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    Published on: July 9, 2010

    USA Today reports that Johnson & Johnson is expanding its recall of Tylenol, Motrin and other over-the-counter drugs said to have a musty, moldy smell.

    According to the story, “The company has already made a large recall of those drugs and over-the-counter products, saying about 70 people noticed the smell. Some of them got sick, with symptoms including nausea, stomach pain, vomiting and diarrhea. The odor was linked to a chemical in shipping pallets and traced to a facility in Puerto Rico. The company had planned to stop shipping those products on wooden pallets treated with the chemical, and asked its suppliers to do the same.”

    The continuing recalls by J&J - which seem to be linked to a lack of internal quality control, and have caused sales of the company’s pain reliever pills to drop by 56 percent in the four weeks ending June 13 compared to the same period a year earlier, according to SymphonyIRI Group - are seen to have severely damaged the credibility of a company that set the standard for recalls with its Tylenol recall in the early eighties.
    KC's View:
    Maybe shareholders should get top management from J&J together with top management from Toyota, and ship them off to Devil’s Island or something. Because sometimes it feels like these folks have no clue.

    Important lesson, I think. It was not that long ago that both companies were perceived as being examples of extraordinary leadership. Recent events show that “legendary” is a word used to describe the past. You have to re-earn that description every day. No excuses. No exceptions.

    Published on: July 9, 2010

    The Wall Street Journal reports this morning that “a report originally due to Congress July 15 outlining a set of voluntary standards for marketing foods and beverages to children has been delayed, and it isn't yet clear when it will be completed, according to people familiar with the work.”

    No reason for the delay has been given, though there are some who say that they believe that the standards are too strict, which may have given the report’s authors pause.

    The report has been developed by officials from various federal agencies, and a draft was circulated late last year that proposed various voluntary standards for the nutritional content of foods being marketed to kids. Before going to Congress, there was supposed to be a period of public comment - but the standards have not been formally released, so there has been no public comment and no delivery to Congress.
    KC's View:
    I guess it is a good thing if unreasonable standards - even voluntary ones - are not put into place. But man, sometimes it seems like the wheels of government grind exceedingly slow ...

    Published on: July 9, 2010

    Wine Spectator reports that while “past studies have found that resveratrol, a polyphenolic compound found abundantly in red wine and grapes, helps reduce inflammation of the arteries,” new research “finds the chemical lowers blood-vessel growth in the eye, thereby reducing symptoms associated with the leading causes of blindness.”

    According to the story, “Researchers at the ophthalmology department at Washington University in St. Louis working with pharmacologists at R.W. Johnson medical school in New Jersey found that resveratrol, when administered in high doses, helps block the formation of new blood vessels, called angiogenesis, in mouse retinas. Angiogenesis in healthy patients is normally balanced, but when vessels grow out of control, the result is symptomatic of several cancers as well as age-related diseases such as diabetic blindness and macular degeneration.”
    KC's View:
    Y’know, it wasn’t that long ago that I went to the eye doctor and discovered that the keratoconus in my left eye actually has gotten a little less severe, which apparently is sort of unusual. Now we know why - it is all the resveratrol in my system.

    Published on: July 9, 2010

    The World Health Organization has, according to an Associated Press report, “set the first global limits for melamine contamination in food and infant formula ... The threshold for infant milk formula was set at 1 milligram per kilogram, equivalent to the U.S. limit of 1 part per million.”

    The limits were set because of recent melamine contamination found in infant formula made in China, which sickened more than a quarter-million children and killed at least six infants. “The limits still allow for the occurrence of very low levels of melamine in food that stem from the use of the insecticide cyromazine and from contact with plastic dishes and some table top services,” the story says.
    KC's View:
    I hate to be a purist about this, but at some level I find this story to be really disturbing. Just the idea that infants are ingesting melamine and cyromazine “from contact with plastic dishes” just seems so wrong. Maybe there’s nothing we can do about it, but that is hard to believe.

    Published on: July 9, 2010

    The Seattle Times reports that Borders plans to launch its own e-bookstore, and that it is more interested in “selling books that can be used across multiple platforms rather than just one device,” as opposed to Amazon and Barnes & Noble, which have focused on proprietary devices such as the Kindle and the Nook.

    The store reportedly will have more than 1.5 million titles that will be available for a variety of e-readers. In addition to an online presence, the e-bookstore will be promoted in Borders’ bricks-and-mortar locations.
    KC's View:
    I’m not sure if this gives Borders any sort of differential advantage, but at least it gets the troubled retailer into the game. The problem, of course, is that Borders seems to have fewer and fewer advantages that it can offer shoppers, which makes it less and less relevant in the marketplace.

    Published on: July 9, 2010

    The Boston Globe reports this morning that “four months after more than 300 warehouse workers at Shaw's Supermarkets Inc. walked off their jobs, they have reached an agreement with the supermarket chain over pay and health benefits.”

    The affected employees ratified a new four-year contract ending the strike that began on March 8. According to the story, “Shaw's spokeswoman Rebekah Fawcett said the agreement includes wage increases and higher contributions to the employee health plan from workers and the company, but said that she could not release the new figures. Fawcett said retirement benefits would not change under terms of the agreement.”
    KC's View:

    Published on: July 9, 2010

    • Wakefern Food Corp. announced today that a new member – Kenneth Thompson – has joined its retail cooperative and will own and operate a new ShopRite store at 1121 Jerusalem Avenue in Uniondale, NY.  The store is scheduled to open later this year.

    Thompson is a forty-five year supermarket industry veteran, having most recently served as senior vice president of operations at Penn Traffic. Prior to that, he was president of Waldbaum’s supermarkets from 2004-2006.

    • The Associated Press reports that the state of Pennsylvania is testing a new concept in wine sales - vending machines that allow people to swipe their drivers’ licenses, blow into a breath sensor, and then buy a bottle of wine using a credit card. The kiosks are being tested inside two supermarkets, and if successful, could lead to its expansion throughout the state.

    • The Organic Trade Association (OTA) has called on the U.S. Departments of Agriculture (USDA) and Health & Human Services (HHS) to encourage those seeking to minimize their exposure to toxic chemicals to buy foods with the USDA Organic label.

    In testimony before the federal panel making recommendations in revisions to current organic guidelines, OTA CEO Christine Bushway said that current recommendations note that “our current understanding of conventional and organically produced foods indicate that their nutritional value and contributions to human health are similar.”

    “These conclusions are neither grounded in current science nor relevant to the mandate of the Dietary Guidelines,” Bushway said, adding, “It is inconceivable and alarming that the very document that is the under pinning of our nation’s policies regarding food and nutrition would include a statement that directly contradicts these recommendations and certainly does not meet the stated goals of the committee to speak with ‘one nutrition voice’.”

    • The Chicago Sun-Times reports that “CVS is doubling the amount of nonperishable food it sells in 11 Chicago stores, while Walgreen is introducing fresh fruits, vegetables and new meal ingredients to 10 of its stores inside Chicago's food deserts, where healthy food choices are scarce. The CVS pharmacies in Chicago are among 3,000 nationwide being converted to offer shoppers more convenience items such as Hamburger Helper, Old El Paso dinner kits, household staples such as honey and vinegar, and other items targeting busy people who want to grab dinner ingredients on the way home.”

    KamCity reports that “union workers at Loblaw’s outlets in Ontario have voted to give their leaders authorization to call a strike against the retailer. The unions complained of a lack of progress in contract negotiations with the supermarket giant. Around 1,600 workers in Windsor, Chatham and Sarnia have already voted in favour of strike authorization, with members in Ottawa scheduled to vote on Sunday. The vote does not guarantee a strike, however, as negotiations between Loblaw and local unions continue this month.”

    KamCity reports that Carrefour is denying numerous press reports that it plans to sell its Singapore and Malaysia operations, releasing a statement that says, in part: “Carrefour Malaysia and Singapore denies any store closure in Malaysia and in Singapore, reminding that it is business as usual for every store. In 2010 itself, four Carrefour hypermarkets have been newly opened in Malaysia and another four additional hypermarkets are slated to be opened by year end.”
    KC's View:

    Published on: July 9, 2010

    • The Food Marketing Institute (FMI) announced the recent promotion of Jennifer Hatcher, who has been serving as FMI’s group vice president of government relations, to Senior Vice President, Government and Public Affairs. She will continue to direct all federal and state public affairs outreach work for the nation’s leading supermarket industry trade association. She reports to Leslie G. Sarasin, president and chief executive officer, FMI.
    KC's View:

    Published on: July 9, 2010

    MNB yesterday took note of a Los Angeles Times report that California Gov. Arnold Schwarzenegger has signed legislation requiring “that eggs sold in California come from hens that are not crammed into cages. The law requires all eggs sold in the state as of Jan. 1, 2015, to come from hens able to stand up, fully extend their limbs, lie down and fully extend their wings without touching each other or the sides of cages.”

    We also noted that the Humane Society of the United States has been supporting the legislation.

    Lots of reaction to this one.

    From one MNB reader:

    Wow, be ready for over $5.00 per dozen commodity eggs. This may be a good move to protect the egg producers in California but this is doing nothing for the consumers in California and is in effect moving a great source of protein out of their reach. The HSUS is trying to change everyone to vegans, whether we want to or not.
    Another MNB reader observed:

    The left coast wonders why business is leaving the great state of California; this bill will put the producers at a cost disadvantage to compete in the egg business. The large producers will either close up shop or relocate to another business friendly state. Will California wake up before it is too late?

    MNB user Ron Kelleher wrote:

    Now what Californians need is an advocacy group as effective as the Humane Society to protect us from the state legislature!

    And, from another MNB reader:

    Maybe the Terminator and the Obamantor can get this same law passed for people flying on airplanes! Just fully extending my legs would be helpful.

    On another subject - SKU rationalization - MNB user Jim Swoboda offered the following thoughts:

    One of yours and my favorite company, Apple, is a perfect model for efficient assortment.  Consider the following points:

    Apple...Each year, they discontinue the BEST selling music player in the world and replace it with a new model, improved and more highly coveted.

    Typical CPG...innovate a new an improved product that may or may not be more highly coveted, introduce it AND KEEP THE OLD product on the shelf.

    Apple...limit the SKU proliferation to just a few colors arguably needed as the old Model T approach, you can have it in any color you want as long as it is black, does not work in today's world.  The only other choice is amount of memory.

    Typical CPG...add four sizes, maybe five; four scents, one with added benefit X, another with added benefit Y and pretty soon, that one item has 30 different SKU's.

    Our retailers are bombarded with too many selections in sizes, colors, scents, attributes because the game is to monopolize shelf space.  Apple's approach is minimalistic, a few great items that consumers covet and an environment where the consumer can feel, touch, play, experience the product.

    Clearly selling electronics is different, but there are many aspects to their model that could, and maybe even should be, adopted by our industry.

    KC's View:

    Published on: July 9, 2010

    Basketball star and free agent LeBron James announced yesterday on a one-hour ESPN special that he will sign with the Miami Heat, departing the Cleveland Cavaliers to join fellow All Stars Dwyane Wade and Chris Bosh in South Beach.
    KC's View:
    To be honest, while I watched the ESPN special last night, it was more out of morbid fascination with the media feeding frenzy than it was out of any interest in where James will play. I simply don’t give a damn, though I was sort of rooting for Cleveland to keep its home-town star.

    However, my interest in this story got a lot greater with the open letter to fans written by Dan Gilbert, majority owner of the Cavaliers, on the team’s website. This letter, which pledged to bring a championship home to Cleveland before LeBron James wins anything, also was a wonderful example of naked bitterness of the kind one rarely sees on display. Gilbert wrote, in part:

    As you now know, our former hero, who grew up in the very region that he deserted this evening, is no longer a Cleveland Cavalier.

    This was announced with a several day, narcissistic, self-promotional build-up culminating with a national TV special of his "decision" unlike anything ever "witnessed" in the history of sports and probably the history of entertainment ... There is so much more to tell you about the events of the recent past and our more than exciting future. Over the next several days and weeks, we will be communicating much of that to you.

    You simply don't deserve this kind of cowardly betrayal ... This shocking act of disloyalty from our home grown "chosen one" sends the exact opposite lesson of what we would want our children to learn. And "who" we would want them to grow-up to become.


    Now, I’m not sure that bitterness is a lesson we want to teach our kids, either. But Gilbert makes a good point - that the LeBron James spectacle was all about ego gratification, not about a team sport. ()Which is sort of odd, because James actually seems to be a good guy with his heart in the right place.)

    I’m not sure that James owed Cleveland anything ... but he certainly could have had the decency of leaving the Cavaliers without all the spectacle, without them finding out on national television. The whole thing left a bad taste in my mouth, and while I would hope that kids would see through the nonsense, I suspect that they saw a lot there to emulate.

    Too bad.

    Published on: July 9, 2010

    Let’s give the “Emotional Maturity Award” to Best Buy CEO Brian Dunn, who said this week that he would not fire the Missouri store employee who made fun of the company and its customers in a series of videos posted on his website and on YouTube.

    According to the Star Tribune, the videos made by Brian Maupin mocked what he perceived to be as blind and mindless trend followers in their allegiance to smart phones. Several mentioned Best Buy, but several did not. The ones that mentioned his employer have been taken down, while the others remain.

    In a statement on his blog, CEO Dunn wrote that the "diverse experiences, opinions, passions and beliefs" of its workers are "vital to our future growth,:” but added: "At the same time, we need to let our company's values guide us in matters that directly involve Best Buy, our employees, customers and shareholders. The videos in question did not illustrate 'humility, respect and integrity,' and that's unacceptable to me, our customers and our employees. We are a values-based organization and I'm relentless on issues or situations that contradict our values."

    Best Buy said that Maupin would not be fired, and that it is "important for us because it involved balancing our social media guidelines with a commitment to creating a supportive environment for our employees ... We're always looking at how our social media can evolve as technology and channels evolve.”

    Ironically, Maupin is saying that he may take a leave of absence to consider his options before returning to work.

    I believe that Best Buy is taking precisely the correct approach - drawing the line on what is acceptable and what is not, but acknowledging that technology and modern communication tools create new situations that have to be evaluated in context. Better to keep this guy on the payroll and figure out how to adapt his talents for the company’s good than just fire him and potentially create a bigger problem.

    Good for Brian Dunn for realizing that this is business, not personal ... and that some of the rules of good business are changing. That kind of emotional maturity is not always shared by other people in corporate executive suites.

    I really liked the interview that the New York Times did the other day with Linda Heasley, CEO of The Limited, in which she said the following about her approach to team-building:

    “I believe that my associates can work anywhere they want, and my job is to re-recruit them every day and give them a reason to choose to work for us and for me as opposed to anybody else.

    “So it’s about making it fun. It’s about making it exciting. It’s about keeping them marketable. I encourage people: ‘Go out and find out what the market bears. You should do that and then come back and help me figure out what you need in your development that you’re not getting, because we owe you that.’

    “I’ve been told by my associates that’s a countercultural approach to leadership: ‘You’re telling me to go look for another job?’ But my point is that I should be able to re-recruit them. I should be able to get them convinced that this is the best opportunity for them. That’s my philosophy.”

    Again, a remarkable level of emotional maturity emanating from the executive suite.

    Too many senior executives believe that they owe their employees nothing other than a job and a paycheck ... and that especially in the current economic environment, people should just be thrilled to have a job.

    At some level, that may be true. But Heasley gets big points in my book for believing that it is part of her job to 1) create an environment that nurtures and grows great employees, and 2) re-recruit her employees regularly, convincing them that The Limited is the best place to realize their potential.

    Good for her. She sounds like she’d be a terrific person to work for.

    I have to be honest. I am less that thrilled with some of the changes made at the Wall Street Journal since it was taken over by Rupert Murdoch. It just seems to me that some of the distinct and differential advantages that the Journal used to have are being watered down. But, hey, what do I know?

    Of this I am sure, however. If there is one thing that I miss in the new Journal, it is the weekly wine column by Dorothy J. Gaiter and John Brecher that ran for 12 years until being discontinued, for no apparent reason, last December.

    Gaiter and Brecher were entertaining writers who made wine accessible, and let readers see how wine intertwined with their lives. We got to know them, we got to know their kids, and we got a real sense for how wine can make life special. And they created a real legacy by urging people to “open that bottle” one night a year, to celebrate wine by uncorking that one bottle sitting in the rack waiting to be enjoyed.

    It has been more than six months, but I continue to miss Gaiter and Brecher. A lot. The Journal is diminished by their absence, as are those of us who enjoyed them for a dozen years.

    Readers on MNB know thatI have been an enormous fan of Robert B. Parker, author of the Spenser series, who died earlier this year of a heart attack at age 77.

    There was a lovely piece in the New York Times about his widow, Joan H. Parker, entitled “Death and the Private Eye,” which looked at how she was coping with the demise of her spouse of more than five decades. The piece describes the familiar outlines of their unconventional marriage, but also reveals that Parker had suffered from heart disease for years, and that he actually seemed to suffer from a kind of depression as he realized the end was near, even as he continued to turn out 10 pages a day and published three novels a year.

    Great piece. You can read it here.

    In Parker’s honor, I have a beer to recommend to you this week: Palm Ale from Belgium, which is simply wonderful - refreshing and delicious.

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

    Fins Up!
    KC's View: