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    Published on: February 6, 2009

    BARCELONA -- Random notes and comments from “Content Guy” Kevin Coupe as the annual CIES International Food Safety Conference unfolds…

    • This is the fourth CIES Food Safety Conference that I’ve attended and spoken at, and seems to be the biggest. JP Suarez, senior vice president and general counsel for Walmart’s International Division, and chairman of the Global Food Safety Initiative (GFSI), says that there are 530 people attending from 44 countries. At a time when a lot of companies are cutting back on travel and educational expenses, that seems remarkable…a testament to the kind of strong program that CIES puts on, appealing to both retailers and manufacturers.

    • In his opening presentation, Suarez noted that food safety had diminished as an industry priority between 2000 and 2007, at least according to the annual CIES “Top of Mind” survey, it has come “roaring back.”

    “Food safety is one of those areas we cannot afford to have as a luxury only when business is good….if the consumer believes it is something is only we focus on when business is good, then the consequences will be dire,” he said.

    • Good line from Suarez: “The consumer doesn’t give us a lot of second chances when it comes to their health.”

    • Looking around the room, good to see a growing contingent of US retailers attending this conference, from Food Lion, McDonald’s, Hannaford, HEB, Kroger, Supervalu, Target and Walmart. Needs to be more, though…which is probably why they’ve announced that the 2010 edition will be in Washington, DC. (JP Suarez joked that he’d try to get President Barack Obama to speak at it…at least, I think he was joking.)

    • Big push on GFSI, from Suarez: “If the consumer ever thinks that certification can be bought and not earned, then we will be in real trouble.” (I’m wondering what kind of certification that peanut plant in Georgia got…and whether it was bought as opposed to being earned.)

    • There is a fascinating theme running through the first day’s presentations – a concern that tough economic times could cause the food industry to take its collective eye off the food safety ball.

    • David Hughes, Emeritus Professor Of Food Marketing at Imperial College in London, gave an interesting speech noting the toughness of the economy, stressing that it was the first time since the seventies that we’d seen food inflation converge with a spike in oil prices. One of his big concerns is that oil prices will shoot back up because of political instability in the Middle East: “If you have a spike in oil prices plus food inflation riding on the back of a recession, it will create real problems,” he said, with what seemed like British understatement. He’s making me worry…

    • Hughes just listed all the reasons that the industry has to be worried about food safety: “…international trade in food products … real and perceived problems with food from high risk countries … food safety stories sell newspapers (Is this media self interest or just plenty of material?) … 24/7 global coverage and global transparency … better science/systems to detect problems … actions of well organized special interest groups…” Yikes! He also just pointed out that a search of top 10 food news stories in 2008 showed that half of them were food safety-related. Yikes!

    • Hughes just repeated the Suarez line almost verbatim: “Food safety is not a luxury you can focus on when everything else is going well.” Think there is a trend here…

    • Hmmm…. Just noticed that Dr. David Acheson, associate commissioner for food safety at FDA, has cancelled out of an appearance he was supposed to make here. Can’t imagine what might be more important than this…unless it is figuring out how to apply the same level of oversight that he’s promised to use in FDA’s new China offices to places closer to home…like a certain peanut plant in Georgia. (Can't help it…this story makes me nuts. No pun intended.)

    • CIES also announced that the Global Food Safety Initiative (GFSI), which it manages, is developing a joint approach to benchmarking with an organization called GlobalGap, which represents the agricultural industry. The idea seems to be – and this gets a little beyond my level of expertise - to find a way to make one food safety audit and certification process serve various ends of the supply chain…and thus appears to be a good idea that will be both efficient and effective when implemented.

    There must be something going around…just got an email on my laptop saying that GlobalGap has signed a similar deal with the Safe Quality Food (SQF) Institute in the US, which is administered by the Food Marketing Institute (FMI).
    • Nice presentation by Dr. Art Liang, director of the food safety office at the US Centers for Disease Control and Prevention (CDC). Same theme, different words: “Even though you may be tempted to cut corners in tough economic times, don't do it,” he warned.

    • Liang said that it used to be that scientists didn’t detect outbreaks, but just waited for people to come in and say they got sick, and the sources were so clear that they didn’t need an epidemiologist. Now, he said, the science is so far ahead that they can actually find a needle in a haystack.

    • Cautionary note from Liang: “Foodborne outbreaks actually are stable…it is the number of high profile multistate outbreaks that is going up.” I remain convinced that as much work as the industry needs to do in terms of the science and infrastructure of food safety, consumer-oriented transparency also is a significant problem. There is a lot of coverage and information out there, but not enough good information.

    • It’s interesting. While the peanut butter-related salmonella outbreak is something that’s being widely discussed, I get the sense that it isn’t as much of an issue for the Europeans in attendance as it for Americans. Granted, it is a US issue…but there doesn’t seem to be a “there but for the grace of God go I” attitude. Rather, they seem to think that is a specific problem owing to lack of proper US regulatory oversight.

    This would be irritating, but then I remember that the US food industry sometimes tends to react with similar superiority/arrogance when it reads about occurrences of mad cow disease or melamine-related food poisoning in foreign countries. Then, of course, we find out that it can happen to us…

    If recent events prove anything, it is that there is no room for arrogance if you’re in the food safety business.

    • Just talked to the folks at JohnsonDiversey, which sponsored the video that I presented here at CIES: Gone Fishing: Food Safety In A Global Supply Chain.

    They’ve agreed to make a DVD available to any member of the MNB community who wants one…anyone who is interested just has to send me an email with their name, title, company and address…and I’ll pass that information on to JohnsonDiversey, and they’ll send the video out.


    KC's View:

    Published on: February 6, 2009

    The Washington Post carries an interview with Tom Vilsack, the new US Secretary of Agriculture, in which he says that “this is a department that intersects the lives of Americans two to three times a day. Every single American. So I absolutely see the constituency of this department as broader than those who produce our food -- it extends to those who consume it."

    The Post writes, “With President Obama at the government's helm, food activists have begun drafting policy wish lists calling for more nutritious food in schools, money for school gardens, and incentives and support for small producers who find it difficult to compete with industrial-size farms.

    “Vilsack was cautious about outlining detailed proposals; he has yet to appoint a deputy secretary or the heads of key agencies such as the Food and Nutrition Service, which oversees the food stamp program, or the Food Safety and Inspection Service, charged with protecting the meat, poultry and egg supply.” But there seems to be little doubt about what his priorities are.

    And, Vilsack says, “We want to make a better connection between what kids eat and knowing where it comes from. I've seen it in my own family. If you educate kids at an early age, you can have a tremendous impact."

    The Post notes that this “is a significant departure from the traditional view of the USDA, which historically has emphasized programs that support commercial farming, such as price guarantees for crops and marketing promotions for exports.”

    KC's View:
    The Post is correct in this. Which is why consumer confidence is diminishing. What Vilsack hopefully realizes is that a better informed and more confident consumer actually is good for industry.

    Published on: February 6, 2009

    Dunkin’ Donuts had fired its salvo in the decaf wars, which began when Starbucks announced that as a cost savings measure, it would only brew decaffeinated coffee on demand in the afternoon.

    In the print ad, Dunkin’ Donuts makes the point that now, in the afternoon, you’ll have to wait if you want a cup of Starbucks decaf…but then it plunges the marketing knife right into Starbucks;’ shoulder blades:

    "We don't work around our schedule, we work around yours,” the ad says. “Get what you want, when you want it. Because at Dunkin' Donuts, you kin' do it.”

    KC's View:
    I think most of us agree that, in the words of one MNB user who wrote me yesterday, Starbucks has “botched the marketing and set themselves up as easy targets for their competitors.”

    I also believe that the “we put you first, not our organizational issues” message is a compelling one for any retail venue.

    It is easy to tell when a food retailer is thinking about its own needs and not the customers. The first sign is when you walk into the store early in the morning and find the rotisserie chickens cooking…a process that may be efficient, but that will render the chickens tasteless and useless by suppertime.

    Published on: February 6, 2009

    Food retailers have long worked under the premise that woman do most of the food shopping, even in two-income families where their husbands might be expected to spend an equal amount of time in the supermarket aisles.

    But now, there is at least a possibility of a change in this presumption.

    The New York Times this morning reports that “women are poised to surpass men on the nation’s payrolls, taking the majority for the first time in American history. The reason has less to do with gender equality than with where the ax is falling.

    “The proportion of women who are working has changed very little since the recession started. But a full 82 percent of the job losses have befallen men, who are heavily represented in distressed industries like manufacturing and construction. Women tend to be employed in areas like education and health care, which are less sensitive to economic ups and downs, and in jobs that allow more time for child care and other domestic work.”

    And, the Times goes on: “Economists have predicted before that women would one day dominate the labor force as more ventured outside the home. The number of women entering the work force slowed and even dipped during the boom years earlier this decade, though, prompting a debate about whether women truly wanted to be both breadwinners and caregivers.

    “Should the male-dominated layoffs of the current recession continue — and Friday’s jobs report for January may offer more insight — the debate will be moot. A deep and prolonged recession, therefore, may change not only household budgets and habits; it may also challenge longstanding gender roles.”

    KC's View:
    And so, if you are a retailer that has traditionally catered to a female customer base, it is time to start thinking about how you need to change things up for the men who may be doing more of the shopping now.

    Published on: February 6, 2009

    Bruno’s Supermarkets has filed for Chapter 11 bankruptcy protection, according to a Reuters story, which says that Jim Grady has been hired as Chief Restructuring Officer, replacing CEO Kent Moore, who resigned last week.

    Bruno’s currently owns 66 stores under the Bruno's and Food World banners, and employs 4,200 people.

    The company said that its cash from operations will be enough to meet its normal business obligations and that it is trying to negotiate a commitment for a debtor-in-possession financing package.

    KC's View:

    Published on: February 6, 2009

    The National Association of Convenience Stores (NACS) has released a new report suggesting that “gasoline prices affect overall spending behavior more than any other economic factor – including the slowdown in the economy and the meltdown in the financial markets.”

    According to the report, “The lone good economic news for consumers over the past six months has been a huge drop in gas prices, yet 59 percent of consumers say that high gas prices have a ‘very significant’ effect on their spending behavior, substantially above the 45 percent who said the same in the 2008 consumer survey. To a much lesser extent, consumers said they were concerned about a slowdown in the national economy or a recession (41 percent), rising food costs and rising home energy costs (each 31 percent) and the credit crunch and lending crisis (21 percent).

    “Even with gas prices at the beginning of 2009 approximately $1.40 per gallon below last year’s levels, consumers remain incredibly price sensitive, with 70 percent saying that price is the most important factor in deciding where to purchase gas, and more than half of all consumers (51 percent) reporting that they will drive 10 minutes out of their way to save as little as 5 cents per gallon.”

    One interesting note from the report – consumers have no idea how much profit retailers make when they sell gasoline, and in fact generally think that gas stations generate about four times as much profit as they actually do.

    KC's View:
    It is amazing when you see a line of cars waiting at gas stations where they are charging a few cents less than other nearby stations, but not hugely surprising. Is there anyone out there who doesn’t believe that the dip in gas prices is the anomaly, and that it won’t be long before we see them spike again…and that this time, they’ll go even higher than last summer.

    That’s why when we have to replace the Murano later this year when the lease runs out, I’m thinking Mini Cooper. That 36 miles-per-gallon looks really attractive…though the winter weather this year has given me a little pause.

    Published on: February 6, 2009

    Promo magazine reports that Kellogg’s is launching a new loyalty program for Pop-Tarts, which will include “e-mail, direct mail and online media,” and is focused on “creating a two-way dialog with moms, including offering activity ideas, special offers, new product sampling through the mail and exclusive content.”

    KC's View:
    The big point here is that, even for mature brands, you can't just count on a store presence and traditional ad buys. You have to connect with the customer in other, more fundamental ways that transcend the store experience. Whether this works will depend, of course, on the content…but Kellogg’s head is in the right place on this.

    Published on: February 6, 2009

    Crain’s Chicago Business reports that Walgreen Co. plans to buy 12 Rite Aid stores in California and Idaho, a move designed to bolster its western US presence. Terms for the deal were not disclosed.

    • The Associated Press reports that three men have been arrested and charged with trading inside information that allowed them to make a $7 million profit on the sale of Albertsons in 2006.

    KC's View:

    Published on: February 6, 2009

    • Walmart said that its January same-store sales were up an expectedly high 2.1 percent in the US…and then said that from now on, it will begin issuing forecasts only on a quarterly basis, saying that consumer and economic volatility made monthly forecasts too difficult.

    • Spartan Stores reported third quarter sales of $781.9 million, a 9.9 percent decrease from $788.8 million from last year, on same-store sales that were up 3.3 percent over the same period a year ago. Q3 profit was up 17.4 percent to $8.7 million.

    • Target Corp. said that its January sales were up 0.8 percent to $4.14 billion, on same-store sales that were off 3.3 percent.

    • Ingles Markets said that its fiscal first quarter sales were up 3.6 percent to $804.9 million, on same-store sales that were up 5.4 percent. Q1 net income was down a bit, though, to $11.1 million from $12.7 million a year ago.

    • Weis Markets said that its Q4 net income almost doubled, to $17 million, from $8.6 million during the same period a year ago. Quarterly sales rose three percent to $619.4 million from $603 million a year ago, on same-store sales that were up 2.2 percent.

    For the just-completed fiscal year, Weis said that earnings fell 8 percent to $47 million, on sales that were up 4.5 percent to $2.42 billion, and same-store sales that were up 4.3 percent.

    • Walmart de Mexico, also known as Walmex, said that its January sales were up 9.2 percent to the equivalent of $1.5 billion (US), on same-store sales that were up 2.7 percent compared to the same period a year ago.

    • Kellogg Co. reports that its Q4 earnings were $179 million, up seven percent compared to the same period a year ago. Q4 revenue increased to $2.93 billion, up 5 percent from $2.79 billion a year ago.

    Kellogg’s annual profit was $1.15 billion for the just completed fiscal year, up from $1.1 billion last year, with revenue that was up nine percent to $12.82 billion.

    • BJ’s Wholesale Club reports that its January sales were up nearly 1 percent to $656.7 million from $651 million last year, though same-store sales were off 0.7 percent for the month.

    KC's View:

    Published on: February 6, 2009

    …will return.
    KC's View:

    Published on: February 6, 2009

    There was an interesting column the other day in the Wall Street Journal by Mark Penn, who posited that there is a major demographic shift taking place in the US that could, I suppose, have an impact on traditional retailing models.

    Essentially, Penn argued that the institution of marriage is in decline – not because more people are getting divorced, but because fewer people are walking down the aisle to begin with. He writes:

    “Marriage in America is on the rocks. People skirt the issue, talking about how career women delay marriage until it's too late, or about how men marry younger the second time around. But the truth is, except for the highest-income Americans among us, fewer and fewer of us are getting married at all.

    “Married couples with children now make up fewer than one in four U.S. households. That's half the rate of 1960. Married households of any type have been in the minority since 2005.

    “It's not that people are suddenly more promiscuous, or more celibate. Americans are pairing off and staying together just as much as ever, but now it's without the rings, gowns and expensive photographers.”

    This new demographic, Penn writes, are called “committed cohabiters,” and he says that census results show that there are 5.2 million such couples in the US, raising 2.2 million children.

    According to the column, “it's not just the young who are living in what just a generation ago was called living in sin -- their parents have adapted and are living that way too. The fastest growth in cohabitation is among the over-50 set. Oftentimes, widows, widowers and divorced Americans over 50 -- who now total 25 million people -- don't want to complicate inheritances (or burial plans) with a second marriage, but they are committing to each other with devotion just as tender as young people experience, and they are counting very much on the other's being there at the end.”

    Here’s the marketing angle: “Marketers, too, have yet to recognize committed cohabiters as a class and start offering products that acknowledge their unique status,” Penn writes. “Towels with his and her initials, but separately designed. Address labels that can actually handle two full names. How about a legal and will kit that allows cohabiters to choose just how separate-and-apart they want to be in death, as in life? And if Hallmark is missing out on all those wedding anniversary cards, maybe it's time to celebrate when we moved in together.”

    Speaking as someone who has been happily married for more than 25 years, somehow I don't find this very troubling. Not at all.

    To me, a much bigger problem than lack of marriage is lack of commitment.

    (By the way, you do have to take Mark Penn with a grain of salt. If I’m not mistaken, it wasn't all that long ago that he was confidently predicting that on January 20, it would be Hillary Clinton taking the oath of office, not Barack Obama.)

    I have a question. Do Republicans have better accountants than Democrats?

    Just curious.

    Not everyone is going to agree with me on this, but I feel bad for Michael Phelps.

    Okay, what he did was illegal. Maybe even stupid. (Certainly allowing someone in the room with a camera was dumb.)

    But he really is just a big kid. Maybe more so that most people his age would be, because he’s been sequestered in that competitive bubble for so long. And kids do dopey things (no pun intended) sometimes.

    Now, he’s learned a hard lesson. He’s going to take his lumps, lose a little money and prestige in the process, and will go back into the pool a wiser man.

    In the meantime, we need to stop treating him as if he blew up a convent.

    This book won’t be for everyone, but I really enjoyed it. “Pictures At A Revolution,” by Mark Harris, is a terrific book about the five Best Picture nominees at the 1968 Academy Awards: “The Graduate,” “Bonnie & Clyde,” “In The Heat Of The Night,” “Guess Who’s Coming To Dinner,” and “Dr. Doolittle.”

    Harris argues persuasively that this is the intersection of the new and old Hollywood, represented by five movies that were vastly different in scope and intent. “The Graduate” and “Bonnie & Clyde” were products of a new kind of artistic moviemaking, made with one eye on Europe and the other on a dawning American sensibility about authority, violence, and tradition. “In The Heat Of The Night” and “Guess Who’s Coming To Dinner” were sort of old Hollywood pictures with liberal sensibilities that would only go so far. And “Dr. Doolittle” was about as old Hollywood as could be…and also was a terrible movie musical that somehow made the final Oscar cut.

    Harris traces all five films from conception to release…and it is fascinating not just as a film book, but also as a piece of sociology and a business book about marketing and changing demographics.

    Of the five films, of course, only two would be considered real classics. But I have to admit that the book made me want to re-watch four of them, just to see how they hold up.

    But you couldn’t pay me enough money to watch “Dr. Doolittle” again.

    My wine of the week, go figure, is from Spain…but it is available to some extent in the US. The Bodegas Victoria Pardina 2005 is a wonderful red that goes down very, very smoothly…it is 90 percent Tempranillo and 10 percent Cabernet Sauvignon …and I loved it.

    That’s it for this week…looking forward to heading home for a few days.

    See you next week.


    KC's View: