business news in context, analysis with attitude

Published on: March 14, 2013

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

I'm just back from California, where I had an opportunity to teach a class in USC's Food Industry Management program - a great time, and terrific program, and it is one of the great pleasures of what I do that universities ask me to participate in such programs.

While I was there, I was interested to read a story that was sent to me by an MNB user, and that went as follows:

"Consumers visiting Carrefour stores in Shanghai are now able to trace the origin of vegetables and fruits on sale by scanning the Quick Response codes of products with their smartphones. "The production place and date of the item, the business license of its supplier and other information regarding the farms can be tracked down, officials said yesterday ... All of its outlets in Shanghai will have the codes by the end of this week, officials said," adding that "the intent is to improve food safety and freshness, and also increase farmers' incomes at the same time."

Wow. That's pretty cool. And evidence, I think, of how important transparency is becoming in global markets.

But what I really found interesting about this was the fact that essentially the same kind of system was in place in Tokyo when I visited some Aeon stores there in 2006.

I remember being fascinated with it. For example, in the produce department, packaged tomatoes had a QR code - it may have been the first QR codes I'd ever seen. Using cell phones - they weren't even smart phones - people could take a picture of the code, and within a minute or so find out where the tomatoes were grown, what was used to fertilize the ground where the tomatoes were grown, and even see a picture of the farmers who grew the tomatoes.

Because of the concerns about mad cow disease, Aeon also had a system that offered a code number for every piece of beef sold there, and the number correlated to the cow from which the beef came. By typing in that code number, one could see the BSE-free certificate, find out where the cows were raised, what they were fed, what bulls they may have been consorting with, and see a picture of the rancher who owned them.

This is 2006. Now, seven years later, it sounds like a similar system is being implemented in Shanghai. And most remarkably, I've never seen a system like it being used in the US ... certainly not at the consumer level.

This speaks to a couple of things. One is Aeon's willingness to be transparent. The other is the general feeling on the part of many in the US that they don't have to be ... despite the fact that in so many ways, the balance of power has shifted to the consumer.

I'm hopeful that Whole Foods' decision to mandate the labeling of GMOs in products it sells is the beginning of greater transparency in the US market, and that it won;t be long that I can get the kind of information I could have gotten more than a half-dozen years ago at some stores in Japan.

One other note. When I asked the folks at Aeon how many of their customers used these information systems, they told me about five percent ... which I found alarming. But they explained to me that this was a good thing ... that this meant that 95 percent of customers trusted them enough to not use the system, and one of the reasons they trusted Aeon was that the systems existed.

Investing in transparency ... investing in accurate Country of Origin Labeling ... investing in systems that give consumers as much information as possible about the foods they buy and eat and feed their families ... these are not investments in technology. These are investments in trust. And in the end, if you are in the food business, trust is one of your most important attributes.

That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

Published on: March 14, 2013

by Kevin Coupe

Two stories this morning suggest how the business model is changing in the entertainment business, which I think should serve as a cautionary note to people in pretty much any other industry who believe that their businesses are somehow resistant to change, or will not be affected by the shift in the balance of power to consumers.

The first story has to with "The Good Wife," the CBS TV series, which the network said yesterday has been licensed to Amazon.com for reruns beginning later this year.

According to the piece, "the deal crystallizes a shift in sales of reruns. Historically, TV stations dominated the rerun market, bidding for rights to air broadcast-network reruns. In recent years cable networks have also become big buyers of such reruns. Only recently have online outlets become a factor in the market, usually for years-old series."

The Times writes that "reruns of 'The Good Wife' will be available on traditional TV outlets, including Hallmark and some local TV stations, next year."

Of course, the whole notion of "TV reruns" is an almost obsolete construct ... since at this moment, I can go on iTunes and buy every episode of the series and watch it on my laptop/iPad/iPod/iPhone.

But the larger point is an important one - which is that traditional venues are becoming less important, and businesses need to embrace the alternatives ... because that's what consumers are doing.

The other story comes from Variety and concerns a proposed feature film sequel to the old "Veronica Mars" TV series. I never saw the show, but it apparently had something of a cult following.

However, Warner Bros., which owns the rights, was reluctant to greenlight a film version because it wasn't sure there was enough fan support.

So the show's creator, Rob Thomas, and star, Kristen Bell, made a deal. They'd go on Kickstarter.com and try to raise money for a film. If they hit $2 million, Warner would agree to back a movie.

Yesterday, within four hours and 24 minutes of the proposal going live on Kickstarter.com, they had $1 million. They hit $2 million by last night, and as of this writing, they've gotten crowdsourcing commitments for $2,565,410, or 128 percent of what they were looking for ... 29 days to go on the offering.

Variety writes:

"The blistering pace of incoming coin surprised everyone involved with the project, which still has 29 days left to pad its budget. As with many Kickstarter efforts, producers laid out incentives for fans — who are not equity partners, ergo see no fiscal return — ranging from a PDF of the shooting script (pledges of $10 or more) to a speaking part in the film (the highest pledge of $10,000, which was promptly claimed). Other goodies include a T-shirt ($25 or more), Blu-Ray/DVD combo pack ($100) and signed posters ($200 or more).

"As 'Veronica Mars' speeds into production, it’s easy to imagine a clutch of similar efforts to adapt low-budget cult properties that never found financial backing. TV shows 'Firefly,' '24' and 'Arrested Development' (which Netflix is now rebooting for television) had all been kicked around as possible films. None went the Kickstarter route, but might soon reconsider."

There is no question that I'd kick in money to see film versions of "24" and especially "Firefly." But more importantly, this story points yet again to the shifting balance of power, toward the consumer, and how this is influencing content and marketing decisions to a greater extent than ever.

It's all an Eye-Opener.

Published on: March 14, 2013

Mashable.com reports on a new study from Forrester Group saying that "e-commerce, which generated $231 billion in sales for U.S. retailers last year, is expected to increase 13% to $262 billion this year."

According to the story, "The growth of e-commerce, which already accounts for about 8% of total retail sales in the U.S., is expected to outpace sales growth at bricks-and-mortar stores over the next five years, reaching $370 billion in sales by 2017. By that time, e-commerce is expected to account for a full tenth of all retail sales in the U.S."

The study suggests that two trends are driving this growth - the expanded availability and use of mobile technology, and the greater investments that retailers are making in their online businesses.

Published on: March 14, 2013

USA Today reports that Whole Foods is planning to open "an upscale health resort where guests could stay and learn about a healthier lifestyle ... The resort – which would use Whole Foods in its name -- would likely open in or near downtown Austin, where the company plans to expand its headquarters, perhaps within the next three years."

CEO John Mackey tells the paper that the company is negotiating for real estate, and looking for a hotel partner to operate the resort. If it works, it could lead to a chain of health resorts around the country.

"The health resort idea came from an in-house program to improve eating and lifestyle habits of Whole Foods employees -- focused on weight loss and reduction in blood pressure and cholesterol," the story says, noting that Mackey sees a business opportunity in spreading the concept beyond staff.

Published on: March 14, 2013

Yesterday, MNB took note of a Reuters report that Amazon.com is running into resistance to its request to own new internet domain names, including ".book," ".author" and ".read". Barnes & Noble, the Authors Guild and the Association of American Publishers have all registered their objections to Amazon's efforts, which they said would be anti-competitive.

In my commentary, I wrote:

I'm with Barnes & Noble, the Authors Guild and the Association of American Publishers on this one. Not only should Amazon not get these domain names, but no private company or organization should have them.

I've been on the Internet Corporation for Assigned Names and Numbers website, by the way, because I was curious if perhaps Amazon might also be interested in domains like ".food" or ".grocery." Because it would not surprise me...

Well...this morning Storefront Backtalk.com has a story reporting that "Walmart and Safeway "are each trying to privatize .grocery, so no competing chains can use it. Barring an unexpected change, one of the two will lock it down. Meanwhile, the spotlight has been on Amazon for attempting to get exclusive use of .books. Other retail-friendly top-level domains (TLDs), including .toys, .kids, .tools, .shoes, .fashion and .food, are also in play."

Good piece, evaluating what I would view as a real competitive threat, and you can read the whole thing here.

Published on: March 14, 2013

The New York Times reports this morning that Valley Meat, the New Mexico company "seeking to become the first slaughter house for horses in the United States since 2007," has a history of complaints over its food safety and sanitary procedures.

According to the story, the complaints came "over a two-year period from federal food safety inspectors and state regulatory authorities over its disposal of animal remains when it processed cattle for beef," and "included a 2010 letter to state health officials from an Agriculture Department inspector reporting that piles of animal remains were as high as 15 feet high along the back property line of the plant."

A lawyer for the slaughterhouse tells the Times that the owners "had been struggling financially because of the sharp drop in beef cattle prices over the last three years and could not afford to have the compost and other waste hauled from the facility.," and that "there were never any environmental concerns or health hazards at the site."

State officials, however, say this characterization is "factually inaccurate." The questions about the slaughterhouse's past activities are seen as a possible impediment to approvals from the US Department of Agriculture (USDA) of its application to begin slaughtering horses for human consumption.

The Times also writes that this week, bills have been introduced in both the US Senate and US House of Representatives that would "prohibit horse slaughter for human consumption and forbid the transport of horses across the border for slaughter in other countries." The bill is at least in part a reaction to the "recent uproar over horse meat" in Europe that began began "when trace amounts were found in products labeled 100 percent beef. Major food companies and restaurant chains, like Nestlé and Taco Bell, pulled products off shelves and tables in 14 countries."

Published on: March 14, 2013

• UK-based Tesco said yesterday that it is acquiring the Giraffe restaurant group for the equivalent of $72.7 million (US), a move that will give it 48 restaurants.

According to the story, "The acquisition will help Tesco create 'compelling retail destinations where customers can meet, eat and drink, as well as shop.' The first Giraffe to open next to a Tesco store will be near London, it said."

Published on: March 14, 2013

• The Puget Sound Business Journal reports that Haggen is closing its TOP Food & Drug store in Federal Way in April," a move that "whittles the Bellingham-based chain to 27 supermarkets in Washington and Oregon operating under the TOP Food & Drug and Haggen Food & Pharmacy brands.


• McDonald's said yesterday that it is trying to get healthier in the morning with the launch of Egg White Delight,  which the Chicago Tribune describes as "featuring egg whites cooked on a grill with a spatula and topped with white cheddar and Canadian bacon on an  English muffin made with whole grains. Egg white versions will also be available for the company's other breakfast sandwiches."


• The Independent Natural Food Retailers Association (INFRA) has issued a statement supporting Whole Foods' decision to mandate that its suppliers list genetically modified ingredients (GMOs) on packaging by 2018.

According to the announcement, "Independent Natural Food Retailers Association (INFRA) members have been and continue to make changes to their product selections to avoid GMOs by choosing products with ingredients that are organic or non-GMO verified through the Non-GMO Project. Many INFRA stores have been in the forefront of GMO labeling and have taken a lead in pushing manufacturers to remove GMOs from their products. Some INFRA stores have already put policies into place that say they will not allow any new products into their store if the product contains any at risk GMO ingredients unless the product has been verified by the Non-GMO Project or the ingredient is organic."


• The Wall Street Journal reports that Dunkin' Donuts has agreed to source all its palm oil from sustainable sources and will set a target date for the transition "in its next Corporate Social Responsibility report for sourcing 100 percent sustainable palm oil or for purchasing offset certificates covering its sourced palm oil."

The company is making the move in the face of a shareholder resolution asking it to address palm oil-related sustainability concerns, though Dunkin' Donuts management says it has "been engaged" with the issue for some time.

Published on: March 14, 2013

• William Morrison Supermarkets in the UK said this week that it is "in talks with Ocado Group Plc to support the start of its online business next year," according to a story from Bloomberg News, which adds that "Morrison will spend 1.1 billion pounds ($1.7 billion) this year investing in the online business, opening 40 percent more convenience stores and continuing the revamp of its existing outlets to halt the company’s slide in market share."

“Now is the right time to get into” the online grocery market, because “it’s accelerating,” says Morrison CEO Dalton Philips.

Published on: March 14, 2013

Got the following email from an MNB user who wanted to comment on an email that ran here yesterday...

I’d like to weigh in on the following ramble:

Whether it be the "most useless among us" statement or other sentiments which conveyed that everyone under $20 per hour is basically a drain on society, one thing is clear - The same people who whine about "class warfare" and accountability simply have no interest in society, except for as it serves them.

If their statements in this space from last week aren't the best examples of class warfare, I don't know what else to tell you.

They cry for "free markets" (and "freedom") like an involuntary reflex, but their freedom has no real purpose.  They care neither about their fellow citizens or the rule of law.  Long ago, they began to ignore society and the voice of their own conscience.

But don't worry -- there are more of us than there are of them.

It’s hard to know where to begin.  Perhaps those of us who went to business school and studied economics have an advantage here, especially if you consider the majority of academic studies show that minimum wage increases do a lot of harm to those with less experience, education, skill, and circumstances.  So if you’re actually compassionate, you may want to re-think your position.

Free market capitalism is by far the most successful method of lifting people out of poverty, so it’s simply amazing to hear that economic freedom is for no real purpose. 

As for caring for our fellow citizens - I’m a business owner, with thirty employees.  Everyone earns more than minimum wage, and some earn six figures.  We provide a 401k, health insurance for anyone working 25 hours or more, free dental, free life insurance, free short-term and long-term disability, and flexible vacations.  I care about the front line, back room and everyone else, and we’ve lost very few employees over the years.  My charitable giving is above 20%, but I would like to do more. 

It is scary to think that your reader says there are more of you than those like me.  I think I am fairly compassionate, but I don’t wait for the government to provide for employees or others in society.  We’re called awful things because we don’t support the increase in minimum wage - we’d much rather provide real jobs and opportunities.  And we actually look into the results, not just the feel good mantra.

I don’t exploit employees, and I don’t need government intrusion on minimum pay rates to be a decent person and a good employer.  It’s a real shame that many in the country won’t do what they should to help others - and many of them simply want the gov to do it all, since they won’t do much themselves.

Maybe I should not speak for the reader who you criticize, but I honestly don't think that he was referring to people like you.

If every employer were like you, not only would we not need an increase in the minimum wage, but we might not need a lot of programs that the government creates.

I absolutely get the argument against an increase in the minimum wage. But I think there also is another argument for such an increase, and it can be seen in the diminishing levels of disposable income available to a lot of people at the lower end of the economic spectrum in this country - people who work one, two and sometimes three jobs and still have trouble keeping up because of the rising cost of meat, gasoline, clothing, and pretty much everything else.

For me, it is a complicated issue ... and I can see both sides of the argument.




Regarding the judge's decision to strike down the NYC rule that would have banned the sale of jumbo sugared soft drinks in certain venues, I said that I thought while the original rule was arbitrary, it was hardly capricious ... and perfectly in line with public health stances taken by the Bloomberg administration.

One MNB user wrote:

"Capricious" is a term of legal art -- not Webster's -- so let me ask you this: have you read the decision, so you offer informed, considered criticism?

If not, your uniformed judgments are a disservice to your readers.

Yes, I have read the decision. Though I won't for a moment argue that I understood the whole thing. If I were king for a day, I'd rule that all lawyers' briefs and judicial decisions would have to be rewritten by actual writers before being distributed to the public.

Unless I missed it, when the judge used the word "capricious," he did not add a footnote saying that he was using it as legal jargon as opposed to actual English. But I get your point.

If I understand the judgement correctly, it is essentially his argument that the Bloomberg administration overstepped its authority and that the ruling is mostly about the balance of power with the city government. I would tend to agree with the judge on this ... I've always thought that this ban was a bridge too far.




I used a Babe reference yesterday to talk about leadership, which led MNB user Bruce Law to write:

Baa Ram Ewe… Baa Ram Ewe!!

Babe knew how to lead the sheep because he knew how to talk to them in their own secret language and gain their respect - something he was also able to attain for the wolves (sheepdogs)!

And that’s my Babe reference for the day… 

And a great point. If I remember the film correctly, in order to lead the sheep, Babe was willing to speak their language ... not expect them to speak his.

That's called servant leadership. Not arrogance.