business news in context, analysis with attitude

Published on: July 18, 2012

by Kate McMahon

“How could you do such a thing!?!”

“They are horrible – I threw mine to the birds. The birds threw them back!”

“This is what you have done: Changed square to round, changed flavorful to tasteless, changed fresh to stale, diminished the amount of crackers while charging the same price.”

“Are you kidding me?”

“Bottom line, you should be ashamed of yourselves.”

“What the h**l is next, a square Ritz?”

The above postings are among the calmer, G-rated reactions to Nabisco’s four-month test marketing of revised, round Original Premium Saltine crackers in New England and New York. The iconic, square Original Premium Saltine neatly stacked in its sealed sleeves (four to a box) was jettisoned for a single bag of round, crumbly counterfeits.

The cracker-noshing public in this part of the country is not pleased. The comedian Dave Hill posted a rant online with language salty enough to make a longshoreman blush. MNB reader Darrell Allen shared his incredulity at the moronic makeover with us in much saner terms. Others took to Twitter and multiple blogs such as ConsumerAffairs.com.

Trust me, the change didn’t fly in my household, either. I attempted to slip the round Saltines (along with Campbell’s Chicken Noodle soup and Schweppes Ginger Ale – the official sick tray meal in our home) past a 17-year-old with pneumonia and her response was one of disbelief. “Ugh. Why did they ruin Saltines?”

Which makes one wonder why anyone in the food/retail/marketing business old enough to remember the New Coke debacle would attempt this. By changing the shape, consistency and packaging, Nabisco managed to offend consumers on several fronts, from aesthetics to price point.

Though it’s just a simple cracker, there are several lessons here:

People can be passionate about products, especially those they grew up with that have resonance beyond taste: Devotees posted particulars about the use of their Saltine crumbled in soup, topped with a square piece of cheese, dabbed with a dollop of peanut butter, dunked in a glass of milk or crushed for crust. The cupboard staple is also hailed as a cure for morning sickness, upset stomachs and hangovers.

Older consumers also vent on the internet: To those who think only tech-savvy younger consumers make their opinions known online, think again. Many of the posts were from older consumers who wrote about eating Premium Saltines for 60 plus years and politely expressing their dismay with the change.

Packaging matters: Premium fans lamented the loss of the plastic sleeve, which they either shared or factored into their cracker/calorie consumption. The sleeve also counted big time for freshness.

Price, price, price: The blog Dave’s Cupboard and others noted the new packages are 10.5-ounce net weight compared to the old ones at 16 ounces, but the price remains $2.49 a box.

So what’s the Kraft/Nabisco take on this? Company spokesman Basil T. Maglaris told MNB yesterday the company had “tested the idea of round Premium Saltines” in the New York metro/New England area. In a previous interview with the website masslive.com, Maglaris said the changes were designed to present Saltines in a “relevant and contemporary way.” He recommended customers contact the company’s hotline at 1-800-NABISCO with comments, and said, “We really do want to know what people think.”

I’d say the people have spoken, and when it comes to Saltines, it’s hip to be square.

Comments? Send me an email at kate@mnb.grocerywebsite.com .

Published on: July 18, 2012

The Wall Street Journal reports that Supervalu's investors yesterday voted to reject a proposal that would have lowered the number of shareholder votes necessary to approve a merger or sale of all or part of the company - a vote that has a lot of meaning for a company that has declared itself on the sales block because of poor sales and earnings, a decision that caused the stock to drop more than 50 percent in one day.

In addition, Reuters reports that Supervalu CEO Craig Herkert says that "bankruptcy is not among the options being weighed at the company hampered by debt from its $12.4 billion acquisition of more than 1,100 Albertsons stores in 2006."

According to the Journal story, Supervalu's board wanted to change the company's rules so that only two-thirds of shareholders needed to approve a sale, down from three-quarters.

The Journal notes that "requiring a higher percentage of shareholder votes essentially puts more control in the hands of the board of directors, because potential buyers will be forced to negotiate pricing with the board, which could be beneficial to shareholders. However, it also gives the board greater ability to reject proposed acquisitions and refuse to sell, which could be detrimental to shareholders."

Among the players likely to be interested in all or part of the company, according to the Journal: C&S Wholesale Grocers, Kroger Co., Cerberus Capital Management and Kohlberg Kravis Roberts & Co.

Published on: July 18, 2012

by Kevin Coupe

Did you see the story on the New York Times website the other day about email traffic?

Well, it was an Eye-Opener for me...

"Last year, Royal Pingdom, which monitors Internet usage, said that in 2010, 107 trillion e-mails were sent. A report this year from the Radicati Group, a market research firm, found that in 2011, there were 3.1 billion active e-mail accounts in the world. The report noted that, on average, corporate employees sent and received 105 e-mails a day."

Meanwhile, the Times writes, "all of this e-mail could be increasing our stress.

"A research report issued this year by the University of California, Irvine, found that people who did not look at e-mail regularly at work were less stressed and more productive than others."

And here's what's really amazing.

For young people, email isn't even the communications vehicle of choice.

When we want our kids to read an email or, heaven forbid, listen to their voice mail messages, we have to send them a text message instructing them to do so.

Otherwise, we have no shot.

Published on: July 18, 2012

Food Lion announced yesterday that it is expanding its "new brand strategy in 269 stores in North Carolina and South Carolina" that it says "is based on customer feedback and continues to position the company for future success." The strategy, the company says, "offers customers lower prices on 6,000 items throughout the store and access to quality store brand products at lower prices, including the company’s my essentials value tier, as well as enhanced produce and an easy and convenient shopping experience, such as faster checkout."

The new brand strategy first launched in the Raleigh and Fayetteville, N.C., markets, as well as Chattanooga, Tenn., in May 2011, and the company announced an additional 268 rebranded stores on March 28, 2012 in Virginia, West Virginia and the outer banks of North Carolina.

"Today’s launch is a pivotal turning point for our company as we have implemented our new strategy in more than 700 stores," says Cathy Green Burns, president of Food Lion. "We are committed to being recognized as a price leader, making our stores easier to shop, offering the greatest value in store brands and providing the freshest produce. We are pleased to bring the strategy to our hometown markets, where we have served Food Lion customers for 55 years."

Published on: July 18, 2012

Forbes reports that Amazon.com may be "gunning to be the store of choice for contractors and the DIY set," a development that is less than optimal for a retail segment that already has been suffering because of the recession's impact on the housing market.

According to the story, Amazon's plan to offer same-day or next-day delivery in many markets "could deliver the death blow to some home improvement retailers. Home Depot, Lowe’s, Menard — is there room for everyone? Probably not ... Amazon’s new online fulfillment goals are set to deal the weaker of the chains a near death blow. Already, Amazon has an advantage in inventory and service. Anyone looking to remodel a bathroom, install new light fixtures or build a deck is likely to do a good amount of online research first. Home Depot and Lowe’s have tutorials and sell product, but once in the store things fall apart. Out of stocks, hard to find sales people and misinformation abounds. Weekend traffic and difficult to maneuver parking lots just add to the inconvenience. The 'need it now' nature of home improvement goods has helped insulate the channel from online predators.

"Until now."

Published on: July 18, 2012

Reuters Health reports that a new study from Tufts University shows that the average fast food meal in New York City has gone "from containing nearly three grams of trans fat to just half a gram" in the four years since the city's Department of Health implemented "regulations prohibiting restaurants from serving food that contains partially hydrogenated vegetable oil and has half a gram or more of trans fat per serving."

According to the story, "Based on receipts from 6,969 customers surveyed in 2007, the average fast-food meal purchased that year had 2.9 grams of trans fat. By 2009, that figure was 0.5 grams in a sample of 7,885 customers. The number of meals without any trans fat increased from 32 percent of all purchases before the regulations to 59 percent afterward."

Published on: July 18, 2012

Safeway announced that it has "enhanced its Just for U program for Northern California shoppers. The first-of-its-kind mobile and online shopping tool now gives shoppers a simpler and faster way to save on groceries. The Just for U enhancements personalize the shopping experience even more – providing shoppers with savings of 10 to 20 percent more than using their Safeway Club Card alone."

The company said that by using Just for U before a shopping trip, shoppers can "access hundreds of Digital Coupons," new savings are added every week; "download Personalized Deals based on personal shopping history," with deals updated weekly; "view filtered and sorted Safeway weekly Club Card Specials on items a shopper buys regularly"; and "create a personalized Savings List on a mobile device or on the Just for U website."

“Gone are the days where shoppers have to clip coupons, or browse through ads and promotional flyers for the best savings. With Just for U, our Safeway shoppers are able to more easily save time and money,” said Karl Schroeder, president of Safeway’s Northern California Division.

Published on: July 18, 2012

The Wall Street Journal reports that the US Food and Drug Administration (FDA) issued a rule yesterday that bans the use of bisphenol A, better known as BPA, in baby bottles and sippy cups - though it said at the same time that the ruling was pretty much irrelevant because the makers of such products no longer use the chemical in their manufacturing process.

The story notes that "BPA has been linked to possible health problems of the brain, breast and prostate (and) it is commonly used in can linings and plastic containers to help prevent the growth of germs, and to makes plastics more impervious to damage." However, the FDA continues to stand behind a previous finding that it is safe in other products, a position that is supported by the American Chemistry Council lobbying group.

“This is a big day for everyone who has worked so hard to get BPA out of our sippy cups and baby bottles, especially the families who have lobbied the government to do the right thing for our kids,” said Jean Halloran, Director of Food Policy Initiatives for Consumers Union.  “Scientific studies show there are serious health risks associated with BPA, and this action by the FDA will help protect millions of the most vulnerable Americans.  FDA's next step should be to ban this chemical in infant formula containers.  Babies’ exposure to BPA should be minimized in every way possible.”

Published on: July 18, 2012

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

• Dow Jones reports that Target plans to extend its summer "online-only 'Bonus Black Friday' sale to two full days and will hold its first-ever 'Summer Cyber Week' sale" as a way of combatting lagging sales in a still-stagnant economy.

The story says that "the summer Black Friday sale, which Target started two years ago, is scheduled for Friday and Saturday, and the Cyber Week sale will go on all next week. The retailer said customers will find 'Black Friday-like' deals on more than 2,000 items on Target.com, including toys, movies and apparel."

• The Associated Press reports that Costco has "joined a growing list of retailers and restaurants in asking suppliers to phase out the use of small pens for pregnant sows, as an animal welfare group prepared to release an undercover video showing conditions at one of its suppliers.

According to the story, "National restaurant chains that have asked their suppliers to stop using gestation stalls include McDonald's, Burger King, Wendy's and Hardee's. Joining the list this week were Sears Holding Corp., which owns Kmart Corp. and its 25 Super Kmart stores that sell groceries, and ketchup maker H.J. Heinz Co., which also makes a variety of frozen foods and sauces that contain pork."

Mercy for Animals, the group that has been pushing for the elimination of the gestation crates, now says it will turn its attention to Walmart.

I'd make a "when pigs fly" joke here, but it would be inappropriate. Also probably wrong...because Mercy for Animals seems to have been very effective in this particular fight.

• United Fresh and the Produce Marketing Association (PMA) said yesterday that they have ceased merger talks that would have created a single, unified trade association for the category, and now will continue pursuing their own separate agendas.

Published on: July 18, 2012

Since I am currently spending the month in Portland, Oregon, team-teaching a course at Portland State University, I've gotten a number of requests from folks asking if I would have one of those casual get-togethers of MNB readers that I do around the country from time to time.

My answer: Absolutely!

Next Tuesday, July 24, at about 6 pm, I am going to be sitting in the open courtyard at Nel Centro, located in the Hotel Modera at 515 SW Clay St in downtown Portland. (You'll know me because I'll be wearing the smile of a guy who is living the dream...) I'll buy the first couple of bottles of wine, and will hang out as long as anyone wants me to ... or at least until I have to head back to my home-away-from home to get MNB done for Wednesday.

I hope I see you there...

Published on: July 18, 2012

One MNB user wrote:

Having worked for 26 years at Fleming I am not the least bit surprised by the Supervalu announcement.  Mark Hansen was brought in to run Fleming from Wal Mart (Sam’s Club) and his insistence to bring the K-mart agreement into play brought the company to its knees within 5 years of his taking over.  In the case of Supervalu, the Albertson’s debt along with the usual inability of wholesalers to run retail operations was a disaster waiting to happen!  Having watched a 20 billion dollar Fleming dismantled in less than 6 months I feel for those who have dedicated so many years of quality service to SV.  For many years both Fleming and SV battled it out as 20 billion dollar wholesale rivals/competitors and were at the top of their game!  Sad to see one die years ago and the other, which should have grown stronger after the Fleming departure, looking for life support!

MNB user Bill Smillie wrote:

Remember Fleming.  The 2nd largest grocery wholesaler in the United States.  I hope SV can get something done before the end.  Wholesalers need to focus on wholesale, and let retailers focus on retail.

What's the old line ... those who do not study history are doomed to repeat it?

Regarding the emails we ran yesterday about Supervalu cutting out perks like free coffee to its associates, one MNB user wrote:

Do you think for one moment that the free coffee etc. has stopped flowing on the Exec. floor?  Or that they are flying coach?

When my former employer was going down the tubes the new CEO spent thousands of dollars on a state of the art sound system for his office.

Sad to say, this kind of crap seems to be more the rule than the exception.

And another MNB user chimed in:

I worked with Jewel-Osco briefly 2 years ago and loved the organization.  What struck me was their idea of competition.

At the local level, they knew prices were far too high.  At the headquarters level, they wanted profit margins.  Not profit, per se, but profit margins.  During my orientation, they compared themselves to the local regional players- including the small guys- but couldn’t pinpoint the role of competitors like Walmart or Costco.  When called out on it, they acknowledged the problem but didn’t know how to address it.

The other thing I learned at Jewel was that while I was surrounded by very smart, very experienced people, I wasn’t surrounded by people who understood data.  I think about data as ranging from the dunnhumby/Kroger relationship, anyone and Nielsen, or even just the knowledge of very good store managers.  That data wasn’t incorporated into the decision-making process.  The lack of data- along with the history of abrupt changes- lead to a culture of fear that prevented real innovation.

And finally, from another reader:

I'd like to reiterate my comment when SVU hired a WaMart exec to run their business ... I said to you ... What if it was a strategy by WM to take a competitor out of play ? It's in WM play book to remove competitors ! Now if you pin me to the wall I would have to say that I really don't believe it ... But don't you just love a good conspiracy?

It is amazing how many emails I've received along this line. People don't really believe it, but...