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    Published on: January 23, 2013

    by Kate McMahon

    "Kate's Take" is brought to you by Wholesome Sweeteners, Making The World a Sweeter Place.

    Gotta hand it to the Whole Foods Market social media team. Like a Super Bowl-caliber offensive line, they knew to jump into action the minute leader John Mackey uttered his latest politically divisive comment, likening Obamacare to “fascism.”

    In fact, many Facebook followers (myself included) had not yet even heard about Mackey’s interview with National Public Radio (NPR) last week when we received the pro-active news feed which read: “Thanks for taking the time to send us your thoughts! Challenging the way people think is part of John Mackey’s DNA. He’s a catalyst for new ideas and clearly a provocateur.”

    My first thought: What did he say now?

    Back in 2009, the upscale supermarket chain co-CEO ignited a firestorm of controversy on the internet when he likened hot topic health care reform to a form of socialism. (In other web woes, he was reprimanded in 2008 for posting an anonymous comment that criticized then-rival Wild Oats before Whole Foods purchased the company.)

    Mackey was on NPR’s Morning Edition promoting his new book, "Conscious Capitalism," when asked if he still considered the Affordable Care Act socialism. He replied, “Technically speaking, it’s more like fascism.”

    Within hours, thousands jumped into action on Facebook, blogs and Twitter, debating Mackey’s statement. Progressives dominated and many demanded (another) boycott of Whole Foods. In one of 15,000-plus comments on a Huffington Post article, one reader posted: “This customer, Sir, is going back to Jewel and Trader Joe's. Bye now.”

    Cut to the next day when Mackey backtracked in morning television and print interviews. "I regret using that word now because it's got so much baggage attached to it," he told HuffPost Live on Thursday. "Of course, I was just using the standard dictionary definition."

    The Whole Foods Facebook page was quick on the turnaround, posting “We hear your concerns about our co-CEO's recent comments loud and clear. He offers clarification here in his own words” – with a link to Mackey’s blog regretting his “poor word choice.”

    Most of his customers were not impressed, evidenced by these responses: “In other words, ‘Oops, I offended 85% of my customer base, so I guess I chose the wrong word’” and “Although I abhor what he said, I defend his first amendment right to say it. And mine to shop elsewhere."

    A smattering of support was summed by this post: “We will shop here exclusively. You speak the truth, Mr. Mackey.”

    (In the end, while Mackey's words probably were not calculated, they could end up having a positive impact. People who hate Obamacare and might have perceived Whole Foods as being liberal/elitist might now see it as a more friendly place to shop. And people who find Mackey's comments to be offensive probably will end up returning to the store to shop because, after all is said and done, where else are they going to find Whole Food's range of products?)

    While I personally disagree with Mackey’s observation and think he could use a word choice coach, I am impressed with the Whole Foods Facebook approach to debate on its site. The original post noting Mackey’s provocative ideas concluded with:

    “However, it’s the combined power of all 73,000+ Team Members, the faces you see in your store everyday, that defines who we are. While our discourse may not always be easy, it’s what leads us to bring about the ideas, products and programs that best serve our communities.”

    Which was, I think, one way to turn lemons into lemonade ... albeit local, organic, and expensive lemonade.

    Comments? Send me an email at .
    KC's View:

    Published on: January 23, 2013

    Notes & comment from The Content Guy...

    SCOTTSDALE, Arizona -- If you put the pieces together from yesterday's final sessions at the Food Marketing Institute (FMI) Midwinter Executive Summit here, you get a sense of the shifting competitive landscape and what retailers need to do in order to stay - or become - viable and sustainable.

    For example...

    "We have to get away from stocking shelves and move to selling benefits," said Diane Dietz, executive vice president/CMO for Safeway, pointing to the need for a more experiential shopping experience.

    That means, Thom Blischok of Booz & Co. said, creating more "experience-based retailing" that is "value-centric, not price-centric."

    That's critical, if one is to believe a report from Deloitte that suggested that the dollar store format is becoming ever more competitive, as players in that space invest in geographic expansion, higher SKU counts, more private brands and an improved store experience - all of which are leafing CPG companies to invest more money in the channel. (Consumers seem to appreciate dollar stores for "not ripping them off," the report says.

    To respond to such challenges, futurist Andrew Zolli said, retailers have to adopt the habits of highly innovative companies - constantly making lots of small and innovative bets, embracing cognitive diversity within their organizations, building differentiated partnerships and thinking "in more than just one time frame."

    All of which adds up, I think, to an industry where the most effective players are looking for differential advantages wherever and however they can find them, with an deep understanding that ongoing and sustainable business success cannot be built on areas in which they overlap and/or resemble each other, but rather must have as their foundation innovative products and services that continue to evolve and improve.

    This requires an ability to listen, to not operate on the premise that you are the smartest guy in the room (even if you are). Kroger chairman./CEO David Dillon, I thought, summed it up correctly when he said he felt executives should use the mirror as a leadership metaphor. A mirror, he said, can provide instant feedback on one's physical attributes, and true leaders need to be constantly seeking out feedback on their efforts, goals and achievements ... which gets harder and harder the higher one gets in an organization. "Set an environment where people know you want feedback, and respond with a thank you, and not in a defensive way," he said.

    Because learning is an ongoing process.

    In other FMI Midwinter news...

    • Norman Mayne, CEO of the iconic Dorothy Lane Markets in Dayton, Ohio, was honored with the second annual Robert B. Wegman Award, presented in recognition of "achievement of entrepreneurial excellence."

    • FMI recognized Joe Burke, the longtime and retiring vice president of industry affairs for Coca-Cola, with the William H. Albers Award, presented for his role in fostering positive industry relations and collaboration.

    • FMI presented its annual Herbert Hoover Award to Alfred Plamann, CEO of Unified Grocers, recognizing his humanitarian business efforts.

    • FMI raised $800,000 at its annual Foundation dinner, money that is earmarked for what it called "ongoing charitable, educational and scientific commitments," including the fight against childhood obesity, the promotion of family meals, and the development of metrics to measure the impact of food safety education efforts.

    • At the Foundation dinner, by the way, Kroger chairman/CEO David Dillon was presented with the Distinguished Eagle Scout Award, "given to Eagle Scouts who, after 25 years, distinguished themselves in their life work and who have shared their talents with their communities on a voluntary basis."

    • A new campaign, "Let's Put Our Plates Together," was introduced at the conference, designed to "inspire, inform and motivate ... members to create family meal solutions for their shoppers.  The campaign will include the introduction of a new, annual honor, the Gold Plate Award," which will encourage members to "submit their best campaigns around healthy family meals, quick family meals, cooking with kids, themed dinners, breakfast with the family, MyPlate meals, and other creative concepts."
    KC's View:

    Published on: January 23, 2013

    In Toronto, the Globe and Mail reports that Walmart plans to invest $450 million in its Canadian operations, but the money will be largely spent on expanding its distribution network and converting stores to the supercenter concept; a year from now, it will likely have just nine more stores there than it has now, for a total of 388.

    Walmart Canada CEO Shelley Broader tells the paper that the plan is in line with the company's broader - no pun intended - strategy, that a higher investment level last year was more a function of opportunity.

    The paper writes that "Wal-Mart spent far more – $750-million – on expansion in the year just ending, adding 46 new stores, although 39 of those were former Zellers stores it purchased in 2011. (Those stores were bought from Target, which had picked up more than 200 Zellers leases but didn’t want to keep all of them.)"

    Here's how the paper frames the Walmart strategy:

    "Wal-Mart Canada’s response to the arrival of Target stores into the Canadian market will be simple: emphasize its own low prices and 'one-stop shopping' service, Ms. Broader said.

    "The company prefers not to worry about any single competitor, she said, but instead plans to concentrate on its strengths. 'Our strategy is to save people money so they can live better, and to keep our own operating costs as low as we possibly can so we can pass all those savings on to our customers.'

    "The retailer also wants to ensure its customers can buy everything they need in one location – a place 'where they can get apparel, and bedding, and dinner, and ride home on a new bike, if they chose to,' Ms. Broader said.

    "While Target’s design-oriented cool factor sets it apart, Ms. Broader said Wal Mart’s vast worldwide network can sometimes bring in new items – like patio furniture – that have unique designs. 'We continue to up our style quotient when the customer values that'."
    KC's View:
    First of all, let's be clear. If you look up "style quotient" in the dictionary, it is a pretty good bet that you'll see Shelley Broader's picture there.

    Some of the analyst comments on Walmart's Canadian strategy suggest that it has to be careful about becoming complacent, that when Target begins opening stores there it will be a formidable competitor. I think that's true, but I also don't get any sense of complacency from Shelley Broader's comments. I also think that she is their best weapon when it comes to food marketing, because that's an area in which she always has excelled.

    Published on: January 23, 2013

    USA Today has a piece about the just-completed Winter Fancy Food Show in San Francisco, offering a look at what it perceived as being the hottest food trends of 2013. Among them...

    1. Coconut: "In canned juice or as an ingredient or simply a dried, unsweetened snack, coconut was legion at the show."

    2. Vegetable and fruit oils: "You use olive oil, once bought walnut oil and tasted truffle oil. But how about Austrian pumpkin seed oil? Or tomato seed oil? Or cherry pit oil or chili seed oil?"

    3. Beer as an ingredient: "The past several decades have seen a resurgence in the art of brewing. Now beer is making its way into foods, such as the Beer Flats crackers from Daelia's Food in Cincinnati. The crackers come in porter and pilsner flavors. For serious beer lovers, there's Beer Candy from Santa Clara, Calif." And even beer jelly, which apparently tastes really good on pancakes.

    4. Heritage foods: "America's growing love affair with its sometimes forgotten foods and animal breeds was on full view at the show. One such food was black walnuts, the robust-tasting American walnut species that grows mostly in the Southeast ..."

    5. Spicy sweet: "Salt has been showing up in sweets for several years; sea salt caramels and chocolates are available seemingly everywhere. Now hot is migrating into the candy world ..."
    KC's View:
    I'm sorry...I know I should have some pithy comment about these trends, but I'm having trouble getting past that whole beer-jelly-on-pancakes concept.

    Published on: January 23, 2013

    Continued consumer economic caution and retailers' desire for more targeted marketing efforts will lead to a change in approach for manufacturers used to simply throwing promotion dollars at their problems, according to a new study from AMG Strategic Advisors, a unit of Acosta Sales & Marketing.

    Essentially, the study identified four consumer trends liked to a greater sense of frugality:

    • "67 percent of shoppers said they are 'buying less and sticking to a budget'."

    • "More than half (54 percent) of shoppers indicated they are buying fewer items on impulse – making it harder to get shoppers to purchase unplanned items."

    • "59 percent of shoppers indicated that more than half of their shopping basket is filled with items that are 'on deal'."

    • "Shoppers have become accustomed to buying products on promotion. In fact, 65 percent of shoppers said they 'expect certain products to be on sale, and if they are not, they will wait until they are on sale to purchase'."

    At the same time, retailers are adjusting their approach, the study suggests:

    • "It’s expected that over the next three years, nearly 75 percent of retailers will be either every day low price (EDLP) or some form of hybrid EDLP/high-low format."

    • "67 percent of retailers did more digital advertising in 2012 vs. 2011."

    • "46 percent of retailers are ... limiting the available display space in stores for shippers and other displays."

    The result, the study says, is likely to be that "25 percent of manufacturers are shifting trade funds toward digital promotions," and "42 percent of manufacturers plan to spend more on long-term temporary price reductions (TPRs) to buy price down."
    KC's View:

    Published on: January 23, 2013

    NBC News in Chicago reports that Ed Burke, generally considered to be one of the most powerful aldermen in the Windy City, has proposed a "a blanket ban on energy drinks like Red Bull, Monster, Full Throttle, 5-hour Energy and others."

    The ordinance reads, in part: ""No person shall sell, give away, barter, exchange or otherwise furnish any energy drink." Fines would range from $100 to $500 for each offense. The ban would apply to everyone - not just minors, who are often cited as prime and vulnerable targets for energy drink marketing.

    The NBC News story goes on to say that "the energy drinks, considered boom-town for soft drink makers who have seen increasing profits from that segment of the beverage industry, have raised health concerns because many combine stimulants like Taurine and Guarana with caffeine."
    KC's View:
    Hard to imagine that this could pass in Chicago, especially because Mayor Rahm Emanuel acts like he's got a permanent energy drink drip into one of his arms.

    Published on: January 23, 2013

    The Los Angeles Times reports that US-based Atari Inc. has filed for Chapter 11 bankruptcy protection "in an effort to break free from their debt-laden French parent."

    According to the story, "Its leaders hope to break the American business free from French parent Atari S.A. and in the next few months find a buyer to take the company private. They hope to grow a modest business focused on digital and mobile platforms, according to a knowledgeable person not authorized to discuss the matter publicly.

    "Although the 31-year-old brand is still known worldwide for its pioneering role with video games such as 'Pong' and 'Asteroids,' Atari has been mired in financial problems for decades. Since the early 2000s it has been closely tied to French company Infogrames, which changed its name to Atari S.A. in 2003 and in 2008 acquired all the gaming pioneer's American assets."
    KC's View:
    A cautionary tale, proving yet again that just because one is a pioneer does not mean that sustained success is assured. The story points out that Atari has just 40 US employees, and lately has been almost as focused on licensing its name for other consumer products as on creating new games; indeed, it recently has been working on updating old games under a "greatest hits" title.

    That's not my definition of innovation.

    Published on: January 23, 2013 reports that Starbucks is instituting a new national policy - requiring its baristas to wear name tags.

    According to the blog post, the goal is to provide "an extra touch of personal interaction (and potential chance for personal attacks if that latte used half 'n' half instead of skim)."
    KC's View:
    The odd thing here is that I didn't even realize that they didn't wear name tags.

    I guess this makes me wonder if there is a little concern at Starbucks headquarters about whether the culture of customer service and interaction is dissipating a bit, and that it needs to create the illusion of personal connections because few of them are taking place.

    Just wondering.

    Published on: January 23, 2013

    • The Los Angeles Times reports that "Americans are going to chow down on 1.23 billion chicken wings during Super Bowl weekend this year. But there will be fewer wings available and they’ll cost more, according to an annual report ... there will be 12.3 million fewer wings eaten than last year, or a 1% decline," the National Chicken Council says, noting that the slide is because of "fewer chickens in 2012, as corn and animal feed prices soared to record highs amid a severe summer drought and ethanol fuel production regulations."

    Reuters writes that "McDonald's Corp. is running out of quick-fix strategies for stemming declines in U.S restaurant sales inflicted by tougher competition for customers who are pinching pennies in a weak economic recovery.

    "The world's largest restaurant chain by revenue welcomed customers on Christmas Day and shifted the limited offering of its cult favorite McRib sandwich into December to avoid a big year-end decline in its U.S. restaurant business. But, it appears the company has exhausted its supply of such tactics."
    KC's View:

    Published on: January 23, 2013

    ...will return.
    KC's View:

    Published on: January 23, 2013

    The Sacramento Bee reports that Ron Burkle - the billionaire financier and founder of Yucaipa Companies who often is described as a "supermarket magnate" who owns significant shares of companies that include the Great Atlantic & Pacific Tea Co. - is in discussions to be part of an effort to buy the Sacramento Kings of the National Basketball Association (NBA) and prevent the team from being bought and moved to Seattle.

    Mark Mastrov, described as a "Bay Area investor," also is part of the discussions, according to the story. Burkle already owns the Pittsburgh Penguins of the National Hockey League (NHL).

    Part of any Kings deal would include the financing of a new downtown Sacramento arena in which the team would play.
    KC's View: