business news in context, analysis with attitude

Published on: May 8, 2017

by Kevin Coupe

Fox Business reports on an early stage venture capital group being quarterbacked by NFL Hall of Famer Joe Montana has invested "in a Seattle-based food startup called Crowd Cow, which allows customers to buy a cow directly from ranchers using a crowd-funding type approach."

According to the story, "Crowd Cow, which launched in 2015, sells one animal at a time, and only processes orders once all parts of the cow are sold, allowing customers to buy shares—or specific cuts—of meat that they want ... The meat is then directly shipped to your house without going through multiple middlemen like traditional store-bought meat."

The Fox Business story says that "Crowd Cow has raised $2 million in venture capital and the founders say they have generated more than $1 million in sales in less than two years by selling over 300 cows. Currently, they are in about 20 states west of the Mississippi, but plan to sell nationwide beginning next month."

The investment group, Liquid 2 Ventures, were attracted to the company because, asa dedicated carnivore, Montana believed there was appeal in knowing more about the source of the meat one is eating.

"I think in most cases you don’t have any idea where the cows are coming from or what they’ve been fed or how they’ve reached this weight. There are a lot of ways to get weight on a cow that are not natural. That’s the one thing that you can count on with Crowd Cow is that it’s completely natural,” Montana says.

It is an interesting concept, and one that might have broad appeal for people with disposable income and an interest in transparency of product. It seems to me that I've heard of traditional retailers helping to connect ranchers and customers, and if Crowd Cow is able to gain traction and generate steak-holders as well as stakeholders, we might see more of this occurring ... and it'll be an Eye-Opener.

BTW....they say that once the whole cow business takes off, they may move next to pork. Which makes sense, since with Montana involved, it won't just be meat that'll seem attractive. It'll also be the pigskin.

Published on: May 8, 2017

The Washington Post reports that the US Food and Drug Administration (FDA) has put aside $3 million to "fund a campaign to promote genetically modified organisms in food" and "tout 'the environmental, nutritional, food safety, economic, and humanitarian impacts' of biotech crops and their derivative food products."

The decision to fund such a campaign was a result of the agreement reached last week in the US Senate to avoid a government shutdown, which allocated the money to FDA for this specific use. Just last month, the Post reports, "more than 50 agriculture and food industry groups" signed a letter "urging the funding to counter 'a tremendous amount of misinformation about agricultural biotechnology in the public domain'."

The Post writes that "some environmental groups and House Democrats have derided the provision as a government-sponsored public relations tour for the GMO industry," and that "an attempt by Democrats to redirect the project’s funding to pediatric medical projects within FDA was unanimously voted down by Republicans."

Published on: May 8, 2017

Kroger has announced its intention to launch a new line of meal kits - called Prep Pared - that is designed to compete with the likes of Blue Apron and Hello Fresh.

Prices for the meal kits, which serve two, start at around $14.

The kits are being tested in four Cincinnati stores, and for online ordering and pickup via Kroger's ClickList service art two of them.

Kroger currently offers five options: Japanese-Inspired Beef Bowl, Chimichurri Steak, Moroccan-Inspired Spring Vegetables, Creamy Chicken and Bacon Alfredo, and Chicken Enchiladas Rojas. 

Meanwhile, Ahold Delhaize-owned Peapod announced that it has begun selling "three new meal kits featuring Frontera, the gourmet Mexican food line from chef Rick Bayless and Conagra Brands." The kits contain "pre-measured, pre-cut and pre-washed ingredients for meals made in 30 minutes or less that can be added to customers' Peapod carts along with all other grocery and pantry essentials."

Recipes include Grouper with Tomatillo-Avocado Sauce, Ancient Grain Chorizo Cazuela, and Sweet + Savory Pork Tacos," offered at what the company calls "family-friendly prices (many are less than $5 per serving)." and "available in 4-6 serving size options."

The Peapod meal kits are currently available in Chicago, and will be rolled out to Peapod's other markets this summer.

"Peapod prides itself at providing real solutions for its customers, from the convenience of reliable grocery delivery to creating stress-free one pot meals," said Tony Stallone, Vice President of Merchandising for Peapod. "Working with partners like Conagra is really helping us fill a need with busy consumers, and we're seeing that firsthand in our sales data. Not only are kits tremendously popular with some of our most loyal shoppers, but they also seem to be attracting new fans."

Published on: May 8, 2017

The Chicago Sun-Times reports that Jewel-Osco plans to begin offering online ordering to Chicago-area customers by the end of the summer.

Doug Cygan, president of the Albertsons-owned retailer, says that he views it as "a logical next step for Jewel-Osco, which got its start 118 years ago as a horse-and-wagon food-delivery service and supplied food for online grocer Peapod for a decade in the 1990s. Peapod started sourcing from wholesalers 17 years ago to save money."

Specific details about the nature of the Jewel-Osco offering have not yet been divulged.

Published on: May 8, 2017

IGD offers a RetailAnalysis paper about how "Walmart and Target are looking at two very different opportunities in auto-replenishment," as they look to compete with Amazon's effective Subscribe-and-Save and Dash button programs.

According to the piece, "Target is aiming to emulate Amazon’s Prime program with a new initiative, Target Restock. This would enable Target’s customers to have a large box, filled with an unlimited number of items, constrained by a weight limit, shipped to their homes for a flat fee. While no fee details have been released, it is expected to be competitively priced. While the service will make it more convenient for Target’s shoppers to have all their items delivered in one order, for Target it helps to reduce shipping costs."

And, as noted here on MNB last week, IGD writes that "Walmart has filed a patent for technology that would enable it to track the way products are used at home by its shoppers after their purchase. This would include frequency of use. Based on this information, the technology would automatically re-order items when the products start to run low. It could also provide Walmart with valuable insights into consumer behaviour and enable it to make personalised recommendations that would better match their usage patterns. The main difference versus Amazon’s Dash button program is that it does not require any intervention from consumers to reorder the products."

Full disclosure: Tom Furphy, who co-writes MNB's "Innovation Conversation" column, is a co-founder of Replenium, which has developed an open subscription platform usable by both retailers and suppliers.

Published on: May 8, 2017

Bloomberg BusinessWeek has a long story about how Walmart is girding for an e-commerce battle with Amazon.

Here's how it frames the story:

"Last summer, Marc Lore, founder and chief executive officer of e-commerce startup Jet.com Inc., sat down to record a private video for the top officials of the world’s largest retailer: Wal-Mart. In the video, meant for Wal-Mart executives and board members who weren’t yet part of weeks of secret negotiations between the companies, Lore stares earnestly into the camera and shows off his Bentonville bona fides. After humblebragging about reading every annual report since 1972, he says he’s been 'struck by Wal-Mart’s maniacal focus' over its storied 54-year history.

"But Lore’s 40-minute presentation doesn’t hold back about the threat posed by its most fearsome and increasingly powerful archrival. 'AMAZON IS DOMINATING' reads a slide on a large screen behind him. In the video, Lore presents a plan to bet Wal-Mart’s future not on e-commerce standbys such as books, electronics, and toys, but on product areas only now becoming popular online, including apparel, fresh food, and 'everyday essentials' like drugstore items. 'We’ll need to take the offensive, swim upstream,' Lore says. 'As Sam Walton said, ‘Opportunity lies in the opposite direction.’ ”

Fascinating piece, and you should read it - if only because if you are not Amazon or Walmart, there is at least the potential that you could end up as collateral damage. It can be found here.

Published on: May 8, 2017

USA Today reports that Toys R Us "is revamping its website to woo back customers who may have fled to Amazon or other retail rivals," debuting today "to a small number of users before a full rollout that is expected by early July. The revamp is part of a nearly $100 million investment by Toys R Us over the last three years that is geared toward jump-starting an e-commerce experience that it acknowledges lagged some of its retail peers."

Acknowledging that the company has fallen dangerously behind in e-commerce, Lance Wills, Toys R Us’ first global chief technology officer, tells the paper that "in a year to two years, we have to catch up on 10 years of innovation and that’s no small feat.’’

The story goes on to say that "the new site features larger images along with streamlined menus that make it easier for shoppers to find items. And customers who are simply shipping items to an address, instead of asking for gift wrapping or another extra service, will be able to complete the purchase in two steps ... Separate from the website overhaul, Toys R Us is also aiming to offer a more personalized experience to customers that includes targeted email and tailored presentations of Web content, specific to a shopper's interests, that will start later this year."

Published on: May 8, 2017

The Puget Sound Business Journal reports that a Brooklyn coffee shop called The End is using Starbucks over its popular Unicorn Frappuccino concoction, saying that the giant coffee company stole the name and concept.

According to the story, The End says "it came up with the original Unicorn drink name, launched its 'Unicorn Latte' in December and had a trademark pending since Jan. 20. Starbucks said the accusations have no grounds."

The Journal writes that "both drinks are similar, although The End says that its offer is a healthier option. The End says the Unicorn Latte is made from ingredients like dates, ginger root and algae, while the Starbucks brand has 76 grams of sugar, 11 grams of saturated fat, and uses its typical mix of milk and artificial sweeteners.

"Neither contains coffee."

The End says it "wants a public apology and $10 million."

Published on: May 8, 2017

• Re/code reports that Amazon and Apple appear to have reached a corporate truce, and that they are close to an agreement that will "bring an Amazon video app to Apple’s Apple TV set-top box," allowing "Amazon Prime Video subscribers to easily watch TV shows and movies from the service using Apple TV."

It seems likely that Amazon also would once again sell the Apple TV system on its site. Amazon stopped doing so in 2015, because the way things were configured made it cumbersome for people to watch Amazon programming on Apple's TV.

Re/code writes that "both Apple and Amazon want to be the primary sources of entertainment in their customers’ homes, and in some cases the two offer products that compete directly with each other. Amazon, for instance, sells Fire TV sticks and boxes that bring video to TV sets, just like Apple TV boxes do. Other products are more complementary, at least for now. Apple has yet to launch a streaming video service like Amazon provides via its Prime subscription offering."

Published on: May 8, 2017

• The Wall Street Journal reports on how Monsanto "is investing in gene editing in an effort to keep an edge over rival suppliers of high-tech crop seeds. Monsanto has signed a string of licensing deals to add new gene-editing capabilities to its established methods of genetically modifying seeds, or creating GMOs."

The story says that gene editing "could help corn plants thrive in dry conditions, or produce tastier bell peppers," and that Monsanto believes it is a "breakthrough technology."

However, the Journal writes, "Startups and established competitors like DuPont Co. and Dow Chemical Co. are also working on gene-edited plants, which can advance through regulatory reviews faster than seeds developed with earlier biotechnology techniques."

The story explains that "gene editing allows scientists to make changes to a plant’s already-existing DNA with the same precision that word-processing programs can edit text, scientists say. In the crop-seed business, genetic modification up to this point mainly has involved inserting new genes from bacteria or another plant. That difference can mean a shorter review by U.S. regulatory agencies for gene-edited crops."


• The Associated Press reports that "Johnson & Johnson has been hit with a multimillion-dollar jury verdict for the fourth time over whether the talc in its iconic baby powder causes ovarian cancer when applied regularly for feminine hygiene.

"Late Thursday, a St. Louis jury awarded $110.5 million to Lois Slemp, 62, of Wise, Virginia, who was diagnosed with ovarian cancer in 2012. She blames her illness on her use of the company’s talcum powder-containing products for more than 40 years."

The story notes that "the biggest studies have found no link between talcum powder applied to the genitals and ovarian cancer. But about two dozen smaller studies over three decades have mostly found a modest connection — a 20 percent to 40 percent increased risk among talc users."


• The Washington Post reports that Amazon "has leased 10,000 square feet at 3040 M St. NW in Georgetown, a storefront previously occupied by Barneys New York," which it plans to use to open a bricks-and-mortar store. No date for the opening has yet been set.

Published on: May 8, 2017

On the continuing issues faced by the airline business, MNB reader Michael Stumpf wrote:

I avoid flying as much as possible, not only for short trips, but also for long distances. About a year ago I chose to drive three days from Milwaukee to Edmonton to spare myself the torture of flying. The experience has been severely diminished since I began to travel regularly in the 1980’s. Small gestures like offering free wi-fi for a limited time are not going to change customer perceptions.

The fundamental problem is that the airlines have placed the customer far down on their list of priorities, after profits and procedures certainly, and this has created a culture in which some employees believe that they need to make little effort for the customer’s sake. The airlines do not need to compete for customers, and so they have converted airplanes into flying cattle trucks. Customers arrive at the airport dreading the next few hours, in a poor mood, and expecting a bad experience. It is a set-up for confrontation and failure. The solution is to return to wider seats and more legroom, selling only the seats available, a more generous approach to snacks and beverages, and less nickel-and-diming passengers for things like bags or seating preference. What do you think the chances are of them doing this?




Regarding downgrading of federal support for healthier food in school lunch programs, one MNB reader wrote:

Kevin, we have a neighbor who works in the cafeteria at a school in the Winter Haven, FL schools.  She tells us frequently that the children are throwing away the food they are given that is prepared under the rather recent change in guidelines.  Education may well be the answer but we are not sure where it is going to come from.  She also tells us that many of these same children have no interest in math and science and only disrupt the educational system.  Unfortunately, many of these same children are also the ones who don’t get fed properly or at all at their homes. Maybe some food is better than no food.




On the subject of craft breweries being sold to major brewers, one MNB reader wrote:

Wicked Weed selling out to Anheuser Busch has been talked about constantly the last few days ever since it happened in Asheville. Us locals are torn between being happy that one of our favorite breweries now has the opportunity for wider distribution and being majorly annoyed that our pro-local town is being sold out to huge companies. A few months ago, my friends and I took a tour of Wicked Weed’s sour beer brewery and were told about how excited they were to be expanding to open a second distribution center a few miles outside of Asheville, now they’re basically on their way to becoming another major chain.

The Asheville vibe is very pro-local and the new worry is that many of our other successful breweries are going to start selling out too. People are still going to buy their beer and eat at their restaurants, but at least for a while it’ll leave a bad taste in everyone’s month.

From another reader:

I agree with you, a good beer is a good beer, no matter who makes it. Personally, I like trying new things and supporting the little guy, along with a great beer.

I think most craft beer likers agree. The craft beer lovers may feel differently.

Boils down to a concern that the product sold to the big guys will be ruined when the VP of Pencil Sharpening changes the product to make a little more money.

Published on: May 8, 2017

Always Dreaming, ridden by John Velazquez, won 143rd running of the Kentucky Derby on a rainy Saturday afternoon at Churchill Downs. Always Dreaming won by 2 3/4 lengths with a time of 2:03.59, while Lookin At Lee finished in second place, and Battle of Midway came in third.