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    Published on: June 5, 2012

    by Kevin Coupe

    I do like it when a retailer demonstrates that it knows how to throw a party.

    As you may know, last Friday marked the first time since Prohibition that a state - in this case, Washington - went from state controlled to privatized liquor sales.

    Bloomberg BusinessWeek reported that "customers lined up Friday at retail stores across Washington to buy spirits for the first time outside state-run stores, and retailers highlighted their liquor deals with full-page newspaper ads, radio spots, banners and special events.

    Now, there have been some controversies. There are some retailers who have complained that big retailers are getting better selection than smaller businesses. Pricing is said to be inconsistent - sometimes lower, sometimes higher, and sometimes pretty much the same as they used to be.

    I did love the marketing event that was thrown by Metropolitan Markets, which had a midnight party at its 1st and Mercer store in Seattle, from 11 pm to 2 am, offering a sampling of craft spirits-infused appetizers and then, after 12 am, a big reveal of the store's new spirits department which is designed to offer what was called the "best tasting, best crafted" selections.

    This isn't enormously surprising - after all, it has long been my contention that Metropolitan Markets is one of the best independent food retailers in the country, expert at celebrating food in a way that a lot of other retailers do not.

    But it is always worth noting when a retailer does something unusual and fun, and takes the notion of competition to the next level.

    "Compete," as we're fond of saying around here, is a verb. It means action. And it is always both eye-opening and satisfying when we see smart retailers engage in actions that make them better and are relevant to their customers.
    KC's View:

    Published on: June 5, 2012

    The New York Times reports this morning that in a move that is expected to set the tone for at least some of its competitors, the Walt Disney Company is expected today to announce "that all products advertised on its child-focused television channels, radio stations and Web sites must comply with a strict new set of nutritional standards.

    "The restrictions on ads extend to Saturday-morning cartoons on ABC stations owned by Disney. Under the new rules, products like Capri Sun drinks and Kraft Lunchables meals - both current Disney advertisers - along with a wide range of candy, sugared cereal and fast food, will no longer be acceptable advertising material."

    In addition, the story says, "Disney will reduce the amount of sodium by 25 percent in the 12 million children’s meals served annually at its theme parks, and create what it calls fun public service announcements promoting child exercise and healthy eating."

    The new standards are based on federal guidelines as well as input from recognized national nutrition experts. First Lady Michelle Obama is expected to be at Disney's announcement today at a Washington, DC, press conference.

    Furthermore, Disney also is getting into the nutritional labeling business. According to the Times, Disney plans to "introduce what it calls Mickey Check in grocery store aisles: Disney-licensed products that meet criteria for limited calories, saturated fat, sodium and sugar can display a logo — Mickey Mouse ears and a check mark — on their packaging. The logos will include the slogan, 'Good For You — Fun Too!'"

    The new guidelines will not take effect until 2015 because of long-term contracts that Disney says it cannot violate.

    The Times notes that "Food companies have vociferously fought government regulation on advertising, saying they can take steps on their own. Disney acknowledged it would most likely lose some advertising revenue — it declined to say how much — but said that the benefits outweighed the downside ... Disney’s ad restrictions apply to any programming targeted to children under 12, which includes popular live-action programs as well as cartoons."

    Not everybody was entirely pleased with the moves.

    The Center for the Science in the Public Interest (CSPI) said that while Disney's actions put it far ahead of its competitors in this area, the initiatives do not go far enough.

    And the story suggests that some people will chafe at the idea that Disney is giving its imprimatur to some foods,moving into an area in which it may not belong.

    Still, the Times writes, if history repeats itself the Disney moves will create waves of change. "In 2006, Disney said it would sharply curtail the use of its name and characters with foods high in sugar, salt and fat. Mickey Mouse stopped appearing on boxes of Pop-Tarts, and Buzz Lightyear and his 'Toy Story' pals disappeared from McDonald’s Happy Meals. Within months, Nickelodeon and Discovery Kids announced similar restrictions; the 2007 effort by food companies to reel in advertising was also linked to Disney’s lead." Today's announcement will almost certainly ratchet up pressure on the likes of Nickelodeon and Cartoon Network to raise their standards as well.
    KC's View:
    When I saw the thing about CSPI, I first thought of the scene from Moneyball, where Billy Beane abruptly ends a conversation and tells Peter Brand, "When you get the answer you're looking for, hang up the phone."

    When the folks at CSPI got the news about what Disney is doing, it seems to me that it would have been nice to be a little gracious. You want to push Disney farther, do it ... but have the decency to allow the company to make a significant move and enjoy the moment without whining about how it isn't far enough.

    This is a lot more important, in its own way, than NYC deciding to ban jumbo sugary drinks. I think the implications could be broader, and Disney's economic clout will be such that a lot of companies will go along and find ways to adapt. (As opposed to suing NYC over the ban, which is likely to happen.)

    This isn't an altruistic move. I'm sure Disney believes that in the long run, this is a smart business move. (After all, if the childhood obesity problem gets any worse, they're going to have to widen all the seats on its rides, which is gonna cost a lot more money down the road...)

    Published on: June 5, 2012

    The New York Times reports that when the votes were tallied after last Friday's board of directors election at Walmart's annual shareholders meeting, the "no" votes on four people - CEO Mike Duke, former CEO Lee Scott, chairman S. Robson Walton, and Christopher Williams, chairman of the audit committee - "exceeded 12 percent, the largest opposition any of them has encountered in an annual shareholder vote.

    "The tally against Mr. Duke, moreover, set a record for opposition to a Wal-Mart chief executive, according to Securities and Exchange Commission’s filings since 1995, the first available electronic filings on the topic from Wal-Mart."

    Because the Walton family controls almost 50 percent of the company's shares, and when combined with executives and board members actually owns a majority of the company, the numbers mean that roughly one-third of outside investors voted against the company’s chairman, chief executive and two board members - a percentage that experts call "very significant."

    The vote follows recent revelations that Walmart's Mexico division may have engaged in systematic and systemic bribery as a way of growing its business there, and then when presented with evidence in the case, Walmart's top execs - including Duke and Scott - may have covered it up.
    KC's View:
    Better to light a candle than curse the darkness.

    Sure, tossing out the current board was never going to happen. But maybe some of the outside investors have actually gotten the attention of Walmart's controlling interests. Maybe they'll realize in Bentonville that cover-ups are almost never the answer. And maybe they'll start walking the integrity walk as opposed to just talking the talk...

    Published on: June 5, 2012

    The San Francisco Business Journal reports that Starbucks will spend $100 million to acquire San Francisco-based bakery La Boulange as part of its broader goal of upgrading its food offerings. La Boulange products will begin replacing current Starbucks based goods early next year.

    As part of the deal Starbucks will hire the bakery's founder, Pascal Rigo. Reuters reports that Starbucks "plans to expand La Boulange from 19 cafes into a national chain. The bakery will continue to supply its existing restaurant, hotel and specialty grocery store customers."

    This is an investment in our core business," said Howard Schultz, Starbucks' chairman and CEO. "After more than 40 years, we will be able to say that we are bakers too."

    According to the Times, "The deal allows La Boulange's majority owner, San Francisco private equity firm Next World Group, to exit an investment it made in 2006."

    The deal is expected to close during the third quarter.
    KC's View:
    In addition to positioning Starbucks even more effectively against the likes of Panera as the company improves its food profile, I wouldn't be surprised to see a big move to get La Boulange into the CPG business, which clearly is a high priority for Schultz these days.

    Published on: June 5, 2012

    The Sacramento Bee reports that Raley's employees have completed voting on whether to go out on strike. According to the story, "It isn't known when results will be announced. But interviews with workers voting at the downtown Sacramento Holiday Inn suggested there's considerable support for a walkout. The UFCW's Bay Area unit, Local 5, already authorized a strike last month."

    If a strike is authorized,it would be the first-ever walkout at the California-based company.

    The story goes on: "Several UFCW members said they believe a walkout is unlikely, but they voted to authorize a strike as a way of providing the union with more leverage ... Raley's is pushing for concessions, saying it needs lower costs to compete with nonunion grocers. At least some workers said they agree."
    KC's View:

    Published on: June 5, 2012

    The Kroger Co. said yesterday that it has begin informing its pork suppliers that it has come to the conclusion that "a gestation crate-free environment is more humane and that the pork industry should work toward gestation crate-free housing for pregnant sows."

    The retailer said that while it is encouraging its suppliers to accelerate this already-occurring transition in the Kroger supply-chain," customers need to know that "this is a transition that may take many years."

    A similar announcement was made by Safeway about a month ago.
    KC's View:

    Published on: June 5, 2012

    • IGA announced it will be rolling out IGALink 2.0,described as "the newest version of the IGALink digital marketing platform that provides unique full-featured grocery websites and mobile websites to each of over 900 IGA USA retailers operating more than 1,100 stores. IGALink 2.0 includes two new features, a print-at-home coupon solution and a new digital ad option. Rolling out sequentially, the first of these new features, the print-at-home coupon solution sourced from leading coupon provider Coupons.com, will be live on IGA retailer’s IGALink websites beginning June 20, 2012, with the digital ad option following soon."
    KC's View:

    Published on: June 5, 2012

    Michael Sansolo is taking a break this week. He'll be back next Tuesday with his usual brand of pithy commentary.
    KC's View:

    Published on: June 5, 2012

    ...with brief, occasional, italicized and sometimes gratuitous commentary...

    Advertising Age reports that in the wake of an announcement by NYC Mayor Michael Bloomberg that he wants the city's health department to ban the sale of jumbo sugary drinks, "beverage giants and restaurant heavyweights are striking back, seeking to protect one of the most profitable parts of their businesses.

    If the sweeping ban is adopted, industry advocates say it has the potential to crimp the bottom and top lines at restaurants and beverage companies, from McDonald's to Coca-Cola to Starbucks. The American Beverage Association and the National Restaurant Association both say they are exploring legal options as a means of combating the proposed ban."

    • Lubbock, Texas-based United Supermarkets announced that it has converted its Market Street location there into a 24-hour store, the first time in the company's history that it has operated a round-the-clock unit.

    “We have a significant number of people in the Lubbock community who work late or overnight – law enforcement, healthcare and some large manufacturing companies with night shifts,” says COO Sidney Hopper. “We believe this is an underserved population in terms of shopping options, particularly when it comes to pharmacy.”

    • The St. Louis Business Journal reports that "workers at a Supervalu Inc. grocery warehouse in Fargo, N.D., went on strike briefly Monday but are back at work...About 85 employees walked off the job at 6 a.m. Monday after rejecting the company’s contract offer that provided a 50 cents-an-hour raise and health and pension benefits."

    • Amazon.com, moving to further cement its reputation as a publisher, not just a bookseller, announced yesterday that it is acquiring Avalon Books, a small publishing house that specializes in mysteries and romance novels.

    Terms of the deal were not disclosed.

    Ellen Bouregy Mickelsen, the publisher of Avalon Books, said in a prepared statement: “I’ve been running Avalon Books – which was founded by my father — since 1995, and it is time for me to explore the next chapter of my life. I chose Amazon Publishing because they care deeply about the writers, readers, and categories that have long mattered to our family business and they are uniquely positioned to assure that our titles make the leap forward into the digital future.”
    KC's View:

    Published on: June 5, 2012

    • The California Grocers Association Educational Foundation announced the hiring of Shiloh London as its first Executive Director, effective immediately. London is the former Executive Director, Business Development for the Foundation for California Community Colleges and Senior Campaign Director for United Way California's Capital Region.
    KC's View:

    Published on: June 5, 2012

    Lots of reaction to the proposed NYC ban on large sugary sodas.

    MNB user Jan Dragotta wrote:

    The problem is not dietary sugar large drinks but way too much caffeine in the coffee of our elected officials – giving them too much energy to do dumb things instead of focusing on balancing costs with revenues to reduce our taxes.  Do we really need a Mayor (or any other elected official for that matter) who focuses on these things? 

    On second thought, the ban should NOT be on large coffees but maybe on excess taxes that ultimately fund too many elected officials!  If we have to have Mayors then maybe getting rid of all their staffs so that they simply don’t have enough time to do dumb things could be a boon for democracy!


    MNB user Blake Steen wrote:

    This is a very scary “slippery slope” we are going down.  If the masses can’t control themselves on a big gulp what is next?  Always track the money when it comes to these things.  Has the sports world or the movie theaters made Mr. Bloomberg mad lately?

    MNB user Bob Warzecha wrote:

    All this talk about Bloomberg and his desire to ban large drinks versus consuming everything in moderation reminds me of a discussion I had with my doctor about two or three years ago.

    My doctor asked me how often I eat at a fast food restaurant (she was concerned about my sodium intake).  I like Big Macs so I told her that once a year on my birthday I go to McDonald's to have one.  She relied "Once a year, on your birthday?  Well, knock your socks off, super-size the meal".


    MNB user Glenn Cantor wrote:

    In commenting about the recent torrent of injuries in Major League Baseball, one of ESPN’s commentators stated that a General Manager proposed that a possible reason for muscle injuries might be enhanced dehydration caused by sports and energy drinks.  Think about the ramifications if this theory gains traction.

    It'll make the NYC proposal look like a tempest in a teapot.




    Regarding the Walmart bribery scandal, MNB user Tom Robbins wrote:

    Enough on the "bribery" scandal. Let move on to things that "we" can do to improve our  business.

    Not sure I can accommodate you on this one.

    I'm sure than some days it is like I am beating a dead horse, and I'll try to be conscious of that. But this is a big story that speaks volumes about the character of an American retailing institution and the people who run it. I'm interested in stories about character ... and also stories that have things like scandal, bribery, foreign affairs, and corporate intrigue.

    This may be a character flaw on my part ... but I can't help it.
    KC's View: