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    Published on: October 21, 2009

    by Kate McMahon


    “Tastelessness that beats the others cold, Pepsi pours it on …”

    That tweet, a takeoff on one of Pepsi’s classic slogans, sums up the cyber-reaction to a crude “fratire” iPhone application about scoring with women that has landed the national beverage brand in a Twitter-storm of protest.

    The new iPhone app -- titled “AMP UP Before You Score” – promotes Pepsi’s Amp energy drink, targeted toward young males. It tells guys how to score with 24 “types” – such as Sorority Girl, Cougar, Rebound Chick and Goth – and provides pickup lines and links to resources for the effort.

    As if that boorish attempt at humor wasn’t bad enough, the app then suggests users share their conquest results via Twitter or Facebook: "Get lucky? Add her to your Brag List. You can include a name, date and whatever details you remember."

    Reaction was fast and furious, and further proof that social networking is drastically changing the way America does business. Just a year ago I would have scoffed if you told me I would be using the terms iPhone app, Twitter and Pepsi in the same sentence, and now they are the makings of a national media story.

    The initial internet outrage about the app was reported on the social media site mashable.com last week with the headline: “Alienate your female customers? Pepsi has an app for that.” After the story broke, the number of free downloads jumped by more than 75,000.

    The parent brand jumped in and responded via Twitter: “Our app tried 2 show the humorous lengths guys go 2 pick up women. We apologize if it’s in bad taste & appreciate your feedback.”

    “If” it’s in bad taste? Please.

    It’s beyond bad taste. It’s inexcusable. And the “apology” lacks any credence whatsoever since Pepsi did not choose to pull the app from circulation. A spokeswoman was quoted as saying “the application was designed to entertain and appeal to Amp’s target. We’ll continue to monitor the feedback from all parties and act accordingly.”

    Oh, yes, they got plenty of feedback, including some 100,000 viewings of an ad for the app on YouTube and thousands of tweets. The Twitter community assigns a searchable “hash tag” – the symbol # before a word or phrase -- to commentary for purposes of re-tweeting and sharing comments on a story. And interestingly, Pepsi/Amp chose to include the hashtag #pepsifail to its apology, which further linked parent company Pepsi to the ruckus.

    The app was deemed “sexist,” “ridiculously offensive” and “an insult to half of your customers.” Many were angry that Pepsi failed to pull the app: "To apologize for the Amp campaign but not remove the app yet - is GROSS” and “Words are cheap - until they pull the app, ‘Coke is it!’” Not all of the comments were negative: “Dear Pepsi: You app is genius and hysterical” and “People need to get over themselves … Don’t tell me girls don’t joke around like this either.”

    There were several online debates about whether Pepsi and Amp set out to cause a tempest to raise awareness of the Amp brand. One post called it “a great and gutsy stunt” and another wrote “I am willing to bet that the marketing department at Pepsi is jumping up and down, high fives all around.”

    Adding to the irony, the top executive at PepsiCo is a 53-year-old woman with two daughters, which prompted this posting: “Until Amp app removed, I’m guessing PepsiCo CEO Indra Nooyi advising her daughters to avoid boys with iPhones.”

    And I’m stunned she didn’t insist the company “act accordingly” and pull the offending app out of circulation.

    You can reach Kate McMahon via email at kate@morningnewsbeat.com .
    KC's View:
    This is vile stuff, and it is unfathomable to me that Pepsi didn’t immediately order this app taken down. Forget about the fact that the CEO has two daughters; there must be other people in the company who have girls at home and who are offended by this kind of crap.

    In fact, it shouldn’t take having a daughter to be offended. I’d be appalled if I found out my sons were engaging in this kind of discourse about women...though to call it “discourse” is to grant it far too much dignity.

    Published on: October 21, 2009

    The Great Atlantic & Pacific Tea Co. (A&P) yesterday said that Eric Claus, the company’s president/CEO, has resigned, as it announced financial results that included sales that were down for the second quarter to $2.1 billion from $2.2 billion during the same period a year ago, same-store sales that were down 3.8 percent, and a loss from continuing operations of $62.2 million (which it said included “a $50.0 million increase in non cash mark to market adjustments related to financial liabilities) compared to a loss of $4.3 million during the same period a year ago.

    In his prepared statement, company executive chairman Christian Haub said, in part: "The current challenging economy continues to impact our business. The macro headwinds including rising unemployment, intensifying price competition and now also deflation are creating an even more difficult short-term economic environment. Nonetheless, we have made progress in several of our formats and many of our initiatives.

    “Our legacy business which is mainly comprised of our Fresh, Discount and Gourmet stores experienced negative same stores sales in the quarter but through tight expense control and stronger margins produced positive year over year segment income. Our Price Impact or Pathmark business continues to struggle as we experienced negative same store sales and negative year over year segment income. We have been making the difficult choices for the short term, such as improving our retail pricing, and will continue to work on lowering our expenses, enhancing our customer service and improve our overall brand image of this key format ... We believe that once the economy improves these strategies will position us well to realize the tremendous strategic value of the company and to capitalize on our leadership position in the Northeast."

    Haub, who reportedly will serve as interim CEO while a search is conducted for Claus's replacement, added: "I would like to thank Eric Claus for his contributions to our Company during his tenure at A&P and wish him well in his future endeavors."
    KC's View:
    To be honest, I was shocked by this news...and it takes a lot to shock me these days.

    Granted, A&P was having a tough time as Eric Claus tried to reposition the company with a multi-format strategy during a recession that was wreaking havoc on many of the communities that the company serves in the northeastern US.

    And Pathmark, to be sure, was like an anchor tied to the company’s balance sheet.

    But I am surprised.

    Now, to be honest, I have to say that I like Eric Claus a lot. He’s always been forthright with me, and strikes me as a stand-up guy with an enormous amount of passion for the business. So I cannot be entirely objective here.

    That said, he also seemed to have generated a lot of goodwill within the company and, best I could tell, seemed on track with his goals if somewhat frustrated by the perfect storm of circumstances that made things a lot harder than he would have liked.

    Let’s not forget that Eric Claus ran A&P’s successful and profitable Canadian operations before the company sold them off and brought him to the US in 2005 to take over a very troubled chain. It isn’t like he is less skilled and passionate now than he was then, and it isn’t like he’s been pursuing a strategy that was unknown to the board of directors.

    It is hard to know what role Yucaipa, the private equity form that has been putting money into A&P might have played in this. That’s why this seems like it is about something else other than performance.

    One other quick note. Is A&P maintaining that Eric Claus has somehow been outperformed by Christian Haub through all of A&P’s struggles? hard to imagine. Of course, Eric Claus isn;t a member of the family that owns the company that owns much of A&P...so he’s safe and apparently not accountable.

    All of which simply suggests that life isn’t fair.

    Though Eric Claus can come work for MorningNewsBeat anytime.

    Published on: October 21, 2009

    The New York Times reports this morning that the US Food and Drug Administration (FDA) will propose new standards early next year for companies to follow when developing nutrition labels that go on the front of packages.

    The announcement comes after a controversy erupted over the use by Kellogg’s of the Smart Choices label on its Froot Loops sugared cereal, not to mention other foods not generally considered to be nutritious, and is seen as a direct challenge to the validity of the program, which was developed both by health organizations and manufacturers.

    According to the story, the new rules “could force manufacturers to deliver the bad news with the good, putting an end to a common practice in which manufacturers boast on package fronts about some components, such as vitamins or fiber, while ignoring less appealing ingredients, like added sugar or unhealthy fats.

    FDA Commissioner Dr. Margaret Hamburg said that “it is clear that at the present time this vast array of different approaches is adding confusion rather than clarity. We believe we can offer important benefits in terms of developing the science- and nutrition-based criteria for the use of dietary guidance claims.”

    Pamela G. Bailey, president/CEO of the Grocery Manufacturers Association (GMA), released a statement saying that “we look forward to working with the FDA to determine what nutrition information is most useful in providing consumers with the tools they need to help them build a healthful diet.”
    KC's View:
    The FDA had no choice but to do this. And while the Smart Choices folks seem confident when they say they are comfortable with their ratings, it is hard to imagine that they aren’t sweating just a little bit right now. And they should. Because it seems to me that they have made some poor choices. They deserve whatever happens to them.

    Published on: October 21, 2009

    The National Retail Federation (NRF) is out with its annual Holiday Consumer Intentions and Actions Survey, which indicates that “consumers plan to spend an average of $682.74 on holiday-related shopping, a 3.2 percent drop from last year’s $705.01.”

    According to the report, “two-thirds of Americans (65.3%) say the economy will affect their holiday plans this year, with the majority of these consumers saying they’re adjusting by simply spending less (84.2%). People will also be shopping for sales more often (55.0%), using more coupons (41.7%) and putting up last year’s decorations (34.0%). Many Americans will also make changes in gift-giving, planning to buy more practical gifts (36.0%), buying a joint gift for kids or parents (17.3%), and making more gifts (16.7%). Additionally, more than one-fourth of Americans (28.6%) say the economy is forcing them to travel less or not at all for the holidays.”
    KC's View:

    Published on: October 21, 2009

    Emarketer.com reports on a Harris Interactive survey saying that 42 percent of Americans between the ages of 18 and 34, and 33 percent of those between the ages of 35 and 44, “are at least somewhat interested in receiving opt-in mobile alerts from their favorite places. Among respondents who would opt in to location-based alerts on their mobile phones, more than one-half were interested in messages from restaurants, followed by movie and event tickets, weather, and clearance sales.”
    KC's View:

    Published on: October 21, 2009

    The Sacramento Bee reports that Walmart will begin a long term test in some of its California stores of either charging 15 centers for shopping bags, unless customers bring their own. The story notes that the company has “a goal of cutting plastic bag usage 33 percent by 2013. Now, at selected stores around the world, the company is testing ways to deliver that reduction, from retraining baggers to pack sacks fuller to giving shoppers who bring their own bags access to designated checkout lines.”
    KC's View:

    Published on: October 21, 2009

    • The Denver Business Journal reports that the resumption of negotiations between Colorado’s major grocery chains and members of organized labor has not resulted in any closing of the gap between the two sides, and the union now says it plans to strike “soon” if no progress can be reached. The definition of “soon” was not specified.

    • The Dallas Morning News reports that Safeway-owned Tom Thumb “says it's cutting prices on thousands of items beginning today to become a ‘more affordable and convenient one-stop-shopping experience.‘ The Texas division, which includes Tom Thumb in North Texas and Randalls supermarkets in Houston and Austin, is one of the last of 10 U.S. divisions to adopt Safeway's everyday-low-prices strategy.

    • Sprouts Farmers Market announced that it will open its ninth Dallas location and 42nd store overall when it unveils a 22,488-square-foot unit in Cedar Hill this Friday.

    • The Arizona Republic reports that Bashas’ plans to reopen the Goodyear, Arizona, store that it closed just two weeks ago as part of its Chapter 11 bankruptcy filing. It is the only one of 23 announced closings by Bashas’ expected to be reversed, and management said it could do so because of real estate concessions and local shopper support.
    KC's View:

    Published on: October 21, 2009

    • Supervalu said yesterday that its second quarter profit was down 42 percent to $74 million, from $128 million during the same period a year ago. Q2 revenue was down 7.5 percent to $9.46 billion.
    KC's View:

    Published on: October 21, 2009

    MNB took note yesterday of a USA Today report on planned new US Food and Drug Administration (FDA) regulations that will require that oysters harvested during warm weather months be “post-harvest processed” to kill the deadly bacteria vibrio vulnificus, which is more evident in osyeres harvested between May and October. As a result, oysters will become harder...though not impossible...to find during the summer.

    However, we should have pointed out that these new regulations would apply only to Gulf Coast oysters - not the ones from the East Coast or Pacific Northwest.

    Which means that maybe we can all still have oysters and beer for dinner every day of the year, and feel fine...
    KC's View:

    Published on: October 21, 2009

    Dr. No has said goodbye.

    Joseph Wiseman, a distinguished New York stage actor for decades who is probably best known for playing the nefarious villain Dr. No in the first James Bond movie of the same name, died Monday at age 91.
    KC's View:

    Published on: October 21, 2009

    ...will return.
    KC's View:

    Published on: October 21, 2009

    In the American League Championship Series, the New York Yankees pulverized the Los Angeles Angels 10-1, and now leads the best-of-seven series 3-1.
    KC's View: