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    Published on: September 8, 2009

    The New York Times reports on a controversy surrounding the Smart Choices program, which uses a green checkmark on CPG products to denote “smarter food and beverage choices.” At issue are the standards used by Smart Choices to define these smarter options …and the fact that “sugar-laden cereals like Cocoa Krispies and Froot Loops” have made the list.

    “These are horrible choices,” Walter C. Willett, chairman of the nutrition department of the Harvard School of Public Health, tells the Times, saying that giving such products an imprimatur represents “a blatant failure of the system.”

    The same time, the US Food and Drug Administration (FDA) and the US Department of Agriculture (USDA) reportedly have sent the Smart Choices management a letter saying that are monitoring the impact of the label, to make sure that label does not have “the effect of encouraging consumers to choose highly processed foods and refined grains instead of fruits, vegetables and whole grains.”

    However, Eileen T. Kennedy, president of the Smart Choices board and the dean of the Friedman School of Nutrition Science and Policy at Tufts university, defends the program as identifying “better for you” products as opposed to approving some and disapproving others, and she tells the Times that “the program’s criteria were based on government dietary guidelines and widely accepted nutritional standards. She said the program was also influenced by research into consumer behavior. That research showed that, while shoppers wanted more information, they did not want to hear negative messages or feel their choices were being dictated to them.”

    According to the Smart Choices website, “The Smart Choices Program is the only nutrition labeling system that was created by a diverse coalition of scientists, academicians, health and research organizations, food and beverage manufacturers, and retailers. Unlike scoring systems, product rankings or store-based programs, the Smart Choices Program is a not-for-profit program created by a coalition that developed nutrition criteria based on consensus science including the Dietary Guidelines for Americans and other sources of authoritative dietary guidance.”

    The Smart Choices board is made of up of representatives from the Baylor College of Medicine, the American Dietetic Association, and the American Diabetes Association, as well as executives from Kellogg’s, General Mills, Kraft Foods and Unilever. There have been some complaints that the program’s decisions are too influenced by the industry representatives.

    “The object of (Smart Choices) is to make highly processed foods appear as healthful as unprocessed foods, which they are not,” Marion Nestle, a nutrition professor at New York University, tells the Times.
    KC's View:
    This is a debate that ultimately doesn’t do any of the nutritional labeling programs any good, because it creates doubts about legitimacy and consumer value.

    I’m sure the Smart Choices folks are doing their best to offer viable and actionable guidance, but I’m not sure they are doing themselves any favors by saying that “sugar-laden” cereals are good for you, and falling back on the “well, they are better for you than some other things” defense. In the end, as many of these companies actually spent a lot of time and money trying to develop healthier options, they may undermine those efforts by lumping them in with less healthy products.

    I’m not saying that nobody should eat sugared cereals, not ever. But at the very least, it is fair to say that they’re not on a nutritional par with things like fresh fruit and whole grains…and the Smart Choices defense sound suspiciously like rationalization.

    There will, I suspect, be some folks who will say that this is why there needs to be a national nutritional labeling system, but I also think there is a good argument for why a multitude of programs may better serve shoppers…if for no other reason than it allows people to choose which programs best serve their needs. For example, if I think that the Guiding Stars program is the one that best suits my buying patterns and nutritional priorities, then I can choose the local store that offers it. If I feel that way about the Nuval system, then I can choose the store that uses that system.

    Sure, there is the possibility that this could all get confusing for consumers, and it is up to retailers to a) explain the way their chosen systems work, b) explain the differential advantages of their system. This puts a greater burden on retailers, but since this is something they ought to be doing anyway – being a resource for information as well as a source of product – it ought to fit into a broader strategic imperative.

    Published on: September 8, 2009

    The New York Times reports that John Sweeney, president of the AFL-CIO, has said that he would accept proposed labor legislation that does not include controversial “card check” provisions. Instead, Sweeney says he is open to a bill that requires a fast election process that “protects workers against anti-union intimidation by employers and eliminates the threats to workers.”

    Card check legislation, known as the Employee Free Choice Act, would not require a secret ballot election during unionization drives, but rather the simple signing of petitions. Employers have complained that this puts them at a significant disadvantage in any debate over unionization, while organized labor has said that it prevents management interference with their efforts.

    President Barack Obama has supported card check legislation, which has been the subject of much debate on the Congress…which many observers believe will lead to some sort of compromise.
    KC's View:
    It was increasingly clear, especially as the Obama administration deals with challenges on a number of fronts, that card check legislation simply was not going to fly. Which in my view is a good thing, since calling for a secret ballot ought to be the right of every business. (It also is business’s responsibility not to intimidate employees, by the way. The two responsibilities go hand-in-hand.)

    Y’think maybe compromise and level-headedness is coming to Washington. (What are the odds?)

    Published on: September 8, 2009

    A new study, published in the Annals of Internal Medicine, says that a comparison of data from retail clinics, doctors' offices, urgent care centers and hospital emergency departments shows that medical clinics in retail stores such as Walmart and CVS, staffed by nurse practitioners, can provide “a good standard of care for sore throat, ear infection]s and urinary tract infections,” according to HealthDay News.

    "I'm interested in how we deliver new forms of health care," writes Dr. Ateev Mehrotra of the University of Pittsburgh School of Medicine. "There's been a lot of discussion about the quality and effectiveness of these clinics … From the patients' perspective, their appeal is twofold. They're convenient and they provide significant cost savings."

    The story says that Mehrotra concluded that “one-third of Americans live within a 10-minute drive of a retail clinic, and more than 6,000 of these clinics are expected to open across the United States within five years … Using various statistical tools, the researchers found that the standards of care in retail clinics in Minnesota were consistent with accepted medical guidelines for those ailments, including the frequency and type of lab tests performed and drugs prescribed.”
    KC's View:
    With all the debate about health care, you never hear anyone in government talk about how retail medical clinics have had an enormous impact on how some folks are able to get access to effective and reasonably priced medical care. Maybe it would make more sense if people were talking about this success and spending less time ranting about death panels.

    Published on: September 8, 2009

    There is a piece in the Times of London looking “to establish whether it is really worth paying extra for the supermarkets’ standard, premium and organic ranges.” According to the story, the Times engaged in a blind taste test of a wide variety of foods “that were hard to tell apart by appearance alone, such as chicken breasts, apples, broccoli, tea, white wine and yoghurt.”

    And here’s what the Times concludes: “For a start, the difference in taste between the supermarkets’ cheapest ranges was huge. Overall, Waitrose’s Essentials range was judged to be by far the tastiest of all the ranges at all of the supermarkets. The Sainsbury’s Basics range, however, was judged to be by far the worst of all. But the most revealing result is how badly organic food performed.

    “The organic brands at Tesco, Waitrose and Asda scored worse than each supermarket’s basic, standard and premium ranges. Only at Sainsbury’s did organic food not come bottom, and that was only because its Basics range is so bad. Hard though it may be to believe, Asda’s standard range scored higher than Waitrose’s organic range. Remember, this was a completely blind test — we had no idea what we were tasting, we simply gave each food a mark out of ten based on how much we liked it. Of course, taste is purely subjective and our experiment did not have the scale or scientific rigour to be conclusive. Nonetheless, the results are fascinating and suggest that it is not worth paying extra for organic food.”

    The story makes several other points:

    • “The idea that organic food is worth more because it is healthier is totally bogus. Only last month the Food Standards Agency, the unbiased government agency set up to protect the public’s health, published a report concluding that organic food has no greater nutritional value than conventional produce.”

    • “The idea that organic food is better for the environment is also questionable. Organic milk, for example, generates more carbon dioxide emissions than standard milk and uses significantly more land.”

    • “Then there is the pesticide question. High doses can indeed cause cancer and birth defects. However, there is no evidence that the miniscule amounts found in conventional food are harmful. In fact, some studies have shown that the incidence of cancer among farmers, who are routinely exposed to relatively high levels of pesticide, is lower than in the wider population.”

    The Times concludes: “Support for organic farming seems based on the belief that ‘nature knows best’. Sadly, this is little more than nostalgia for a golden age of small-scale and simple farming that never really existed. Before intensive agriculture, pesticides and artificial fertilisers, food supplies were constantly endangered by drought and disease. Agriculture was associated with grinding poverty, intensive labour and low yield.

    “Of course, this is not to say that all organic food should be avoided. The animal welfare standards of organic farmers are generally considered better than average. And as our test demonstrates, some organic foods, such as burgers, do seem to taste better. But consumers should be aware that with organic food in general, they are not paying a premium for real quality, just the perception of such.”
    KC's View:
    One can only imagine how people who are deeply committed to organic, natural and local foods will react to this story…and will come up with credible scientific evidence to debunk most of what the Times is saying. Those of us who are not scientists will find ourselves betwixt and between…unable to say which science is right, we will try to use common sense to decide which position seems most logical.

    For my part, it is hard for me to believe that there are no inherent advantages in most organic foods. It just doesn’t seem logical. Then again, I also believe in evolution and global warming…not to mention the hanging curve ball, high fiber, a constitutional amendment outlawing Astroturf and the designated hitter and in opening your presents on Christmas morning rather than Christmas Eve.

    Published on: September 8, 2009

    The Financial Times reports that while Tesco may have slowed its Fresh & Easy Neighborhood Market growth plans in California, that doesn’t mean that it has abandoned its Northern California expansion strategy.

    According to the story, Tesco “has continued to add to almost 50 store sites already acquired in communities including San Francisco, Sacramento and San Jose as well as Reno, Nevada. This month it reportedly paid $3.75m for two plots in the East Bay area, while it has also acquired a third site in San Francisco this summer.

    “Property brokers say Fresh & Easy has been increasingly interested in buying rather than leasing sites, given the current slump in commercial real estate prices in the region.”
    KC's View:
    Despite the naysayers, it has always been maintained here that Fresh & Easy is going to continue to tweak and adjust its format until it gets it right…and will expand in a way that seems prudent in a California economy that has been devastated in recent months. At the FT certainly makes it seem like the company is going away anytime soon.

    Published on: September 8, 2009

    Kraft Foods offered $16.7 billion to acquire Cadbury on Monday, a hostile takeover bid that was almost immediately rejected as “fundamentally inadequate”…though Kraft CEO Irene Rosenfeld seems to be open to the idea that the offer could be raised.

    In the meantime, there is speculation that Nestlé and/or Hershey could launch a rival bid.

    "We trust that our proposal makes clear our level of seriousness and enthusiasm for pursuing this opportunity. We are willing to commit substantial time and financial resources to do so," Rosenfeld wrote to Cadbury chairman Roger Carr.

    In a statement, Kraft said that the acquisition would create “a global powerhouse in snacks, confectionery and quick meals,” and would save the company more than $600 million in marketing and distribution costs.

    Kraft also estimated that the deal would save up to $625 million a year in marketing, distribution and product development costs.
    KC's View:

    Published on: September 8, 2009

    • Good piece in Advertising Age about Walmart’s “redesigned, repackaged and reformulated” Great Value private brand, saying, in part, that “to write it off as similar (to most generics) not only misses the point but underestimates its potential impact. The new Great Value is a game changer, not simply because of its size -- the brand is estimated to be larger than $10 billion -- but because its novel approach to store-brand packaging and merchandising.” The company says that the goal is to differentiate “Great Value from other brands rather than trying to mimic them.”

    That has meant improving the quality and hiring brand marketing executives used to competing in the national brand CPG business, though the approach is not without risks. As Ad Age writes, one of them” is to what extent Walmart will trade consumers down from the brands that have been its bread and butter for decades, which could depress same-store sales but possibly sweeten profits and margins.”
    KC's View:

    Published on: September 8, 2009

    The Nielsen Company is out with new research saying that “more U.S. consumers are using coupons when purchasing consumer packaged goods (CPG) items with 1.6 billion coupons redeemed in the first half of 2009, up 23 percent from last year…and that 39 percent of affluent consumers (making more than $70,000 a year) are using coupons, as opposed to 35 percent of the total population.

    Meaning, one supposes, that one of the reasons that affluent people are affluent is that they know how the value of a buck.

    Other notes from the research:

    • “Serious coupon users include those from large households, those households with female heads age 54 and younger, as well as consumers living in affluent suburban and comfortable country spreads.”

    • “Those likely to be low or non-coupon users: low-income, one-member households, male-only head of households, African-Americans and Hispanic consumers, residents in rural and struggling urban areas.”
    KC's View:

    Published on: September 8, 2009

    Brand Week reports that Burger King’s deal with ConAgra will bring the fast feeder’s French fries to retail stores later this month, which large-sized versions – dubbed King Kolossalz, and King Wedgez – expected to follow shortly.

    The microwaveable fries will retail for approximately $1.49 per box.

    According to the story, “Sharon Miller, vp of retail sales for ConAgra’s Lamb Weston, said the BK branding will give the products a jumpstart in the marketplace: ‘Now consumers can enjoy King-fries at home, in an easy-to-prepare, microwaveable format that’s perfect for today’s busy families.”
    KC's View:
    I almost hate to get on this horse one more time, but…I would argue that supermarkets ought to consider whether carrying Burger King-branded French fries is a good competitive move, considering that Burger King’s core mission is to get people to eat out rather than at home. Why do anything to bolster the competition?

    There will be folks who will argue that I am being too absolutist in this position, but let’s be clear. My goal is not to be absolutist, but rather to suggest that everybody in the food business is in a battle for share of stomach, and therefore everybody ought to be playing hardball. That’s what BK is doing…using supermarkets to bolster its own brand credibility and bottom line. Why be complicit?

    Published on: September 8, 2009

    The Burlington Free Press reports that People for the Ethical Treatment of Animals (PETA) will give Price Chopper CEO Neil Golub a Compassionate Action Award for having pulled the company’s sponsorship of a lion and tiger act at the Champlain Valley Fair.

    “By refusing to sponsor the Nerger Lion and Tiger Show, Price Chopper is sending fair officials and attendees a strong message that big cats shouldn’t be subjected to unnatural environments, noisy crowds, and cruel training methods,” PETA official Debbie Leahy said in a statement.

    According to the story, “The animals used in the show belong to Hawthorn Corp., an Illinois company that supplies performing animals to circus and fair acts. Hawthorn has been cited several times by the federal Agriculture Department for its caging, care and training of animals.”
    KC's View:

    Published on: September 8, 2009

    Shelley Broader, the president/COO of the Michaels Stores crafts chain, has departed the company “to pursue other opportunities.”

    Broader joined the company about 15 months ago, after having served as CEO of Delhaize-owned Sweetbay Supermarkets and before that as a senior executive for Hannaford Bros. When she joined Michaels, she was hired by Brian Cornell, the former chief marketing officer at Safeway, who had joined the chain as CEO.

    However, Cornell left Michaels earlier this year to become CEO at Walmart-owned Sam’s Club, and was replaced by John Menzer, Walmart’s former vice chairman/chief administrative officer, who retired from the world’s biggest retailer 14 months earlier.
    KC's View:
    Of all the people I’ve met in the supermarket industry over the past couple of decades, Shelley Broader is one of the people who, in my view, was born to be in the food business – she just gets it in a way that a lot of people do not. She understands how food retailers can be category killers within their own segment, and she has all the leadership tools necessary to make it work.

    Which is just a long way of saying that I hope she finds her way back to the food business. Soon.

    And by the way, I wouldn’t be enormously surprised to find out that she’s booking a flight to Bentonville one of these days. (So maybe somebody ought to make her a better offer. Soon.)

    Published on: September 8, 2009

    • The CBC reports that Canada Safeway has locked 350 employees out of an Edmonton distribution center and Lucerne ice cream plant, after the unionized employees overwhelmingly rejected a contract offer. According to the story, the employees have been working without a contract since last December, and had been threatening to go on strike. The union says that Safeway plans to hire non-union replacement workers.
    KC's View:

    Published on: September 8, 2009

    Quite a week to take a vacation. Charlie Gibson retires and Diane Sawyer becomes the anchor of the ABC World News. Don Imus leaves the RFD Network and goes to the Fox Business Channel. And today, Tony Kornheiser returns to daily radio on WTEM-980 in Washington, DC.

    There were some interesting business stories, too…and some of the ones I thought worth noting follow…

    • The Wall Street Journal reported that Walmart has begun using its website to sell merchandise from outside retailers, an effort that added an estimated one million SKUs to its online offering. Walmart handles the transaction but not the fulfillment – it never touches the merchandise.

    The move put Walmart in even more direct competition with, which offers a similar service.

    • The Washington Post reported that “labor groups renewed their campaign against Wal-Mart on Tuesday, launching a coalition that calls for improvements in the company's wages, health care, and environmental and labor policies.” Ironically, the campaign comes after Walmart CEO Mike Duke came out in favor of the Obama administration’s call of mandated employer-provided health care benefits as part of a larger health care system overhaul…a cause also supported by organized labor.

    • Whole Foods released a results of a new Harris interactive survey that it commissioned showing that “two out of three (68 percent) U.S. adults have changed their cooking and eating habits because of the current state of the economy, with about half (51 percent) eating dinner at home more often and more than a third (37 percent) budgeting food shopping trips more strictly.

    “At the same time, the survey found that the majority (76 percent) say they do not want to compromise on the quality of the food they buy, regardless of current food prices. While three in four (75 percent) also continue to purchase natural and/or organic foods in the same quantities as they always have, nearly two-thirds (65 percent) of consumers surveyed say they would like to find ways to be able to buy these foods within their budget.”

    • The Wall Street Journal reported that Walmart plans to stop handing out payroll checks to its employees, but rather will roll out a system that will transfer earnings to a MasterCard debit card if the employee does not want direct deposit to a checking account. According to the story, the move is expected to save more than 250,000 pounds of paper a year, plus significant costs in its payroll department.

    • The Austin American-Statesman reported that Whole Foods CEO John Mackey is not interested in running for the US Senate seat being vacated by Republican Sen. Kay Bailey Hutchison as she runs for governor. Rumors are circulated about a possible Mackey candidacy after he stirred up a political hornet’s nest with a Wall Street Journal op-ed piece promoting his company’s approach to health care and decrying the Obama administration’s efforts.

    • Publix Super Markets aid that it plans to open a 60,000 sq. ft. hybrid-organic supermarket in Naples, Florida, that will integrate elements from its GreenWise organic/natural foods format and its traditional store concept. The store is scheduled to open during the second half of 2010 and will be roughly 25 percent bigger than the typical Publix.

    • The Puget Sound Business Journal reports that Starbucks plans to expand on its test of a new format that doesn’t carry its name or branded product, but does sell beer and wine. According to the story, Starbucks “plans to add a second coffee house in the style of the much-talked about 15th Avenue Coffee & Tea cafe that opened recently in Seattle’s Capitol Hill neighborhood. The new cafe will be called Roy Street Coffee & Tea and will open this fall, also in Capitol Hill, at 700 Broadway East.”

    • The Patriot Ledger reports that Ahold-owned Stop & Shop and Giant Food are shuttering 43 Starbucks kiosks in their stores for not performing up to expectations – a decision that Ahold says will result in a $7 million impairment charge. The closings will leave 53 Starbucks kiosks in Stop & Shop and Giant stores.

    • Costco said that its August sales were flat at $5.4 billion, on same-store sales that were off two percent. Fourth quarter sales were down three percent to $21.9 billion, on same-store sales that were down five percent. And, Costco’s annual sales fell two percent to $69.9 billion, on same-store sales that were down four percent.

    Family Dollar Stores said that its fourth quarter net sales were up 2.6 percent to about $1.81 billion, on same-store sales that were up one percent.

    Rite Aid said that its August sales fell 3.2 percent to $2.4 billion, on same-store sales that were off 1.9 percent. The company’s second quarter sales were down 2.7 percent to $6.3 billion, on same-store sales that were down 1.1 percent.

    BJ’s Wholesale Club said that its August sales fell 1.9% to $757.6 million, on same-store sales that were down six percent.

    Target Corp. said that August sales were up 0.1 percent to $4.86 billion, on same-store sales that were down 2.9 percent.

    • Starbucks announced that it has named Michelle Gass, its executive vice president of marketing, to be the new president of its Seattle’s Best Coffee subsidiary.

    At the same time, the company hired Annie Young-Scrivner, formerly the chief marketing officer for Quaker Foods, to replace Gass as its global chief marketing officer.
    KC's View:

    Published on: September 8, 2009

    A few emails regarding issues covered before we went off on vacation…

    One MNB user offered the following thoughts on an issue we cover a lot in this space:

    While I believe we should increase awareness of the obesity issue, and in particular childhood obesity, we need to also be mindful of the increase in eating disorders like Anorexia Nervosa and Bulimia. The cause of eating disorders is a complicated business to sort out with societal pressures, genetics, family-issues and media influences being the main suspects.

    My 12-year old daughter recently completed a 10-day intensive stay at a clinic for eating disorders. I can say with a fair degree of certainty one of the triggers of her illness was an over-zealous health education class. The material presented in this class was so focused on the "evils" of saturated fats and junk food that my health-conscious, perfectionist little girl processed the information in what became an obsessive and harmful spiral. I certainly don't lay all of the blame on this health class; there are just too many unknowns with this affliction. My only hope is the media, public health officials and educators will temper their approach to the obesity issue by emphasizing a balanced diet which includes fats and carbs and, yes, dessert.

    This is actually something that I’ve mentioned from time to time, because I have some family experience with anorexia and bulimia, and it is worth reiterating. It is one of the reasons that we all have to be careful about how we address the obesity issue, making sure that we come down on the side of moderation.

    I have a teenaged daughter, and because of the family history, I am very sensitive to the moments where she says things like “I’m fat.” (She’s not.) That parental sensitivity has to be extended to how we comport ourselves in our professional lives.

    We had a piece about how Burgerville is creating a drive-through lane for bicycles after one Oregon customer – a woman who eschews the use of a car and travels on a specially made bicycle with seats for all her children – used the Internet to object when a Burgerville employee wouldn’t serve her in the drive-through lane.

    MNB user Rusty Findlay wrote:

    I understand that I will be at odds with your belief on this issue, but I believe every business has a primary responsibility to protect…shareholders, employees, customers even those who are only visiting. Without creating a Bicycle only lane, which I note was not already in existence in this store; it was dangerous for a bike to be admitted to the drive thru lane. Cars do not yield to bicycles all the time. Over 50% of bike accidents are in response to auto drivers not seeing or expecting bicycle riders to be where they were. I am dumbfounded that a mother would endanger her children in such a reckless manner. I do not care how socially responsible this woman is, she needs to be more responsible about her children. Get off the bike, park it in an appropriate space and dismount with your children, keeping them safe at all times. My wife and I drive an automobile that research has shown is one of the safest on the road and we utilize car seats, for our grandchildren, that are as safe as we could find. Are they cumbersome? Yes, but our children and then our grandchildren are the most important part of the environment to us. Let’s show some intellect and stay out of the drive thru lane.

    I may be wrong here, but I’m working under the premise that the woman is a good mom not putting her kids at risk…and Burgerville’s move seems to be a way of assuring everybody’s safety. In the modern world, where more people ought to be riding bikes instead of driving cars, we may have to adjust all our attitudes on these issues.

    And finally, I recommended the new DVD set featuring the first season of “thirtysomething,” which led one MNB user to write:

    I remember one episode that contained a rather valuable management lesson, drawn from some turmoil taking place at Miles Drentell’s ad agency, DAA. I forget the details, but something happening in the internal politics of the agency was really troubling Miles, as if there was a possible palace coup in the works, behind his back, as retribution for his generally heavy-handed management style. After due consideration, Miles' judgment was to proceed with a debriefing of all company employees, seeking to uncover who was really with him, and who was against him, once and for all, chips fall where they may. In the end, Michael (Ken Olin) was able to persuade Miles that this was a "win the battle, lose the war" proposition for himself and the firm because it would forever convey the message that the associates employed there really weren't trusted when the rubber met the road; Miles eventually saw it Michael's way & climbed down off the ledge. A timeless message in employee relations, I have always thought.

    True. Of course, later in the show, if I recall correctly, Michael and Elliot tried to engineer their own takeover of the company. Which is its own timeless message.
    KC's View: