business news in context, analysis with attitude

Published on: August 3, 2015

by Kevin Coupe

One of the more extraordinary people I've ever met in my career is Frieda Caplan, who in the 1960's began a career that revolutionized the fresh produce business, bringing to stores and consumers a vast selection of exotic fruits and vegetables and in the process expanding the American palate.

So, it is with enormous admiration that I report to you that a documentary about Frieda Caplan's life has been produced and currently is available on, among other places, iTunes. Fear No Fruit, written and directed by Mark Brian Smith, is an affectionate look at a woman who became a powerhouse businesswoman in the "Mad Men" era and who many people see as being on par with Julia Child in changing the American culinary landscape.

I didn't realize until I saw Fear No Fruit, for example, that until Frieda brought the New Zealand Kiwifruit to America in 1962, no new fruit had found its way into US stores since the banana in the late 1800's. There's a wonderful segment in the film in which there is a "crawl" listing all the various products that Frieda and her namesake company. Frieda's Finest, has introduced ... as Frieda and her daughters try to name them all from memory. (They can't.)

As impressive as Frieda's contribution to American gastronomy has been, perhaps even more impressive is the story the film tells about her family, and how her daughters Karen and Jackie now run the business, and how her granddaughter Alex not only is in the business, but also lives with Frieda. (Alex seems not just to like the living arrangements, but also to really like her grandmother.) As powerful an influence as Frieda has been, she gives Karen much of the credit for the business's success, noting that when Karen became president in 1986, the company’s sales volume more than doubled in less than 5 years.

Here's the thing I found most heartening - at age 91, Frieda still goes to work every day, showing enormous energy and passion for the business. And she's also ever-present at Santa Monica's legendary Farmer's Market, testing new items, looking for opportunities, and always, always learning. (I also know that Frieda knows her way around the internet ... I don't think she'd mind if I mentioned here that I get emails from her from time to time, reacting to something I've written or suggesting something to which I should pay more attention.)

Fear No Fruit is one of those movies that ought to be required viewing for anyone in the fresh produce business ... or for anyone in the food retail business, for that matter. It provides insight and context about an important part of the American food experience, and shines a well-deserved light on one of the industry's most interesting and influential personalities, and nobody deserves it more.

Fear No Fruit is available on-demand on iTunes, Amazon Instant Video, Google Play, Vudu and XBOX.

Published on: August 3, 2015

The Washington Post reported last week that Stewart Parnell, the former CEO of the now-bankrupt Peanut Corporation of America (PCA), is facing a possible life sentence related to his company's implication in a salmonella outbreak across 46 states that killed nine people and sickened some 700 others.

The story notes that the life sentence has been recommended to the judge in the case by federal authorities, following Parnell's conviction last year on "71 criminal counts, which included conspiracy, obstruction of justice and wire fraud." An investigation into the case found that the company shipped peanut butter and peanut paste in containers that were "partially covered in dust and rat crap,” the court documents said; it was widely reported that the manufacturing facility had fecal matter and "mold, roaches and water leaks", and that the situation was never rectified because it would have cost money and taken time, and Parnell was focused on making his numbers.

The Post writes that "at trial, prosecutors laid out a seven-week paper trail that included e-mails, lab results and financial records that showed Parnell not only knew about the contamination but had worked to cover it up while he continued to ship bad products to food processors ... The U.S. Department of Justice said Parnell and others made up lab test results when the food had never even been tested and covered up results that later showed the products were tainted."

Published on: August 3, 2015

The Wall Street Journal has a story about Blue Bell Creameries, noting that as the company "prepares to resume production of its ice cream after a sweeping recall, its mistakes are fueling broader rethinking of how to keep ice cream and other foods free of deadly bacteria.

"Federal records show that Blue Bell failed to follow practices recommended by government and industry groups that might have prevented listeria contamination of ice cream at all three of its main plants. At the same time, some food-safety professionals say the crisis is indicative of insufficient attention, beyond Blue Bell, of the risks of listeria."

The story goes on to report that "some food-safety professionals say Blue Bell’s problems reflect broader complacency in the ice-cream industry about listeria. Many people in the food industry believed the frozen dessert was at lower risk of being associated with infections from listeria than some other packaged foods, in part because the bacteria doesn’t grow when food is frozen."

The Journal notes that "three small ice-cream makers recently have recalled products because of listeria contamination, including Columbus, Ohio-based Jeni’s Splendid Ice Creams, which has had to shut production twice. Since its second bout with listeria in June, Jeni’s has been searching its plant for the source of contamination while another facility makes its ice cream.

"Blue Bell’s struggle with listeria also has spurred other rivals to evaluate their food-safety programs. The board of directors at another U.S. ice cream company commissioned a full briefing from its management after the Blue Bell problems surfaced to confirm its own practices were sufficient, a person familiar with the matter said."

To be clear, "Blue Bell won’t resume distribution from any of its facilities until the company, the FDA and state health officials are satisfied its products are safe, according to a company spokesman."

Published on: August 3, 2015

The New York Times had a fascinating story yesterday about Dan Price, the CEO of credit card processor Gravity Payments, who made news last April when he decided to cut his million-dollar salary to $70,000 a year so he could give raises to a number of his employees that would, in essence, make $70,000 a year the minimum wage at Gravity.

It has not all turned out as he would have hoped.

"The move drew attention from around the world," the Times writes, "including from some outspoken skeptics and conservatives like Rush Limbaugh, who smelled a socialist agenda — but most were enthusiastic. Talk show hosts lined up to interview Mr. Price. Job seekers by the thousands sent in résumés. He was called a 'thought leader.' Harvard business professors flew out to conduct a case study. Third graders wrote him thank-you notes. Single women wanted to date him."

The story goes on:

"What few outsiders realized, however, was how much turmoil all the hoopla was causing at the company itself. To begin with, Gravity was simply unprepared for the onslaught of emails, Facebook posts and phone calls. The attention was thrilling, but it was also exhausting and distracting. And with so many eyes focused on the firm, some hoping to witness failure, the pressure has been intense.

"More troubling, a few customers, dismayed by what they viewed as a political statement, withdrew their business. Others, anticipating a fee increase — despite repeated assurances to the contrary — also left. While dozens of new clients, inspired by Mr. Price’s announcement, were signing up, those accounts will not start paying off for at least another year. To handle the flood, he has already had to hire a dozen additional employees — now at a significantly higher cost — and is struggling to figure out whether more are needed without knowing for certain how long the bonanza will last.

"Two of Mr. Price’s most valued employees quit, spurred in part by their view that it was unfair to double the pay of some new hires while the longest-serving staff members got small or no raises. Some friends and associates in Seattle’s close-knit entrepreneurial network were also piqued that Mr. Price’s action made them look stingy in front of their own employees."

And yet, Price - who has a conservative religious background (not a Socialist one) and seems to be rooted as much in values-and-faith as in politics - seems to be convinced that his move has the potential to create a revolution.

You can read the entire, fascinating story here.

Published on: August 3, 2015

The New York Times had a piece over the weekend about the A&P store on Riverdale Avenue in the Bronx, noting that it "is the last in New York City, where the once-mighty chain was born just before the Civil War. Now the company has filed for bankruptcy protection for the second time in five years. Once its plan for liquidating is approved, the store’s A.&P. signs will come down. And the A.&P. name will vanish from New York."

Linda Fisch, a longtime A&P customer, tells the Times that "it does look like the last A.&P. in New York City ... It’s not that it’s dirty, it’s that it looks tired. And when we have Fairway and Whole Foods and Trader Joe’s and all these upscale markets with food that’s flown in from all over the world, and even Target - it’s very clean and orderly and well-managed - the competition is fierce."

And then, Fisch delivers the knock-down punch: "It’s like it’s been going out of business for a long time."

Published on: August 3, 2015

Interesting confluence of stories in recent days about the airline industry, which currently is being investigated for possible collusion - the US Congress has suggested that by limiting flights, major airlines are in fact conspiring to keep prices high and limit consumer choice.

In the case of these two stories, the subject has more to do with how they treat their customers ... and the impact it could have on long-term brand equity.

For example, the New York Times had a story about all the extra fees that passengers now have to pony up when they fly:

"Some airline passengers view high fees, an increasing number of fees and poor disclosures as sources of friction when traveling. But even with recent meetings among regulators, pressure from lawmakers and now a Department of Justice investigation into possible collusion among airlines, the airlines’ penchant for fees is not going away any time soon in what has become a highly profitable industry ... A recent analysis of 63 airlines by the airline consulting firm IdeaWorksCompany and sponsored by the travel-technology service CarTrawler found that these airlines earned $38.1 billion in ancillary revenue, or revenue from nonticket sources, last year."

Now, not all of that $38.1 billion was from fees. But a lot of it was. And passengers don't like it ... not that they can do much about it, since pretty much everybody charges those fees.

The Times also had a story the other day about how, "over the last 18 months, Delta Air Lines ... no longer posts any award chart explaining how many miles your free tickets will require, the way that United and American Airlines still do" for their frequent flier programs. "But Delta also hasn’t moved to a transparent miles redemption system that is based entirely on the cash price that the 'free' ticket would otherwise cost, as Southwest Airlines and JetBlue Airways do.

"Instead, Delta issues proclamations like this one that came along a few weeks ago: 'For travel on or after June 1, 2016, the number of miles needed will change based on destination, demand and other considerations. But most Award prices will remain unchanged.'

"Which destinations? How much demand? What other considerations? Which prices? The airline won’t say. You’re just supposed to cross your fingers and hope that you have enough miles come vacation time or if you have to get to a funeral quickly. Or hope for some magic."

Published on: August 3, 2015

IJR Review reports that Rep. Jackie Speier (D-California) has introduced a bill that would allow the US Postal Service (USPS) "to ship alcoholic products across the country ... Current law prohibits Postal Service customers from shipping beer, wine and distilled spirits to consumers. Speier believes this puts the company at a competitive disadvantage against competitors like UPS and FedEx, both of which allow customers to ship alcoholic goods."

The story says that The USPS Shipping Equity Act already has 24 co-sponsors from both parties; the ban on shipping of alcohol through the USPS goes back to the Prohibition era.

The Congressional Budget Office anticipates the bill would provide the consistently troubled USPS with $50 million in annual incremental revenue.

Published on: August 3, 2015

Wired reports that Facebook has announced that "it has begun testing virtual storefronts on company Pages, so consumers can shop without ever leaving its app or site. Google too is now testing an e-commerce option to let mobile users make purchases directly in search results via shopping ads that pop up at the top."

The story goes on to say that "the push into more naturally integrated e-commerce makes sense, even if the real goal isn’t to become a retail hub.

"These tech titans don’t necessarily want, or need, to replace a shopping site like Amazon, or even the IRL Walmart. But with millions of people signing onto Facebook and searching in Google daily, adding another seamless in-house service has bottom-line appeal. What’s for an advertiser not to love about buying an ad that itself is also a way to make a purchase? As for consumers, in-app purchases mean you never have to leave, which is exactly what these companies want."

Meanwhile, there also are a number of reports that Google wants to push into the home services business - going where Angie's List has made a considerable impact, and where Amazon is broadening its presence. Buzzfeed says that Google is "working on a service that would connect local plumbers, cleaners, painters, and other workers with homeowners."

Published on: August 3, 2015

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

• The Orange County Register reports that Fresh & Easy plans to close 14 stores in markets that include San Diego, Los Angeles, Orange County, Arizona and Las Vegas.

“Fresh & Easy is closing a small number of underperforming locations,” spokesman Brendan Wonnacott tells the paper. “While recent initiatives have helped drive additional sales across the Fresh & Easy business, in the case of these locations the progress was not enough to bring their performance in line with the rest of the business.”

What do you think the odds are that Haggen decides to buy these units? I mean, based on recent history, anything is possible...


• Business Insider reports that "IBM and pharmacy chain CVS Health have announced a first-of-its-kind new partnership to put IBM's supercomputer Watson to work for millions of Americans with chronic health conditions."

The story goes on: "Watson will watch data from what IBM describes as an "unprecedented mix of health information sources" including a person's medical health records, prescriptions, environment, even fitness devices. It will then spit out suggestions on how to improve that person's health care to save the person money and help the person feel better.

"But the ultimate goal of this partnership is really pretty astounding: IBM and CVS hope to find people at risk for illnesses before they've gotten sick and create custom programs to help them avoid the illness."

Beats the hell out of playing Kern Jennings at Jeopardy...


• The Wall Street Journal reports that "to stop a precipitous sales decline, McDonald’s Japan is inviting 100 mothers to tour its facilities ... Women living in Japan who have at least one child are eligible to enter a competition for the facility tours."

The fast feeder's problems in Japan began when "Chinese media reported that one of the fast-food chain’s suppliers allegedly sold expired chicken nuggets," and now the company is hoping to rebuild trust.

Published on: August 3, 2015

Whole Foods announced that its chief information officer (CIO), Jason Buechel, has been promoted to the company’s executive leadership team, in a move that the Wall Street Journal says "signals technology’s growing importance at the grocer, which recently has made significant investments in IT."

Published on: August 3, 2015

On Friday, we took a look at a Washington Postpiece about a study suggesting that if McDonald's "maintained its current profit margin of 6.3 percent - which, to be fair, is fairly slim - hiking the pay floor at fast-food restaurants to $15 an hour would mean just a 4.3 percent increase in prices." That would mean a Big Mac would cost about 17 cents more - though "this is just a rough estimate - the numbers would vary based on location and what the minimum wage is now, just as financial needs vary depend on where the employees live."

I commented, in part:

Essentially the question is whether people would be willing to "pay 17 extra cents for a Big Mac if it meant the person who prepared it could earn a living wage." Though I suppose that some might ask whether people should be forced to pay that extra 17 cents for a Big Mac to support a living wage.

Seventeen cents? To me, that's both a no-brainer and an Eye-Opener.

One MNB user wrote:

This is awesome Kevin.  I can't wait to ride my shiny white unicorn through the drive thru at McDonalds and solve poverty with the change I found under my couch pillow.  Unfortunately white unicorns don't exist and the folks at Purdue left some pretty obvious logic out of their model.  Let's say I have been working at the slaughterhouse that provides beef to McDonalds and after breaking my back for the last 10 years, I earn $15/hour.  I am not going to high five the 16 old kid flipping burgers and tell him great job on his raise.  On the other hand, I am definitely going to my boss and demand that my wages be increased so I am not earning the same as a fry jockey.

This will cascade throughout the market and wages/retails will correct; however, in the short term owners will find creative ways to reduce hours and ultimately jobs.  Folks need to keep in mind that currency is merely a symbol of economic value.  This might seem unfair to someone who works really hard at an entry level job but it is a fact of life.

But another MNB user wrote:

I agree, a no-brainer.  They wouldn't have to raise the cost of a Big Mac if they had healthy fast food to go ... Or organic sirloin beef (not mystery meat) grilled burgers?  fair trade ....coffee with real half n Half, healthy band name organic green juices, Ben N Jerry's ice cream, kale wrap salads.   How about organic milk and lactose free?  What about gyro sandwiches which can be eaten in the run...as long as it is not mystery meat.   They have the facilities and infrastructure -- they just need to sell something healthy but good that people need to buy on the run when there is no time to run into Whole Foods...

Here's a question I would ask. Let's say the study was way too optimistic about the numbers...and the actual amount that a Big Mac would go up is twice that, or 35 cents. Is that too much to pay for a higher minimum wage? Is 50 cents a Big Mac?

I don't know what the numbers are, and I'm no mathematician. But I guess that I think this debate could be connected to another discussion we've often had here on MNB - that Americans are addicted to low prices, and nobody really knows what anything costs ... which ends up artificially driving down prices in a way that may not be helpful to the economy or the culture.




On the subject of the Amazon Dash Buttons now available, allowing people the ability to reorder single items extremely easily, one MNB user wrote:

I can see this catching on. I am also waiting for the very comical story of the toddler that ordered 30 bottles of detergent “helping with the laundry”.

My understand is that there is a failsafe mechanism to prevent this from happening ... but yes, this sort of thing probably is inevitable.




I asked last week if there was anything remotely positive about the Haggen debacle, which led MNB reader Joel Yochem to offer:

Those 146 new Haggen stores could have just gone away, along with the employees…

True. On the other hand, if Haggen had not done it, maybe they would've been sold off piecemeal to a bunch of other companies better equipped to keep them viable.



In writing about a study suggesting that red mean could be carcinogenic, I joked that I was glad I'd ordered the veggie pizza that night and not the meat lovers ... though I conceded that the fact that it was pizza and not a salad probably made the whole point moot. But MNB reader Herb Sorensen wrote:

As someone with nutrition credentials (Ph.D. biochemist, former founder of a nutrition lab and one time Nutrition Advisor to Denny's Restaurants;) and as a lifetime near-vegetarian, here's my comment on: "eating pizza instead of a salad probably mitigates against any health advantages."

It's hard to see how avoiding carcinogens in one food ingredient (red meat,) could be mitigated by eating the kind of salad typical of pizza restaurants.  Other than the significant fat content of the pizza, it is FAR more nutritious than the salad, which would have the advantage on micro-nutrient vitamins common to fresh vegetables.  Any pizza would likely be more nutritious than any salad, in relation to the macro-nutrients of protein and carbohydrates.  For the fat, it depends on your overall diet (and exercise.)  If you've got a problem there, deal with it.

I feel so much better now. And as you read this, I'm probably off on a 12-14 mile bike ride along the Willamette River. So I'm dealing with it...