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    Published on: August 24, 2009

    The Columbus Dispatch reports on the re-emergence of online shopping being offered by central Ohio brick-and-mortar food retailers, with Buehler’s Fresh Foods in Delaware offering Internet ordering and customer pick-up…the third Buehler’s store to provide the expanded service.

    At the same time, the Dispatch writes, “Meijer plans to test its own online shopping plan in its Westerville store in October … Meijer, which already offers online shopping for bulk, nonperishable grocery products, will roll out its Grocery Express program locally.” Meijer also is using a customer pick-up model, according to the story.

    According to the story, part of the impetus for the new development comes from concerns that other competitors in the area might do the same thing and get an advantage, though Giant Eagle and Kroger have not announced any plans. And the big concern is that Walmart – which offers a plethora of food product information on its site, but not online grocery shopping – could make the move, as has often been rumored.

    Full disclosure: Buehler’s online grocery shopping service was developed and is maintained by MyWebGrocer, a MorningNewsBeat sponsor.
    KC's View:
    Everything I’ve read suggests that retailers offering the pick-up model – as opposed to the delivery model – tend to find such programs to be both successful and profitable…and it would be my expectation that they will only get more so. With every day that passes, the generation that is used to only buying online gets closer to the center of the target…and so retailers that resist the trend risk a certain kind of irrelevance.

    Published on: August 24, 2009

    Marketing Daily reports that a new survey released by KPMG suggests that there is a general optimism among food and beverage industry executives about the likelihood of an economic recovery, with almost three-quarters saying that they expect an industry recovery in 2010.

    About 65 percent of those surveyed said that they believe the food and beverage industry is well positioned for a recovery, and 60 percent think that the food business will actually recover ahead of much of the rest of the economy. However, 48 percent say that the entire US economy may not be back in good shape until 2011.

    Other notes from the story:

    • “In regard to jobs, 48% said that they have already made head count reductions, and just 22% are considering further cuts. More than half (54%) expect industry jobs to be stable next year, and about a third (32%) believe the job scenario will be better than this year's.”

    • “Asked how they have adjusted to cope with the recession, fully 82% cited implementing IT solutions as a means of reducing costs, 63% cited cutting capital expenditures, and 63% said that they had created or modified their risk management plans.”

    • “Asked about current strategy, nearly two-thirds (63%) said that they are focused on investing for growth, versus 37% who indicated that they remain focused on cost-cutting.”
    KC's View:
    It is good to see that this industry seems to be putting a premium on both investment and hiring, which should give it an advantage in the marketplace when prosperity returns. It seems to me that it is critical for companies to also focus on creating cultures that make these people want to turn these jobs into careers…makes them want to feel personally invested in the companies where they work.

    For some companies, at least, this would be more than a recovery. It’d be a quantum leap.

    Published on: August 24, 2009

    The Los Angeles Times reports that so-called “sin taxes” – that impose extra taxes on food products that are high in fat and low in nutrition – seem to be “catching on with the American public.” The Times writes that a recent Kaiser Family Foundation poll showed “that 55% of respondents favored a tax on unhealthful snack foods, up from 52% in April. Support for a soda tax rose to 53% from 46%. And 63% of those who opposed the idea said they would change their minds if the revenue were used to fund healthcare reform and combat health problems related to obesity.”

    However, critics of the approach say that sin taxes unfairly target poor people and, in the case of junk food, aren’t even significant enough to have an impact on the nation’s obesity rates.

    Here’s the argument against it, as characterized by the Times:

    “To make a significant dent in escalating rates of obesity, taxes would have to be steep and widespread. Two-thirds of states now impose a modest soft-drink tax -- the average rate is 5.2% -- and though the taxes are linked to a drop in body weight, the difference is extremely slight: about 3 ounces for a 5-foot-10, 279-pound person. Taxes on foods such as candy bars and microwave popcorn are even less effective, according to available data.

    “There's even evidence that such taxes can have the perverse effect of increasing consumption of fatty or salty foods. There are reasons why taxes curb smoking but might have little effect on obesity. Raise the cigarette tax, and smokers can either pay up or quit. Raise the tax on sugar-sweetened colas, however, and customers can switch to sports drinks or punch, which often contain even more calories.

    “Moreover, tobacco taxes apply to all products you can legally smoke. Junk-food taxes are less logical. A 5.5% snack tax in Maine, for instance, covered blueberry muffins and fresh-baked apple pies, but not English muffins or frozen pies. Tobacco taxes are also much higher than anything likely to be adopted for food and beverages. Slapping a 10% tax on a $1.50-bottle of Coke would raise the price a mere 15 cents -- not enough to persuade most shoppers to drink Diet Coke instead. Many calorie-laden foods are simply too cheap to be priced out of the market by any but the most draconian of taxes.”

    And, some research suggests that if people were faced with higher costs for non-nutritious foods, they’d actually spend less money on fruits and vegetables as a way of offsetting the increased prices. And so, sin taxes might actually have the opposite effect from what is intended.

    At the same time, proponents of such an approach argue that if health care systems in the US really are broken, then it is critical to deal not just with symptoms but also the cause – which is unhealthy people putting too much stress on the health care infrastructure, leading to artificial and arbitrary cost increases.
    KC's View:
    The more I read this story, the more I got queasy about it. There’s just a social engineering aspect to it that is a littler unappetizing…I’d love to see people eating healthier food, but taxing them into submission doesn’t strike me as the best approach.

    I’m with Jimmy Buffett on this one – a little sin is good for the soul. (Besides, haven't we sort of devalued the nature of sin when we start equating it with sugared soft drinks?)

    Published on: August 24, 2009

    The Financial Times reports that Ahold CEO John Rishton is saying that the company will seek opportunities to expand, noting that “in a recession, the strong will get relatively stronger and the weak will get relatively weaker. We’re one of the strong and will seize opportunities that will inevitably arise in this kind of market … I’m convinced that some more consolidation is going to take place in our industry and we’re well-placed to take advantage of that.”

    Rishton also said that the company’s Stop & Shop, Giant-Landover and Giant-Carlisle divisions will announce new marketing initiatives in the coming week, moves designed to build on what the company says are improved margins at all three divisions.
    KC's View:
    Could “weaker” mean Ukrop’s, despite speculation that an unnamed private equity firm is best positioned at the moment to acquirer the iconic Virginia retailer?

    It should be pointed out that FT notes that Ahold’s debt is just 20 percent of what it was a few years ago, when it was in the middle of a financial scandal caused by then-senior executives juggling the books. That’s an impressive achievement by any measure.

    Published on: August 24, 2009

    Safeway announced that it is “offering seasonal flu vaccines in its U.S. stores at a substantial savings compared with the cost of doctor-administered vaccines. The lower cost will help consumers and businesses control health care spending in a challenging economy.

    “Now through March 2010, or while supplies last, Safeway stores will provide seasonal flu vaccines on a ‘walk-in’ basis at most stores, and through scheduled flu vaccine clinics at others. The cost of a vaccine administered at a Safeway pharmacy is far below the cost of a shot administered during a doctor office visit. Safeway is also providing an off-site flu clinic service in most states for businesses, senior centers and nursing homes that choose to provide their employees or residents with the convenience of receiving a flu vaccine where they work or live.”
    KC's View:
    It is going to be a big flu season, and Safeway is smart to build on its broad “lifestyle” and “healthy living” approach to business in developing this initiative.

    Published on: August 24, 2009

    Advertising Age reports that some major manufacturers seem to be reacting to public pressure by eliminating high fructose corn syrup (HFCS) from products, while the Corn Refiners Association is fighting back with a media campaign designed to battle what it defines as misinformation.

    Among the companies that are eliminating HFCS from some of their products are Pepsi and Kraft. Starbucks is another example of a company that has eliminated HFCS (as well as trans fats) from the products in its bakery cases.

    The Corn Refiners Association has developed a multi-million dollar campaign to respond directly to news stories that it sees as being inaccurate or unfriendly about HFCS, as well as produce and air advertisements that promote HFCS as a healthy alternative to sugar when consumed in moderation.
    KC's View:

    Published on: August 24, 2009

    • The Wall Street Journal reports that Walmart-owned Sam’s Club has begun providing discount coupons to members holding Advantage and Business Plus cards, allowing the users to either download the coupons electronically or print them out at in-store kiosks – the discounts are then automatically deducted at checkout.

    According to the story, “Its move comes as Sam's Club and its membership rivals are competing fiercely for new customers, who pay an annual fee to join.” The coupons are seen as a way of justifying the cost of belonging to a club and reinforce the values contained therein, at a time when people are being more vigilant about virtually every purchase.
    KC's View:

    Published on: August 24, 2009

    The San Jose Mercury News reports that the City Council there plans to consider a series of bills that could have an impact on the use of disposable plastic bags. One option is said to be a per-bag fee/tax, while another is a public education plan. However, the paper says that the general feeling seems to be that the former isn’t a good idea in a recessionary period, while the latter would be expensive with limited impact. Therefore, a ban on plastic bags – similar to regulations passed in nearby San Francisco and Los Angeles - is seen as the most likely approach.
    KC's View:

    Published on: August 24, 2009

    • The Binghamton Press reports that Weis Markets has closed 11 Giant Food Markets that it acquired two months ago and is converting them to the Weis banner – complete with a shift to the company’s own front end systems. Five of the units reportedly will be converted to a 24-hour operating schedule, with the rest open 7 am – 11 pm daily.

    • Starbucks announced last week that it will lower prices on some products and raise prices on others – gambling that even in a recession, what it views as product-appropriate pricing will fly with consumers.

    Prices reportedly will go up (as much as 30 cents) on labor-intensive drinks such as frappuccinos and caramel macchiatos, while they will go down between five and 15 cents on easier drinks to make such as brewed coffee, lattes and cappuccinos.
    KC's View:

    Published on: August 24, 2009

    • JM Smucker said that its first quarter revenue was up 58 percent to $1.05 billion, from $663.7 million during the same period a year ago. Q1 earnings were $98.1 million, up from $42.3 million a year ago.

    • Hormel Foods said that its third quarter earnings were $77.2 million, up from $51.9 million a year earlier. Q3 revenue fell six percent to $1.57 billion from $1.68 billion.

    • HJ Heinz said that its first quarter profit was down seven percent to $212.6 million, from $229 million a year ago. Q1 revenue dropped four percent to $2.47 billion.
    KC's View:

    Published on: August 24, 2009

    MNB took note last week of a Bloomberg report saying that Nestlé is once again distributing its Toll House cookie dough to supermarkets, two months after a recall cased by concerns about E. coli contamination resulted in a voluntary recall of all the product in the US. However, the new packaging will carry a label that says “New Batch,” and also will warn consumers that they should not eat the product raw.

    The source of the E. coli contamination remains uncertain. While packaging from a Virginia Toll House plant was found to be tainted with E. coli, it wasn't the same form of the bacteria that made more than 70 people sick.

    My comment: Getting my daughter to stop eating raw cookie dough is going to be a little tough…but I’m going to have to lay down the law. Tell you one thing, she’s going to be thrilled when the product is back in the refrigerated section of the store – she’s been asking me when it’ll be back pretty much once a week since the recall.

    Got a lot of email on this one…

    One MNB user wrote:

    It's outrageous that people in this country, and their government, simply accept unclean standards in our food supply. Years ago, people ate raw hamburger with no ill effects, but cannot do so now because the meat industry can't (or won't) run a clean operation. Their answer- blame the victim for not cooking it. Then the vegetable got
    contaminated - and the agriculture conglomerate blamed the victim for not washing it sufficiently. Then the eggs got contaminated, and we were all told illness would be our own fault for not cooking them. And on, and on, and on. Now, we have Toll House, which can't (or won't) clean up an operation that supplies cookie dough to children, once again blaming the victim. Toll House executives should get a ruler across the knuckles and a seat in the corner. It's sad, but typical, that your response is that you'll have to lay down the law with your daughter, rather than calling for Nestlé to clean up their act and produce a clean product fit for human consumption. As I said, it's outrageous that people supplying our food are allowed to get away with this.

    By the way, shut up about obesity. Everybody's sick of your preaching.


    To be fair to Nestlé, that company’s situation seems to be different from that of Peanut Corp. of America, say, where there appears to have been deliberate and likely criminal negligence.

    As for your last point, I’m pretty sure not everyone wants me to shut up.

    For the record, I’m trying to reason my way through a complex issue, figuring out what is fair and sensible in an environment that doesn’t always encourage either. Sure, I’m going it out loud, which I suppose can get tiresome…but I suspect what I’m trying to do is being done in a lot of places by a lot of people.

    Another MNB user wrote:

    After a fun night of making the product and enjoying it in all stages of the baking process, we received an automated call from Costco alerting us of the recall on the product. They instructed us to return the unused portion back to the store for a full refund and further explain that eating uncooked cookie dough was not a good practice. In addition, they left a phone number if you should need more information.

    With the amount of recalls in the marketplace today, the uneducated consumer continues to make a generalized statement about products coming from China along with other media hyped topics. I hope the FDA takes a stance on regulating the quality of the products with a fine tooth comb to help eliminate these issues. Let’s face it, with the amount of things that a manufacture needs to do and the people involved, mistakes are going to happen. However for Nestlé to default back to not eating uncooked cookie dough since it states it on the package is a long time practice that is standard in most households in the world. How do we think all of these cookie dough products has surfaced in our grocery stores? From Cookie Dough Candy Bars to Ice Cream.

    We called the phone number to understand more about the issue and was sent into automated customer service hell in which you are continual routed to various recordings that generally do not answer your question. I guess that is the way the cookie crumbles..


    Another MNB user wrote:

    Funny you should mention your daughter wanting to eat raw cookie dough... Only so many food memories remain from childhood and one that stands out for me was the pleasure of eating raw cookie dough as a little girl. It was much better than the baked product. I wouldn't dare anymore of course with raw eggs being so unclean now. Yet another lost little joy not to be enjoyed for the new generations along with trick or treating the entire neighborhood well into dark, walking alone anywhere, playing in the front yard, going to the store by yourself with your allowance to buy (eek) "penny candy"! Sigh. On the other hand, we can all now tweet instead of talking or walking or running.

    Yikes! This "old days" reminiscence ( just like my parents and granny use to make) hit me like a stone: It is official: I am old.





    Joining in on the continuing discussion about plastic bags in supermarkets, one MNB user wrote:

    At the FMI Sustainability Summit this week there was a lot of talk about reusable bags. The consensus seems to be that, at least in the current economic environment, “carrots” that encourage consumers to do the right thing are a better approach than “sticks” that penalize consumers for choosing disposable bags. The EcoUnit reusable bag program – that rewards reusable bag users with credits that they can spend on support of local environmental projects – received a lot of attention at the show.

    I always prefer carrots to sticks.

    Another MNB user wrote:

    I work in the supermarket industry, but have a comment from a consumer standpoint. In the past, I was a customer that requested a mix of paper and plastic, as I would use each for trash can liners. Then along came the Cloth bags, and being the good citizen I try to be, I switched to cloth, even though there isn't much incentive ($.05) to do so. But what I found, is that now I have to purchase plastic bags to line my kitchen trash can. From my standpoint, this change cost me money as a consumer, and has not helped the planet and now I buy plastic that I used to get for free. Better for the planet (and me), would have been to keep requesting the paper. Hmmmm.......

    Still another MNB user wrote:

    On the topic of reusable bags, I think people will be willing to wash them, especially if they are aware of a potential food safety issue. However, if they are not willing to do that, there are still other solution options. I have several different colors of reusable bags and even though I wash them, now I am going to ask my courtesy clerk to put raw meats in the red and purple bags only. The produce can go in the green ones and everything else in the other bags. This is the same thought process as having different color cutting boards for different species of protein and produce to prevent cross contamination. Salmonella does not have to be a fear. Realistically, good food safety practices just take a little thought and common sense. Stores can easily help customers in this by selling bags for individual uses which can serve as a win for both customers and retailers.




    We had a story last week about the US Department of Justice indicting three men – a Miami man and two Russian co-conspirators – who are accused of the theft of more than 130 million credit card and debit card numbers between late 2006 and early 2008, a scam that affected the computer systems of retailers that included Hannaford Brothers and c-store chain 7-Eleven, as well as Heartland Payment Systems, a payment processor.

    Among my comments: Perhaps the most important lesson from this case comes from how Hannaford dealt with it – the company got a lot of criticism for holding back on informing its customers about the breach of its systems, and creating a situation in which at least some of its affected shoppers found out about the problem with their cards by reading the Boston Globe and other newspapers. That’s never how you want your shoppers to find out.

    Now, Hannaford probably has a good defense – that to have told its customers any sooner might have jeopardized the federal investigation into the breach. But this is a tough one, and the company had to worry that its shoppers might feel that among other things, their confidence had been breached. That’s never how you want your shoppers to feel…


    One MNB user wrote:

    As a Hannaford associate, who is biased (yes, we could have done better), I would note that you failed to point out that many of the retailers mentioned in the identify theft story NEVER even told their customers...which is worse, to understand the situation first and then take steps to correctly inform customers of the true exposure or to never even tell them?

    Clearly, not saying anything is inexcusable. No disagreement here.
    KC's View: