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    Published on: September 11, 2009

    A number of emails yesterday referred me to an op-ed piece in the New York Times by Michael Pollan (“The Omnivore’s Dilemma”) in which he suggests that the biggest impact on the US health care system can be achieved through addressing the nation’s generally poor diet.

    “We’re spending $147 billion to treat obesity, $116 billion to treat diabetes, and hundreds of billions more to treat cardiovascular disease and the many types of cancer that have been linked to the so-called Western diet,” Pollan writes. “One recent study estimated that 30 percent of the increase in health care spending over the past 20 years could be attributed to the soaring rate of obesity, a condition that now accounts for nearly a tenth of all spending on health care.

    “The American way of eating has become the elephant in the room in the debate over health care … food system reform has not figured in the national conversation about health care reform. And so the government is poised to go on encouraging America’s fast-food diet with its farm policies even as it takes on added responsibilities for covering the medical costs of that diet. To put it more bluntly, the government is putting itself in the uncomfortable position of subsidizing both the costs of treating Type 2 diabetes and the consumption of high-fructose corn syrup.”

    Pollan concludes that reforming the food system will be even more challenging than reforming health care. “Cheap food is going to be popular as long as the social and environmental costs of that food are charged to the future. There’s lots of money to be made selling fast food and then treating the diseases that fast food causes. One of the leading products of the American food industry has become patients for the American health care industry.”

    But, he says, this could change if health care reform is passed by the Congress and signed by President Obama: “Even under the weaker versions of health care reform now on offer, health insurers would be required to take everyone at the same rates, provide a standard level of coverage and keep people on their rolls regardless of their health. Terms like ‘pre-existing conditions’ and ‘underwriting’ would vanish from the health insurance rulebook — and, when they do, the relationship between the health insurance industry and the food industry will undergo a sea change.

    “The moment these new rules take effect, health insurance companies will promptly discover they have a powerful interest in reducing rates of obesity and chronic diseases linked to diet … When health insurers can no longer evade much of the cost of treating the collateral damage of the American diet, the movement to reform the food system - everything from farm policy to food marketing and school lunches - will acquire a powerful and wealthy ally, something it hasn’t really ever had before.”
    KC's View:
    Fascinating piece…and however one feels about the contentious health care debate, it is hard to argue with the notion that a system based on prevention rather than treatment would be far more efficient and effective. I’m not sure it will be as simple as Pollan suggests – wouldn’t it be pretty to think so – but it does seem like a logical conclusion, and one that could be good for smart food retailers and manufacturers.

    Published on: September 11, 2009

    BrandWeek has an interview with Walgreens’ chief marketing officer Kim Feil, in which she addresses the retailer’s aggressive new advertising campaign to position the company as a consumer resource. Excerpts:

    • “We (have) a clear insight into what our consumers want Walgreens to be, which is a resource to them, whether it’s helping them do easy things like grabbing a gallon of milk on a Sunday morning to make breakfast, or something as complicated as [assisting] a newly diagnosed diabetic. This all led to the development of our new communication program.”

    • “We used to market all of our businesses as separate businesses, but what we really wanted to communicate is we are a comprehensive destination for pharmacy health care and a community-based services company - I hope consumers begin to understand that Walgreens isn’t just a store - [we’ve got] the e-commerce site, they can access their services through the Web, in our clinics, in our employer work sites and in a lot of different places. We want to elevate the brand beyond the walls, and really focus on it as a brand that meets consumers where they are.”
    KC's View:
    It is, in essence, the MNB mantra – in the 21st century, effective retailers need top be where consumers want them, when consumers want them, how consumers want them, selling products at prices that consumers believe are appropriate. “Beyond the walls” is a bare minimum…

    Published on: September 11, 2009

    The In-Store Marketing Institute has a piece on its website about how The Great Atlantic & Pacific Tea Co. (A&P) has been pushing both its loyalty marketing program and its private brands:

    • According to the story, “Shoppers at A&P chains were invited to save up to 15% on a future purchase by using a store loyalty card between July 31 and Aug. 27 … the promotion dangled discounts off future receipts of 5% with total purchases from $200 to $400, 10% with purchases from $400 to $600 and 15% with totals of $600 or more (for a maximum reward of $75). The savings certificates were valid from Aug. 28 to Sept. 3.”

    • In addition, the retailer is “touting its private-label America's Choice brand with shelf tags promoting ‘I-want-to-hug-the-manager low prices’ and ‘I-can't-believe-my-eyes low prices.’ Private-label promotions are also presented on stanchion signs, along with price labels and ceiling signs comparing America's Choice prices with those of equivalent national brands.”
    KC's View:
    It has been a tough few years for A&P, probably all the more frustrating because the company is opening some excellent stores in its marketing areas. I hope, for their sake, that as times get better, people start to catch on to a company doing some good work.

    Published on: September 11, 2009

    Dow Jones reports that Walmart CEO Mike Duke is expecting a lot of last-minute end-of-year holiday shopping this year, and so will delay putting up Christmas decorations until a little later than usual.

    "The customer will use every bit of intelligence, price comparisons and shopping on the Internet," Duke told at a Goldman Sachs retail conference Thursday, referring to a global consumer frugality that will affect sales through the end of the year.
    KC's View:
    It will be interesting to see what happens on Black Friday this year – always one of the busiest shopping days of the year, and not one of the more profitable because of all the sales that take place that day.

    Published on: September 11, 2009

    • The Minneapolis/St. Paul Business Journal reports that General Mills has said that its new Wheaties FUEL cereal – a line extension from the traditional brand that was rolled out in 1924 – will be “a lightly-sweetened, crunchy whole wheat flake with granola and crispy rice with cinnamon and honey flavors.” Test marketed in several formulations over the summer, the cereal will hot store shelves nationwide in January 2010.

    According to the story, “Wheaties FUEL was developed with the help of Indianapolis Colts quarterback Peyton Manning, triathlete Hunter Kemper, Boston Celtics forward Kevin Garnett, decathlete Bryan Clay, St. Louis Cardinals first baseman Albert Pujols and sports nutritionist Dr. John Ivy. General Mills has produced a six-part Web series that chronicles the process General Mills and its famous consultants went through to develop the cereal.”

    • The Los Angeles Times reports that a pair of California produce companies, Steinbeck Country Produce and Ocean Mist Farms, have recalled thousands of cases of onions because of fears about salmonella contamination. No illnesses have been reported, but the salmonella was detected during routine tests of produce shipped to New York City.
    KC's View:

    Published on: September 11, 2009

    • Dollar General said that its second quarter net income was $93.6 million, up from $27.7 million a year earlier. Q2 net sales rose 11.2 percent to $2.90 billion, on same-store sales rose 8.6 percent.
    KC's View:

    Published on: September 11, 2009

    • Walmart announced that Scott Price, the former CEO of DHL Express Europe, has been hired to be the company’s executive vice president, president and chief executive of Walmart Asia, which includes China, India and Japan.

    • Walgreen announced that it has hired Tim Theriault, a financial services industry veteran, to be its new chief information officer.

    Denise Wong, who has been serving as CIO for Walgreen, has been named corporate vice president of information technologies, focusing on in-store retail and corporate IT systems.
    KC's View:

    Published on: September 11, 2009

    We continue to get emails about my comments on a story about how Safeway Canada has gotten injunctive relief to prevent locked-out workers there from blockading a food warehouse and ice cream plant while the retailer hires replacement workers. Some 350 employees have been working without a contract since last December; reportedly objecting the company’s desire to have them work a 40-hour week (rather than the current 37 hours), not to mention the pay and benefits packaged offered by management.

    My problem was with a negotiating position that seems to think that a 40-hour workweek is somehow too much to ask…which simply seems out of touch with the 21st century global work environment.

    One MNB user wrote:

    Your coverage and take on news blurbs lately does increasingly paint you as anti union. Middle class is crunched these days - don't think that the working class is not feeling that pain exponentially more so. Yet you express amazement that the workers fight to keep benefits, pay and working conditions. Sheep behavior is encouraged and in mode now big-time, thus no surprise you think they should sit back and take it because they are lucky to have jobs. I believe that thought process works exceptionally well for Chinese sweat shops, why not apply to all workers! Take a strong look at the disparity of the earnings ratios in the corporate ranks over the past decade or so. They will illustrate who are the lucky ones.

    I’m not defending corporate bigwigs who exploit their employees. Far from it. I believe strongly, as I’ve written here before, that the best businesses are structured so that employees feel that they have skin in the game, so that there is not too much disparity between senior executives and lower level employees. (I subscribe to Jim Donald’s dictum, that senior executives should never think they are bigger than the people on the front lines.)

    But I also think that having skin in the game means being willing to work harder and longer. And I have trouble with the notion that five eight-hour workdays is somehow an onerous demand. They shouldn't make less money for taking on more hours, and I’m not supporting the idea of 16-hour-a-day sweatshops. But that’s not what’s being proposed there.

    Another MNB user wrote:

    If the financial crisis has shown us anything, it is that private industry management needs some flexibility. In a unionized shop, that flexibility goes away with the long-term contract and rigid work rules. Revenues go up and they go down... especially recently. If you can’t adjust your expenses to respond, you end up like General Motors or Stella D’oro. The management of this venerable baked goods company got its flexibility to lower manufacturing costs. But it took a year, change of ownership, and moving of manufacturing facilities to another location. It would have been a lot simpler (and more efficient) if there had been some give by the workers. Given that this saga replays itself frequently maybe there needs to be a new approach. Maybe US manufacturing should act like the NFL and offer a % of revenues to labor with a salary cap.

    Be careful what you wish for. A lot of people believe that the NFL may be headed for a labor stoppage next year.
    KC's View:

    Published on: September 11, 2009

    In the opening game of the National Football League season, the Pittsburgh Steelers defeated the Tennessee Titans 13-10 in overtime.
    KC's View:

    Published on: September 11, 2009

    Today, we remember 9-11.

    Eight years ago, after that terrible tragedy punctuated a clear late summer day and forever draped the numbers “9-11” in melancholia, it seemed as if the one positive to emerge from the rubble was sense of connection – with each other, and to much of the rest of the world.

    Today, it seems to me that this has been squandered. The hyperbole, hysteria, and the lack of civil discourse capture much of the attention, but also signal deep divisions in our society. We can't even get along with each other.

    It’s like we remember the date, but not the meaning, not the underlying importance.




    There was an interesting story in the Minneapolis Star Tribune about how clothing retailer Abercrombie & Fitch has been forced by the Minnesota Department of Human Rights to write a check for $115, 264 to settle a discrimination suit.

    According to the story, the fine relates to a 2005 case in which the store prevented an older sister from helping her 14-year-old autistic sister try on clothes in the dressing room of the company’s Mall of America unit. The paper writes that the case took four years to resolve because “the retailing giant refused to apologize for the incident and even questioned whether the girl was disabled.”

    "She was singled out and required to hear her sister and mother repeatedly ask for accommodations based on her disability, in front of a long line of customers, at a store that markets itself to young people as a purveyor of a particularly desirable 'look,'" administrative law judge Kathleen D. Sheehy wrote in her ruling.

    Ugly stuff. And dumb. All at the same time.

    First of all, the case reflects a larger issue of which retailers need to be aware. They need to be vigilant about all acts of discrimination in the stores not just because they are wrong, but also because when they happen, they can be amplified in the 24/7 news media and over the Internet. And when your people make a mistake, you apologize and make amends quickly … as opposed to what Abercrombie did.

    It isn’t just people with physical and mental challenges. It also is people who are Muslim. Or African American. Or Hispanic. Or whatever.

    The customer base in almost all places is more diverse than ever…and getting more so, every day. Retailers need to be aware of the trend and its implications.




    I have to say that I was a little offended when I read in Time the other day about a new website called PeopleofWalmart.com, which is designed to catalog what they call the “absurd attire” typical of some Walmart shoppers. There is, for example, a woman in pink velour sweatpants and black cowboy boots, another guy carrying a parrot, one wearing a Captain America outfit.

    Now, having checked out the site, I have to admit that some of it is funny, and some is pretty horrifying. I’m also a little shamed of myself for having looked, because there is a cruel subtext to the site. They say that they won’t post pictures of disabled people, or Walmart employees doing their jobs. But that seems small comfort.

    I’m no saint when it comes to mockery. I’m perfectly capable of it. But this is cruelty for cruelty’s sake that says more about the people who put it together than the people it ridicules.




    Interesting marketing move by Netflix, which announced this week that it will host a 70th anniversary celebration of the release of The Wizard of Oz with a special free showing in New York’s Central Park, preceded by a concert of songs from the movie given by, among other people, Jennifer Hudson.

    Not only can people see the movie for free in Central Park on September 29, but on October 3, they can watch it for free online … which is a good way of promoting its downloading service.

    One note. The Wizard of Oz is hardly the only movie celebrating a 70th anniversary this year – 1939 was a banner year for movies, during which some of the best movies ever made were released. Among them, Gone With The Wind, Goodbye, Mr. Chips, Gunga Din, Mr. Smith Goes To Washington, Ninotchka, Stagecoach, The Hound of the Baskervilles, Wuthering Heights, and Young Mr. Lincoln.

    Just FYI.




    New on my iPod: the new John Fogerty album, “The Blue Ridge Rangers Rides Again,” which consists of charming covers of old songs, including “Garden Party” and “When Will I Be Loved.” Fogerty’s voice remains one of my favorite things to listen to, and both Bruce Springsteen and Don Henley add their vocals to the proceedings. Great stuff.




    I had a lot of time while on vacation last week, so I decided to check out an episode or two of “Firefly,” the old Joss Whedon science fiction series that lasted about 14 episodes on Fox back in 2002. My sons are both enormous fans of the series, and have been trying to get me to watch it…so I figured I’d give it a quick look.

    And got utterly hooked. “Firefly,” if you like this sort of thing, is a terrific series set 500 years in the future, and is an endearing mix of western and sci-fi…it has a unique voice, an irreverent attitude, quirky performances from the likes of Nathan Fillion, and a story arc that is fascinating. Enough people got hooked on the show that even though it was cancelled, they actually made a feature film, “Serenity,” which carries the plot forward and kept me on the edge of my seat for much of the time.

    I’m an enormous Trekker, but I have to say that after 14 episodes of “Firefly” and a viewing of “Serenity,” I can also say, in the jargon of the series, that I’m also a Browncoat.

    Great way to spend a vacation. (Especially because the Mets are impossible to watch.)




    Last time out, I recommended Hey Mambo, a 2006 “Bistro Style” wine that is a blend of Sauvignon Blanc, Viognier, Muscat Canelli, and Chenin Blanc.

    Well, I’m back to tell you that the Hey Mambo 2007 “Bistro Style” Sultry Red wine - made from a blend of Syrah, Barbera, Zinfandel, Petite Sirah, Malbec, and Alicante Bouchet – is equally terrific…smooth, and wonderful with spicy food or even just a thick, juicy cheeseburger. Wonderful.




    That’s it for this week. Have a great weekend, and I’ll see you Monday.




    Sláinte!!
    KC's View: