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    Published on: February 22, 2010

    The March issue of The Atlantic has a piece by food writer Corby Kummer in which he compares the food offerings at Walmart and Whole Foods ... and comes up with what to some will be a surprising conclusion - that in many cases Walmart’s fresh produce was as good or better than Whole Foods’, and certainly less expensive.

    Advantage, Walmart.

    Some excerpts:

    • “I started looking into how and why Walmart could be plausibly competing with Whole Foods, and found that its produce-buying had evolved beyond organics, to a virtually unknown program - one that could do more to encourage small and medium-size American farms than any number of well-meaning nonprofits, or the U.S. Department of Agriculture ... The program, which Walmart calls Heritage Agriculture, will encourage farms within a day’s drive of one of its warehouses to grow crops that now take days to arrive in trucks from states like Florida and California. In many cases the crops once flourished in the places where Walmart is encouraging their revival, but vanished because of Big Agriculture competition.”

    • “As with most Walmart programs, the clear impetus is to claim a share of consumer spending: first for organics, now for locally grown food. But buying local food is often harder than buying organic. The obstacles for both small farm and big store are many: how much a relatively small farmer can grow and how reliably, given short growing seasons; how to charge a competitive price when the farmer’s expenses are so much higher than those of industrial farms; and how to get produce from farm to warehouse.”

    • “Walmart says it wants to revive local economies and communities that lost out when agriculture became centralized in large states. (The heirloom varieties beloved by foodies lost out at the same time, but so far they’re not a focus of Walmart’s program.) This would be something like bringing the once-flourishing silk and wool trades back to my hometown of Rockville, Connecticut. It’s not something you expect from Walmart, which is better known for destroying local economies than for rebuilding them.

    “As everyone who sells to or buys from (or, notoriously, works for) Walmart knows, price is where every consideration begins and ends. Even if the price Walmart pays for local produce is slightly higher than what it would pay large growers, savings in transport and the ability to order smaller quantities at a time can make up the difference. Contracting directly with farmers, which Walmart intends to do in the future as much as possible, can help eliminate middlemen, who sometimes misrepresent prices.”

    • “In an ideal world, people would buy their food directly from the people who grew or caught it, or grow and catch it themselves. But most people can’t do that. If there were a Walmart closer to where I live, I would probably shop there. Most important, the vast majority of Walmarts carry a large range of affordable fresh fruits and vegetables. And Walmarts serve many ‘food deserts,’ in large cities and rural areas - ironically including farm areas. I’m not sure I’m convinced that the world’s largest retailer is set on rebuilding local economies it had a hand in destroying, if not literally, then in effect. But I’m convinced that if it wants to, a ruthlessly well-run mechanism can bring fruits and vegetables back to land where they once flourished, and deliver them to the people who need them most.”
    KC's View:
    It has long been the contention around here that Walmart could and should be the engine that attacks food deserts around the nation...it offers the company enormous opportunity in terms of locations and market share, not to mention public relations. And, we’ve long argued that Walmart could have an enormous impact on popularizing natural and organic foods in a way that almost nobody else can.

    The next step will be to have Walmart execs hanging out with First Lady Michelle Obama and supporting her efforts to fight childhood obesity and bring better, healthier foods to poorer neighborhoods. Just watch.

    Published on: February 22, 2010

    It didn’t take long.

    Last week, it was reported that Ukrop’s longtime policy of allowing nonprofits and charities to solicit outside its stores has been reversed by Ahold-owned Martin’s Food Markets, which is absorbing the 25 Ukrop’s units acquired by Ahold and its Giant of Carlisle division. The decision was said to be in line with a longtime Martin’s policy, but a major shift for Ukrop’s, which enabled the fundraising as part of its much vaunted commitment to the local community. Affected will be organizations like the Salvation Army and the Girl Scouts.

    Well, over the weekend, the following press release was circulated:

    “United Food & Commercial Workers Local 400 and its members employed at Kroger are inviting Girl Scouts to sell cookies in front of Kroger's Virginia stores in the wake of Ahold/Martin's decision to end Ukrop's tradition of holding Girl Scout cookie sales at their stores in Richmond, Va.

    Upon learning of Ahold/Martin's reversal of Ukrop's policy, as well as its longtime prohibition on Girl Scout cookie sales in its other Virginia stores, UFCW Local 400 officials and members agreed to welcome the Girl Scouts with open arms. They also committed to buying the first 100 boxes of cookies at a Kroger location in Virginia where Girl Scouts conduct sales.”

    "This really highlights the difference between a community-oriented, family-owned business and a multinational corporation where foreign executives call the shots with no knowledge of local traditions," said Local 400 Secretary/Treasurer Tom McNutt. "Customers can decide whether to spend their hard-earned food dollars on a company that's only interested in making a profit and one that believes in supporting its communities and the people it serves."
    KC's View:
    Ahold has given the competition the opening, and expect a whole bunch of folks to run through it.

    I remain skeptical that this was a smart move by Ahold/Martin’s. It just doesn’t seem to have enough upside.

    Published on: February 22, 2010

    Reuters reports that the Obama administration has promised to provide $400 million for a Healthy Food Financing Initiative, “which is modeled on a successful Pennsylvania program that in the last five years has led to more than 80 supermarkets being set up in ‘food deserts’ - areas that were previously underserved by sellers of healthy food.” Included in the support is $250 million in tax credits “to encourage food retailers to set up food stores in areas that would not otherwise be served by supermarkets.”

    According to the story, “First Lady Michelle Obama said the new national program aims to eliminate food deserts - where the only food sources are typically convenience stores or gas stations - in the next seven years,” and she said “the program is needed to work alongside efforts to improve the quality of food in schools, and to educate the public in healthy eating.”
    KC's View:

    Published on: February 22, 2010

    Fascinating piece in the Boston Globe over the weekend about a company called Harvest Power, which has pulled together $40 million in funding from venture capital firms in order to create a business that will turn leftover food from homes, restaurants and supermarkets into compost, electricity, natural gas, or steam for heating.

    Harvest Power, which is based in Waltham, Massachusetts, “is set to begin building its first energy-producing plant in Vancouver, Canada, later this year, and is proposing another for San Jose, Calif.,” the Globe writes, continuing, “In Vancouver, Harvest bought an existing 22-acre facility that was already producing compost from food and yard waste. It will add what are called anaerobic digesters. In an airless chamber, lawn trimmings and food scraps are mixed with a variety of bacteria, which first break the material into acids, and then turn the acids into methane, the main component of natural gas. The methane can be used to fuel a combined heat and power system, which generates electricity and also heats water or produces steam. The methane can also be transformed into compressed natural gas, which is useful as a vehicle fuel.”
    KC's View:
    I’m always in awe of this sort of stuff. It is so far beyond my ability to understand ... and idea that people who recycle waste into energy and fuel is just fascinating. It will no doubt require us all to sort of change the way we think about things...but it certainly seems worthwhile.

    The other good news - this is designed to be private enterprise, which should generate jobs, and avoid going on the public dole. So everybody should be happy.

    Published on: February 22, 2010

    In Pennsylvania, the Beaver County Times reports that Tops Friendly Markets, which has acquired Penn Traffic’s 79 supermarkets, plans to close four of them - in Hornell, New York; in Clarion and Blairsville, Pennsylvania; and in Bradford, Vermont.

    According to the story, “In making the announcement, Tops cited economic viability, current store conditions and the ability for the stores to compete in the marketplace.”
    KC's View:

    Published on: February 22, 2010

    Good piece in the Sacramento Bee about Blockbuster, which the paper notes is “battling financial losses, layoffs and fierce competition from Netflix, Apple, Sony, Google, Microsoft and others,” and now “is betting its survival on a slew of new technologies designed to make it easy to watch movies wherever and however you want. From DVD rental kiosks to streaming video over the Internet to your TV or cellphone to downloading movies to memory cards at a store, Blockbuster isn't just throwing concepts against the wall to see what sticks. It's practically using a machine gun to fire off new ideas.”

    Here’s the salient comment: "If you think of a movie, we'll get it for you," says Bruce Anderson, senior vice president and general manager of Blockbuster OnDemand.
    KC's View:
    I’ve been pretty critical of Blockbuster over the years, and I suppose that you can still make the argument that these efforts are too little, too late. That said, the “if you think of a movie, we'll get it for you” mantra strikes me as the right way to go...though it has to be matched to some sort of strategic vision for the company and not just a series of tactics.

    Published on: February 22, 2010

    Reuters reports that Wal-Mart de Mexico “will use a small supermarket format aimed at low income customers to drive its expansion in 2010...the company is also set to increase its bank branches by 88 percent, said Chief Executive Scot Rank.”

    Of the 300 stores that will be opened this year, the story says, “186 will be the Bodega Aurrera Express, a format it launched last year.”
    KC's View:
    It was just last week that Walmart’s Asda Group in the UK announced the same sort of initiative...with 100 small format stores planned for the next three to five years. Wonder if or when this concept will find its way to the US?

    Published on: February 22, 2010

    • Tesco announced that its US Fresh & Easy Neighborhood Market division is moving into a different neighborhood - South Los Angeles, a so-called “food desert” - where it will open a store at Adams and Central this Wednesday, living up to a commitment made when Tesco first announced that it would be coming to the US.

    According to the announcement, “A study conducted by CB Richard Ellis shows that the South Los Angeles area is in need of grocery, dining and entertainment businesses to service the growing, diverse community.   Residents would have to travel as far as 10 miles for better retail options.  Research also points out that there is a $400 million dollar sales leakage for food and entertainment retail in what amounts to about nine square miles.  The new Fresh & Easy Neighborhood Market on Central & Adams hopes to contribute to the need in the area and in turn provide fresh, quality foods at affordable prices to residents.”
    KC's View:

    Published on: February 22, 2010

    • The San Jose Business Journal reports that some 450 janitors employed by four janitorial service contractors and who work at Safeway stores in Northern California have come to a tentative agreement for a new contract. Terms of the deal were not disclosed, but the agreement averted a threatened strike vote by the janitors.

    • In Illinois, the Daily Herald reports that Jewel-Osco “plans to cut 110 store directors to change its management structure,” a move that it hopes will make it more efficient and competitive. Spokesperson Karen May tells the paper that “historically, Jewel-Osco has operated its retail locations with two store directors, one to manage the Jewel food side of the business and another to handle Osco drug operations. The company will move to a new structure in which the standard will include a single store director who is responsible for the entire store operation."

    • The Hartford Courant reports that “about 500 unionized Stop & Shop workers in Connecticut this morning authorized a strike, but the union said there will be no walkout for at least another week.” Negotiations broke down over the weekend as the existing contract expired, but the two sides plan to resume talks on Tuesday and agreed to extend the contract through next weekend.

    • The Business Courier of Cincinnati reports that Procter & Gamble CEO Bob McDonald told investors last week that the company “will introduce technological enhancement for some of its best-known brands in coming months. According to the Wall Street Journal story about the same conference, “ “the chief executive touted the pipeline of new products P&G will roll out over the coming months, saying there will be 30% more launches in the company's main product categories and key countries than in the year before, and the most in his 30-year career at the company.”
    KC's View:

    Published on: February 22, 2010

    • The Charlotte Business Journal reports that Alan Dickson, co-founder with his brother Stuart Dickson of Ruddick Corp., parent company of Harris Teeter, has retired from the company’s board. He helped to found the company in 1968, was president of Ruddick until 1994, and then chairman until 2006.
    KC's View:

    Published on: February 22, 2010

    Responding to my criticism last week of some folks out in Utah who think that simply eliminating the 12th grade might be a nice way to save the government some money, MNB user Ted File wrote:

    The comment about Utah and the senator who suggested dropping the 12th grade did raise hundreds of eyebrows in the state.   You pointed out one result but there are many other negatives such as: what about the affect of athletics and opportunities for scholarships to college; missing the senior proms and many other activities;  where would they find jobs .... especially when no one is hiring (with exception of Stop n Go burgers).    Bottom line it is not the way to handle the money issues faced by all school districts in Utah.

    You’re right. I never considered the senior prom issue.

    MNB user Dave Hanneman wrote:

    I wanted to give you a possible insight into the Utah proposal to eliminate 12th grade. We had the opportunity to live out there for a few years in the mid-90's. As I'm sure you're aware, Utah (especially outside the Salt Lake City valley) is nearly a Mormon church state. What you might not be aware of is that nearly all of those Mormon students will head out on a 2-year church mission between high school and college. That's why you see BYU quarterbacks and point guards who are married with kids and pushing 30 years old!

    Anyway, their thinking could be that this allows their kids to get started on their missions a year earlier and back to BYU before their athletic careers are all washed up.


    I also never considered the gridiron angle.

    This is why I love MNB. It makes me think of stuff I never considered before.




    We had a piece last week about how Bob Moore, founder of Bob’s Red Mill Natural Foods, 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.

    I just thought this was kind of cool, which is why I wrote about it.

    MNB user Rosemary Fifield responded:

    Not sure if you are aware of it, but King Arthur Flour in Norwich, Vermont, is a highly successful ESOP and has been for at least 10 years, I believe.

    MNB user John Quinn wrote:

    MNB user Chris Connolly wrote:

    After a decade in this business, I have seen ESOPs that were set up with the best of intentions by the business owner, but in the  end there was not a clear leader or group of leaders within the business who were able to keep the company headed down the right path.   The business owner(s) may have had a benevolent spirit, but the employees didn't have the talent within their ranks to keep things running after the sale was completed. 

    I think it's a wonderful story and has tremendous potential for the future growth and success of the firm……if they have the right people in leadership positions.


    Another MNB user wrote:

    You should check out Daymon Worldwide! The original founder of Daymon Worldwide did exactly the same thing a few years back. Now the employees own over ½ of the company stock. Milt Sender felt that it was important that the people who built the business should be the ones to profit from it. He is a very generous man.

    And another MNB user wrote:

    Just FYI...Daymon Worldwide - the giant Private Label company in Stamford has a similar program - not sure that's "public knowledge" but Milt Sender put a similar program in place there and it has instilled incredible loyalty amongst the employees. Just thought you'd be interested…..

    Fins up!


    And another MNB user wrote:

    Certainly Bob Moore's giving his Red Mill Natural Foods to his employees via an ESOP was very generous, but I believe there are some very attractive tax incentives involved as well. Anyone in his situation would be well advised to look into that.  It often is a true win-win situation (except for the U.S. Treasury).




    We took note on Friday of a piece in Crain’s Chicago Business reporting 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.

    My comment: 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.


    One MNB user didn’t think I was giving MillerCoors enough credit:

    It’s ok that you think the objection is disingenuous, but give a look here:  www.greatbeergreatresponsibility.com Specifically, the Alcohol Responsibility page within the site.  MillerCoors has had a stand of promoting responsible drinking for some time.  And even goes as far to put the reminder on the packaging.

    But MNB user Stephanie Rasor wrote:

    Right on, this is disingenuous!  I’m sure Miller Coors understands that beer pong, quarters, and a myriad of card drinking games are not accompanied with a Sierra Nevada or Deschutes beer.  No, you need a nice easy drinking Miller Lite or Bud Light.  The drinkability is akin to a Pellegrino and the low alcohol content allows competitors to still be standing at the end of the tournament.

    Look, I wasn’t doubting MillerCoors’ commitment to responsible drinking. I was just saying that at some level, beer pong has to be good for business...and they know it.

    MNB user Steve Lutz wrote:

    Amen, Kevin.   However, at least at the university where my son is attending school the beer pong game has been indelibly changed by the H1N1 flu virus.  Over the past year after the flu hammered the campus I saw a distinct shift in my trips to campus.  There are no longer half-full cups of beer on the table to be chugged when a ping pong ball is tossed into your cup.  Way too unsanitary.  Now, they use cups of water that are used over and over.  The beer is  now off to the side.  It’s still consumed…just not from a cup that has just had a dirty ping pong ball dropped in it.  Who says college doesn’t teach kids to adapt to changing circumstances.

    That’s why they call it higher education.




    On another (liquid) subject, MNB user Dan Jones wrote:

    Your acknowledgement of Washington’s Birthday and National Margarita Day was extremely well balanced.  You may end up editing the 2011 Publix calendar!

    That’s what I was thinking.

    Now, I have two words for you:

    Tequila Pong!
     



    Chiming in on our ongoing discussion about my piece last week about “who killed American exceptionalism,” MNB user Jeff Hays wrote:

    Could someone please tell me what this country would do without OIL, and it
    suddenly "dried up" and was gone? C’mon man. It will be American Exceptionalism that eventually brings this country to a new clean form of energy. In the meantime greenies and progressives need to keep their left foot planted in the present moment. Why in the world would any entrepreneur take the risk of developing ANYTHING new and innovative in this anti-business climate? Why put up a "shingle" when you know the EPA, environmentalists and the unions, who operate without discretion and oversight, are going to slap you and your business with all kinds of B. S. Not to mention the fact that the current administration and the puppets in the congress are STILL pushing unpopular legislation that will hurt consumers and business. Let's look at government "Stealth Care" (I mean health care reform), "Cap and Tax" (I mean a comprehensive energy bill), and more "Porkulous Bills" (I mean a jobs bill) as just a "small obstacle" to creating more American Exceptionalism. This is about as transparent as a plastic shopping bag.


    I read an email like this, and I cannot help but start to hum a song...

    Some things in life are bad
    They can really make you mad
    Other things just make you swear and curse.
    When you're chewing on life's gristle
    Don't grumble, give a whistle
    And this'll help things turn out for the best...

    And...always look on the bright side of life...
    Always look on the light side of life...

    If life seems jolly rotten
    There's something you've forgotten
    And that's to laugh and smile and dance and sing.
    When you're feeling in the dumps
    Don't be silly chumps
    Just purse your lips and whistle - that's the thing.

    And...always look on the bright side of life...
    Always look on the light side of life...

    KC's View: