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    Published on: February 12, 2009

    The Atlanta Journal-Constitution reports that two executives with Peanut Corporation of America (PCA) – president Stewart Parnell and plant manager Sammy Lightsey – refused to answer question before the Congressional panel investigating the salmonella outbreak that has sickened more than 600 people, killed nine, and has been linked to the Georgia plant for which they were responsible.

    According to the report, the two men refused to enter the hearing room during testimony offered by victims of the salmonella outbreak. When they finally appeared before the committee, they “refused to answer any questions from committee members - including whether they would eat any of their own products, which one congressman showed off in a plastic container wrapped with yellow caution tape,” the paper writes.

    Indeed, in testimony and evidence presented to the committee, a clear picture was painted of a company and management more concerned with profits than food safety.

    The Journal-Constitution reports that “e-mails between Parnell and Lightsey, manager of the company’s Blakely plant, were released as part of the hearing opened by U.S. Rep. Bart Stupak, chairman of a House subcommittee on oversight and investigation.

    “In one e-mail, Lightsey wrote Parnell discussing positive salmonella tests on its products, but Parnell gave instructions to nonetheless ‘turn them loose’ after getting a negative test result from another testing company, according to testimony.

    “In another e-mail, Parnell expressed his concerns over losing ‘$$$$$$’ due to delays in shipment and costs of testing.

    “Parnell in another company-wide e-mail told employees there was no salmonella in its plants, instead accusing the news media of ‘looking for a news story where there currently isn’t one’.

    “Even in the heat of the nationwide outbreak that has killed nine people and sickened hundreds more, Parnell seemed more worried about his company’s profits than with food safety, according to regulators and congressional investigators.”

    At the same time, the paper notes, there seems to be ample evidence that the system designed to insure public safety broke down:

    “The Georgia Department of Agriculture conducted two inspections of the company’s Blakely, Ga., plant in 2008, but did not test for salmonella on its own on either occasion - despite an internal agency goal to conduct such tests once a year.

    “The company’s largest customers, including Kellogg’s engaged contractors to conduct audits, but they did not conduct their own salmonella tests.

    “The FDA did not test for salmonella at the plant, despite the 2007 salmonella outbreak traced to the Con-Agra plant about 70 miles from Peanut Corp. of America’s Blakely plant.”

    Furthermore, testimony was given to the committee to the effect that workers at the company’s Georgia plant were given government training in how to avoid salmonella contamination – but never put the procedures into place. And, plant officials refused to act in cases where salmonella contaminated products were discovered and shipped.

    After the hearings yesterday, Consumers Union issued a statement calling for Congress “to increase penalties against companies that ship adulterated food and to overhaul food safety laws so problems like this do not recur. And, it asked Congress to “require FDA to conduct annual inspections of food processing facilities, require processors like PCA to test for contaminants like salmonella, require these companies to disclose when their own tests find tainted products, and to increase fines and penalties against those who ship contaminated products.”

    KC's View:
    There’s no other way to put it. These PCA guys are disgusting.

    My stomach actually wretches at the thought of these guys being utterly cavalier about their responsibility for food safety and public health.

    Kudos, however, to Rep. Greg Walden (R-Oregon), who had the panache to ask these clowns to eat a product made from their own peanut butter. (Forced feeding of these products to the company executives ought to be part of their sentence when they get convicted…and I hope they get hit with the maximum possible sentence.)

    Let’s be clear, though. It isn’t just these two guys. There had to be plenty of people working in the plant who could have called the authorities at any time. And they didn’t, as far as we know at this time.

    This case has exposed all the inadequacies, inefficiencies and lack of transparency in the US food safety system.

    But here’s the real problem. Does anyone doubt that there are plenty of other cases out there in which there has been similarly disgusting behavior, similarly inadequate oversight and regulation, and similar public vulnerability to food borne illness?

    It is not a matter of “if” another case will occur. It is a matter of “when.”

    Published on: February 12, 2009

    Now available on iTunes...

    To hear Kevin Coupe’s weekly radio commentary, click on the “MNB Radio” icon on the left hand side of the home page, or just go to:

    Hi, I’m Kevin Coupe and this is MorningNewsBeat Radio, available on iTunes and brought to you by Webstop, experts in the art of retail website design.

    The recession that we all are spending so much time reading and worrying about is claiming a lot of victims. People, businesses, and even consumer confidence. But I worry that perhaps the fabric of our culture may be enduring more stress than it can possibly handle. Maybe this makes me a pessimist, but if so, I didn’t get here on my own. I feel like I’m being pushed there as if being pushed toward a cliff. My heels are dug in and I’m fighting best I can…but there are moments when resistance seems futile.

    There have been a number of moments like that this week, as so many stories seemed to coalesce around the complete lack of trust that we seem to be able to place in seemingly reliable institutions. For the moment, let’s put aside the bankers and the politicians, who have only been marginally trustworthy from the beginning of time. No, let’s focus on two stories that speak to the very fabric of our cultural being and to how deeply rooted our problems are.

    Peanut butter. And A-Rod.

    What really bothers me about these two stories, beyond the obvious fact that they signify the weakening of trust in American institutions such as the food supply and baseball, is that in both cases the betrayal of standards and the public trust has gone back years and has involved clear and premeditated deception. I don't know if one can go so far as to say that there is no remorse, but it certainly seems apparent that in both cases the principals involved probably are mostly sorry that they got caught.

    If people hadn’t started getting sick from salmonella poisoning after eating products that could be traced back to Peanut Corporation of America, there is no evidence that executives and workers, wracked with guilt, would have exposed their misdeed to regulators. And if reporters from Sports Illustrated had not discovered Alex Rodriguez’s name on the list of people who tested positive for steroid usage in 2003, there’s no way that he would have called ESPN’s Peter Gammons to talk about what he’d done.

    By the way, there’s plenty of room for cynicism in both cases. A-Rod’s interview seemed like baby steps at best, and I’d be willing to bet that there are plenty of cleats left to drop in this case. And the folks at Peanut Corporation of America seem to have been trained at the Bernie Madoff School of Business Ethics.

    My bigger concern is that we’re getting to the point when it will be impossible to believe in anything, to trust anyone…and that once we go down that road as a society, it will be difficult to find our way back.

    (I’d suggest that church attendance is likely to increase…but the headlines don't tend to be any more positive about some organized religions.)

    As businesspeople, as citizens and as parents, I think we have to pay very close attention to this trend and address it in virtually everything we do. It is critical that in almost every business decision we make, we ask ourselves this question:

    How will this build, not erode, trust?

    We talk a lot here about the issue of sustainability, and it usually is related to the environment, the economy, or both. But ultimately, we need to establish levels of trust and dependability that will make our businesses sustainable in the future. If we don’t, I’m not sure there will be a future.

    For MNB Radio…where I know it sounds like I could use a stiff drink…I’m Kevin Coupe.

    KC's View:

    Published on: February 12, 2009

    Western New York-based Tops Friendly Markets announced that it is rolling out its own private label spring water … which it said “is another step in the company’s transition to being a locally owned and managed grocer … Prior to the launch of Tops brand spring water, the grocer was selling water bottled and sourced from outside of the region under a different corporate name along with other regional and national brands.”

    Frank Curci, president and CEO of Tops, noted in a statement that “we are pleased to offer our customers another quality, affordable product that has local origins.”

    KC's View:
    It may only be water, but to me these kinds of moves have real meaning. If you’re going to be local, be local. Hype your localness at every available opportunity, and use it to establish whatever differential advantages you can create.

    Sure, it’s only water. But it really is a lot more.

    Published on: February 12, 2009

    The Washington Business Journal reports that Maryland-based California Tortilla, a fast food chain, is offering unemployed patrons the ability to get a free burrito – all they have to do is show their termination papers.

    The promotion is scheduled to run through the end of February.

    KC's View:
    There have to be a lot of stores out there that are dealing with customers and families that have been decimated by the recession, and I’m sure that there are new victims every week. I really like this promotion by California Tortilla, and think that maybe it could be replicated in some way by a lot of other retailers that can, perhaps, soften the blow a bit. It might even be a good way to establish a relationship with the family member who could end up ding a lot more shopping than in the past…

    Published on: February 12, 2009

    • Reflecting an increased desire to focus on private label, Wal-Mart has hired a new ad agency – Publicis & Hal Riney – to improve the marketing of its Great Value house brand.

    KC's View:

    Published on: February 12, 2009

    Advertising Age reports that while Coca-Cola’s Vitaminwater is a major sponsor of the NCAA, the league’s players “shouldn't drink six of its varieties or they might test positive for banned substances.

    According to the story, “The Rescue and Energy flavors are both banned because they contain caffeine or guarana-seed extract, according to the NCAA website. The other four beverages, B-relaxed, Vital-T, Balance and Power-C, include impermissible substances such as Taurine, L-theanine, green-tea extract and glucosamine. Other impermissible substances include various amino acids, protein powders and ginseng. An impermissible substance is not able to be provided by coaches or trainers to students, but players are able to purchase products with impermissible substances.”

    However, the Ad Age story points out that the one Vitaminwater flavor directly associated with the NCAA – Revive – is not on the banned substance list.

    “The news came to light today after an e-mail, purportedly from Drug Free Sport, an organization that conducts drug testing for NCAA schools, found its way into the inboxes of athletic directors around the country. Drug Free sport denied sending the e mail and referred calls to the NCAA.”

    It hasn’t been a good month for Vitaminwater. Just last month, Coca-Cola Co. was sued by the Center for Science in the Public Interest (CSPI), which charged that the company has engaged in deceptive and misleading labeling of its Vitaminwater line of beverages, calling it a healthful alternative to soda when in fact the levels of sugar in the drinks promote obesity, diabetes, and other health problems.

    KC's View:
    This will now be the A-Rod defense: “Those were steroids? I thought I was drinking Vitaminwater!”

    Published on: February 12, 2009

    The Washington Post has a good interview with the new Secretary of Agriculture, Tom Vilsack, in which he describes what he sees as USDA’s constituency:

    “This is a department that intersects the lives of Americans two to three times a day,” he says. “Every single American. The department has a global influence in terms of food, in terms of consumers and in terms of some of the moral challenges that a wealthy nation faces in the face of hunger. So I absolutely see the constituency of this department as broader than those who produce our food. It extends to those who consume it.”

    And, Vilsack says, he has personal reasons to be very active in the anti-obesity movement. “Food is a fairly significant aspect of my life,” he says. “I have struggled mightily with food. With my weight. And I'm conscious of it. So I have a sensitivity to people who struggle with their weight. That's one aspect people don't fully appreciate. I don't want youngsters to go through what I went through.

    “There are ways we can go do a better job of educating young moms and dads about the vital role they have as the child's first teacher. I think there are ways in which we can partner with local school districts and states to do a better job to provide nutrition options at school. It's our responsibility to get this health-care crisis under control … Part of my responsibility is to find people who share my concern and have more expertise than I do. People we nominate will be people who understand this issue and have the desire to effect change. The specifics of how we can do this will come from the experts. My job is to listen to the president, who is the ultimate vision maker, articulate his vision to the people who work in this department and add my two cents' worth. The vision is, he wants more nutritious food in schools.”

    KC's View:

    Published on: February 12, 2009

    • In North Carolina, the Citizen Times reports that Ingles Markets is “slowing” its capital expenditures in the coming year – though it plans to move ahead with “several projects already in the pipeline to build new stores or renovate or remodel existing ones.”

    “Credit's a lot tighter and the economy's slowed down, and in reaction to that we're going to reduce” expansion plans, said CFO Ron Freeman.

    KC's View:

    Published on: February 12, 2009

    • Winn-Dixie Stores reports second quarter earnings of $16.1 million, almost four times the $4.1 million earned during the same period a year ago. Q2 revenue was nearly flat at $2.25 billion for the quarter.

    • Dean Foods said that its fourth quarter net income was $66.4 million, up from $32.6 million during the same period a year ago. Sales, however, were off 4.7 percent to $3.08 billion.

    • Stater Bros. reports that its first quarter earnings were off 68 percent to $3.5 million, on sales that were up two percent to $959 million. Same-store sales were up 1.4 percent.

    CEO Jack Brown said that the decline in profit was expected: “"Our plan is to assist our customers during these very tough economic times," Brown tells the Los Angeles Times, and the plan is working. By holding back on price increases, which affected our profits, we served approximately 1 million more customers in the first quarter of fiscal 2009 than in the first quarter of fiscal 2008.”

    KC's View:
    In other words, I think, Stater Bros. is using the recession to get aggressive about market share. Which is what I think retailers should do in the current environment.

    Published on: February 12, 2009

    • Bloom Supermarkets, a division of Delhaize-owned Food Lion, has named Paul Sabattus, the former vice president of marketing at sister retailer Sweetbay Supermarkets, to the newly created position of vice president of Merchandising and Training.
    KC's View:

    Published on: February 12, 2009

    Responding to various stories about layoffs, one MNB advanced an interesting thought:

    After watching Obama's Press Conference the other evening, one thought I had was he should have scolded corporate America something along the lines of "If you have to lay off employees because it is necessary for your survival, that is one thing. But if you are laying off employees just to enhance short term profits, that is both unconscionable and counterproductive to putting the brakes on a downward economic spiral."

    I say this because I sincerely believe that much of the downsizing we see is not only hindering recovery from this recession, it is also a bad decision for the long-term prospects of these businesses. Unfortunately, the mentality of looking only at short-term results remains. That view without a doubt was instrumental in the downfall of many of our financial institutions - make it today, get our bonuses, don't worry about tomorrow.

    MNB user R. Dale Blotter had another thought:

    The Fortune columnist Stanley Bing had one of the better perspectives I’ve seen on all the corporate layoffs. In a recent column he was writing about some of the negative forces at work in our economy right now. Here’s a quote; “While firing people does solve the cost issues for a while, it gets to be pretty limiting. Like, don't we need somebody to turn the lights on in the morning? How about lowering profit expectations instead? We're in a depression. Duh.”

    I thought that was great perspective on the often knee jerk reaction of many companies to just look at the short term picture and cut people which then helps feed the downward spiral.

    I continue to get email responding to my suggestion that retailers ought to consider getting rid of their magazine departments since the newspaper and magazine business are on their way to becoming obsolete, replaced by the Internet, which is the younger generation’s preferred method of getting information.

    MNB user Richard Lewis wrote:

    Have to chime in and support you on the print magazines issue, since so few have. You are most definitely *not *wrong about this, just a few years ahead of the curve. You need only look at what has happened in music to see how it will play out in the written word. The big US book publishers were quoted in the FT only today as calling on Apple and Sony to enter the market and compete with Amazon, to build an e-book business
    that HarperCollins puts at 5-7% of the total over the next five years. (Currently at 1%).

    So clearly it won't happen overnight, as you rightly say, and e-books and readers will undoubtedly coexist with print media for a long time, gradually gaining share. However, it will happen because that's where young people are migrating.

    The danger here is that the food business remains skeptical: this equates to waiting around for someone else to develop a business model that sidelines you economically and leaves you playing catch-up. Which is what happened in music. Had record companies embraced downloading from the outset and licensed the big retailers straight away, no one would ever have gotten the idea that music was basically free and companies like HMV might just still have a part to play.

    Haven't bought a Kindle yet. I'm kind of waiting until Apple makes one that is also an iPhone, so I can have my reading, music, video, appointments, photos, camera, GPS and telephone in just the one device. Nearly there.

    The only thing I would suggest in response is that this shift almost certainly will happen faster than we expect.

    MNB user Mike Griswold wrote:

    With multiple swimsuit issues hitting the streets this week, including Sports Illustrated on Tuesday, it may be a bit pre-mature to signal the demise of magazines (at least until spring).

    You know, you have an excellent point here…because there’s certainly no lace on the Internet to see pictures of great looking women clad in very little clothing.

    (We kid because we love.)

    My point is not that people don't want to see pictures of girls in bathing suits. Just that for the next generation of consumers, the ones who will be the center of the mainstream marketing target in just a few years, the idea of seeing the pictures on paper will be an anachronism.

    And I’m not sure it helps for retailers to be considered anachronistic.

    KC's View: