all the phone numbers in the phone book over the years - you can crunch a lot of data, identify trends, and it may not mean anything. The globe has had ice ages and hotter periods (Antarctica was a jungle at one point) without the impact of man. So are we in a natural temperature fluctuation, or are humans driving higher temperatures? The fact is, we don't really know.

    But what we do know is that there is more CO2 in the atmosphere due to human behavior - and we should work to lower those levels. Will the earth cool as a result? Who knows.

    I consider myself a practical environmentalist. I have been recycling for years. We use canvas bags, use our furnace and AC as little as possible, drive smaller cars etc. to try to minimize our "carbon footprint." I know I am putting less CO2 in the atmosphere, and that is the right thing to do. Even if the "invisible hand" of nature continues to increase the temperature of the earth, we will do the right thing by lowering levels of CO2.


    Agreed.

    MNB user Ron Pizur wrote:

    I like to hear your views on global warming and then everyone's responses. What I can't believe is how naive people can be.

    This is sort of similar to an argument I was having about religion with someone once, where I was postulating what if there was no God. His response was what does it hurt if you live a good Christian life like there is a God. When you die and maybe find out that there isn't a God after all, won't you feel better knowing that you have left the world a better place anyway.

    So what does it hurt to just admit that the world is getting warmer (who can deny that glaciers and ice shelves are melting?). I mean, we can discuss, debate and argue to what extent man is contributing to global warming, but who cares about percentages, let's just admit things are changing. Now, if a few changes can be made that will make the air cleaner and possibly slow, halt or reverse global warming then couldn't we all agree to just try them? Even if our efforts don't affect global warming, doesn't the outcome of cleaner air and a prettier environment justify the change anyway. Plus if our efforts don't work we can at least say we tried to leave our children a better world and didn't bury our heads in the sand and tell the future generations that we had a good life and didn't care if they did.


    Agreed.

    And MNB user Ashlee Gossell wrote:

    Those that believe that what we do does not have any impact on our planet have to step out of their cave, rub the sleep out of their eyes, and splash some oily polluted water on their face…

    Not only is the science there to back it up but look around. Who is responsible for the thousands of pounds of trash pulled from our lakes and rivers, who is responsible for the factories that spill toxic gasses into the air, who is responsible for the billions of cars driven around the world that emit harmful chemicals? We are.

    It is not “the plan” for this to happen to the earth, we have done this to the earth. Not intentionally of course, but because we didn’t know any better. As some one who deals with this subject matter on a daily basis, I can honestly say that this is our mess, and we are responsible for cleaning it up to the best of our ability.

    It scares me to think that there are people out there that honestly do not see the global climate change and state of our environment as being our responsibility…it makes me weep for the youth of tomorrow…





    Responding to my scathing comments last week about John Thain, who while he supposedly was trying to save Merrill Lynch during trying times also was spending $1.2 million to redecorate his office, one MNB user wrote:

    For Merrill Lynch and former CEO John Thain, no more unsympathetic could I be to their predicament and the spiral of hypocrisy and irresponsibility they've demonstrated so blatantly.

    But going through that laundry list of unnecessary expenditures and his preaching of cost/spend efficiencies to his employees, does it not remind you of the people we have serving in Washington? At least, the vast majority of them? And yet, they are the ones pointing all of the fingers, when at the same time I would love to see their expenditures over the last couple of years.

    Seems like we have a huge pot of hypocrisy stew bubbling, and that to me, is very unsettling.

    We really need some transparency and accountability not just within these companies like Merrill Lynch, but within our own federal government.


    Transparency ought to be the law of the land. The good news is that the Obama administration keeps talking about it…and it is our job, as citizens and taxpayers, to make sure that it isn’t just talk.

    Another MNB user wrote:

    You and I both operate a "small Business". The IRS Code allows us to deduct business expenses that are "ordinary and necessary". What do you think would happen if we attempted to deduct as a business expense even one of these items: $87,000 area rug, four pairs of curtains $28,000, a pair of guest chairs $87,000, fabric for a 'Roman Shade $11,000, mahogany pedestal table $25,000; 19th Century Credenza $68,000; sofa $15,000; pair of guest chairs $87,000; George IV Desk $18,000; a commode on legs for $35,000."

    We'd be facing penalties for tax evasion and maybe a little time in the slammer that's what.

    I saw so much of this first hand in my 25 years working for a Fortune 100 company that it forever jaded my respect for the Internal Revenue Service and its legions of corporate auditors.

    Congress talks about the tax gap - well I strongly suspect that this kind of extravagant spending (tax evasion) is more the norm than the exception at big corporations. Hell, it probably is rampant at high levels of government including Congressmen and Senators.


    Hell, I wish I had room in my office for a credenza.




    We wrote last week that China’s decision to put to death some of the people responsible for the melamine contamination of dairy products there seemed a little extreme but effective. MNB user Steve Klingman wrote:

    The Chinese people in question were well aware of the severe penalties that likely awaited them should they shame their country. And yet, any checks that were in place to catch them at their deed failed. Deterrence by threat of life and liberty may work for some. There will always be people willing to risk even the most sever penalty. While imprisoning and killing people for their misdeeds is a very public (and double-edged) display, the question of how China will monitor the safety of its food supply – in practice, not just in words -- both for internal and external consumption, remains.

    Agreed.

    Another MNB user chimed in:

    Whether I lived in a totalitarian or democratic society, and I laced food with a toxic chemical killing several people, wouldn’t you expect me to pay for my greed with my life?

    Depends on what state you live in.




    Got the following email from a faithful (but possibly delusional) MNB user:

    >b>I have been reading all of your commentary on this issue and agree whole-heartedly that the FTC is wasting our tax dollars. I agree that there is no lack of competition in the area of Organics offered to the general public. The removal of Wild Oats in the marketplace has not hampered the availability, selection, nor raised the prices of Organics available to the consumer.

    By forcing Whole Foods to undo the merger, it will likely cause Whole Foods to become less than competitive and possibly financially unstable. Such actions by the FTC could likely cause Whole Foods to go into bankruptcy and that would probably lead to a lawsuit against the FTC. The cost of all of this to the American Taxpayer is ridiculous.

    How long can we tolerate this level of misguidance in our government?

    You say: "This may be good for people like me, who rant for a living. But I can’t see how it is good for anyone else."

    I ask you this: If you think that ranting is a good living, then why is it that your ranting has not influenced those that need to be changed?

    I will be sending my nomination of Kevin Coupe as the new "Food Czar" to Mr. Obama.

    Let's put some REAL CHANGE into the area we talk about daily.

    I appreciate your confidence, but I’m not sure I’d pass the vetting.

    But I’ll promise you this – the Senate confirmation hearings will be hugely entertaining.

    (Think Woody Allen’s last line in “The Front”.)




    Finally, I joked last week that I was astounded to find out that I had 120 bottles of wine in my basement…and that this means that I’m ready to weather the recession. Which led one MNB user to respond:

    You mean the recession will only last 60 days?

    Good point. I was being optimistic.

    Time to hit the wine store…
    KC's View: