business news in context, analysis with attitude

Published on: March 27, 2015

by Kevin Coupe

Let's face it. This is a brand and product introduction that was inevitable.

And if it works, it'll form a connection in the minds of consumers that will be always on their minds.

Music Times reports that "in perhaps the least surprising news of the day, Willie Nelson has shared his plans to launch his own brand of marijuana. Aptly titled Willie's Reserve, the new venture will capture the musician's lifelong passion of the cannabis and hemp culture ... The plan is to have Willie's Reserve be available in stores where marijuana is legal. The singer's strain will be the flagship product with opportunities for other growers to sell their products, as long as they were grown under Willie's standards."

There also seems to be the possibility for a chain of Willie's Reserve stores, which the singer says will be modeled on Whole Foods and have an "anti-Walmart" vibe, offering his own brand of weed as the flagship brand but also other brands that that meet his standards.

However and wherever it plays out, this is just perfect. And reflective of what could turn out to be a broader trend of celebrity pot endorsements ... it was just last November that the family of reggae icon Bob Marley said that they were behind the introduction of a new brand of marijuana products, "Marley Natural," bearing the late singer’s name. Y'think maybe Jack Nicholson is considering the possibilities...?

It's an Eye-Opener.

Published on: March 27, 2015

The Chicago Tribune reports that a new report from Accenture says that "despite retailers' efforts in recent years to give shoppers a 'seamless' experience whether they're shopping in store, online or on their mobile phones, a gap remains between what customers expect and what retailers are offering."

Some examples cited in the story:

"Eighty-two percent of U.S. consumers surveyed said they expect a retailer's prices to be the same in store and online, a significant increase over the 69 percent who said so the previous year, according to the consulting firm. But in a benchmark analysis, only one-third of U.S. retailers had consistent pricing for more than 80 percent of the items assessed, the report found.

"When asked which shopping experience was most in need of an upgrade, survey respondents ranked the physical store as No. 1, citing easy ordering of out-of-stock merchandise and free Wi-Fi as the most desired improvements. Yet just two-thirds of U.S. retailers let sales staff order out-of-stock items for shoppers and less than half have free Wi-Fi in stores, Accenture said."

And, the story says, "Almost half of U.S. respondents said they would like to receive real-time promotions on their phones while they're in store, but only 28 percent of retailers are able to deliver that service, the report found."

Published on: March 27, 2015

The Washington Post has a piece about Steve Case, the founder of America Online, who now, as a "big name venture capitalist," is finding lots of opportunity within the food business, saying that it is “ripe for disruption” and "one of America’s most promising growth industries."

“There are opportunities to improve the way things are done at every level: How food is produced, exported, processed, consumed,” Case tells the Post. “Our focus … is on investing in people and ideas that can change the world, and it’s harder to imagine anything that changes the world as much as food.”

And, he adds, "We’re in the first days, the early innings of this food revolution ... Nothing’s more important than what you put in your mouth three, four, five times a day."

Fascinating story, and you can read the whole thing here.

Published on: March 27, 2015

The San Diego Union Tribune reports that as Haggen has begun launching its stores in Southern California, it is meeting some resistance from shoppers who "took to social media to voice their dismay at the prices, which were higher than expected."

It wasn't just an impression.

The company's Pacific Southwest CEO, Bill Shaner. tells the paper that "a mixup resulted in higher-than-intended prices on about 1,000 grocery items at the 10 stores opened so far in San Diego, Orange and Los Angeles counties. That’s about 2.5 percent of the 40,000 total products in a typical Haggen store.

"The error affected a number of leading brands – mostly packaged foods such as peanut butter and canned goods. Shaner said that within the next week or two, prices should be corrected to be competitive with those at supermarkets such as Vons and Albertsons."

Burt Flickinger III of the Strategic Resource Group tells the paper that "his research shows that Haggen historically has competitively low pricing in all of the top 10 grocery categories."

And Phil Lempert, the 'Supermarket Guru," says that Haggen will have to do something dramatic - perhaps a targeted coupon or discount - to address the snafu.

According to the story, "Shaner said he’s focused on correcting the prices and plans to stick with the original plan of adding more natural, organic and local products over the next few months. Meanwhile, customers can expect to see dramatic price reductions over the next seven to 14 days. 'You never get another chance to make a first impression, and we’re afraid this was a very incorrect impression,' he said. 'We’re hoping to regain those customers’ trust through our customer service, by responding to each customer we’ve heard from, and we will put out a statement on our Facebook page this week'."

Published on: March 27, 2015

The Wall Street Journal reports this morning that Diet Coke has dropped to number three in the ranking of US soft drinks by volume, replaced by Pepsi-Cola in the number two position. Coca-Cola remains the nation's number one soft drink.

Coca-Cola has a market share of 17.6 percent, Pepsi-Cola has a share of 8.8 percent, and Diet Coke has a market share of 8.5 percent. Diet Coke has passed Pepsi for the second spot back in 2010.

The shifting market shares are said to be part of broader erosion in the soft drink business, and the Journal notes that "Beverage Marketing has predicted U.S. bottled water volumes could surpass soda by late 2016 or early 2017."

Published on: March 27, 2015

• RelayFoods.com, which describes itself as "the healthy online grocer, " has announced the launch of Meal Planning by Relay Foods, defined as "a free service allowing customers to plan a personalized menu of healthy meals and shop for the ingredients in one quick, seamless process. The service enables customers to plan, customize, and shop for a week's worth of meals in less than 15 minutes with three integrated tools: a weekly seasonal meal plan built by a Registered Dietitian, an extensive and expanding catalog of a la carte dishes sorted by dietary preference, and the company's 'Cook It!' Chrome extension, which translates recipes from around the web into ready-to-shop dishes. "

Most main dishes are said to cost between four and eight dollars per serving.

Published on: March 27, 2015

• The Cincinnati Business Courier reports that Kroger "will continue to have access" to the tools and science developed by DunnhumbyUSA even if Tesco sells its share of its parent company. According to the story, Kroger CFO Mike Schlotman told a conference this week that "we have the rights to the software and to their science in the United States. And there’s nothing in whatever construct of a deal out there that would preclude us from being able to continue to enjoy the benefits of their insights. That said, there are a lot of people that are innovative in that space, and that’s not the only place we go to for insights. It’s an important part of our arsenal, but it’s not the only place we go to develop customer insights.”

The story notes that Kroger owns half of DunnhumbyUSA.


• In Toronto, the Globe and Mail reports that "foodie culture has arrived at Metro Inc.’s newest supermarket, which features a lush wall of veggies, dozens of exotic cheeses, a slow-cooking rotisserie, a sushi bar and organic offerings ... It’s Metro’s version of the gentrified grocery store, a bid to tempt urban consumers and boost business by focusing on a smorgasbord of fresh foods – with some higher prices and fatter profit margins – even as shoppers are courted by a growing array of discount retail options."

The story notes that this is hardly undeveloped territory - both Loblaw and Sobeys have been improving their fresh food offerings, Whole Foods plans to expand in Canada, and Loblaw is rumored to have an option to operate an Eataly store there.


• The Des Moines Register reports that Kansas City-based Price Chopper "will replace five Dahl's locations starting Sunday, making it the third-largest grocery chain operating in the city." It is the company's first venture into Hy-Vee's home territory, the story says, and the task will be made more difficult because "the selection, decor and services at P-Chopper — as it's known to some locals — are typical of most midsized supermarkets ... The stores look and feel a lot like a Hy-Vee, and fall somewhere between specialty markets like Whole Foods and Trader Joe's and deep discounters like Aldi and Wal-Mart."

In other words, the story suggests, it will remain for a largely undifferentiated Price Chopper to find ways to distinguish and differentiate itself.

Published on: March 27, 2015

• Festival Foods announced that Marlin Greenfield, the company's COO, will transition into a new role as Senior Operations Leader, a role that the company says "provides him the flexibility to serve as a mentor and advisor to the Senior Leadership Team and store directors throughout the organization. “

In addition, the company said, Mike Mesich, previously Vice President of Store Operations, has been promoted to Senior Vice President of Operations.

Published on: March 27, 2015

Got the following email from an MNB user, regarding the subject of GMO labeling, which a new bill proposed in the US Congress would prevent even at the state level:

While it is likely that some or most products that contain GMO’s are just fine I take a more critical view of the labeling.  As a person that has cancer and more than likely will not see Christmas I want a choice of what I eat and what I serve my children and grandchildren.  It is as simple as letting me know the ingredients.

It is also likely that the pesticides or herbicides we used on the farm as I was growing up had a negative impact on my body and today I am paying for that usage.  At the time those chemicals were considered “just fine”.

I do not see that having a national labeling law disclosing the usage of GMO’s would do anything but assist the consumer in making easier choices for themselves and their families.

A compelling argument. I agree. And I thank you for sharing your story.



On the subject of Coca-Cola's issues, one MNB user wrote:

It's well known among current and former Coke employees, including its bottler partners, that Coke has no real growth strategy. Regular Coke consumption piques at 29 years of age in US; Tab ( for your readers who can remember that Brand) peaks at 35. Coke's two most valuable assets are it's water filtration and it's bottling system. Freestyle is the only innovation selling more soda. Juices, milk and k-cups can only go so far. It took someone to leave Coke to see the vision of k-cup partnership.

CEO Muhtar Kent has missed his own 2020 milestone goals. He can only fire so many "chiefs of" before he has to take the bullet himself. The Board has been overly patient with poor results. Culturally, idea generators are shot; those keeping their heads down and doing what they are told live from one SOA (strategic org alignment) to another. Giving more stock to higher-ups is not the answer.

The Board needs to take accountability for poor leadership.  Buffett, who usually is impatient with poor leadership and results, is not leading change.




On the subject of the various issues that have affected sales of Levi Strauss jeans, MNB reader Steve Thomas wrote:

I think Levi Strauss also made a mistake when they created a low end brand they call “Signature” that is sold in discount stores.  The Signature brand is sold at Walmart, Kmart and Meijer.  I think it devalued their name/brand and reputation.  Once they created this brand and began doing business with Walmart there was no turning back.  You begin to rely on those sales and if you ever decide to back out you need to find something else to replace those sales.  It’s like a contract with the devil. 
 
When I was growing up the best place to buy your Levi’s believe it or not was Nordstrom’s.  No one in the Pacific Northwest could beat their price or selection.




Regarding the decision by Walgreen to no longer mandate that checkout personnel bid farewell to shoppers by saying, "be well," one MNB user wrote:

I always thought it funny the cashier would try to up-sell candy bars to me, as he/she was ringing me out, then say "be well" after I paid!




And MNB reader Joe Davis had some thoughts about Amazon's desire to test drone deliveries in the UK:

This comes as a snub to the Owl Postal Service, which has been delivering parcels for years to select UK citizens.  Undoubtedly hailed as an improvement in reliability and cleanliness over the owls, Amazon drones cast a pall over the future prospects of yet another business model.  The Ministry of Magic could not be reached for comment.

Boom! And extra credit for making a movie reference...

Published on: March 27, 2015

Back in 2012, The Best Exotic Marigold Hotel proved that there is an audience out there for modestly budgeted, cleverly written movies that are not about aliens, robots, teenagers or mutants ... which all by itself is a pretty good business lesson for any marketer. The movie followed a group of British senior citizens who, for assorted financial and other reasons, moved to India to live out their days and found themselves finding new life in a rundown hotel. The cast - including Judi Dench, Maggie Smith, Bill Nighy and Penelope Wilton - was terrific, the locale was interesting and the movie turned out to be charming.

And so, of course, there's a sequel. The Second Best Exotic Marigold Hotel picks up the action (such as it is) some months after the conclusion of the first one, as the owner (Dev Patel) and one of his tenants (played by Maggie Smith in all her eye-rolling glory) are trying to expand the concept into a chain.

The new movie has a bunch of different plots woven together - there is a romance that goes upon the rocks, a romance that has trouble getting started, a character who finds unexpectedly finds herself in a new late-life career, and the possibility that a new guest (played by Richard Gere) is an undercover inspector for a hotel chain that may invest in the enterprise. I have to admit that the whole is less than a sum of the various parts, and that The Second Best Exotic Marigold Hotel is largely a predictable affair, but that does not mean that it is without merit.

The thing is, actors like Judi Dench, Maggie Smith, Bill Nighy, Penelope Wilton, and Gere give the movie a lot more vitality and heft than it deserves. Even the great David Strathairn, who essentially has two brief cameo appearances in the movie, is unexpectedly touching. They make it all look effortless, but you just know there are hundreds of years of experience going into the movie, and it just feels good. Not great, but good ... and there's something to be said for a movie that is not about aliens, robots, teenagers or mutants. I'll take my pleasures where and when I can find them.




That's it for this week. Have a great weekend, and I'll see you Monday.

Sláinte!!