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    Published on: February 19, 2010

    The New York Times this morning reports that Scripps Networks, owner of the hugely successful Food Network, plans to launch a new Cooking Channel on Memorial Day 2010. The company already has announced a number of series starring Food Network veterans such as Emeril Lagasse, Bobby Flay and Rachael Ray.

    According to the Times, “The craving for food programming is insatiable, Scripps executives like to say ... The ratings were up markedly for the Food Network last year, and shows set in kitchens have flourished on other channels. ... As the Food Network’s ratings have risen, its definition of success for new shows has changed accordingly, squeezing out space for niche shows. That is where programmers at the Cooking Channel say their opportunity lies. The new channel will have room for programs about alcoholic beverages, brunch, low-calorie eating, and food history, among other topics. A broad range of instructional shows during the day will give way to more shows driven by storytelling at night.”
    KC's View:
    If the folks at Scripps are right - and I think they are - they are continuing to lead the way on a trend on which many more food stores ought to be capitalizing. It has been one of MNB’s mantras from the beginning - that in order to be relevant, food stores ought to be not just a source of product, but a resource for information.

    Retailers have to be careful not to be like Steve Martin’s Dr. Michael Hfuhruhurr in Carl Reiner’s “The Man with Two Brains,” in which he prays for a sign that from his deceased wife that he should not marry the bad news bombshell played by Kathleen Turner...and then ignores a whole barrage of signs because he really wants to do what he wants to do.

    Scripps is providing a sign. If you are in the food business, you ought to pay attention.

    Published on: February 19, 2010

    There was a remarkable story in The Oregonian about Bob Moore, founder of Bob’s Red Mill Natural Foods, a $24 million company. Thirty-two years ago, Moore began building a company that reflected his “love of healthful eating and old-world technologies,” creating more than 400 kinds of stone-ground flours, cereals and bread mixes sold all overt the world.

    This week, Moore turned 81. Instead of getting a gift, he gave one - he unveiled an Employee Stock Ownership Program which means that the entire business is now owned by the people who work there. In doing so, he turned his back on a steady flow of offers from people and larger companies that wanted to buy his business. (Moore isn’t quitting or retiring; he plans to keep running the business into the foreseeable future.)

    The paper writes that “Moore said he began thinking about succession about nine years ago. He'd heard about employee-stock-option programs and got much more serious about the idea three years ago ... An employee stock-ownership plan, or ESOP, is a retirement plan in which the company contributes its stock to the plan to be held in trust for the benefit of its employees. The stock is never bought or held directly.

    “Vested employees are sent annual reports detailing their respective stakes in the company. When those employees quit or retire, they receive in cash whatever amount they - and the company, through increased revenues, new sales and controlled costs - are due.”
    KC's View:
    I know this is an isolated incident, and one should not expect to see this business model replicated with any frequency. But it is nice to see when a business leader does something that puts a tangible value on the importance of employees, creating a legacy of people and bettered lives that will persist long into the future.

    Published on: February 19, 2010

    The Minneapolis Star Tribune has a snippet from an investor call conducted by Whole Foods co-president/COO Walter Robb, in which he argues that organic food growth is going to continue, despite the impact of the recession:

    “Organic remains a strong part of the business, and I think the trend association just released new data on the size of the organic industry at $26 billion for the growth rate of 5 to 6 percent. Our own internal numbers show very clearly that. And you can look at the Nielsen numbers too - organic dollars and units, while they're down from historical double-digit results, are still well ahead of conventional growth rates.”
    KC's View:

    Published on: February 19, 2010

    Fast Company reports that Unilever-owned Ben & Jerry’s has announced a plan to go fully Fair Trade by 2013, which “means all of the 121 chunks and swirls and 11 base ingredients (banana, vanilla, cocoa, etc.) found in Ben & Jerry's ice cream will come from Fair Trade Certified sources--no small feat.

    “The company became the first ice cream maker to offer Fair Trade Certified products in 2005. At this point, certified flavors include Chocolate, Vanilla and Coffee Heath Bar Crunch. Once Ben & Jerry's entire range of flavors goes Fair Trade, ice cream lovers can be assured that the farmers behind their Chubby Hubby and Phish Food are earning a fair income and using sustainable growing practices.”
    KC's View:
    Good for them.

    Published on: February 19, 2010

    Crain’s Chicago Business reports that Miller Coors is suing a company called PB&J Design, saying that it was making beer pong tables with a logo that resembles the Miller Lite logo. In addition to charging the company with trademark infringement, MillerCoors also says that PB&J is promoting irresponsible drinking.

    "MillerCoors has taken steps to promote responsible drinking and has worked with the community and its local distributors to help the consuming public understand the importance of drinking responsibility,” the lawsuit states.
    KC's View:
    Okay, I get the trademark infringement part.

    I’m not doubting the sincerity of MillerCoors’ commitment to legal and responsible drinking. But objecting to beer pong on moral grounds seems just a little disingenuous to me. It reminds me of Major Renault in Casablanca saying that he is “shocked, shocked to find that gambling is going on in here!” And then is handed his winnings by a croupier.

    Published on: February 19, 2010

    • The Sacramento Bee reports that the California State Senate has “passed a bill requiring Amazon.com and other online retailers to charge sales taxes on purchases in California,” a move that could generate an additional $107 million annually for the financially strapped state.

    However, Gov. Arnold Schwarzenegger has pledged to veto the bill if it makes it to his desk on the grounds that new taxes will hurt both business and consumers.

    This seems to be something of an incipient trend. Just yesterday, MNB noted that reports that the Virginia State Senate easily passed legislation that would require online retailers to collect a five percent state sales tax and sent the bill to the House of Delegates; if it passes there, it is not considered likely to be signed by Gov. Bob McDonnell, who recently won election by vowing to veto any new taxes.
    KC's View:
    One of these days, an internet sales tax is going to be signed by a governor. And maybe a logjam will be broken.

    Not that this is a good thing.

    Published on: February 19, 2010

    • The Los Angeles Times reports that Frederick Scott Salyer, the former owner of SK Foods, has been indicted on racketeering and other corruption-related charges. He is accused of what the Times describes as “a decade-long scheme to quash competition and sell tomato products at inflated prices -- a practice that led to consumers paying more at the grocery store.” According to the story, Salyer “was arrested at John F. Kennedy International Airport in New York on Feb. 5 after he got off a plane from Switzerland. He is expected to appear in federal court in Sacramento next week for a bail hearing and plans to plead not guilty to the charges.”

    • Ahold-owned Stop & Shop and Giant of Landover reportedly launching new Web sites targeting mothers, called smallvictories.com. The site will be updated daily with new content such as recipes, money-saving advice and other tips, much of it from other mothers. It is an extension of Small Victories, a customer publication that Stop & Shop launched last summer.
    KC's View:

    Published on: February 19, 2010

    • The Lubbock Avalanche Journal reports that Robert Taylor, who was named interim CEO at United Supermarkets after the resignation of Dan Sanders, has now been given the job permanently, and has seen the words “executive vice president” added to his title.

    Taylor previously served as vice president of logistics at United before the Sanders resignation.
    KC's View:

    Published on: February 19, 2010

    • Unified Grocers announced first quarter net earnings of $3.7 million, compared to $3.9 million during the same quarter a year ago. Q1 net sales were reported to be $1 billion, down 4.3 percent from a year ago.

    • France-based retailer Carrefour said that its annual profit in 2009 was down 74 percent to the equivalent of $444 million (US), on sales that were down one percent to $117.9 billion (US). The company blamed restructuring charges for its poor profit performance.

    According to the company, the sales decrease was attributable “primarily to the general economic conditions, including a shift in customer demand towards lower cost items. In addition, approximately $12.4 million of the reduction in sales was due to the shift of the New
    Year's holiday from the second quarter of fiscal 2009 to the first quarter of fiscal 2010 ... The decrease in sales was partially offset by additional sales of $8.7 million in the Company's specialty foods subsidiary.”

    • Hormel announced that its first-quarter profit increased to $111.2 million, from $81.4 million a year earlier. Q1 sales were $1.73 billion, up 2.3 percent.
    KC's View:

    Published on: February 19, 2010

    Published reports say that some 12 wine merchants and vintners have been convicted in a French court for passing off Merlot and Syrah grapes as Pinot Noir grapes between January 2006 and March 2008.
    KC's View:
    Heads on pikes! That’s what these monsters deserve.

    Published on: February 19, 2010

    Responding to yesterday’s column, “Who Killed American Exceptionalism?”, one MNB user wrote:

    I saw your comments on the High Speed rail. To put things in perspective the US has roughly $13B ear-marked for high-speed rail over the next 5 years, while China will spend $300B over the next 10 years on similar projects.

    Wishing that we'd have spent more of the $850B stimulus package on tangible infrastructure that would serve us well over the next 50 years. China sees the future clearly and is investing in it.....


    Another MMNB user wrote:

    You must note that the exceptionalism you talk about is related to politics, i.e., it was the oil executives (excuse me they were President and Vice-President) who led us to the false reasons for invading Iraq. It was for oil (old thinking). And the electric car was killed in the 1990's because the oil industry did not want to become obsolete. Of course other innovations are allowed to move forward because they do not effect the political system (the ones in power) the same way, like Microsoft and Apple. They are outside of the political power structure as it exists. The old way of thinking has always struggles to stay afloat until circumstances force it out of the way.

    Perhaps this quote sums it up the best: "You never change things by fighting the existing reality.  To change something, build a new model that makes the existing model obsolete." --- R. Buckminster Fuller


    MNB user Richard Evans chimed in:

    Good piece on American Exceptionalism in Thursday's MNB, however, a few points to make.

    It has been proven the only way it is cost efficient for electric transportation to operate is in mass transit (ie. trans and rail cars) Otherwise, just as you mention the electric grid being overloaded, it still takes fuel to provide the electricity to charge the cars.

    This is not as efficient as you might imagine, although, it is clean.

    This is the true advantage, not a reduction in fuel consumption.

    An electric generating station can furnish more power at a lower cost both economically and environmentally than on a per vehicle basis.


    This may be true, but even if it is, I would add two words:

    So far.

    MNB user Gerry Buckles disagreed with some of my conclusions:

    You’re kidding, right? These two examples are evidence of why you feel we as a country are not exceptional? The two areas you cited appear to be more personal than practical. The obvious reasons why we have not pursued these areas and why some countries have would require too much time and energy to enumerate. The debate on this will be entertaining and you are always a good sport about that. I’ve got to go now, I think my car has enough of a charge to get me to the light rail station...




    On the subject of changes (like not allowing charities to solicit on sidewalks in front of stores) being made at Ukrop’s - now that it has been sold to Ahold and will be operated by that company’s Martin’s banner - one MNB user wrote:

    You seem to have a thing against any of Ahold's banners.

    I think this is a great idea and I applaud this.  Thank you!  I'm excited for Martins to come to this area as they have beautiful stores along with great prices and services.

    Changes were needed at Ukrop’s otherwise the family would still own it.  Yes this company was great for us customers and did a lot for charities, but that's also why they had to sell the family name because these programs never made them enough money to be the number one player in this area.  I'm sure Ahold will lose customers (Ukrop’s loyal) but they will gain a lot more in the long run and make A LOT more money then Ukrop’s ever did because of these changes.

    Parts of that article you failed to mention were the following....

    Worthy said he was not surprised when Martin's notified the Salvation Army of the chain's policy late last year. For instance, retailer Target banned Salvation Army kettles from all of its stores nationwide a couple of years ago."We expected this because more and more stores are implementing these policies. As far as the Salvation Army is concerned, we're comfortable with the decision that's been made," Worthy said.  He added that Martin's parent company has been good to the Salvation Army in other markets, so "we're not worried."


    MNB user Steve Methvin wrote:

    This debate could go a long time...the two most undefined words in retail are "community" and "loyal". If Ukrops had "loyal" customers these changes may never have happened and if the "community" had supported Ukrops - the scouts would still have a sidewalk to stand on...

    True. Sad but true.

    But I still think Ahold and Martin’s are thinking about their own needs, and not like customers.
    KC's View:

    Published on: February 19, 2010

    Now here’s something I simply do not understand.

    There was a story in the Los Angeles Times the other day about how there is some debate in the state of Utah about the possibility eliminating the 12th grade from the state’s high schools. The thinking behind the proposal is that most seniors fritter away the year and don;t enjoy it; the cold fact behind the proposal is that the move would save the state a lot of money and put a dent in its $700 million budget deficit.

    Now, it doesn’t mean that these kids would miss an entire year of high school. If I’m reading the story correctly, it just means that they’d theoretically get four years of learning done in three years.

    But it simply doesn’t make sense.

    At age 17, most kids are not ready for college. They’re also not ready to face the real world if they don’t go to college.

    Somehow, this proposal reflects the problem with education. More and more, school systems and state education departments are approaching problems with a jam it in, get it done, save some money philosophy that does not respect the critical nature of education in a global environment that demands more knowledge and understanding, not less.

    To follow through on this Utah proposal, it seems to me, would be classic tactical thinking that would ignore the importance of strategic imperatives.




    More on the Michael Sansolo snowblower saga...

    You should not that after Michael’s two columns bemoaning the fact that as the snow fell on Washington, DC, he was sitting there with a snowblower in his garage that he could not get to work. (He used this situation as a metaphor for business planning..or lack of it.)

    Well, one of the unique things about the MNB community is how many of you sent Michael suggestions for how to fix the snowblower...some complicated, some easy, but all offered with heartfelt concern.

    He tried a few things, and then went to an auto parts store for advice. This is what happened, in Michael’s own words:

    Based on a recommendation from an employee in the store, I went back to work on the snow blower.  He suggested I ignore the instruction to prime the engine with three pumps and give it 20 pumps instead.

    I did and the snowblower kicked on...for one second.

    I did it again and got to two seconds.

    Then I primed it four more times and wonder or wonders, the machine came back to life.

    Of course the snow is so melted and heavy now that it actually pulled my gutters off the house, and the snowblower is pretty much useless for the moment.

    But it is working. And now that it is, it also means Washington will never have snow again!


    I just keeping thinking about Michael’s poor wife, who had to deal with shoveling much of the snow while he was traveling around the country to much warmer climes. All he had to do was tell her to prime the damned engine 24 times, and the snowblower would have solved all her troubles...

    But he didn’t.

    If I’d made that mistake with Mrs. Content Guy, the results would not have been pretty.




    Now here’s a story that caught me completely by surprise.

    The Los Angeles Times reports that the West Hollywood City Council has approved legislation prohibiting pet stores there from selling dogs and cats. The odd thing is, the Council didn’t have to do it...because there are almost no pet stores there that actually sell dogs and cats.

    The reason? Animal activists have been successful in lobbying against the sale of such pets on the grounds that they usually come from so-called “puppy mills” and “kitten factories” that mass produce the animals with little concern for their care, health or breeding. Many of these pets end up in shelters and being euthanized...and, in fact, between three and four million cats and dogs are euthanized each year in the US.

    And so, a national movement is beginning to grow that is trying to put these breeding factories out of business.

    I find this fascinating. And I had no idea.

    That’s the great thing about this job. I learn something every day.




    I also didn’t know this until a few days ago:

    Next Monday, February 22, is National Margarita Day.

    Need I say more?

    However, because I don’t want to be slammed for being unpatriotic, it should also be pointed out that February 22 also is George Washington’s birthday. His 278th birthday, to be exact.

    So have a margarita. And raise a toast to George.




    I’ve had a chance to catch up on some movies over the past week, and saw a couple of terrific ones.

    Crazy Heart is the new movie starring Jeff Bridges as Bad Blake, a down-on-his-luck country singer who finds himself driving around the southwest playing hole-in-the-wall venues, drinking and smoking himself into a near stupor as he is simultaneously consumed by bitterness and lethargy. This kind of character could almost be a stereotype, except that Bridges - simply one of the best actors in the history of American film - invests him with a kind of real wounded dignity that is palpable; when his Bad Blake is onscreen, you can practically smell the tobacco and bourbon, the portrayal is that vivid.

    The script and direction by Scott Cooper avoids sentimentality as it explores a relationship that Blake has with a writer and single mom played by the luminous Maggie Gyllenhaal; their connection is so fragile that it catches Blake by surprise...and yet the level of his personal dysfunction is so deep that his ability to connect with this person is severely compromised. And the songs, mostly performed by Bridges - an accomplished musician in real life - are wonderful, advancing the plot and illuminating character at every turn.

    There’s are great cameos by Robert Duvall and Colin Farrell (who shows off some nice pipes as a younger country star who was mentored by Blake and now has become a much bigger star). But the magnetic center of this film is Bridges, who is as good as he’s ever been - and that’s saying something.

    When you watch his performance in Crazy Heart, you almost certainly are watching the guy who is going to win the Best Actor Oscar this year.



    When I watched Quentin Tarantino’s Inglourious Basterds, I wasn’t sure what to expect. He’s a major director, though an erratic one. And I can find myself loving certain parts of his movies, while hating other parts.

    Inglourious Basterds, which is marginally about a fictional all-Jewish commando squad sent to Germany during World War II to hunt and kill Nazis, is no different. And yet, I could not take my eyes off it. There are parts that are too long, but then again there are set pieces - like the entire first section of the movie - that are almost unbearably tense and have almost a Hitchcockian quality. And what I really loved about this film was that it seemed utterly fearless. Also quirky, bizarre, sometimes off-putting, funny, disturbing, and outrageous. But mostly fearless.

    I recommend it highly. But it is not for the faint of heart.



    I also saw The Hangover. I thought it was funny, though not the groundbreaking laugh riot that some people seemed to think it was. Though maybe I’m just getting old...




    My wine of the week is the 2007 Point Break North Coast Red Wine from Longboard Vineyards. It’s got some Syrah, Cabernet Sauvignon, Carignane and Zinfandel...and they all blend into a delicious wine. Enjoy...and thank me later.




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

    Slainte!
    KC's View: