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    Published on: July 27, 2009

    Thoughts and stories to consider as the workweek begins…

    • Good news from Newsweek: the recession, apparently, is over. And now all we have to do is survive the recovery.

    It takes Newsweek some 3,500 words to tell the story, but here’s the gist of it. While the recession appears to have receded – based on the fact that the stock market is up 44 percent since March, home sales have improved for three straight months, and seven out of 10 indicators in the Conference Board’s Leading Economic Index are looking good – it is expected that unemployment is going to get worse, possibly a lot worse, before it gets better. (Employment almost always lags in an economic recovery, the story says.)

    Also making the recovery hard to assess at this point is the political and cultural debate that persists about the shape of the government’s approach to an economic resurgence. There are just too many questions and too many unknowns to make reliable predictions. And here’s the big question, as posed by Newsweek:

    “Historically, the economy has kicked into higher gear when a development comes along that can touch every part of the economy, not just particular sectors: the steam engine, electricity, the computer chip, globalization, the Internet, cheap money. By definition, it's almost impossible to know what the next disruptive, discontinuous great leap forward is going to be. On several occasions, Lawrence Summers has remarked that when he was involved in the big economic summit Bill Clinton held after winning the 1992 election, he didn't recall hearing many mentions of the words ‘the Internet’.”

    And so, the process of recovery is likely to be slow and painful, with many consumers having lowered expectations and shifted priorities. As the magazine writes, “Until the next big thing comes along, consumers and businesses will continue to do what they've been doing for the last several months: pay down debt, restructure, and focus on survival. Using federal resources as a lever and crutch, we'll have to take satisfaction in small, incremental gains.”

    In other words, the recession may end, but consumers/citizens will continue to recession-minded. (Which shouldn't be an enormous surprise, since they were acting like the nation was in recession long before economists decided that the nation actually was in one.)

    • Age 70 is the new 65, according to a story in the Chicago Tribune and numerous other McClatchy newspapers. Statistics indicate that the recession is forcing people to work longer than they intended, with the general sense being that most people are postponing retirement for at least five years because they thinks it will take that long to get back on a firm financial footing.

    This probably doesn’t come as a huge surprise; the plummeting stock market wiped a lot of people out, and there has been a lot of conversation about how long it would take for them to rebuild their portfolios and savings, if indeed that is even possible. But it also raises other issues, especially for retailers.

    To begin with, how will this shift affect employees and a chain’s labor costs? If older employees – from the store to the executive suite – decide to stay on, what will be the impact on things like health care and benefits costs, not to mention salary expenses?

    Companies also need to consider whether customer needs will change if older people stay in the workforce. Will these changes affect how stores merchandise themselves in so-called retirement havens, which depend on an influx of retirees each year? And finally, will this shift – if it lasts – allow/force companies to change mandatory retirement ages that used to be inviolate?

    • The Washington Post reported over the weekend on a new development in the globalization trend: “Chinese real estate investors based in Hong Kong and Beijing plopped down a small fortune last month and bought” the Chateau Richelieu vineyard, one of the most prestigious in France – the second such acquisition in about a year.

    “In both cases,” the Post writes, “according to specialists involved in the negotiations, the Chinese buyers sought precisely what France is richest in: history, elegance, tradition and savoir-faire. The new generation of wealthy Chinese entrepreneurs in effect came to France to buy a piece of the class, bloodline and heritage that were uprooted in their own country by the communism of Mao Zedong and the Cultural Revolution … In both cases, winemakers reported, the Chinese investors have laid plans to market the pedigree of their newly acquired Bordeaux wines to the nouveaux riches back home. Local realtors estimated the purchase prices at several million dollars each. But with 1.3 billion consumers in a China that is just starting to get reacquainted with the finer things in life, including wine, Chinese getting a foothold in Bordeaux have concluded there is gold in the green bottles soon to be shipped to the other side of the world.”

    The investors apparently don't just plan to ship French wine back home. They also intend to renovate the actual chateau at Chateau Richelieu and turn it into a hotel especially designed for prosperous Chinese tourists.
    KC's View:
    So we’ve got a recovery taking place, albeit slowly and in fits and starts, with the kinds of changes taking place in our economy and culture illustrated by some basic shifts in how consumers plan for the later part of their work lives. And, even as all this takes place, globalization continues…with at least some folks clearly still able to pay big bucks for big toys.

    The lesson is that it’s a complicated world, and simplistic approaches, responses and initiatives probably won’t be up to the task. As a wise troubadour once sang:

    It’s a jungle out there, kiddies…have a very fruitful day.

    Published on: July 27, 2009

    The Wall Street Journal reports this morning that “organic farmers and grocery retailers are embracing the idea of lower-cost, private-label products to retain newly budget-conscious consumers.” Organic private brands accounted for almost 23 percent of all organic sales in the 52-weeks ending June 13, according to a Nielsen Co. study, compared to less than 14 percent during the previous year.

    The trend reflects the reality that organic retailers – just like most other retailers - are trying to cater to cash-constrained consumer, and are working with suppliers and wholesalers to develop private brands that they believe will expand their appeal to shoppers.
    KC's View:
    It isn’t just wholesalers and suppliers that are working with retailers. It is our understanding that companies like Daymon Associates, for example, are making real strides ion developing effective private brands for their retailer clients…and that this is a segment where they are seeing real growth.

    BTW…this is a good example of why, even if economists say that the recession has ended, people are going to continue acting, at least for a time, in a recessionary mode.

    People haven't lost their aspirations, but they are seeking new ways to fulfill those aspirations and are making decisions about priorities.

    Published on: July 27, 2009

    Terrific story in the Austin American-Statesman about how Whole Foods has provided more than $2.5 million in low interest loans to more than 50 companies around the country – including Owl Tree Roasting, an Austin-based coffee company – as a way of bolstering local food producers. The retailer plans to hand out at least another $7.5 million in loans ranging from $1,000 to $100,000 before it is done, “a way to help small producers while burnishing its own local credentials,” the paper writes.

    The loans allow entrepreneurs to buy equipment of expand their facilities, and Whole Foods provides both favorable rates and generous repayment terms to companies that it deems to be in synch with its own priorities. And there are no exclusivity clauses – in the case of Owl Tree, it now roasts more coffee for other Austin area shops and restaurants than it does for Whole Foods.
    KC's View:
    I think it is possible that years from now, when Whole Foods management looks back, it will conclude that this is one of the smartest things that the company ever did. These aren’t costs, but investments…and they have the potential of paying off in a variety of ways for a long, long time.

    Published on: July 27, 2009

    The New York Times this morning reports that Nestlé has filed a complaint with the National Advertising Division of the Council of Better Business Bureaus, charging that Muscle Milk, a sports drink made by CytoSport, is deceiving consumers because it doesn’t actually have any milk in it.

    “Nestlé USA strongly believes in the nutritional benefits of milk,” Nestlé said in a prepared statement. “Consumers looking at Muscle Milk, marketed as a ‘Nutritional Shake,’ are likely to be misled into believing they are purchasing a flavored or supplemented milk product, when, in fact, they are purchasing a water-based product that contains no milk.”

    CytoSport responded with the following statement: “CytoSport’s marketing and advertising materials have made it clear — over the more than 10 years that Muscle Milk has been sold — that Muscle Milk products are high-protein nutrition products designed after one of nature’s most balanced foods: human mother’s milk.”

    The irony, according to the Times is that CytoSport has gone to great legal lengths to prevent other companies from making the same assertions that it has been making.
    KC's View:
    And we do love irony here at MNB.

    I’m no a scientist, but the phrase “designed after…mother’s milk” sort of makes me queasy.

    I gather that the government has rather loose definitions for what can be called milk, though it isn’t entirely clear whether Muscle Milk will fit into that definition. It’ll probably end up in the courts.

    But it seems to me that consumers have a fairly specific view of what milk is, and that legal loopholes only manage to allow prevarications to take on the illusion of truth. Then again, legal loopholes do have a tendency to conceal the udder facts.

    Published on: July 27, 2009

    The Los Angeles Times reports that a lawsuit has been filed by a New Jersey man, supported by the Center for Science in the Public Interest (CSPI), charging that the restaurant chain Denny’s serves meals that are “dangerously high in sodium” that puts "the restaurant chain's customers at greater risk of high blood pressure, heart attack and stroke."

    The suit seeks to force Denny’s to both list the sodium content for all of its menu items as well as warn patrons about the health hazards of consuming so much sodium.

    One example cited by the Times: “Doctors recommend against eating more than 2,300 milligrams of sodium a day. Order a Denny's double cheeseburger and you'll consume 3,880 milligrams in one sitting.”

    Denny’s has responded to the suit by saying it is "frivolous and without merit,” and that it offers plenty of options for people with specific dietary needs.

    The Times says that CSPI only agreed to participate in the lawsuit after talks with Denny’s proved fruitless, and that CSPI also has petitioned the US Food and Drug Administration (FDA) “to regulate salt as a food additive instead of an ingredient that is ‘generally regarded as safe’.”
    KC's View:
    No idea here whether this lawsuit will be successful, but Denny’s ought to be paying closer attention to how these things tend to develop in 2009. Management there can go into denial mode and talk about frivolous lawsuits, but that doesn’t change the fact that these charges will take on a viral nature…and Denny’s will look like it is both 1) unresponsive to current health/nutrition trends and 2) non-transparent in its dealings. And, eventually, they’ll have to list sodium content on their menus.

    Published on: July 27, 2009

    HealthDay News reports that there is good news and bad news on the childhood obesity front in the US.

    The bad news: one out of seven preschoolers from low-income families is considered to be clinically obese.

    The good news (sort of): national levels of childhood obesity in this demographic seem to be leveling off.

    The numbers are included in a new study from the US Centers for Disease Control and Prevention (CDC), entitled the “Morbidity and Mortality Weekly Report.”

    The reason for the stabilizing of the numbers seems to be that there have been numerous public information campaigns in low-income communities to encourage better eating habits and more regular exercise. However, not all of these efforts have been successful, with Native American children and Alaska Native children said to be at greater risk for obesity and the long-term health problems that obesity can create.

    It’s interesting that as this story ran, the Philadelphia Inquirer had a piece over the weekend on federal and state efforts to improve poor communities’ access to healthy foods and full service supermarkets.

    According to the story, “The secretaries of agriculture and commerce, as well as other federal officials, toured the Parkside ShopRite store, which opened in 2007 on 52d Street near Parkside Avenue (in West Philadelphia), and lauded it as an example of what community partnerships with government can accomplish.

    “Adolfo Carrion, the director of the White House Office of Urban Affairs, praised the Parkside ShopRite and the Fresh Food Financing Initiative, a state program that combines state and private money. He also noted the efforts of nonprofit organizations to build food markets across Pennsylvania.”

    Jeff Brown, owner of the Parkside ShopRite, said that the unit “was designed in cooperation with the community, noting that the store offers locally grown produce and that it has a second meat department that has beef and chicken produced in accordance with Muslim religious standards.”
    KC's View:
    Good for ShopRite…the only way to fight and win this battle is to do so at the front lines.

    Published on: July 27, 2009

    The Tennessean reports that a new report from the US Department of Agriculture (USDA) says that while food prices won’t go down during 2010, they are not likely to go up as much as in 2009.

    According to the story, “Fruits and vegetables will go up 3 percent to 4 percent, while cereals and bakery products could increase by 2.5 percent to 3.5 percent — which would be an improvement compared to the past 12 months, analysts said.

    “The bottom line: The overall food-inflation rate should be the slowest since 2006 and that comes after a brisk 5.9 percent gain last year, which was the biggest jump since 1980, according to the U.S. Bureau of Labor Statistics.”
    KC's View:

    Published on: July 27, 2009

    • Starbucks has stated its intention to enter the India market within two years, though it has not revealed any specific plans for sites or local partners.

    • PetSmart reportedly is considering getting into a series of in-home services such as dog walking and setting up aquariums…looking for a way to differentiate itself from Walmart, which is putting price pressure on the category-killer.

    USA Today this morning reports that Unilever plans to announce today that it plans to remove trans fats from all its soft-spread brands.

    The paper notes that this is part of a broader trend; since the negative impact of consuming trans fats first came to the public’s attention just a few years ago, the use of trans fats in foods has dropped 70 percent, according to the Center for Science in the Public Interest (CSPI).
    KC's View:

    Published on: July 27, 2009

    MNB took note last week of a Wall Street Journal story about Federal Trade Commission (FTC) consideration of new rules that would regulate how these mommy bloggers are endorsing products on their sites. At issue is whether the women are being compensated for their endorsements, and how transparent those payments should be to readers.

    The heightened scrutiny comes as more and more companies – both retailers and manufacturers – have realized that the blogs can be an effective marketing tool and have trained their considerable marketing resources on the women who write them. The general consensus seems to be that the mommy bloggers ought to regulate themselves and understand how not to cross the line into crass commercialism…and that if they don't, people probably will stop reading them.

    My comment: Speaking as someone who some folks would define as a blogger (though I’ve been doing this since before the term was invented), this doesn’t seem to me to be that big an issue, and one where self-regulation is the best approach.

    My position on this here at MNB is fairly simple. I’m in this to make money. I like doing it, but not enough to continue doing it if I can't make a living at it. I also think that I need to be transparent about who sponsors are, which is why I go out of my way to disclose any business relationships that could even be perceived as influencing my opinion; that’s the only way to be fair to you.

    I’ve also been pretty lucky, though. Over the years, pretty much every sponsor I’ve had has either made a product that I enjoy using or provided a service that I think is a positive one for the industry. (I’ve turned down a couple where I thought I’d have trouble looking in the mirror in the morning.)

    As in pretty much all cases, transparency is the key. Just try to be honest, and it’s hard for people or governments to be too critical or too regulatory.


    One MNB user responded:

    I've come to expect a fair amount of contradiction in your commentary but this really takes the cake. Just last week you were bemoaning the “wrong people” consuming the wrong sort of beverage (Alcohol & Caffeine Beverages Under Scrutiny and cheering on the crusading AG's that will right those wrongs.

    This week you want the FTC to leave you poor bloggers alone and let you use the honor system. Make up your mind; does the government get to interfere with everyone's business or just the ones that sell "inappropriate" products?


    To be clear – and I’m not sure I was when I wrote that about alcohol and caffeine beverages – when I wrote about the “wrong people,” I was referring to young people who think they are bulletproof and consume gallons of this crap without any worry about what it might be doing to their bodies. Somehow, I think we owe them better than that.

    Some things ought to be regulated, some don't need it. But I concede that I have a conflict of interest here…which is why I go out of my way to point those conflicts and self-interests out whenever appropriate on MNB.

    And sure, I contradict myself sometimes. I’m human.

    MNB user Heather Leacy wrote:

    Perspective from a younger generation… I understand that in some cases the FTC probably is concerned about bloggers giving, say, nutritional advice when they are not trained in nutrition, but on the other hand there are a lot of people who are as knowledgeable (or more) in a subject to the equivalent of a college education. They just don’t have the degree to hang on their wall. It should be made clear in their blogging that they are not traditionally trained in the subject (they shouldn’t be calling themselves a nutritionist if they’re not) but should be very free to express their point of view and experiences they’ve had with products. Now if they’re advertising Twinkies in a recipe as a great healthy after school snack, that may raise some legitimacy questions.

    I agree that it ultimately it comes down to honesty and transparency. I don’t think bloggers need to disclose how much of a paycheck they’re getting from their sponsors (why??? I would be more interested in finding out how much employees at the FTC make to investigate these kinds of things.), but it’s good to mention who their sponsors are and when they are advertising a product. That usually gives the product even more substantiality because the person is saying, “Yes, I’m being paid to talk about this, but it really was a great product! This is how I used it.” That would mean more to me than just, “Try this product! It’s great!”

    When it comes down to it, most people are going to try to get sponsors for things they enjoy and would advertise via word of mouth anyway. And blogs that are purely advertisement will not do well. Who really wants to go out of their way to read ads or watch commercials (unless they’re funny)? We want ideas, reviews, and recommendations from people like us when we’re looking for a solution, trying to come up with a good gift, or just looking for a new thing to try or learn.


    There is an interest sentiment expressed in this email – that bloggers are more reputable than the FTC. (Except for me, of course. I’m thoroughly disreputable.)

    Not sure how widespread this may be, but I wouldn’t be surprised.
    KC's View:

    Published on: July 27, 2009

    • Alberto Contador of Spain won the 2009 Tour de France, with Andy Schleck of Luxembourg coming in second and the USA’s Lance Armstrong – who won the race every year between 1999 and 2005, and came out of retirement to compete this year – finishing third.

    • The New York Mets actually won a series, beating the hot Houston Astros in two out of three games this weekend and showing offense, energy and even a little optimism. MNB was unable to confirm reports that pigs were seen flying over Minute Maid Park.
    KC's View:

    Published on: July 27, 2009

    “We have brought on at least three new clients because of our MorningNewsBeat Drumbeat- and it resulted in not just a “one time sale” but two of these companies are now repeat customers. In addition, we have had several calls with people interested in making career changes that we have been able to assist and/or network with for future business. Most importantly, sponsoring MorningNewsBeat has given us a lot of visibility in the industry and has done a lot in terms of “brand name” recognition. When we call potential first time clients, we now hear “Yes, I have heard of Samuel J. Associates” at least 50% more than before we started sponsoring MNB.

    We are not a large company with a marketing staff and putting together the drumbeat and tile ad was almost effortless due to the input and creativity provided by Kevin and his staff. The return has been fantastic!
    -Jean Forney, Samuel J. Associates



    MorningNewsBeat. For almost seven years, MNB has been providing its readers news in context, analysis with attitude, experience, perspective, and irreverence for sacred cows…all of which separate it from every other business communications vehicle.

    What defines MNB?

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    Who writes MorningNewsBeat?

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    • Michael Sansolo, the long time senior vice president of the Food Marketing Institute and past editor-in-chief of Progressive Grocer, who each week offers a diverse and unique view of the changing nature of today’s shoppers and their impact on the food retail industry. Through countless studies and work with some of the world’s most innovative retailers and manufacturers, Sansolo has a distinctive perspective on the changing nature of shopping, cooking, eating and competition.

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    KC's View: