business news in context, analysis with attitude

Published on: June 12, 2013

by Kate McMahon

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

“Hey, Mom, I’ll make dinner tonight...”

There’s a new world order in my kitchen, and with it a 24-7 window on the shopping and dining habits of the Millennial Generation. This much I can tell you. They can be fickle, want their food fresh and fast, and are never without their smart phone.

My 21-year-old daughter Mara graduated from college last month and, like many of her peers, has returned to the nest to save up for an apartment. Happily, she learned to shop on a budget and cook last year sharing a house with four roommates. (Full disclosure: She had previously put a frozen pizza in the oven with cardboard on the bottom. Where there’s smoke…)

We’re two weeks in and already I’m seeing confirmation of what research has told us about Millennials (current age 18-35). They are highly connected and price savvy, health-conscious and attuned to environmental concerns, and have little traditional brand loyalty.

A recent Mintel study found that Millennials buy only 41 percent of their food at traditional grocery stores - compared to 50 percent of Baby Boomers – as they also shop online, at specialty retailers and farmer’s markets or co-ops. In Lewisburg, PA, Mara shopped at Walmart and an impressive Weis Supermarket – the nearby organic farm was too pricey.

And since it came of age in both the recession and the “showrooming” era, this group can execute an immediate price comparison with two taps on an omni-present smart phone. An online survey showed that among young adults ages 18 to 34, 60 percent will choose a lower-priced item over their usual brand if it will save them money, hence the term “brand-agnostic.”

The new cook in my kitchen is a fan of the Food Network and Master Chef – always available on Hulu or demand TV - and bookmarks favorite recipes on her iPhone, which doubles as her shopping list and recipe card. Like many aging boomers, I still have cookbooks and need a much bigger font size to read a recipe. Mara recently prepared a Honey-Soy-Citrus chicken with roasted sugar snap peas, a quinoa salad with corn, cucumber and edamame, and grilled salmon with a mélange of vegetables. I was stunned when my formerly plain-pasta child told me a dash of chili powder enhanced the flavor of roasted Brussels sprouts.

(A side note on quinoa: Her college dining hall featured an assemble-your-own quinoa salad bar, along with a traditional salad bar, a stir fry station, gluten-free and vegan stations, and on Monday nights a gourmet mac-and-cheese bar. All fresh and fast nothing like the steam table Salisbury steak/lumpy mashed potatoes that exemplified 1970s college cafeteria fare.)

Admittedly, my kitchen view is limited to one recent graduate readying to enter the real world. The clear challenge in marketing to Millennials is the sweeping size and range of this group – in both age and income.

It’s worth noting that by 2016, Millennials will have the highest discretionary income in the US, and by 2020, there will be 64.1 million Millennials over the age of 25, a whopping increase from just 17.1 million in 2010.

Retailers who expect this next generation of shoppers to be like the baby boomers but with faster internet are kidding themselves. This is the most connected group in history. The are going to be so much more discerning than us, with more knowledge, more biases (in a good way) and tolerance, more savvy and with greater expectations. Filling their shopping baskets is going to be an enormous challenge.

Comments? Send me an email at kate@mnb.grocerywebsite.com .

Published on: June 12, 2013

by Michael Sansolo

Finding a way to zig when the competition zags always makes for a great business lesson. Finding quality people to do that with makes for an Eye-Opener.

A sports article in the Washington Post Tuesday gave us examples of both.

The lead article in a Post National Football League roundup focused on Tim Tebow joining the New England Patriots. (Kevin mentioned this yesterday in yesterday's MNB Sports Desk brief.)

Despite Tebow’s demonstrated abilities - he won a playoff game with the Denver Broncos - he was shunned by every team in recent weeks after being let go by the New York Jets. According to every sports story I saw, the rejection had nothing to do with his strongly held religious beliefs. Rather it was his apparent shortcomings as a quarterback that seemed to doom him.

Which is why the Patriots move is so incredible. For the last decade, the Pats have been among the top teams in the league and have repeatedly shown an ability to buck trends, rehabilitate players and win. I’m no fan of Pats’ coach Bill Belichick’s style, but his results are impressive. Belichick finds a way to win and, no doubt, sees something in Tebow that gives him confidence. The rest of us will find out what that is in due time.

Again that’s only part of the story. The remainder of that same NFL roundup was the real eye opener. After Tebow, the story focused on, in order, a player arrested for assault, a former player hospitalized for suspicious reasons and third denying involvement in a nightclub brawl.

Tebow looks better all the time.

One last item: the New York Jets, Tebow’s team last year, train at the public college I attended long ago in upstate New York. A few months back the president of the college shared with me some stories about the Jets and Tebow.

He described Tebow as possibly the most polite person he ever met. Despite repeated requests, Tebow addressed the president and other school officials formally (and politely) at every meeting.

More impressively, he said, was watching Tebow handle the busloads of religiously motivated visitors who traveled to the school specifically to meet the young quarterback, but not to watch him play. Tebow understood his special celebrity in the religious community and took the time to meet and chat with his visitors.

Now, I have no insight to evaluate Tebow’s football abilities. I cannot possibly tell if the Patriots just pulled a historic coup or if Tebow will be cut in two months. But I do believe that winners find a way to succeed by doing things others can’t or won’t.

And they do it with quality people. Seemed like an Eye-Opening lesson to me.

Michael Sansolo can be reached via email at msansolo@mnb.grocerywebsite.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .

Published on: June 12, 2013

Reuters reports that "pigs fed a diet of only genetically modified grain showed markedly higher stomach inflammation than pigs who dined on conventional feed, according to a new study by a team of Australian scientists and U.S. researchers."

Here's how the story frames the research:

"One group of 84 ate a diet that incorporated genetically modified (GM) soy and corn, and the other group of 84 pigs ate an equivalent non-GM diet. The corn and soy feed was obtained from commercial suppliers, the study said, and the pigs were reared under identical housing and feeding conditions. The pigs were then slaughtered roughly five months later and autopsied by veterinarians who were not informed which pigs were fed on the GM diet and which were from the control group.

"Researchers said there were no differences seen between pigs fed the GM and non-GM diets for feed intake, weight gain, mortality, and routine blood biochemistry measurements.

"But those pigs that ate the GM diet had a higher rate of severe stomach inflammation - 32 percent of GM-fed pigs compared to 12 percent of non-GM-fed pigs. The inflammation was worse in GM-fed males compared to non-GM fed males by a factor of 4.0, and GM-fed females compared to non-GM-fed females by a factor of 2.2. As well, GM-fed pigs had uteri that were 25 percent heavier than non-GM fed pigs, the study said."

The story says that the researchers concede that more studies need to be done, but that the new information "adds to an intensifying public debate over the impact of genetically modified crops, which are widely used by U.S. and Latin American farmers and in many other countries around the world."

The GMO industry continues to take the position that exhaustive studies have been done and that no scientific evidence has been found of "detrimental; impact" from genetic modification of crops.

Published on: June 12, 2013

Internet Retailer reports that "@WalmartLabs, the technology research and development unit of Walmart Global eCommerce, said today it will buy Inkiru Inc. Its 'predictive analytics' technology is designed to pull data from multiple sources and help retailers build merchandising and marketing campaigns targeting shoppers when they are most likely to buy ... Wal-Mart’s purchase of Inkiru follows its acquisitions last month of OneOps, an e-commerce development company, and Tasty Labs, which specializes in developing ways for retailers to connect with consumers through social media."

Terms of the deal were not disclosed.

Published on: June 12, 2013

MyWebGrocer, described as a "leading provider of digital marketing solutions for grocery and Consumer Packaged Goods (CPG) companies," has announced that it has completed a growth equity raise with HGGC, a leading middle market private equity firm. Terms of the private transaction were not disclosed."

“We have generated exceptional growth since we partnered with our first institutional investor, the Stripes Group, in 2009, and we now feel that the time has come to take the next step in the Company’s evolution to further capitalize on a truly exciting market opportunity,” said Rich Tarrant, founder and CEO of MyWebGrocer. “We have benefited greatly from the operational assistance, strategic insights, recruiting capabilities, industry experience and technology expertise that the Stripes Group has provided us over the last four years, and we believe HGGC’s unique insights, proven track record with technology-enabled services businesses, and experience with founder-owned businesses make them the clear choice to support our exciting growth potential going forward.”

Published on: June 12, 2013

The New York Times this morning reports that Walgreen has agreed to write an $80 million check to resolve a probe in which it was accused of not properly controlling the sale of narcotic painkillers - including but not limited to oxycodone - which then found their way to the black market.

According to the story, "Officials at the Drug Enforcement Administration described the fine as the biggest ever paid by a pharmacy chain. As part of the settlement, the license of a Florida facility used by Walgreen to distribute controlled drugs was revoked for two years ... Under the agreement, Walgreen committed to establish better internal controls. It acknowledged that practices at a distribution facility and some of its pharmacies in Florida did not meet standards."

Published on: June 12, 2013

• The Boston Globe reports that North Carolina-based The Fresh Market is teaming up with the New England Aquarium "to promote sustainable fishing practices and responsible aquaculture ... The Fresh Market said it will work with the aquarium to ensure that its seafood suppliers utilize responsible fishing and farming methods that maintain and preserve the ocean’s ecosystem."


• The Wall Street Journal reports that Dollar General is one of two companies - the other is BMW's US unit - accused by the US Equal Employment Opportunity Commission (EEOC) of "improperly using criminal-background checks in hiring" by using them broadly rather than specifically, which "had the effect of discriminating against black applicants."


• Bloomberg Businessweek has this note about a fast feeder on a fast path to continue growth:

"Subway is already the largest fast-food chain by store count, with 39,500 restaurants worldwide. But that’s nothing compared with its expansion plans in the coming years, as the sandwich maker projects adding more than 10,000 new stores by 2017 and openly discusses the prospect of getting to 100,000 by 2030.
Breakneck growth is nothing new at Subway. The company has added 11,000 locations to its all-franchise roster since 2007, and executives believe their appetite for expansion is far from sated."

Published on: June 12, 2013

Responding to my Forbes column, "A Clear & Utterly Unscientific Case For GMO Transparency," one MNB user took note of the fact that Mark Bittman, the wonderful New York Times columnist, said on Twitter and Facebook that he wished he'd written it. (I'm still blushing.)

If Bittman says that he wishes he had written it, who am I to argue?  That is quite the compliment.  What I like is that you’re clear, honest about your lack of technical knowledge and make a strong case for what should be the obvious – why does the industry seem to want to hide?

I am a food scientist and I have invested the last 37 years to this wonderful food industry in both the R&D and technical sales areas.  GMO’s are not bad; we know that.  It is unfortunate that the naysayers are so narrow minded as to treat Mark Lynas as a pariah because he finally saw the light and proclaimed GMO’s as safe.  Their response has been so virulent that I fear he may suffer the same fate as Peter Finch in Network (there’s my movie reference and I enjoyed yours at the beginning of the article).

As you indicate, the point is going to be the cost of litigating every state.  It certainly seems counter-productive.  If Monsanto and the rest of the players invested in this argument were to come to the table and forge agreement as to what we call these ingredients and products, perhaps the hysteria would go away.  We scientists tend to make for bad press because we’re boring; we speak in technical terms while the anti-side of anything spouts rhetoric and spreads fear.  THAT sells newspapers.

Interesting to note that the latest IFIC survey suggests that only 3% of respondents wants to see GMO’s labeled.  So from where is all the noise coming?  Is it really the consuming public or is it Monsanto et al yelling back?

Labeling is coming; we just need to figure out how to make it sound more than acceptable and we need to tell the story repeatedly that GMO’s will not make us grow tails!!!

From another reader, with a different point of view:

While I don't outright disagree with your sentiment that people who don't want to eat GMOs deserve the same consideration of advocates of Kosher, vegetarian, and other restrictive diets etc., I just find it remarkably naive.
The potential devastation wrought by GMOs sphere of influence upon farming, our food supply and our environment for current and future generations is unknown, yet all mainstream crops in the United States are dominated by GMO production and GMOs subsequently are present in almost all non-organic foods consumed in the US (for the most part, unwittingly).

Earth and all its inhabitants are at the mercy of Monsanto's global science experiment, which is truly criminal and intrinsically interwoven into corrupt politics, especially within the US government.

Known facts: unprecedented declines in beneficial insects; creation of pesticide & herbicide resistant super weeds, conventional farmers find themselves trapped in the web Monsanto and other GMO seed companies carefully wove by controlling and licensing almost all seed available for commercial farming.

This precarious time history for the health of our planet continues to play out before our eyes.

I wholeheartedly embrace the grass roots revolt against Monsanto and hope it will continue to open the eyes of those who aren't aware of the duplicity.
 
It's a rogue and arrogant manner to abuse the abundance we've heretofore enjoyed on Earth. Let's endeavor it's not the tipping point to destruction.




We talked the other day about the decision by the Chicago Sun Times to fire all its staff photographers and just let readers and reporters take pictures. I thought this was relevant because I thought it seems like a short-term business decision, economically feasible in the short-term, but in the long-term giving up on what should be a differential advantage.

Posted some email earlier this week about how cell phones make everyone a photographer, which prompted one MNB user to write:

In response to the comment from Darren Josey about the new generation of photo takers armed with cell phone cameras…

I had an architecture professor in college (from which I just graduated a year ago) who made it a regular point to correct her students in the difference between a “picture” and a “photograph.” What we see all over sites like Facebook and Instagram would fall into the “picture” category: an image captured with little regard to composition, lighting, etc. Throwing on a digital filter after the image is captured is not to be confused with the thought and composition that goes into a “photograph.”

Now, there is certainly something to say about images that are captured by both professional photographers and the common folks on the street with their cell phones in fast paced situations and emergencies, such as the bombings in Boston. Images in these situations are as much about capturing the raw emotion and power of the moment as they are about any other factor.

In other situations, however, a “photograph” can never be replaced by a “picture”, and thus a photographer cannot be replaced by someone wielding an iPhone. For example, I attended a wedding this weekend that was by no means a high class affair. But in one of many attempts to cut costs, the couple chose a family friend to act as their “photographer.” Now, I can understand this where that friend has better equipment, and at the very least some experience capturing the myriad of images associated with a wedding day. However, the woman capturing images possessed neither. The images, while capturing the moment, pale in comparison to those of similar moments at other weddings where the photographer uses their experience and advanced function camera to compose beautiful “photographs.”

The same can be said for the news world. While many stories and their accompanying images may fall into the category of simply needing to capture the emotion of the occasion, many more involve things such as investigative journalism, entertainment, sports, and so on. These are occasions where an experienced photographer, such as those laid off by the Chicago Sun Times, will truly be missed. If printed media (or news media of any sort for that matter) are going to stay relevant in a society where I learn of news faster through Twitter than CNN, then they need to have the added value of capturing the “photographs” that no bystander on a cell phone can duplicate.

And from another reader:

The Sun-Times decision to rely on everyone instead of professional photographers for their photographs is reminiscent of the early desktop publishing days when companies bought PageMaker and let everyone become art directors and graphic designers. It took a while for organizations to acknowledge that quality design consistently portraying a distinctive identity, no different than quality photographs, is not so easy to accomplish.

News organizations cannot survive as professional journalists unless they demonstrate their curating quality advantages over citizen journalism.




On another subject, MNB user Matt Hautau wrote:

Reading the email from one of your readers about the online book buying experience in France, she writes “Learned that lesson fast -- sitting in my pajamas, I bought the book in 10 minutes flat, and it arrived in the mailbox on Tuesday.” 

While I can't speak for France, the fact is that you can go to / call most independent bookstores in the U.S. and order that book from them and they’ll have it to you in a couple days without ANY shipping costs as they get constant deliveries from book wholesalers like Ingram.   What's more, if you want your book the next day or even in a couple days, Amazon will charge you a premium for delivery.  In the end, you end up paying more and you play a part in taking apart the bookstore industry in the process.  All for what?  For the convenience of ordering in your pajamas?  It might just be me, but I think that there are times where the luxury of convenience carries too high of a price.  While we trumpet the arrival of the great online retailer, let’s not forget that we’re paying for it … both now and - in ways that are much worse to local economies -  later.

I understand what you are saying, but the suggestion that one form of commerce is somehow morally superior to another is one with which I cannot agree.

Writing in response to our various stories about online shopping, one MNB user emailed:

I don't know how the top of the organization is running things (Peapod/Giant-Landover/Ahold) but, speaking for many pleased D.C. metropolitan area users, I adore on-line shopping, home delivery of groceries. Not only do I save time and grey hair, but I spend less on impulse items. I also buy healthier food, because Peapod carries easy-to-read nutritional labels and package contents listings.

Finally, I  buy everything on my list and can shop at midnight or at lunch hour from my desk.A few years ago, Publix gave a half-hearted effort with a order-and-pick-up plan in a pilot area, but soon closed it down. (Friends in that city told me they didn't even know the program existed, so meager were Publix's efforts to make the program work.)  I definitely think this is the wave of the future.

Peapod started it all, and every time I see its trucks all over the D.C. area, I applaud!




On the subject of Whole Foods developing stores that cater to urban markets that may be less affluent that the places it traditionally has operated, one MNB user wrote:

Can I please reiterate that, in most cases, Whole Foods isn’t selling the same foods more expensively, but selling better quality foods which cost more to produce. A huge amount now comes from small, local producers who do  not have the benefits of economy of scale either. The higher quality and safer ingredients – from hormone-free milk, humanely raised meats, without antibiotics are other tricks of mass livestock production, not to mention the absence of bleached or bromated flours, higher quality produce……(honestly, I had to stop at a conventional grocery store while my son was in a class and there was not a single item in the bakery that I could give to my daughter as a snack while we waited. Every single item began with “bleached/bromated flour”).

You get what you pay for, and if you want to eat cheap, questionable crap for the sake of a bargain, and get poor customer service from poorly treated employees, by all means, shop at Target or Walmart for you food.
 
I personally have developed such a deep mistrust of the conventional food industry that I am eternally grateful that Whole Foods exists.




Finally, thanks to the MNB readers who wrote in on Monday to wish my daughter a happy birthday. She turned 19 on Monday, and I was amazed how many people in the MNB community remembered, apparently because I must've mentioned it when she was younger.

You folks track this stuff better than I do.