business news in context, analysis with attitude

Published on: May 11, 2012

by Kevin Coupe

Yesterday I had the opportunity to venture into what, for me, is foreign territory - Wall Street - when I attended the 2012 Goldman Sachs Consumer Products Symposium to listen to some of the presentations and attend a post-symposium reception where Boston Beer CEO Jim Koch would be serving Samuel Adams beer. I've always wanted to meet Koch, and so I hopped a train and a subway and headed down to Goldman Sachs' fabulous new building (which next door to the under-construction One World Trade Center, already New York's tallest building even though it is not all the way up yet).

To me, there were three Eye-Openers about which I would like to report:

• In a discussion about private label, Brian Sharoff of the Private Label Manufacturers Association (PLMA) made a comment that, I think, may require some reconsideration. In speaking about the benefits that private label products offer to retailers, he said that when buying Coca-Cola, one has to deal with Coca-Cola. But if one wants to purchase a private label item to sell in one's store, if one does not like the terms of the deal or the product itself, one can turn to the plethora of other manufacturers that are out there.

At the risk of disagreeing with one of the people who has helped to drive private label consciousness in the US, it seemed to me that this actually runs counter to the way people ought to be thinking about private label.

Part of the transition from "private label" to "private brand" has required defining these products as definable, distinctive, unique and providing retailers with differential advantages that cannot be acquired elsewhere. To my mind, though, if you have a manufacturer that makes a product - let's say, a private brand chocolate chip cookie - and you have problems coming to terms with that supplier, you can't just go find another supplier ... because another supplier won't make the same cookie the same way.

Now, there probably are some categories where it matters less than others. But for private brands to really continue making strides in terms of market share penetration and public consciousness, content has to be seen as being at least as important as the label. At least, IMHO.

• This may go without saying, but I also walked away from the Symposium thinking that Joe Tripodi, executive vice president and chief marketing and commercial officer at Coca-Cola, is really, really smart. The presentation that he gave about how Coke has created a holistic and integrated marketing program around the upcoming London Olympics was fascinating ... especially because he described the Olympics themselves as a tactical way to achieve a greater strategy - connecting with youth.

Tripodi also said that while most of the people in the room would think of the initials "EPS" as standing for earnings per share, these days Coca-Cola thinks of those initials as standing for the creation of Economic Shared Value, Partnership Shared Value, and Social Shared Value ... and that it is in finding and building such shared value that the company will have sustained and sustainable growth.

• Finally, I thought the way Tripodi described the Olympics as a means to an end - rather than an end themselves - was highly persuasive and sophisticated, and I love it when people make distinctions between strategy and tactics. Which is exactly what Boston Beer's Jim Koch did during the post-Symposium reception. While he was being pressed by some of the financial types in the room about short-term things he could do to generate cash or build value, Koch made it very clear that he wasn't interested. "I don't worry about quarters," he said. "I worry about where the company is going to be 10 years from now."

Koch did celebrate at the Symposium the fact that Samuel Adams has reached the point where the brand represents one percent of the total US beer market ... but he kept it in perspective. "It means that after 28 years of working my ass off ... we've gone from infinitesimal to tiny to small."

I'll drink to that.

Published on: May 11, 2012

The Los Angeles Times reports that the American Meat Institute (AMI) said that the usage of "meat glue," described as a "binding agent often used to patch together pieces of beef and other protein," is not only safe, but also approved by the US Department of Agriculture (USDA).

However, AMI also said that the law requires that when used at retail, meat glue has to be noted on labels, and that it is "patently illegal" to use it to bind together high quality cuts with lower quality meats.

Meat glue is not usually disclosed when it is used in products sold in restaurants and other foodservice businesses, AMI said.

The story suggests that since the meat glue controversy came up so quickly after a new case of mad cow disease was reported and the use of "pink slime" was decried by so many retailers, AMI wanted to get out in front of this controversy before it got any traction.

Published on: May 11, 2012

The New York Times reports that the Obama administration and the chairman of the Federal Trade Commission (FTC) are pushing the US Congress " to enact online privacy legislation, saying new laws would level the playing field between companies that already had privacy policies and those that lacked them, and thus escape regulatory oversight ... Currently, the FTC monitors whether Internet companies that have privacy policies keep their promises to consumers about when and where they will share personal information. But the commission lacks the authority to assess penalties for most transgressions, and it has little authority over how companies operate when they have no written privacy rules."

The administration wants the Congress to enact new laws and give the FTC "the power to enforce them with civil penalties would promote Internet commerce by increasing the trust that Americans put in online transactions."

There is some resistance to new legislation because of fear that expanded government power could inhibit business growth.

Published on: May 11, 2012

Internet Retailer reports on a new comScore study saying that "online retail sales increased about 16.6% in the first quarter, to nearly $44.3 billion compared with $38.0 billion for the same period on 2011 ... The Q1 spending marks the tenth consecutive quarter of positive year-over-year growth and sixth consecutive quarter of double-digit growth, the web measurement firm says."

 “While the economic recovery continues to be painfully slow, the channel shift to e-commerce appears to be accelerating,” comScore chairman Gian Fulgoni tells Internet Retailer. “This presents opportunities but also challenges for bricks-and-mortar retailers if they can’t hold onto their offline market share in the digital world.”

Published on: May 11, 2012

Bloomberg Business Week reports that while the mobile food preparation business - also known as food trucks - has "increased 15 percent over five years to make up 37 percent of the $1.4 billion of U.S. street vending revenue in 2011," the growth also has created greater "concern about safe food handling by regulators and complaints by restaurants without wheels."

Among the responses cited in the story:

"New York is weighing letter grades that reflect inspection histories, and Boston now requires healthier menu items to be sold. A proposal in Washington to mandate shorter operating hours than restaurants at night has sparked a petition drive in protest, and California lawmakers faced a backlash in March over a pitch to ban roving eateries near schools in an effort to prevent children from buying less nutritious food."

To reduce the arguments down to the basics, the argument is that illnesses traced back to food trucks have grown in number over the past few years, though, to be fair, the number of food trucks also has grown. Cities don't seem to have enough inspectors to handle the growth and the demand it creates, and it is tough - at this point in the nation's economic history - to come up with the funding to support expanded inspections.

Published on: May 11, 2012

• Harris Teeter said yesterday that it is "significantly changing its mobile application, both improving existing functions and introducing new features to make it easier for shoppers to use their Smartphone to organize their grocery shopping ... The newest version of ht mobile shows vast improvement to not only the visual aspects of the application but the technology behind it as well."

Among the improved offerings: an "updated shopping list, offering access to personalized e-VIC specials and Favorites, the ability to save e-VIC coupons, bar code scanning technology and auto complete search capabilities," plus "seamless integration with your desktop shopping list," text message notification, and the "ability to refill or transfer prescriptions using a Harris Teeter pharmacy."

Published on: May 11, 2012

USA Today reports that the Physicians Committee for Responsible Medicine, which promotes not just what it calls "higher standards of ethics and effectiveness in research," but also advocates veganism as a way of life, has filed a petition with the White House calling for "an executive order banning staged official photo ops that depict the president, the first family, the vice president, and members of the president's cabinet with unhealthful foods including processed meats that can cause cancer and obesity."

According to the story, "Since taking office, President Obama has posed for the cameras in staged events eating hot dogs at a basketball game with British Prime Minister David Cameron; serving sausages with Mr. Cameron; taking a motorcade with the vice president to Ray's Hell Burger in Virginia; eating cheeseburgers with Russian President Dmitry Medvedev; and stopping at a D.C. burger restaurant with a reporter, among other similar instances, with healthful foods largely neglected. His predecessors, including George W. Bush, Bill Clinton, and Ronald Reagan have also posed with unhealthful foods at official photo-ops."

The Physicians group says that "the Petition for Executive Action argues that White House food-oriented photo ops receive massive publicity, akin to product placement in movies, and drown out the government's health messages, such as the USDA's Dietary Guidelines for Americans, contributing to ignorance about health and nutrition."

Published on: May 11, 2012

• The Journal Gazette reports that Supervalu plans to close its Xenia, Ohio, distribution center and consolidate its operations with those of its Fort Wayne, Indiana, warehouse.

• Reuters reports that the Second US Court of Appeals has ruled that Starbucks was within its right to restrict the number of pro-unionization pins that employees could wear on their work uniforms.

According to the story, "The case, a dispute between the National Labor Relations Board and the company, arose out of unionization efforts at several Starbucks coffee shops in Manhattan between 2004 and 2007. None of Starbucks's 7,000 stores in the United States are unionized. Starbucks argued that a NLRB ruling allowing employees to wear an unlimited number of buttons would convert them into 'personal message boards' for the union."

• In Minnesota, the Star Tribune reports that Target "will open its first permanent store without the Target brand name -- an exercise clothing outlet called C9 Active Apparel " in San Francisco.

The story says that "the C9 store will sell the same sportswear line that Target stores have sold for years. It will be paired with another new Target concept, CityTarget, which is essentially a smaller Target store designed to penetrate high-density urban centers where building space is often at a premium. The C9 and CityTarget stores will occupy the Metreon building at 4th and Mission streets in downtown San Francisco. Both will open Oct. 14."

Published on: May 11, 2012

• David Silverberg, a longtime Wakefern Food Corp. executive who was named president of the cooperative in 1971, serving in that role until his 1987 retirement, passed away on Wednesday. He was 91.

Published on: May 11, 2012

I got a lot of reaction to yesterday's FaceTime commentary about the "back to basics" mentality, in which I argued, in part:

I really hate the phrase "back to basics." About as much as I hate the phrase, "get back to fundamentals." I've been writing about this industry for a long time, and I can't tell you how many times I've heard that phrase uttered from lecterns or used in articles - usually during tough times when companies are looking for a solution to their problems.

Here's the thing. If you're not already doing the fundamentals, if you're not doing the basics, then it may well be too late. You're dead.

There are plenty of companies that are, and that are building on the fundamentals with initiatives in e-commerce, social media or in other areas.

The fundamentals are a prerequisite just for getting into the game and staying in the game.

MNB user Ratiba Mekki wrote:

I love reading your articles. I try to read them daily, not only due to my involvement with various grocers, but English is my second language. With that being said, I appreciate your style of writing. I love how you are not afraid to be opinionated and most of the time I appreciate it.

Except for today’s column in regards to “back to basics”. You said you hate it? Your reasoning wasn’t strong enough to support your negative view. Its quite ironic, because I think that majority of companies need to do exactly that. I think that going back to basics puts things in a clearer perspective. Also, you usually sound positive and this time I felt like you were leaning toward “giving up” vs. “fight till the end”. Can you imagine if all companies would follow your advice; avoid going back to basics method and just completely vanish from the industry. When I was in high school, my mom would buy me clothes at Target and I was so embarrassed and I hated shopping at Target, so did all my friends. Guess what changed, they revamped their methodology, went back to basics. Anyway, the reason why I am writing you is that I never found myself disagreeing with you and I wish you could write me back or post something to expand on this subject. I didn’t understand why all of a sudden you sounded pessimistic.

Aside from that, I think you are a brilliant writer and l will continue to read your articles. I just feel like I would like to understand  a little more when you say you HATE back to basics methodology.

First of all, I cannot tell you how flattered I am by your kind words. They mean more than you know.

Second, don't worry about disagreeing with me. Nobody should always agree with me. (Just ask Mrs. Content Guy.)

Finally...I don't think I was being all that pessimistic or negative, and I certainly am not advocating a "giving up" mentality. What I'm really doing is suggesting that everybody needs to raise their games in the current environment ... and that being good - even great - at the basics is necessary just to get into the game. That's not being negative. It is just raising the bar.

I do think that sometimes, when executives talk about getting back to basics, it is because they don't have any other ideas, and the train may already be off the rails. But I also don't think that this is pessimism. Just reality.

However, feel free to disagree.

MNB user Jeff Gartner wrote:

I also cringe when I heard the phrase "we need to get back to basics" or "back to fundamentals." When  I hear or read those words, I'm thinking the speaker senses the world is passing his or her organization by and they don't know how to innovate and adapt. And then whatever they do is always reactionary so they continue to stay behind their market.

We all know this, but thank you for the reminder.

MNB user Steven Ritchey wrote:

I see too many retailers, large successful ones who don’t pay enough attention to the basics.  They may be very technologically advanced and be making good use of social media.  When I see can openers j-hooked on the cereal aisle, and toys j-hooked on the canned vegetable aisle, someone ‘s not paying attention to details.  When I see charcoal displays with no lighter fluid, someone isn’t thinking.  When the meat market, produce and deli people are glorified stockers who don’t know the product they are stocking, someone isn’t paying attention.  When I can shop in the same store for 10 years and never see the store director on the floor, something is very wrong.  I was lucky, I came up in a company that understood the value of good cross merchandising, of a visible store director, of having people in the perishable departments who knew  their stuff.  I saw how it’s supposed to work in the store.

Someday soon, social media and an internet presence may be “basics”, but if you have a great media presence, but your physical store isn’t up to par, you’re not hitting on all cylinders.  You might be making money, but, you’re not being as effective as you could be.

I think that people use the term “getting back to basics” because it sounds good, I wonder how many retailers out there know what the basics really are.

From MNB user Krag Swartz:

“Back to Basics” and “back to the fundamentals” do represent trite cliché.  And they tend to be a catchall for “loss of focus…taking our eye off of the ball…returning to our roots…renewed emphasis on what made us great, etc.”  I bet that these phrases all mean something different to each retailer/company.  In an industry in which competing priorities and limited resources shape the reality of strategy investment and execution, retailers cautiously walk the high wire of R.O.I. and relevance – usually the safety net is that “basics” thing.  When strategies fail, these same retailers/companies are criticized for “straying from the brand”…”they forgot who they were.”  The “basics” aren’t always the staid and stuffy and irrelevant.  Sometimes the “basics” are the essential elements of the brand:  the core competency – the heritage - the relationship with customers - the traditions(symbols and rituals). 

Your brand, MNB, has all of these components too, and they could be described as your basics…and you know when you’ve strayed from the brand.  So, maybe it’s all semantics in this ignorance of cliché.  Maybe we need new vocabulary…and a catalytic kick start that innovation can bring.  We have our soothsayer.  That would be you Kevin.  Thanks for continuing to live your brand:  Retail News with Context, Analysis and Attitude.

You are too kind.




The good news about the MNB brand is that there are so many folks out there who burnish it, every day, with their own comments and participation. (And by sharing it with their friends an co-workers. It is a matter of pride to me that my subscription list grows by 75-100 a week, mostly because of word of mouth.)

A perfect example of how you all make the brand better is how I got a bunch of emails yesterday responding to my story about the eight-year-old Miami orangutans that are highly facile with the iPad, allowing them to communicate with human beings as well as providing stimulating enrichment activities to keep them from getting bored. (I said that they better be careful about the monkeys getting Amazon accounts...)

One MNB user read the story and wrote:

I’m thinking Clyde from Every Which Way But Loose.

We do love movie references around here.

MNB user Glenn Cantor wrote:

I can just see the receiver at the zoo scratching his head wondering about the large, Federal Express shipment of bananas.

There also was a piece of the original story noting that trainers have to hold the iPads for the orangutans because the equipment is just too fragile to just hand to them. Which led MNB user Steve Rash to write the email that, in just eight words, illustrated why I love MNB and the MNB community so much:

So, Gorilla Glass is too fragile for orangutans?

Boom!

That was the line I wish I'd thought of, and wish I'd written.

Published on: May 11, 2012

What can I say about The Avengers, which is well on its way to becoming one of the most successful - perhaps the most successful - movie ever made, at least in terms of box office receipts?

I have to admit that I liked it. The performances are winning, especially Robert Downey Jr. as Iron Man and Mark Ruffalo as David Banner, aka The Hulk. The script is really good - it takes its subject seriously but not too seriously, it respects its audience, and it has moments of real wit and irony (for which we can thank Joss Whedon, who also brought us "Buffy the Vampire Slayer" and "Firefly," which may have been his best work).

However, I have to admit that during the first hour or so, I found myself thinking about how silly it all was, and how strange it is that hundreds of millions of dollars get spent in the service of a superhero movie. At a certain point, I got past that, and I got swept away in the Imax-3D spectacle of it all. And there are some good lessons - offered lightly - about the importance of teamwork, and about how perhaps the greatest superpower of all is good character.

Maybe I'm just getting old. I prefer The Dark Knight kind of superhero movie, which is darker and seems to serve as a metaphor or social commentary. But I get that some people would argue that this creates a kind of self-importance that is inappropriate for a movie about a crime fighter who runs around in a mask and tights.

You'll have a good time at The Avengers, I expect. It is better than the average superhero movie, and even better than anyone has a right to expect. But I guess I'm just getting to the point where comic book movies have limited appeal.




I have two wonderful reds to recommend to you this week...

2007 Tolosa Pinot Noir, which has a light fruitiness and yet a kind of depth that makes it a wonderfully complex pinot. (It goes for about $28 a bottle.)

2006 Mount Veeder Cabernet Sauvignon, which a terrifically bold cab, perfect with a steak and potatoes. (It goes for about $40 a bottle...I have to admit that it was given to me as a gift...)

Both great, if a little pricey. Enjoy!




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

Slainte!