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    Published on: October 26, 2018

    by Kevin Coupe

    There is an Eye-Opening piece in the Wall Street Journal about how investors are gravitating to the restaurant and food delivery segment, noting that “venture-capital firms have invested $3.5 billion in food and grocery delivery services so far this year, more than triple the amount they invested in all of 2017.”

    You can read it here.

    As these companies position themselves for IPOs or new rounds of fund raising, the numbers are staggering. Instacart says it has a $7.6 billion valuation (and we all know how I feel about Instacart … or at least about the companies hitching themselves to its flawed business model). Postmates is valued at around $1.2 billion. DoorDash - $4 billion. “UberEats, the food-delivery unit of Uber Technologies Inc., is credited with what bankers estimate will be $20 billion of Uber’s proposed $120 billion valuation if it goes public as planned early next year,” the story says.

    There seems to be some difference of opinion about the sustainability of some of these companies. Some think that the delivery business will level off, in the same way that the meal kit business has after a flurry of investment activity. (Which it could, but I continue to believe that meal kits are a viable business, even as it evolves and matures.) Some think that there inevitably will be mergers and acquisitions. (Agreed. To me the question is what company is doing the acquiring, and what happens to the customer data.)

    There also is the challenge, the Journal writes, that “customer loyalty largely lies with the food company, not the delivery service they use. Many grocery chains already run their own online pickup operations, and could eventually offer delivery services themselves.” (The problem, of course, is that companies like Instacart would like to disintermediate the retailers for which they “work” from their customers.)

    Still, the delivery business - whether in-sourced or outsourced - is an enormous opportunity, albeit one that businesses must embrace with their Eyes Open.
    KC's View:

    Published on: October 26, 2018

    Amazon said yesterday that its Q3 revenue was up 29 percent to $56.6 billion, with a profit of $2.9 billion, up from $256 million a year ago. The company was helped, analysts say, by Prime Day sales of about $2 billion.

    The results come as Amazon prepares for the upcoming end-of-year holiday shopping season, which can be expected to be a gig revenue generator for the company. However, during that season it also will be facing off against competitors - from Walmart to Target to Best Buy, to name just a few - that have gotten better at e-commerce, at a time when the collapse of retailers such as Toys R Us and Sears will leave some gaps in the marketplace.

    The New York Times quotes Gartner L2 analyst Cooper Smith as saying that Amazon is “saturating the core market in the U.S. for e-commerce. This is a company in transition right now,” he says, moving from a focus on acquiring more customers to getting more growth from people who already shop the site.
    KC's View:
    I think Smith’s analysis makes a lot of sense, especially in view of something my friend Tom Furphy, with whom I do The Innovation Conversation here every other week, said to me in a note when Amazon’s numbers came out, agreeing that its “results are coming back to earth a bit.”

    But he also made another point, pointing to “Amazon’s list of accomplishments for the QUARTER.”

    The press release section about accomplishments for the third quarter runs to more than 2,500 words and includes:

    • “Amazon introduced a new family of Echo devices: the next generation Echo Dot, Echo Plus, and Echo Show; Echo Auto, the new Echo for the car; and companion devices, including Echo Wall Clock, Echo Input, Echo Sub, Echo Link, and Echo Link Amp.

    • “Amazon introduced the all-new Fire HD 8 tablet, featuring an 8” HD display, a quad-core processor, 16 GB of internal storage with support for up to 400 GB more via microSD, up to 10 hours of mixed use battery life, and hands-free access to Alexa. Amazon also expanded availability for Show Mode on Fire tablets and launched the Show Mode Charging Dock in the U.K. and Germany.”

    • “Amazon introduced the new Kindle Paperwhite, which is thinner, lighter, and waterproof with a flush-front display.”

    • “Amazon announced Fire TV Recast, a DVR that lets you watch and record live over-the-air TV at home and on mobile devices with no monthly fees. Additionally, Amazon introduced Fire TV Stick 4K, the first streaming media stick to support HDR10+ and Dolby Vision, in the U.S., Canada, Germany, India, Japan, and the U.K.”

    • “The number of Alexa-compatible smart home devices has quintupled year to date to more than 20,000 devices from over 3,500 brands. Through new tools including updated Alexa Smart Home Skill APIs and the Alexa Connect Kit, developers and device makers can enable voice control of any device and feature with Alexa. The AmazonBasics Microwave is the first device built with these new tools.”

    • “Amazon announced new Alexa smart home features, including: Alexa Guard, which helps keep customers’ homes safe when they are away; Hunches, which allows Alexa to sense when connected smart devices are not in their usual state; and Frustration-Free Setup, designed to make it easy to connect new smart home devices to Wi-Fi.”

    • “Amazon introduced new Alexa experiences for the car, including an upcoming integration of Alexa into select Audi vehicles; the Alexa Auto SDK, which lets automakers and suppliers build Alexa into in-car infotainment systems; and Echo Auto, an easy and affordable way for customers to bring Alexa into vehicles they already own.”

    • “NFL Thursday Night Football (TNF) returned to Prime Video for a second season, reaching more than 8 million combined viewers worldwide in the first 4 games on Prime Video and Twitch.”

    • “Amazon launched the Prime Credit Card in Germany, which comes with no annual credit card fee and enables Prime members to enjoy 3% in reward points for their purchases on and 0.5% in reward points for all other payments where Visa is accepted.”

    That, for the record, is about 400 of the 2,500 words … and I haven’t even included the bits about new Amazon Go stores, the new Amazon 4 Star store, expanded delivery and pickup options at Whole Foods, and all its international investments, and I could go on and on and on.

    Here is what Tom Furphy had to say about this list of accomplishments:

    Check out Amazon’s list of accomplishments for the QUARTER. How many retailers touch this in a DECADE!

    Excellent point. And while the stock market may have been temporarily disappointed by the numbers, and the under-promise-over-deliver guidance it has provided for the rest of the year, those kinds of increases sound pretty healthy to me, as do the company’s approach and ambitions.

    Published on: October 26, 2018

    WinCo Foods has announced that Steven Goddard has stepped down as CEO, and has been succeeded by company president Grant Haag.

    The transition has been in process since last April, when the company announced Goddard’s planned retirement.

    Goddard worked at WinCo for more than 20 years, and Haag’s move into the role continues a company transition of internal growth - Haag has worked there for 34 years.
    KC's View:
    Steven Goddard is someone who has garnered an enormous amount of respect in the food industry, helping to shepherd a company that is a tough competitor in every market where it operates, that has been resolute and disciplined about its value-driven approach to retailing, and extraordinarily successful with its employee-ownership business model.

    Grant Haag has big shoes to fill.

    Personally, I’m going to to miss him .,.. because Steven Goddard has been extraordinarily generous to me over the years, coming to speak to my Portland State University summer class three separate times. Not only has he talked to our students, but he also has listened to them … taking their comments and criticisms very seriously, and always following up with them. Every time he’s come to class, he’s been a big hit. I really appreciate that.

    The only problem I have with this announcement is that he and I are about the same age … which means, to my mind, that he is way too young to be retiring from anything. I look forward to seeing what he does next.

    Published on: October 26, 2018

    The New York Times this morning reports on a new study from France concluding that “the most frequent consumers of organic food had 25 percent fewer cancers over all than those who never ate organic. Those who ate the most organic fruits, vegetables, dairy products, meat and other foods had a particularly steep drop in the incidence of lymphomas, and a significant reduction in postmenopausal breast cancers.”

    The story notes that the numbers surprised even the study’s authors, and that some outside experts say that the evidence is not enough to change basic dietary advice - that cancer prevention is aided by higher consumption of fruits and vegetables, regardless of whether they are organic.

    The study, the Times points out, “was paid for entirely by public and government funds,” and not by organic interests.
    KC's View:
    I’m hardly a dedicated organic consumer, but I have to admit that as I get older, three things are happening. First, I try to eat less crap in general - life is too short to eat lousy food (or drink lousy beverages). Second, I try to eat more fruits and vegetables. And third, I find myself choosing more organics, simply because it seems to make sense.

    It’s all part of trying to take better care of myself, and even if this study is not entirely conclusive, it seems to point in a direction where the road will be longer and more pleasurable.

    Published on: October 26, 2018

    Peter Larkin, president/CEO of the National Grocers Association (NGA), which represents the independent supermarket sector, announced that he will retire from the organization on December 31, 2019.

    Larkin’s retirement, the organization said in its prepared statement, “caps off a nearly 40-year career in the supermarket industry. During Larkin’s tenure, NGA has experienced retail and wholesale membership growth that has more than doubled, ranging from single-store supermarkets to regional independent supermarket chains.  Member engagement for the organization is at an all-time high as evidenced by the numerous member driven share groups and committees, as well as the continued record breaking growth of The NGA Show, which has nearly tripled its attendance levels with Larkin at the helm.”
    KC's View:
    At a time when running a trade association can be problematic because of the dual challenges of consolidation and competition, Peter Larkin has done an exceptional job at NGA, I think. It continues to grow, it has been highly focused in defining both its territory and its opposition, and it has been very smart about choosing allies and coalitions.

    The only thing is, Peter and I are about the same age … which means, to my mind, that he is way too young to be retiring from anything. I look forward to seeing what he does next. (Sense a pattern here?)

    Published on: October 26, 2018

    Forbes has a piece - contributed by the Environmental Defense Fund - that applauds Walmart and Unilever for using “the power of supply chains to tackle the persistent problem of tropical deforestation.

    An excerpt:

    “Earlier this month, the world’s foremost authority on climate change said we must keep global temperatures in check by 2030, or face dire consequences. Another report by Global Forest Watch said tropical deforestation now ranks third in carbon dioxide-equivalent emissions, behind the United States and China.

    “It’s why Walmart and Unilever’s move to collaborate with local governments to reduce deforestation and drive sustainable development in their sourcing regions is so important.
    By throwing their weight behind this strategy and by using actual market signals, these multinationals are showing industry at large how to meet deforestation reduction efforts in a meaningful way.”

    You can read the entire piece here.
    KC's View:

    Published on: October 26, 2018

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

    • The New York Times reports that tobacco manufacturer Altria has agreed to “discontinue most of its flavored e-cigarettes and stop selling some brands altogether,” as it looks to respond to criticisms that it was marketing those products to underage consumers.

    The Times writes that “the Food and Drug Administration launched a campaign earlier this year against the makers of e-cigarettes, including the blockbuster start-up Juul, as well as major tobacco companies, that were marketing their products in ways that appealed to teenagers. The agency issued warnings on Sept. 12 to several companies, giving them 60 days to prove they can keep their e-cigarette devices away from minors.”

    Altria also reportedly plans to “support federal legislation to raise the age to 21 for the purchase of any tobacco and vaping product,” a change in policy for the company.

    Don’t trust them. Don’t believe them. They’ll give a little here, hoping to make up a little ground over there, and find a way to addict young people to products that they’ll pay for - dearly - for the rest of their lives.
    KC's View:

    Published on: October 26, 2018

    James Karen, a veteran character actor who acted in more than 200 movies and TV shows, has passed away. He was 94.

    The thing is, even if you don’t know Karen’s name, you know his face and his voice. He started his career understudying Karl Malden in “A Streetcar Named Desire” on Broadway. In the original Poltergeist, he played the real estate developer who moves the headstones but not the bodies. (Bad move.) In The China Syndrome he played the television station new director for whom Jane Fonda and Michael Douglas work. He also was in Wall Street, Any Given Sunday, Nixon, All The President’s Men, I Never Sang for My Father, Capricorn One, Thirteen Days, Return of the Living Dead, and, amusingly, Frankenstein Meets the Space Monster. He also played the bad guy in the series finale of “Little House on the Prairie,” in which his character (another real estate developer) buys up the town of Walnut Grove, which prompts the residents who he wishes to displace to simply blow the place up.

    But here’s the business tie-in. For people who grew up in the New York metropolitan area, Karen was the face and voice of Pathmark supermarkets, appearing for years in thousands of the retailer’s commercials, usually saying, at some point, “Why pay more?”

    The irony was that the “Little House” gig almost lost him the Pathmark job, people were so outraged by what his character did to Walnut Grove. Karen apparently was so concerned that he took it upon himself to respond personally to many of the letters and phone calls that Pathmark got urging it to fire him; he was able to persuade them that he actually was a nice guy, and that his exploitive real estate developer was just a character.
    KC's View:

    Published on: October 26, 2018

    …will return.
    KC's View:

    Published on: October 26, 2018

    In Thursday Night Football, the Houston Texans defeated the Miami Dolphins 42-23.
    KC's View:

    Published on: October 26, 2018

    Not sure why, but while there is a ton of stuff to watch on all the various streaming services, I found myself the other day, with a couple of hours to indulge myself, drawn to watch the original, 1962 version of The Manchurian Candidate. (It is far, far better than the execrable 2004 version.)

    Directed by the amazing John Frankenheimer and starring Frank Sinatra (his best film performance, I think), Laurence Harvey and an extraordinary Angela Lansbury, The Manchurian Candidate is the classic Cold War thriller, a marvelous mixture of suspense and satire. For those of you unfamiliar with it, the movie concerns Raymond Shaw (Harvey), the scion of a prominent political family who was brainwashed while serving in Korea; the question is why.

    Sinatra plays Shaw’s former commanding officer, who finds himself piecing together fragments of memory from the brainwashing, frustrated by his inability to put the pieces together but sure that there is something nefarious at work.

    The amazing thing about The Manchurian Candidate is how modern it feels, despite the fact that it was made more than a half-century ago in beautiful black-and-white. There is a pitched battle between left and right political factions, Communist meddling, manipulative machinations by senators who are presidential wanabees, and enough plot twists and irony to spare.

    I’ve seen The Manchurian Candidate at least a dozen times, and it seems like every time I watch, it reveals new layers, feeling entirely fresh. And disturbing. And very much of 2018.

    A great wine to enjoy with it - the 2012 Carlton Cellars Estate Pinot Noir, a delicious red from one of my favorite wineries. Enjoy.

    That’s it for this week.

    Have a great weekend, and I’ll see you Monday.

    KC's View: