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    Published on: March 20, 2013

    by Kevin Coupe

    Low tech. High tech.

    Yesterday. Tomorrow.

    Paper. Digital.

    These are the choices that we often talk about here on MNB. While some would like to assign one option or another a kind of moral superiority, there really is no such thing. They're just options - preferable under certain circumstances, optimal to certain personalities.

    But sometimes...

    Well, that's the story of this French television commercial. I think you'll agree that it makes its point in unique and Eye-Opening fashion ... no translation required.

    Enjoy.

    KC's View:

    Published on: March 20, 2013

    Excellent story in Time about the advantages that Amazon.com's Prime program, which offers unlimited two-day shipping to members who pay an annual fee of $79, gives the e-commerce pioneer.

    Here's one thing you need to know about Prime: It appears that membership in Prime has doubled in less than two years.

    Here's another thing: It is likely to double again by 2017, by which point there could be as many as 20 million Prime members. (If the price stays at $79, that means that Prime membership fees alone would generate $1.5 billion.)

    And here's one more thing reported by Time: "It tends to cause subscribers to stop shopping anywhere else.

    You need to read this story. Now.
    KC's View:

    Published on: March 20, 2013

    The New York Times reports this morning that several supermarket chains - including Whole Foods, Trader Joe's and Aldi - have pledged "not to sell what could become the first genetically modified animal to reach the nation’s dinner plates — a salmon engineered to grow about twice as fast as normal."

    The fish, called the AquAdvantage salmon, currently is awaiting final approval from the US Food and Drug Administration (FDA), which already has announced that it believes that the fish is as safe to eat as traditional salmon and that its manufacture would have "no significant impact" on the environment. The fish comes from a company called AquaBounty, and the Times describes it as "a farmed Atlantic salmon that contains a growth hormone gene from the chinook salmon and a genetic switch from the ocean pout that keeps the transplanted gene continuously active. The salmon can grow to market weight in as little as half the time required by other farmed Atlantic salmon."

    The Times notes that the chains are largely reacting to pressure from consumer and environmental organizations that oppose the marketing of the fish for human consumption because of fears "that the fish has not been tested adequately for safety and that it might outcompete wild salmon for food or mates should it ever escape. AquaBounty says its fish are sterilized and would be grown in inland tanks, with little chance of escape."

    Under current FDA rules, if the salmon were to come to market it would not have to be described as being genetically engineered. Of course, that would not be the case at Whole Foods, if it sold the fish - it recently announced that by 2018 it will require all its suppliers to label products containing genetically modified organisms (GMOs).
    KC's View:
    In the long run, I firmly believe that the approach advocated by some manufacturers and the FDA - that the public does not need or deserve to have this information - is misguided and eventually will come back to bite them. Transparency about issues that concern people ought to be a top priority ... and in a 21st century climate of high tech instant communication, there really is no other option.

    And BTW... The Natural Products Association (NPA) Board of Directors this week called "for all foods containing genetically-modified organisms to be accurately labeled under a national uniform standard so consumers can make educated decisions about foods they purchase," saying that "a national standard is the best, most cost-effective and least-confusing way to deliver on this commitment for American consumers."

    Published on: March 20, 2013

    In North Carolina, the News & Observer reports on a new study from NCH Marketing saying that "US consumers last year redeemed 2.9 billion coupons on consumer packaged goods," a number that was down 17 percent from 2011 - even though the number of total paper and digital coupons remained steady at 305 billion.

    The story notes that "coupon-industry insiders disagree on whether the drop is an aberration caused by a poor mix of coupon offers in 2012 or whether it signals the beginning of the end of the paper-coupon era ... Coupon redemption reached 3.5 billion coupons in 2011, which was a 6 percent increase over the previous year and a 26 percent increase since before the recession."
    KC's View:
    The position here - based on nothing other than common sense - has long been that coupons distributed en masse are a dying enterprise, because too many of them are simply irrelevant to the people who get them. I'd have to bet that fewer than three percent of the coupons that show up at my door have anything to do with how I live my life and do my shopping.

    In the current climate, the companies with the most and best actionable information, and then does something with it, will be the ones that win.

    Remember the numbers quoted by Gary Hawkins at the recent National Grocers Association (NGA) convention? He said that Kroger is sending out personalized promotional pieces to 10 million shoppers on a quarterly/seasonal basis, and is getting a 66 percent response rate. "They are weaponizing big data," he said.

    This is not about the effect of the recession on couponing. This is about how consumers are changing, and what they want, and how savvy marketers can react to that.

    Couponing, as we have known it, is a dead industry walking.

    Published on: March 20, 2013

    ABC News reports on a Harvard School of Public Health study suggesting that sugary drinks are responsible for 180,000 deaths each year around the world, including 25,000 annually in the US. The study says that "using data from national health surveys around the world, the team tied sugar-sweetened beverages to 133,000 deaths from diabetes, 44,000 deaths from cardiovascular diseases and 6,000 deaths from cancer in 2010," and "adds to mounting evidence that sugar-sweetened beverages, loaded with calories that carry little nutritional value, are a public health hazard."

    Nonsense, responds the beverage industry.

    The American Beverage Association has responded to the study by calling it "more about sensationalism than science ... The researchers make a huge leap when they take beverage intake calculations from around the globe and allege that those beverages are the cause of deaths which the authors themselves acknowledge are due to chronic disease."
    KC's View:

    Published on: March 20, 2013

    Internet Retailer reports that Walmart "expects to generate $9 billion in global e-commerce revenue in its current fiscal year," a number that Neil Ashe, the company's president/CEO of global e-commerce, describes as "accelerating and ahead of our plans."

    The story notes that "in 2011, Wal-Mart’s U.S. e-commerce sales totaled an Internet Retailer-estimated $4.9 billion, up nearly 20% from $4.1 billion the prior year. In comparison, Amazon.com Inc., No. 1 in the Top 500, had $48.08 billion in sales."
    KC's View:
    This is critical for Walmart, which is looking at a future - perhaps just seven or eight years in the future - in which Amazon.com will be roughly the same size that it is.

    Published on: March 20, 2013

    The New York Times this morning that Monster Beverage, maker of the high caffeine energy drink, has decided "after a decade of selling it as a dietary supplement to market it as a beverage, a switch that will bring significant changes in how it is regulated."

    By not selling the drink as a dietary supplement, Monster "will no longer be required to tell federal regulators about reports potentially linking its products to deaths and injuries ... The company is fighting back against critics on several fronts. This month, it held a news conference to dispute accusations in a lawsuit that the death of a 14-year-old girl was linked to high caffeine levels in Monster Energy. Separately, it threatened to sue a nutritionist who publishes a newsletter for elementary schools for statements that it said were defamatory.

    "The changes by Monster and Rockstar demonstrate the degree to which energy drink manufacturers can decide which rules to follow."

    The Times goes on to report that "a spokesman for Monster, Michael Sitrick, said the company had decided to market its products as beverages for several reasons. One was to stop what he described as 'misguided criticism' that the company was selling its energy drinks as dietary supplements because of the belief that such products were more lightly regulated than beverages. Another consideration, he said, was that consumers can use government-subsidized food stamps to buy beverages."
    KC's View:
    What a crock.

    I suppose that the folks at Monster believe that over time people will forget about the reports of deaths that may have been associated with energy drinks. But just because it does not have to report this stuff to federal regulators won't mean that other folks won;t be keeping track.

    I'm not a scientist, nor a nutritionist. All I know is that I won't drink these things because I don't trust them, and that I've asked my kids not to drink them. We won't have them in the refrigerator at home. And I continue to believe that in the long run, the energy drinks category is a public relations nightmare waiting to happen.

    Published on: March 20, 2013

    Bloomberg News reports that the US Supreme Court ruled yesterday by a 5-3 vote that "publishers and manufacturers can’t block imports of copyrighted items made and sold abroad, bolstering the multibillion-dollar 'gray market'." The ruling is seen as a victory for companies like Costco, Walmart and eBay, which often are able to obtain these gray market goods abroad at lower prices and then sell them in the US for less than their domestic counterparts.

    Essentially, the ruling says that copyright owners only are protected until their products are sold, at which point the new owners can sell them to anyone they want.

    According to the Reuters story, "The gray market is the annual trade in tens of billions of dollars in genuine products outside of their official distribution channels to exploit lower overseas prices.
    KC's View:

    Published on: March 20, 2013

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

    • The Wall Street Journal reports on the modernization process going on at Hillshire Brands, where they decided to change their approach to lunch meat because of declining sales. Consumer research showed that people wanted packaging that was more transparent and allowed meat to be "fanned out," rather than wadded up; packaging that emphasized freshness and the company's brand name; and thin-sliced meat that is both more textured and moister.

    The goal, according to the story, is to create both a reality and perception that is higher quality, because that's what consumers appear to want.


    • The Los Angeles Times reports on how drug stores are changing their approach as a way of attracting more customers to shop more often.

    "Walgreens, for example, is opening glossy stores that feature sushi chefs and enormous alcohol selections," the Times writes. "CVS stores have added fresh sandwiches and produce. Rite Aid has been revamping its locations and bringing in packaged organic and gluten-free food."

    The reason? Drug stores perceive themselves as not just competing with each other, but also with mass merchants that sell many of the same items they do, as well as with online merchants that can beat them on cost and that appeal to tech-savvy younger shoppers.

    Not just young tech-savvy consumers. I've begun ordering a bunch of items from Amazon that I used to buy at my local CVS because I realized they were cheaper and I could use Subscribe and Save to make sure they'd be replenished on a regular basis. I still use the CVS, which is next door to MNB Global Headquarters, for impulse items and prescriptions ... but for some stuff, it has just become irrelevant.


    Bloomberg Business Week reports that hedge fund manager Bill Ackman, who is JC Penney's largest shareholder, has seen the stock value of the company drop by 48 percent in the past 2.5 years. Ackman's "best shot at salvaging his investment," the story suggests, "is to push the department store to go private before it runs out of cash and loses another billion dollars for shareholders."

    The value of JC Penney has dropped lately because of the efforts of new CEO Ron Johnson to switch from a coupon and promotion-based marketing strategy to EDLP, a strategy that largely has resulted in the loss of customers and sales.

    However, one analysts suggests that such a move might be too little too late - that JCP already may have lost much of its customer base for good.
    KC's View:

    Published on: March 20, 2013

    • Starbucks Corp. said yesterday that it has hired Sharon Rothstein, senior vice president of marketing at Sephora USA, to be its new global chief marketing officer.
    KC's View:

    Published on: March 20, 2013

    Kate McMahon is off on assignment. Her fortnightly column will return on April 3.
    KC's View:

    Published on: March 20, 2013

    ...will return.
    KC's View: