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    Published on: February 20, 2013

    by Kate McMahon

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

    Welcome to Watergate 2013.

    We are referring, of course, to Florida Sen. Marco Rubio’s awkward lurch for a bottle of Poland Spring water and subsequent slurp during his Republican rebuttal to the president’s State of the Union address last week.

    Within minutes the Twitter universe lit up with #watergate tweets, and social media watchers anxiously waited for Poland Spring to capitalize on its prime-time product placement moment.

    And waited.

    And waited.

    Even Rubio himself good-naturedly tweeted a photo of an empty Poland Spring bottle right after the speech and has since parlayed his guzzle into a $125,000 boost to his campaign PAC coffers through the sale of Rubio water bottles (certainly abetted by a "Saturday Night Live" spoof).

    But as the hours ticked by, and the gulp was replayed on newscasts, parodied on YouTube and the talk of Twitter, Poland Spring remained radio silent.

    When contacted the next morning a spokesperson said: “I haven’t seen what’s going on on Twitter.”

    Not an acceptable response, particularly for the top-selling spring water brand in America, owned by the multi-billion dollar international conglomerate Nestle.

    And finally at 1:20 p.m. Poland Spring weighed in with a Facebook post showing a tiny Poland Spring bottle looking at its reflection in a mirror with the caption: “Reflecting on our cameo. What a night.”

    Witty, yes, but way too late. The headlines that followed shouted “squandered,” “missed opportunity” and “fumbled.” The Huffington Post compared the 14-hour lag to “roughly 14 years in social media time.”

    Turns out Poland Spring stopped posting on its two Twitter accounts as of July 2010 and January 2011, respectively. Really?

    The lead-footed response had the bad luck to follow a timely moment of social media marketing by Oreo during the Super Bowl blackout. Oreo was already in the game with a commercial, but tweeted “Power Out? No Problem” and a picture of an Oreo with the caption “You can always dunk in the dark.”

    (Tide also sent out a tweet saying “We can’t get your blackout. But we can get your stains out” and Walgreen’s chimed in with “We do carry candles” but it was Oreo that got all the attention.)

    In fact, the Oreo tweet was retweeted 10,000 times in one hour and lauded as the advertising winner of the night.

    And it illustrates the phenomenon that major nationally televised events are essentially “two screen experiences” – what people are watching and what they are tweeting simultaneously.

    Since Oreo had a commercial airing during the Super Bowl, cookie execs and its ad agency team had gathered in a “mission control center” to watch the game and monitor social media channels.

    With all the key players on hand, they were able to design – and get approval for – a witty graphic within minutes.

    Granted, Oreo had a multi-million dollar investment in the Super Bowl telecast and Poland Spring had no way of knowing its product would capture the nation’s attention, thanks to a parched freshman Republican from Florida.

    But the two cases illustrate that real-time interaction with consumers on social media is dictating the discussion. If you aren’t prepared to join in, you will find yourself left high and dry.

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

    Published on: February 20, 2013

    by Kevin Coupe

    In Ireland, the Independent reports that Tesco is forcing employees to "wear electronic armbands that managers can use to grade how hard they are working ... The armbands are worn by warehouse staff and forklift drivers, who use them to scan the stock they collect from supermarket distribution points and send it out for delivery."

    However, one person's efficiency is another person's intrusive behavior.

    While "Tesco said the armbands are used to improve efficiency and save its staff from having to carry around pens and paper to keep track of deliveries," a former staffer says that managers are using them "to keep an eye on employees’ work rates."

    What is interesting to me about this story is that it really is about one of those issues that are a product of our 21st century, technology-driven culture. People can wax rhapsodic about the notion of wearable technology - I've done it myself, most recently about the concept of an iWatch - that will allow us all to be more connected, more effective, more efficient, breezing through life as if with an EZ-Pass strapped to our foreheads, an iPod implanted behind our ears and a computer/TV screen wired into our eyeballs. No muss, no fuss.

    Except that being so wired does mean that not only do we move through life with greater ease, but people and organizations are able to track us with greater facility. Fact of life. And we have to think about whether these trade-offs are worth it.

    I, for one, would be loathe to give up my E-=Z Pass, even though I know my movements can be tracked and used against me. (It seems like every fourth episode of "Law & Order" used this as a plot point.) But since I don't plan to go anywhere or do anything that will end with me in court, I'm okay with that.

    However, if I had an employer who gave me a wristband - or even a smart card of some sort - that would, in exchange for making me more efficient, allow them to track my every movement, how would I react to this? Not well. I recognize that this may be within an employer's rights, but it would be enough to make me want to find another employer.

    I also recognize, though, that this is easy for me to say ... I've spent most of the past two decades seeking professional autonomy, have achieved it to some extent, and so I'm not really worried about it. But if I were working in a store, a warehouse or a factory, and this were foisted upon me, I might not have options.

    In the end, I think, employers need to understand that just being able to track people for efficiency's sake is not some sort of panacea. You may know more, but you've also created a climate of distrust. You've turned that employee into a commodity, when he or she could have been an asset. And their investment in making the business successful will be lessened.

    But I also understand that in cutthroat businesses, the opposite argument can be made. (I don't agree with it, but I understand it.)

    These are tough questions, without easy answers. But they will continue to pop up, as technology continues to advance.

    Our eyes - and our minds - have to remain open.
    KC's View:

    Published on: February 20, 2013

    The Wall Street Journal this morning reports that while the ongoing horse meat scandal in Europe is forcing both suppliers and retailers to apologize for the contamination and "pledge to make better use of DNA testing on their products to ensure it never happens again," the reality is that "avoiding another food scare with testing isn't likely, because testing isn't easy or cost-effective."

    One problem is that resources devoted to DNA testing have been cut back in recent years, so labs that still do the testing now are being inundated, which lengthens turnaround times. In addition, testing is costly - which means that these costs have to be passed along to the producer and, eventually and inevitably, to the consumer.

    And, there's one other twist - it seems that "if the food chain was contaminated with meat from sources that weren't being looked for, DNA testing wouldn't pick it up." In other words, if you are DNA testing for beef, you wouldn't necessarily be able to pick up horse DSNA. Or dog DNA. Or moose DNA. Or anything you are not looking for. Which means that while DNA testing for horse meat now can work because it is reactive, expanded DNA testing in the future will have significant limitations in picking up contamination.

    You can read the whole story click here
    KC's View:
    Jon Stewart had a funny take on the horse meat scandal last night on 'The Daily Show," and he linked it to the asteroids falling on Russia in a segment entitled "We May Be Screwed, But At Least God Isn't Hurling Rocks And Loose Horsemeat At Us."

    You can check it out click here. Prepare to laugh.

    Published on: February 20, 2013

    Interesting piece in the Chicago Tribune about how Kraft Foods is trying to "reverse a string of product failures" by developing "an innovation playbook that calls for more investment in fewer, bigger ideas that receive more financial support."

    Barry Calpino, Kraft's vice president of breakthrough innovation, told a Consumer Analysts Group conference in New York that the company suffered from "small ideas, lack of focus and little investment" that "hobbled development as well as launches."

    And, the story notes, "Calpino said that Kraft is also maintaining focus on its big launches for the first three years of a product's life rather than moving on after the first year. Other initiatives include improving the level of talent within the organization and appealing more to Hispanics in product development and marketing."
    KC's View:
    This is a good business lesson for everyone. Innovations don't always take off on their own, and sometimes you have to give a new idea more than six or nine months to catch on. To make things grow, one has to provide care and feeding and nurturing.

    I would need more than the fingers on my hands and the toes on my feet to count the number of initiatives that I've seen abandoned by various organizations because they didn't catch on quickly enough, when the fact is that investment was less than necessary or implementation was less than effective.

    Published on: February 20, 2013

    The San Francisco Chronicle has a story about how a group of community leaders and business people in West Oakland, California - a community where 50 percent of the residents don't have cars and the closest full service supermarket is a mile and a half away - are raising money to open a local food store.

    According to the story, the group "plans to build a full-service grocery store, the People's Community Market, in a vacant lot at the corner of West Grand Avenue and Market Street. But the entrepreneurs, headed by Brahm Ahmadi, are using a nontraditional method to raise funds.

    "They're selling stock in the supermarket on the People's Community Market website without using an underwriter. The method, known as a direct public offering, was used by companies such as Ben & Jerry's ice cream, Annie's Homegrown foods and Costco when they were still fledgling businesses, and it is growing in popularity.

    "So far Ahmadi, the founder and former executive director of the nonprofit People's Grocery, has raised $240,000 from investors who are disillusioned with Wall Street and want to put their money toward building a better community."

    The goal is $1.2 million, which will then allow the group to obtain a $2.4 million low interest loan to complete the project.

    Here's some of the interesting financial details:

    "The direct public offering is regulated by the California Department of Corporations, a government agency that oversees business and financial transactions. The offering is only available until the end of September and is limited to Californians, as the federal Securities and Exchange Commission is not involved, Ahmadi said.

    "The investment minimum is $1,000 for people who have less than $1 million in net worth - excluding the value of their primary residence - and $5,000 for investors who have more. After seven years, shareholders can choose to get back their original stake, plus 3 percent compounded annual interest, according to the terms of the offering. An investor will also receive an annual credit to the store worth 1 percent of his or her investment."

    It is estimated that local residents spend close to $58 million annually on groceries, with seven out of ten dollars going to stores outside the area; while there may be no supermarkets, West Oakland is said to have 53 liquor stores and 14 mini-markets.
    KC's View:
    Good for them. This strikes me as a worthy cause, and I hope the neighborhood organizers are able to pull together the $1.2 million.

    Published on: February 20, 2013

    Reuters reports that business groups, including the US Chamber of Commerce, yet again are lobbying the US Congress to amend the Foreign Corrupt Practices Act, which bars US businesses from lobbying foreign officials, and which they say is too ambiguous.

    The story says that businesses are seeking "additional safeguards by which companies would escape criminal liability for the misconduct of individual employees if they already have strong safeguards and internal compliance systems in place."

    According to Reuters, "U.S. authorities have significantly stepped up enforcement of the FCPA in recent years, extracting hundreds of millions of dollars in fines from Siemens, Alcatel-Lucent, KBR and others." In addition, "some of the largest U.S. firms, including Wal-Mart and Avon Products Inc, have already spent hundreds of millions on internal investigations into potential misconduct."
    KC's View:
    On the one hand, "don't bribe foreign officials" seems like a fairly unambiguous rule. (Exactly what is the confusion here?)

    On the other hand, I get the idea that sometimes people go rogue and behave in ways not sanctioned by their companies, and maybe there ought to be some protections.

    However ... I also think that this sort of change in the law could be called the "scapegoating amendment," because it will open all sorts of doors to companies blaming individuals and creating scenarios of plausible deniability. (Maybe the amendment could include a clause that says "if you try to scapegoat one of your employees and are found guilty, the fine will be automatically doubled.")

    Published on: February 20, 2013

    Bloomberg reports that the Federal Bureau of Investigation (FBI) and the US Securities and Exchange Commission (SEC) are looking into what are called "trading anomalies" that seemed to occur just before the announcement that Berkshire Hathaway and 3G Capital would be acquiring HJ Heinz.

    According to the story, "The SEC alleged in a complaint filed in Manhattan federal court that the traders earned $1.7 million by purchasing the ketchup maker’s stock just before the announcement. The trading in the deal, which Heinz and 3G said is the largest ever in the food industry, was carried out through a Zurich, Switzerland- based account and involved call-option contracts, the SEC said ... The SEC alleged the defendants invested almost $90,000 in option positions the day before the deal was announced. As a result, their position increased to more than $1.8 million, a rise of almost 2,000 percent in one day."
    KC's View:

    Published on: February 20, 2013

    Internet Retailer reports that 2012 e-commerce sales numbers from the US Commerce Department are in, totaling $225.5 billion, up 15.8 percent from 2011. Internet Retailer "calculates that e-commerce accounted for 7.6% of total retail sales during the year, up from 6.8% a year earlier."
    KC's View:

    Published on: February 20, 2013

    • The Chicago Sun Times reports that "J.M. Smucker Co. is lowering the price for most of its packaged coffee products sold in the U.S. an average of 6 percent, as the price of unroasted coffee beans continues to drop." The brands affected include the Folgers and Dunkin' Donuts lines.

    • Ahold USA announced that "nearly $67 million was donated in 2012 through the company’s Our Family Foundation, its retail banners of Stop & Shop, GIANT/MARTIN’S and Giant Food of Landover, Maryland, along with customer, vendor, and associate donations to local organizations committed to fighting hunger, improving the lives of children, and building healthy communities."

    Ahold USA also announced a new three-year initiative to distribute $9 million in Fighting Child Hunger grants from its Our Family Foundation.
    KC's View:

    Published on: February 20, 2013

    • Kroger has promoted Robert Clark, vice president of merchandising at its Fred Meyer unit, to be its new group vice president of non-perishables.

    • Stater Bros. Markets announced that Dan Meyer, senior vice president of Retail Operations and a 42-year veteran of the company, has been promoted to the position of Executive Vice President Retail Operations.
    KC's View:

    Published on: February 20, 2013

    We continue to get email about the Maker's Mark brand equity story.

    MNB user Pete Deeb wrote:

    Maker’s Mark needs a new set of Marketing people or more intelligent ownership even after their pull back on the product change. If you read the statement they released carefully you will see that they have increased demand for their product and fierce loyalty  - signs that you can raise the price without damaging the product and the image! Additionally the statement about increasing capacity  says that the shortage is short lived (if it ever existed) and that future sales are promising.

    MNB user Daniel Drotning wrote:

    I am not a Bourbon drinker so perhaps I am being cynical.  I have not heard an ad for Makers mark in 20+ years and now the brand is all over the news for not doing something they should not have done in the first place.  Free advertising, can you say “new coke”?

    MNB user Mark Boyer was thinking the same way:

    This story reminds me of the Oscar Wilde quote: "There is only one thing in life worse than being talked about, and that is not being talked about."

    Are these people incredibly clever to create some buzz (any buzz) about their brand, or did greed cloud their good judgment? Before this story came out, when was the last time you heard “Maker’s Mark” mentioned?

    And, along the same lines, from another reader:

    Some might suggest that the producers of Maker's Mark bourbon are simply playing out their own version of the 1985 marketing gambit, New Coke, which in the end, of course, was fabulously successful for the Coca Cola Co.  Maybe the Maker's Mark people are, in fact, crazy like a fox?

    Maybe I'm naive, but I find it hard to believe that Maker's Mark engineered this to get free publicity. If they did, they're morons ... because almost all the publicity has been bad.

    From another reader:

    Maker's Mark must have looked with envy at the CPG industry, which routinely substitutes inferior ingredients and reduces package sizes without lowering retail prices - and gets away with it. Too bad for Maker's that their product is susceptible to closer scrutiny.

    And from still another MNB user:

    I just read the Maker’s Mark article and it reminded me of my own personal frustration with a consumer product.  My situation involves a hair care item that was a miracle product for my particular type of hair.  People would stop me on the street and ask what I did to my hair because it looked so great.  I could always depend on my curly style (maintaining the height and width that was arranged in the morning) to last all day.  Often, I wondered why I hated my hair throughout my early years, when, in fact, I had beautiful hair.  Well, a couple of years ago, I noticed that the fragrance and consistency of the product were different.  So was the outcome.  To this day, I have NOT been able to recreate the beautiful curls and style that I wore with confidence.  I wrote to the company, and they dismissed my note, telling me they did NOT change the formula.  I consulted many hairdressers, and they all confirmed my suspicions.  I again, contacted the company, and they told me to buy my products at a different salon.  That frustrated me even more, so I called them up and asked to speak to someone in their marketing department.  I was not given  a name, but, was told that no one was available to speak to me.  This company had a great product that they ruined, I’m sure, because it wasn’t profitable enough.  I should mention that this item cost $16.95 per can.  I would be willing to pay $50.00 per can to get my perfect hair back.  To date, I have spent hundreds on other hair care items, trying to find one that would work.  No luck.  My hairdresser is also constantly looking, but, is also not successful.  Don’t manufacturers realize that people will pay for something that they can count on?  Changing a formula doesn’t fool anyone.  As I continue my search for the right hair care product, I notice that their “new formula” is not selling so good.  Ya think?

    Point taken.

    On the subject of Walmart opening a Neighborhood Market that is twice as large as its usual grocery stores, one MNB user wrote:

    Walmart has opened two Neighborhood Markets in former Albertson’s locations in Plano, TX.  I’ve been in one of them and it actually a pretty nice store.  It’s got a better product mix and more non food merchandise than the typical Neighborhood Market store.

    So it is not an outlier. I still wonder if this all means that Walmart could be more open to US acquisitions than in the past.

    From another reader:

    I also wonder if Walmart would be interested in acquiring Fresh & Easy and converting them to Walmart Express, which has a similar 10,000 sq. ft. footprint. In the UK, Walmart purchased the Netto chain and converted the units to a slimmed-down version of its ASDA format. Wouldn't it be ironic under this scenario if WMT tapped its UK management to oversee the conversions?

    Regarding another Walmart story, this one about the executive who wrote an email about disastrous February sales that ended up getting leaked to the media, one MNB user wrote:

    These WM execs must have been absent from the first day of executive school, where they would have learned to be careful what you put in writing.

    I suggested yesterday that the writer of the leaked email may get transferred to a night managers's position at a Bismarck, ND, Walmart. Which led MNB user Paul Sakariassen to write:

    So perhaps a comment spoken or e-mailed was taken out of context and all of a sudden it is the buzz on every blog and financial news cast.  If true, it is worthy of the attention, if not it reinforces the general impression of internet gossip.

    By the way, you seem to insinuate that being assigned to work in Bismarck, ND equates to being sent to Dante's ninth circle of hell, believe me, its a bit cooler and much more friendly. I am certain that the Walmart Supercenters in Bismarck are doing just fine with or without the "executive".

    I knew that whatever town and state I used for that crack, I was going to get criticized by somebody. So I used Bismarck, just because it seemed cold and far away from Arkansas. No offense meant ... I've actually never been to North Dakota, but hope to go there someday. (It is one of only four states I've never been to.)

    Yesterday, MNB reported that Don Marsh, the former CEO of the Indianapolis-based supermarket chain that bears his family name, has been ordered by a federal jury there to pay Marsh Supermarkets $2.2 million, the result of a trial that accused him of using corporate assets for personal gratification. The charges specifically were that he defrauded the company by using corporate funds to finance extravagant trips to places like China, Russia and Cuba - allegedly to check out products and investigate the possibility of exporting his own private label products - as well as to hand out gifts to family and friends, including several mistresses that he was keeping on the side, including one in a New York City apartment.

    I commented, in part:

    This is disgusting. No other way to describe the behavior of a guy who once had some measure of respect in the retail business, but who clearly squandered it because he felt that the business was there to serve him, rather than he being there to serve the business.

    Disgusting. In so many ways.

    Let's be clear about something. Most of the people I know who have run family businesses are good, decent, hard-working people for whom this kind of behavior would be anathema. I know people who own businesses who won't even take a water bottle off the shelf without paying for it, because they believe it is wrong, dishonest, and would set a bad example.

    It also seems clear that Don Marsh simply doesn't get it. He continues his appeals and countersuits and protestations, ignoring the simple fact that in any legitimate organization, there is not one code of conduct for the CEO and another for everyone else. Leaders have to lead not from some sense of privilege, but one of responsibility, of service to the company, to the people who work there, and to the people who shop there.

    One MNB user responded:

    All company executives, regardless of the whether it is a large publicly traded enterprise or a small family owned business have fiduciary and ethical responsibilities to employees and shareholders.  The fact that Don Marsh headed a company that was once family controlled does not excuse him from these responsibilities but if anything puts him at a higher standard.

    And MNB user Clayton R. Hoerauf wrote:

    Trying to always be the optimist….. Maybe he just needs a career change. Mr. Marsh might want to consider a move to Illinois. He certainly has the qualifications for political office there.

    Or Louisiana. Or New Jersey. The opportunities are endless.

    Regarding the return to bankruptcy by Reader's Digest, which I described as seeming to have an entirely obsolete business model, MNB user Tom Redwine wrote:

    I'm with you, Content Guy; RSS (and more specifically, Google Reader) replaced the Reader's Digest for me many years ago. I'm actually kind of surprised they made it this long.

    I do have some fond memories of their "Laughter, the Best Medicine" section, though - those were the jokes I could tell just about anyone.

    And, in response to yesterday's piece about Best Buy instituting a permanent price matching policy that it hopes will help alleviate showrooming, one MNB user wrote:

    Beyond price matching, Best Buy simply has to make its bricks-and-mortar experience more compelling by better meeting the service needs of its customer base. That customer-oriented focus was much easier to attain when Best Buy had to compete with the likes of Circuit City, before the latter fired its experienced, if more costly, commissioned salespeople and substituted minimum-wage drones in their place, helping to seal Circuit City's fate.

    Two different reactions to my commentary yesterday about the Heart Attack Grill and the death last week of a 58-year-old guy who ate there every day.

    An excerpt:

    I was not calling for the legislation or regulation of anything. And I noted that the Heart Attack Grill certainly was honest about its labeling.

    But I am perfectly happy to stand behind my essential argument - that we live in a culture that seems to exploit people's weaknesses. I'm not so much talking about Alleman here as I am about the stated policy of free food to anyone over 350 pounds.

    To me, that is just appalling. It shouldn't be legislated, it shouldn't be regulated. But it seems morally and ethically reprehensible. And yes, sort of like giving free heroin to an addict. (A bit of hyperbole? Sure. But defensible hyperbole.)

    There's a broader issue here. It just seems to me that sometimes as a culture, we don't strive to be the best we can be and to appeal to the highest common denominators. Instead, we prey on people's foibles, we celebrate and ridicule them on reality TV shows, we give free, fatty food to morbidly obese people ... and then we call it entertainment, we call it free enterprise, and then we wonder why some people think that American exceptionalism may not be as exceptional as it used to be.

    (I use as my guide in this area my friend Norman Mayne, who once told me that while he appreciates the fact that his Dorothy Lane Markets are so highly thought of, and even legendary in the business, the most important thing to remember is that each day they have to earn those adjectives all over again. So it goes, I think, for the notion of exceptionalism.)

    I know it sounds like I am on my moral high horse here, and I don't mean to be. I'm as capable as being petty and negative as anyone, and I do it with a little bit of a soapbox.

    It's just that I read the Heart Attack Grill story, and it makes me think that we can do better.

    Not because we have to. Not because we are forced to. But because we can. And maybe, because we should.

    MNB user Philip Bradley wrote:

    Your Jesuit education is showing (re the discussion on the Heart Attack Grill).  And you couldn't be more right!
    Thanks and keep it up.

    This will come as a surprise to some of the folks who think I am assiduously anti-Catholic.

    But MNB user Brian Jahn wrote:

    Better be careful with your moral high horse… may be eating him later with a nice rich luscious chardonnay maybe a 2007 Newton Vineyard Red Label??


    I've quoted this before in this space, but I think it is appropriate to do so again ... the playwright is Robert Bolt, the play is "A Man For All Seasons," and the speaker is Sir Thomas More, explaining why he must stand up against King Henry VIII:

    If we lived in a State where virtue was profitable, common sense would make us good, and greed would make us saintly. And we'd live like animals or angels in the happy land that needs no heroes.

    But since in fact we see that avarice, anger, envy, pride, sloth, lust and stupidity commonly profit far beyond humility, chastity, fortitude, justice and thought, and have to choose, to be human at all ... why then, perhaps we must stand fast a little - even at the risk of being heroes.

    Sometimes I think we do not live in such a happy land.
    KC's View: