business news in context, analysis with attitude

Published on: September 19, 2012

by Kevin Coupe

Advertising Age reports that the Most Interesting Man in the World has made a career move that could undermine his mass appeal.

The Most Interesting Man in the World, as most people know, is the fictional character created for an ongoing series of Dos Equis commercials and advertisements, uttering the tagline, "Stay thirsty, my friends." He is played by actor Jonathan Goldsmith, who, despite a long (though largely undistinguished) acting career, has become virtually undistinguishable from the character he plays.

But that's become a problem. Because Goldsmith hosted a Barack Obama fundraiser in Vermont yesterday.

A number of GOP Dos Equis drinkers have said they will now be choosing a different brand now that the Most Interesting Man in the World has made clear his political preferences ... and they have taken to social media to make their case.

According to Ad Age, "Brand importer Heineken USA closely guards what Mr. Goldsmith does in character, but since he is hosting the event as a citizen, the marketer has less leverage. In a statement, the company told Ad Age: 'Mr. Goldsmith's opinions and views are strictly his own, and do not represent those of Dos Equis'."

But it is a great example of how personal decisions, especially in this day and age, are no longer purely personal ... and how, thanks to the power of social media, instantly can become very, very public. (That's the business lesson...take a political position, and you run the risk of alienating a percentage of your customers.)

Of course, what is not mentioned in the Ad Age piece - but is worth noting - is the fact that beer has become a kind of touchpoint for the Obama campaign in this cycle. Perhaps because President Obama realizes that he has trouble connecting with blue-collar, middle class voters, he has been photographed and videotaped numerous times in bars, sharing a beer with and occasionally even buying a round for patrons. (It has not gone unnoticed that he is doing this while facing an opponent who, because he is a Mormon, does not drink alcohol.) And, Obama has mentioned numerous times, and even said last night on "Late Night with David Letterman," that he has installed a home brewing setup at the White House.

None of this, of course, really means anything. Nor should it affect how anyone votes.

But I love this stuff....

Published on: September 19, 2012

Starbucks announced in an email to customers yesterday that it is revamping its rewards program, with the big change being that frequent shoppers will no longer have to wait for postcards that they can use to redeem for a free drink. Now, those rewards will load automatically onto the Starbucks card or mobile application, and consumers can redeem them simply by telling the barista.

In addition, Starbucks said that customers can redeem their freebie for any food product as well as drinks, and will get freebies for every 12 purchases, rather than 15.

Two previous benefits that are going away - Starbucks no longer will offer syrups and soymilk on the house, and no longer will offer a free tall drink when customers buy a pound of coffee.

Published on: September 19, 2012

Safeway announced to employees this morning its intention to combine its Portland and Seattle divisions into a single, newly named Pacific Northwest division, a move made because the company believes that "the close geographic proximity and natural overlap of both operations should allow for significant economies of scale in a highly competitive environment," according to a company memo.

Steve Frisby, who has been serving as president of both divisions, will continue as president of the new combined entity.

In the memo, it says that "there have been a small number of positions eliminated as a result of the consolidation. The individuals involved were informed today. Safeway is actively assisting them in their transition. Both the Portland and Seattle offices will remain open to support our regional operations."

Published on: September 19, 2012

The Hartman Group, in its HartBeat newsletter, has an excellent analysis of why Tesco's Fresh & Easy Neighborhood Markets have been such a disappointment, doing a consumer-oriented analysis of why the company's American foray has failed to live up to expectations.

Among its conclusions:

• While shoppers were primed for a new kind of shopping experience, the actual stores left them "underwhelmed and uninspired with no emotional attachment or reason to ever return."

• Fresh & Easy, especially when compared with competitors such as Trader Joe's, "is out of touch with changes occurring in food culture and is unable to translate this knowledge into compelling products and services or a seductive shopping experience that elicits return trips."

• While Fresh & Easy promises a specific value proposition - a store and products that were both fresh and easy - it has lived up to neither. "To most consumers," the analysis suggests, "plastic-wrapped produce is not all that fresh. And it is certainly not a testament to food celebration or an invitation to a culinary discovery."

You can read the entire newsletter here.

Published on: September 19, 2012

• Reuters reports that Walmart is working with healthcare provider Humana Inc. and will offer "a 5 percent credit on about 1,300 healthy food items at U.S. Walmart stores starting on October 15, ... The credit can be used against future Walmart purchases." The program is open to the more than one million members of Humana's healthy reward program."

According to the story, "products eligible for the credit include fresh fruits, vegetables, lean cuts of meat, skim milk, brown rice and packaged goods, the company said. The program works with a HumanaVitality card provided to members of Humana's rewards unit who receive points for meeting health goals.

• The Sacramento Bee reports that Walmart plans to open five new Neighborhood Market stores today in California's Central Valley, three of them in the Sacramento area.

Published on: September 19, 2012

In the UK, Tesco CEO Philip Clarke reportedly has begun a blog called "Talking Shop" as a way of communicating directly with shoppers.

According to Marketing, an industry magazine, Clarke used his first posting to create a more human face for the retailer, saying that when companies reach a certain size, the "human beings who stand behind them become indistinct," and people become suspicious of organizations' "motives, sincerity and principles."

Clarke writes: "People trust people, and, after the 2008 banking crisis, they don't trust organisations."

Published on: September 19, 2012

Consumer Reports this morning is out with a story saying that in its "tests of more than 60 rice and rice products, inorganic arsenic, a known human carcinogen, was found in most of the name brand and other rice product samples. Levels varied, but were significant in some samples."

And right on cue, the Washington Post reports this morning that "the Food and Drug Administration plans to announce Wednesday that it is working toward a proposal that would limit the amount of arsenic in rice."

The Consumer Reports study goes on to say that inorganic arsenic, the predominant form of arsenic in most of the 65 rice products Consumer Reports analyzed, "is known to cause bladder, lung, and skin cancer in humans, with the liver, kidney, and prostate now considered potential targets of arsenic-induced cancers."

"While there are federal limits for arsenic in drinking water," the story goes on, "there aren’t many standards for arsenic in food. Earlier this year, Consumer Reports found worrisome levels of arsenic in apple and grape juices and called on the U.S. Food and Drug Administration (FDA) to set limits for arsenic in those juices. Based on its latest findings and analysis, Consumer Reports is asking the government to take additional steps, including urging the FDA to set limits for arsenic in rice and rice products."

Published on: September 19, 2012

Last week it was reported that Apple Inc. had sold out of its new iPhone 5 smartphone within an hour of opening its website to preorders; the phone is scheduled to go on sale in stores this Friday.

Now, there are some numbers to go with the anecdotal reports. The Los Angeles Times reports that Apple "obliterated its single-day sales record for iPhone pre-sales, announcing that it took orders for more than 2 million iPhone 5s last Friday. That was more than double its previous mark of 1 million iPhones ordered the first day of pre-sales in October for the iPhone 4S."

At least in part as a reflection of those sales, Apple's stock closed yesterday at $701.91, and the Times notes that Apple, as the world's most valuable company, "is now worth nearly $656 billion - about six times its value in June 2007, when it released the first iPhone."

Published on: September 19, 2012

• Walgreen Co. said that it has concluded its $438 million acquisition of the company that operates drug chains with the USA Drug, Super D Drug and Med-X banners, saying that the purchase will allow it to expand into the smaller communities that these chains often serve.

Published on: September 19, 2012

• Advantage Sales and Marketing has announced that Tanya Domier, its current president/COO, will become CEO on January 1, succeeding Sonny King, the current chairman/CEO/founder, who will transition to the role of Executive Chairman.

• Core-Mark announced that its current president/CEO, J. Michael Walsh, will retire in January 2013, and be succeeded by Thomas Perkins, Core-Mark's current SVP of Resources. Walsh will remain on the Board of Directors following his retirement from management.

Published on: September 19, 2012

Steve Sabol, described by many as the creative force behind NFL Films, helping to dramatize the sport to a mass audience and making football the nation's most popular sport, has passed away. He was 69, and the cause was brain cancer.

Published on: September 19, 2012

MNB took note early this week of a Boston Globe report on how technology may be changing the insurance business, with "more than a dozen insurers, seeking better ways to reward safe drivers and weed out riskier ones, are testing or marketing technologies to monitor driving habits, betting that customers are willing to give up privacy for the promise of lower bills." Essentially, what they are doing is "offering drivers a tantalizing deal: Sharply lower rates in exchange for permission to install a device that tracks when, where, or how you drive."

I noted that there are some privacy advocates concerned about this development, and that I certainly think that it seems possible that insurance companies, if they don't require such monitoring, could impose a financial penalty on those who will not allow their driving habits to be tracked.

And then ... maybe they'll put weight sensors underneath the driver's seat, so they can tell how heavy the driver is, and then charge them more for health insurance...

One MNB reader responded:

Read the leader regarding insurance companies and the car dongles that are being used to negotiate rates and also happen to be sparking privacy concerns.  First scenario that popped into my mind?  It's only a matter of time until we can just toss those privacy concerns out the window (of the moving car).  Most new cars have fancy in-dash systems replete with amazing displays and GPS systems.  I suspect that fancy advertisements based upon my location, time of day, and driving habits (how often I stop at Papa Geno's Cheesesteaks, etc.) will soon be popping up on the dash.  Touts for the tough, smart lawyer when my air bag deploys, ads from the local PD when I start to regularly exceed the speed limit, flower shops on my anniversary...

From another reader:

As people accept the recording devices promoted by the insurance companies, policies will start changing too.  The insurance companies are going to use the driver data to deny claims.  If the speed limit is 65 and the installed recording device says that you were traveling 66 at any time in the vicinity of when the accident occurred, they’ll just deny the claim.

Still another MNB user chimed in:

I thought I would comment on what you said at the end of your article about health insurance companies getting your weight from car seats. My health insurance actually  does what they call “health screenings” in order to find out everyone’s condition. You can decline, but then you pay a higher premium each month. They check your BMI, cholesterol and blood pressure which help you set “health goals” for the year that they monitor the progress of. You can either talk with a health coach each month, or participate in activates to quit smoking or focus on other areas that they  or you feel you are lacking in. I hate it, and I am actually in pretty good health. Last year, I had cold medicine the day of the screening which falsely raised my blood pressure that day. I paid for it by having to talk with a coach every month and track my fruit consumption daily for months.  I understand the reasoning behind it but it is really an adjustment to the way things were even a couple years ago.




On the subject of GMO labeling, MNB user Stephanie Steiner wrote:

Consumers want it – we, as an industry, need to stop shutting down their demand – or worse, telling them their demand isn’t valid.  It is valid.




We noted yesterday a story in USA Today about the continuing debate over the health benefits of milk: "While some consider milk a nutritional powerhouse, others see it as unnecessary for good health and question the rationale behind some government-related programs that try to help the marketing of milk."

One MNB user responded:

Why is there a debate over every conceivable subject? If you want to drink milk, do so. If not, not. Why do these self-absorbed egotists insist on inflicting their moral, political, social, cultural and generational views on others, who are neither interested nor care? Are they compensating for something missing from their drab, meaningless lives?

That seems so harsh ... it seems to me that this is a worthwhile debate, especially if our tax dollars are being used to subsidize the industry.

Besides, there are plenty of MNB users who have opinions ... and they are not people with drab, meaningless lives.

One MNB user wrote:

I had to laugh at the notion that milk is worth subsidizing in part because it is “an easy source of hydration”… come on, if you consider what dairy farmers have to go through in terms of feed, irrigation, hormone treatments to increase milk production, antibiotics to treat the infections caused by the increased milk production, breeding, waste removal, sanitation, refrigeration, transportation …. is it really easier than drinking water for hydration?

From another reader:

Simply put:  Milk is for baby animals.  We humans are the only animals that once weaned, continue to drink milk; which by the way is designed by nature for baby cows.

And from another:

The arguments pro and con regarding the consumption of cow's milk by humans always fascinate me. As one of those Mediterranean types with lactose intolerance, I have avoided milk for most of my adult life. Now well into my sixties, I have low blood pressure, no osteoporosis, and no health issues that require medication. I take no supplements or pills. When a dietitian tells me I need to drink milk for calcium, I have one question: Where does the cow get all the calcium that it puts into its daily output of milk? It sure as heck is not drinking milk.




On another subject - Amazon collecting sales taxes - one MNB user wrote:

Kevin - re today's note on the impact (or lack thereof) on Amazon's sales after they started collecting sales tax in Texas.  Your key point that there is a lot more to the Amazon customer proposition than a tax advantage is correct, and I don't think anyone would disagree in principle.  

But to claim that "there are many (retailers) who clung to the desperate hope that once Amazon starts collecting state sales taxes, it would lose all or most of its differential advantages and plummet to earth, leaving just a broken carcass to be ravaged and picked apart by bricks-and-mortar competitors" - really?  I know you're trying to make a point, but the tone of "you guys are all too stupid to understand this no matter how often I tell you" is beneath you.  Do you truly believe that there are "many" retailers out there who think that the only thing going for Amazon is a 4-7% sales tax advantage?  And while few people may have said "lack of sales tax" was a key reason for shopping at Amazon, I bet many of them said "lower prices" - part (but  certainly not all) of which comes from the 4-7% sales tax advantage - I wouldn't have expected the customers to portion out what part of the overall lower price came from taxes vs. other factors.

Having worked in retail for 25+ years and having seen the extent to which customers will switch stores to save a dollar or two, it's hard for me to believe that a 4-7% advantage has no impact whatsoever - "not the only thing" and "nothing" are not synonymous.

I only wrote the thing about some retailers believing that sales tax collection would eliminate Amazon's advantage because that's what I've heard from a number of retailers, both when I'm out giving speeches and in emails sent to me here.

I certainly wasn't suggesting that anyone is stupid. But I do think there is a certain amount of denial out there...