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    Published on: August 13, 2009

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

    As we continue to deal with the impact of the recession, which may or may not be winding down, depending on who you believe or what level of optimism you decide to adopt, one of the clear indicators that is likely to lag is the nation’s unemployment rate. The general consensus seems to be that it is likely to get worse before it gets better, and that employment will be the last thing to recover.

    I find this interesting on a number of levels. One is the fact that in some ways we seem to be in an era during which there is a different approach to employees than there used to be. I’m old enough to remember a time when layoffs were a last ditch option, the last thing that companies did when dealing with a downturn. Part of this was out of loyalty, and part of it was out of an appreciation for the simple reality that people who are out of work can't spend money, and layoffs have both a broad and deep impact on economic well-being. There was also an understanding that when prosperity returns, you eventually have to replace those workers, which costs money in terms of time and training … and so if you can keep as many workers on-board for as long as possible, it is in the ultimate best interests of the business.

    To some degree, this seems to have changed. I’ve talked to enough people – both in management and labor – to be convinced that this time around, at least some companies are taking advantage of all the media coverage that the recession has gotten to trim or even gut their workforces. There isn’t a lot of concern for broader economic well-being, there isn’t a lot of worrying about when prosperity returns, and there certainly isn’t a lot of loyalty. At least in some workplaces, it is a short-term, cutthroat, down-and-dirty world.

    The good news, if you can call it that, is that in markets where labor contracts have run out, there seems to be a general understanding that it isn’t good for anyone to go on strike or lock employees out; concessions and compromise seem to be the order of the day. Even in Denver, where no agreements have been reached between the three major supermarket chains there and the United Food and Commercial Workers (UFCW), at least there have been a series of contract extensions that have keep stores open and the two sides talking. Hope lives, even in the thin air of the Mile-High City.

    Not so in the Bronx, however, where it seems to me there is a classic case of management and labor butting heads to no avail…and with no compromise or concessions in sight. The situation is almost certainly going to end badly for everyone…and that’s a shame.

    I’m referring to the case of the Stella D’Oro biscuit factory, where about a year ago more than 130 workers walked off the job after ownership demanded reductions in pay and benefits, saying that without such reductions, the company would not turn a profit.

    After an almost 11 month strike, the courts ruled that owners Brynwood Partners had withheld important information from the union and ordered the employees back to work…but it was a short-lived victory since the company now has said that the factory will be shut down in October. In the meantime, Brynwood reportedly as negotiating with Lance to sell it the brand and formulas, but the workers objected to that, too, because their jobs and production almost certainly was going to go elsewhere.

    Read all the coverage of this story – from CNN to the Daily News to Workers World – and if you’re like me, you want to fling the newspapers against the wall in disgust. You have a recession, and you have a brand name with a certain amount of equity and recognition, and you have a factory in a borough of New York City that, quite frankly, needs both jobs and economic development. And all these two sides can do is fight and argue and get nowhere. It seems to me that the jobs are going to go elsewhere, the brand name will get sold after having been tarnished by all this nonsense, and opportunities for compromise and a coming together have been lost. Both sides are to blame, it seems clear to me, because both sides have their own agendas and were unwilling to see the bigger picture.

    For as long as I can remember, I’ve been driving past the Stella D’Oro factory in the Bronx, just north of Yankee Stadium on the Major Deegan Expressway, where on a good day you could smell the biscuits baking.

    Pretty soon, that’ll all be gone. The factory will be closed, the people will be out of work, and all you’ll be able to smell is the odor of stupidity, stubbornness and a lack of big picture thinking.

    It’s a shame. I’m glad that, best I can tell, this kind of nonsense doesn’t happen more often.

    For MorningNewsBeat Radio, I’m Kevin Coupe.
    KC's View:

    Published on: August 13, 2009

    Whole Foods CEO John Mackey had a long op-ed piece in the Wall Street Journal yesterday in which he addressed the ongoing health care debate, writing that “while we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system. Instead, we should be trying to achieve reforms by moving in the opposite direction—toward less government control and more individual empowerment.”

    There are two specific recommendations/observations that Mackey makes that we will focus on here:

    • “The combination of high-deductible health insurance and HSAs is one solution that could solve many of our health-care problems. For example, Whole Foods Market pays 100% of the premiums for all our team members who work 30 hours or more per week (about 89% of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional health-care dollars through deposits into employees' Personal Wellness Accounts to spend as they choose on their own health and wellness.

    “Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own health-care dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan's costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.”

    • “Rather than increase government spending and control, we need to address the root causes of poor health. This begins with the realization that every American adult is responsible for his or her own health.

    “Unfortunately many of our health-care problems are self-inflicted: two-thirds of Americans are now overweight and one-third are obese. Most of the diseases that kill us and account for about 70% of all health-care spending—heart disease, cancer, stroke, diabetes and obesity—are mostly preventable through proper diet, exercise, not smoking, minimal alcohol consumption and other healthy lifestyle choices.

    “Recent scientific and medical evidence shows that a diet consisting of foods that are plant-based, nutrient dense and low-fat will help prevent and often reverse most degenerative diseases that kill us and are expensive to treat. We should be able to live largely disease-free lives until we are well into our 90s and even past 100 years of age. Health-care reform is very important. Whatever reforms are enacted it is essential that they be financially responsible, and that we have the freedom to choose doctors and the health-care services that best suit our own unique set of lifestyle choices. We are all responsible for our own lives and our own health. We should take that responsibility very seriously and use our freedom to make wise lifestyle choices that will protect our health.”
    KC's View:
    It is an interesting and thoughtful piece, notable for being written in an environment where there are a lot of people being anything but thoughtful. (Thank goodness that the words “death panels” appears nowhere in the column … though he does sneak in a reference to socialism, which can by itself inflame a lot of people.)

    Among the other recommendations Mackey makes are to “equalize the tax laws so that employer-provided health insurance and individually owned health insurance have the same tax benefits,” and to “repeal all state laws which prevent insurance companies from competing across state lines.” Seems sensible to me…though like most other Americans (I’m guessing), I am conflicted and confused about what the best approach to health care reform should be, so what do I know.

    I guess I am just grateful for thoughtfulness and calm. Since there is no single health care bill at this point, and there is a long way to go before there is one (if indeed the Congress is able to agree on anything), there ought to be a role for reasoned discussion.

    Published on: August 13, 2009

    The Newark Star-Ledger reports that “ordering in is no longer just about Chinese food or pizza. As the recession drags on, more consumers … are getting full course, finer meals delivered to their homes as a way of saving time and money, without sacrificing the indulgence, according to industry experts and executives.”

    The story notes that “in the New Jersey and New York regions, the average bill for orders rose to about $21 last month, from $18 in May and June, and $8 in March,” according to an analysis by Delivery.com, a food delivery website that serves more than 10,000 restaurants across the country. The story also says that “a review of individual orders revealed that customers were ordering more expensive entrees, and adding appetizers and desserts.”
    KC's View:
    One question that has to be asked is whether this kind of behavior will persist as/if the recession winds down. It likely will, at least to some extent, which is a good reason that more supermarkets should be focusing on raising the level of their game when it comes to prepared food, rather than offering lowest common denominator product.

    Published on: August 13, 2009

    Great piece on Slate.com, which writes that now that the recession seems to be coming to an end, “it's time to start looking at which companies, institutions, and individuals thrived during this grim period. In the harsh downturn that began in December 2007, success was redefined – flat became the new up, and muddling through became a triumph … in a recession that hit all rungs of the income ladder and ravaged the wealthiest consumer markets.”

    Slate’s Daniel Gross nominates McDonald’s as one of the recession’s big winners – growing total sales, opening new stores and expanding its same-store sales figures. Among the factors that worked for McDonald’s:

    • “In 2008, after a decade of relentlessly trading up to higher quality (read: more expensive) consumer goods and services, Americans began to trade down with a vengeance.”

    • “In a recession, people eat out less and at home more frequently. And when they eat out, they eat at cheaper places. McDonald's is so cheap, efficient, pervasive, and convenient that it was a viable alternative to casual restaurants like Ruby Tuesday and to cooking at home.”

    • “McDonald's ran plenty of bargains and distributed gazillions of coupons … but it also spent money promoting a higher-margin good that could appeal to a new class of trading-down consumers: coffee. As consumers jettisoned their $4-a-day latte habits, Starbucks retrenched. But McDonald's expanded its java offerings.”

    • In additional, McDonald’s thrived outside the US because in many countries it is an aspirational brand …and that served it well.

    Gross concludes, “McDonald's success can be chalked up to a combination of luck—which is the residue of smart planning—and savvy moves.”
    KC's View:
    While the Slate piece didn’t mention it in any great detail, the company also was well-served by its move to both a healthier and more diverse menu. It isn’t exactly health food, but the broader options made parents feel less guilty about taking their kids there, and actually offered them foods they didn’t feel bad about eating themselves.

    All in all, smart moves by a smart company…which also survived some tumult in upper management to create a real success story.

    Published on: August 13, 2009

    The New Zealand Competition Commission reportedly has reached an agreement with Visa there that will bring greater interchange fee transparency to consumers and retailers, a move that has been lauded by the Retail Industry Leaders Association (RILA) in the US.

    “American retailers and consumers deserve the same fair treatment that Visa now offers in New Zealand,” says John Emling, senior vice president for government affairs at RILA.

    According to the release issued by New Zealand’s Competition Commission, the settlement with Visa will ensure that:

    • Credit card issuers will now be able to set the interchange rates individually that will apply to transactions using their credit cards, subject to maximum rates determined by Visa. These rates will be publicly available.

    • Merchants will no longer be prevented from applying surcharges to payments made by credit cards or by specific types of credit cards. Merchants will also be able to encourage customers to pay by other means.

    • Visa has confirmed that non-bank organizations or companies that might wish to provide acquiring services to merchants are permitted to join the Visa network as acquirers if they meet relevant financial and prudential criteria.

    Interchange fees, which are imposed by the card association and banks to process the credit and debit card transactions, are said to have tripled in the United States since 2001 to $48 billion last year and RILA, along with other trade associations, charges that amount to a hidden tax on consumers.

    “Regulators around the world have closely scrutinized anti-competitive practices related to interchange fees by Visa, MasterCard and other card associations and have come to the realization that these fees are bad for consumers and retailers,” says Emling. “US regulators must follow suit to prevent these credit card giants from continuing to impose soaring costs on retailers small and large.”
    KC's View:
    I suspect that the goings-on in New Zealand won’t change Visa’s intransigence here in the US. But one can hope.

    Published on: August 13, 2009

    There has been a lot of discussion here on MorningNewsBeat in recent weeks about the possibility of a fat tax in the US, which led one MNB user to point out to us that Denmark is actually imposing one, with extra taxes ladled on foods that are considered unhealthy – a move that is designed to promote healthy eating and reduce that nation’s obesity problem.

    These taxes are scheduled to kick in at the beginning of next year.
    KC's View:

    Published on: August 13, 2009

    A couple of interesting notes from the fast Food Maven blog on the Orange County Register website:

    • Fresh & Easy apparently has begun installing large freezer cases in its stores, designed to offer more family-sized pre-cooked meals.

    • And, the blog notes: “I stopped by Albertsons the other day, and noticed banners outside declaring ‘We’ve cut prices.’ However, I went in to buy a 12-pack of sodas, and was stunned to see that the store was offering a two (12-packs) of Diet Pepsi for $9. If I hunt around, I know I can get four, 12-packs for $11 or $12 at rivals stores like Stater Bros.

    “Do you believe Albertsons has really slashed prices?”
    KC's View:
    The big point here is that in the current environment, you can't get away with anything – if your numbers don't add up, not only will people know it, but they’ll share it with their friends and neighbors…not to mention potentially thousands of other people who they don't know but can influence.

    Published on: August 13, 2009

    USA Today continues the rash of good publicity garnered in recent days by Redbox, the company that rents DVDs for $1 a day from kiosks installed in retail outlets ranging from Walmart to McDonald’s.

    According to the story, “That combination of low price and convenience has suddenly made Redbox a force with consumers — and a threat to Tinseltown studios and rental giants such as Blockbuster and Netflix, which typically charge much higher prices … Following agreements with Albertson's and Kroger supermarkets, Redbox expects to end this year with 22,000 kiosks in all 48 mainland states, up 61% from the end of 2008. Company parent Coinstar says that revenue from the DVD rental operation could double to as much as $780 million.”
    KC's View:
    It was interesting to see in USA Today what the basic Redbox business model is: “Redbox pays about $18 for a DVD and rents it about 15 times at an average of $2 per transaction. The company sells half of the used DVDs back to wholesalers for as much as $4 per disc, and sells about 3% directly to consumers for about $7. It destroys most of the rest.”

    I continue to believe that in the long run, DVD kiosks will be made obsolete by technologies that allow people to download and store movies on their computers and/or iPods. Not this year, not next year, and probably not even the year after that. (I hasten to say this because I inevitably will get emails pointing out that my elitist nature refuses to allow for the possibility that not everyone in the US has good Internet service, much less broadband. That will change, too. It has to.)

    Published on: August 13, 2009

    Mintel is out with a new survey saying that more than 52 percent of Americans are monitoring the amount of sodium in their diets, even as the food product introductions claiming “low,” “no” or “reduced” sodium claims is up 115 percent between 2005 and 2008.

    “The rapidly rising evidence in the past several years points out sodium as a major cause of hypertension, osteoporosis, kidney damage and stomach cancer,” says David Lockwood, director of consumer insights at Mintel. “Because of this scientific knowledge mixed with that of global health activists, there is a climate forming for rapid change. We are starting to see this information set into motion with a reduction in sodium on packaged goods and restaurant menus.”
    KC's View:

    Published on: August 13, 2009

    Just some random stories keyed to the release of “Julie & Julia,” the Nora Ephron movie that stars Meryl Streep as Julia Child and Amy Adams as the blogger who chronicles her own effort to cook all of the recipes in “Mastering The Art of French Cooking,” flashing back and forth between 1940s Paris and 2002 New York City.

    • In New York, the Daily News reports that the movie and surrounding publicity “has boosted sales of Child's tome to new heights.” The book is now in its 49th printing, and it “rose to the No. 1 spot on Amazon.com's Top 100 best-sellers list over the weekend. It captured the top spot on the Barnes & Noble online best-seller list on Tuesday. Sales jumped 300% in a mere week and were so brisk that publisher Random House has ordered three new printings of the cookbook to keep up with demand.”

    Also racking up new and big sales – Child’s memoir, “My Life in France.”

    USA Today reports that “PBS has up to 1,000 hours of Child video on its website, and its top 10 video streams are all Child.”

    In addition, the paper writes, “A $35 Child menu special, introduced Tuesday by the Culinary Institute of America at its Escoffier Restaurant in Hyde Park, N.Y., drew nearly 400 reservations, vs. a typical 150 in August.”

    • And the Washington Post reports that at the Smithsonian Institution's National Museum of American History, visitors have been lining up to visit Child’s reassembled kitchen from her Cambridge, Massachusetts, home, which is seen briefly in the movie.

    "To our visitors, the kitchen appears both accessible and extraordinary at the same time," says co-curator Paula Johnson. "Accessible in that it seems so ordinary, unpretentious and 'just like mine,' and extraordinary in that it contains the actual tools and equipment collected, used and cared for by the beloved Julia Child."
    KC's View:
    Considering that accessibility and popularity, the question is this:

    Do you have a Julia Child promotion in your store? If not, why not?

    Published on: August 13, 2009

    • Published reports say that Charles Conaway, the former CEO of Kmart, is asking a federal judge to throw out a jury verdict saying that he was guilty of making misrepresentations and omissions about the company's financial state in its 10Q filing for the third quarter and nine months ending Oct. 31, 2001, and in an earnings conference call.” The US Securities and Exchange Commission (SEC) wants to fine him a total of $22 million as a result of that verdict.

    • The Wall Street Journal reports that a number of major US food companies, including meat processers and farmers, plan “to release a flurry of studies in coming weeks that scrutinize the potential impact of climate-change legislation, warning that it could lead to higher food prices … The group also is worried that a House bill passed in July doesn't provide sufficient incentives for food and agricultural companies to receive and generate carbon credits to offset their carbon emissions.”

    The Journal writes that “the coalition, which formed informally about two months ago, is becoming more active after concluding that member companies didn't win enough concessions in the House climate legislation, industry lobbyists said. The Senate is expected to take up its own climate bill when senators return from recess next month.”

    • In Canada, Loblaw’s announced that its cooking schools, in collaboration with Let's Talk Science, is launching science-based "Little Hands" cooking classes designed for children ages 3 to 5, in select Superstore locations across Ontario. Parents and children can work together to explore and taste foods, understand the importance of produce, while learning basic scientific concepts through food preparation and mixing ingredients.

    According to the announcement, “Pre-schoolers will create beginner recipes and acquire kitchen skills by exploring different foods with various tastes and textures, as well as learn about healthy eating and the different food groups.”

    • The Wall Street Journal reports that senior executives at Kraft, General Mills, Hershey and Mars have written a letter to US Secretary of Agriculture Thomas Vilsack, warning of a potential sugar shortage.

    According to the story, “The companies threatened to jack up consumer prices and lay off workers if the Agriculture Department doesn't allow them to import more tariff-free sugar. Current import quotas limit the amount of tariff-free sugar the food companies can import in a given year, except from Mexico, suppressing supplies from major producers such as Brazil.”

    The Journal says that it is far from certain that the US will allow increased import levels, at least in part because of pressure from US sugar suppliers who oppose such increases and use their lobbying muscle to fight it.
    KC's View:

    Published on: August 13, 2009

    • Wal-Mart's Q2 revenue decreased 1.4 percent to $100 billion, which the retailer blamed on the negative impact from exchange rate fluctuations. Without the currency fluctuations, Wal-Mart said Q2 revenue would have increased 2.7 percent to about $104.2 billion. US same-store sales were off 1.2 percent.

    • Arden Group, owner of Gelsons Markets in Southern California, said that second quarter profit was down to $4.7 million, from $6.6 million during the same period a year ago. Q2 sales were down to $107.9 million, from $116.6 million a year ago, on same-store sales that were down 7.5 percent.

    • Anheuser-Busch InBev said that its second quarter profit rose 28 percent to $1.07 billion, from $836 million during the same period a year ago. Q2 revenue fell to $9.5 billion from a proforma $10.45 billion that Anheuser-Busch and InBev achieved as separate companies in the same period of 2008.
    KC's View:

    Published on: August 13, 2009

    …will return.
    KC's View: