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    Published on: November 12, 2018

    by Kevin Coupe

    I found a story in the New York Times the other day, in the “Style” section - which ordinarily don’t read, if I’m going to be honest - that struck me as a metaphor for how the world is changing … and how businesses may have to change the way they think.

    The story came out after Tuesday’s mid-term elections, and made the point that “starting next term, Congress is going to have something of a new look, not just because of the striking diversity of race and gender in the House, but because of the new attitude toward image and self-definition that goes with that.”

    Going away, to some degree, will be the blue and gray suits, white shirts and ties worn by the men who have dominated Capitol Hill, as well as the conservative dresses and pantsuits worn by women elected to the US Senate and House of Representatives.

    The Times made the point that the new diversity of elected representatives means that wardrobes are changing, at least in part because newly elected women - whether it be the Native American/LGBTQ/former MMA fighter elected in Kanas, or the Minnesota Democrat who is not just a Somali-American but also the first women to wear a hijab in the House - will be wearing clothing and accessories that reflect their cultures and personalities, and not the traditions and legacies of the past.

    The Times writes that “the move away from the pantsuit, the fake femininity, the pearls, the sprayed-into-submission-bob, may seem like a small thing, given how much else is at stake. To even see it as meaningful in any way may seem ridiculously frivolous … But in these choices is the beginning of different kind of declaration of independence.”

    I don’t think there is anything frivolous about it. In fact, it makes me proud, as an American, to see that the fashion quilt is so much more colorful and complicated and diverse than ever … to see that blue and gray suits will be less in evidence in the coming years. I don’t care what side of the aisle they sit on; I think we are better off when we are represented by people who look like all of us.

    I think the same goes for business. It wasn’t that long ago, for example, that Starbucks didn’t allow its baristas to have visible tattoos. It changed, and relaxed its policies, understanding that the company as a whole would be better off if it reflected the diverse personalities of its staffers rather than trying deny them.

    I think this acceptance, and even embrace, of the panoply of the American culture is critical to business success.

    “Apparel oft proclaims the man,” Shakespeare once wrote, way too early to know or understand that it also proclaims the woman.

    If he were alive today, Shakespeare might’ve written something else: ’Tis an Eye Opener.
    KC's View:

    Published on: November 12, 2018

    The “Grub Street” column in New York magazine argues that while “it’s a bad time to be in the business of selling groceries,” it “is a great time - arguably the best time ever - to buy groceries. In a climate of fierce competition, store owners are racing to roll out new technology, lower prices, and win, by any means necessary, consumers’ ever-elusive ‘stomach share’.”

    The competition, the story notes, isn’t just from Amazon; it also cites Aldi and Lidl has being influential in creating this panacea for food shoppers.

    An excerpt:

    “The public - educated for the last decade-plus on a steady diet of Food Network, restaurant sites (ahem), and all manner of restaurant-democratization - has also created a market for high-quality ingredients that has never before existed in the United States. In terms of selection, Wegmans - formerly a modest-size Rochester-based chain whose showstopping prepared foods and exotic ingredients earned it a cult following - is on a nationwide expansion tear. In June, the mid-Atlantic grocery co-op ShopRite launched a new private label, ShopRite Trading Company, that includes “artisanal and distinctive” imported products like Peruvian artichoke hearts, Italian panettone, and Greek olive oil. Meanwhile, Kroger bought Murray’s Cheese last February, and the venerable Greenwich Village cheese purveyor’s fromage, charcuterie, and other specialty goods are now boasted in over 350 locations. In other words, no matter where you live, it’s likely easier than it’s ever been to track down some nice goat cheese, a well-made baguette, or all manner of high-quality craft beer.”

    You can read the entire story here.
    KC's View:
    It is a really good story, though I might quibble with the suggestion that it is a bad time to be in food retail. It may be more challenging, but I also think that it has the potential to be incredibly rewarding for people and companies that are truly innovative - it is a time that rewards imagination and differentiation, and may weed out the mediocre. That’s good for everybody, I think.

    Published on: November 12, 2018

    There is an ongoing and pitched battle taking place in Oregon over the legitimacy of a wine brand that claims to be from the Willamette Valley, but is not - withe battles playing out on store shelves and courtrooms.

    Here’s how the Oregon Wine Press framed the issue:

    “Until earlier this year. In February 2018, Jim Bernau, founder and principal owner of Willamette Valley Vineyards, was notified by his attorneys that a wine called the Willametter Journal had been approved by the TTB (Alcohol and Tobacco Tax and Trade Bureau). Produced and bottled by Copper Cane in Rutherford, California, the wine’s fanciful label was made to resemble an old-time telegraph dispatch describing its source ‘from the Willamette region of Oregon’s coastal range.’ In capital letters on the bottom of the label appeared the words ‘ESSENTIAL ARTICLE,’ and the back label continued the old-time impression by claiming the grapes’ origins as the ‘Territory of Oregon.’ On the COLA (Certificate of Label Approval/Exemption) application, the word ‘Willamette’ appears in black, blending in with the rest of the copy.

    “But when the wine appeared on the store shelves of the Total Wine retail chain a few months later, the word ‘Willamette’ on the label was printed in bright red, leaping off the page and suggesting the wine was a Willamette Valley Pinot Noir from the broad Willamette Valley AVA. Ever since, Jim Bernau has been seeing bright red, devoting much of his time battling what he calls, ‘the greatest threat we have faced in the history of the Oregon wine industry.’

    “Why was it a threat? Because the Willametter Journal wasn’t some small, quirky label available from an Oregon winery’s tasting room to drop-in customers. Sold exclusively through Total Wine’s 176 nationwide outlets, it was projected to sell nearly 100,000 cases its first year, an astronomical number compared to the 3,000 to 5,000 total outputs of most Oregon wineries. This wine, the most prolific ‘Oregon’ Pinot Noir, was not only NOT from an Oregon producer, it was questionable whether it was even made entirely from Oregon grapes, or made under Oregon rules. As Bernau examined the matter further, he discovered, to his great consternation, there was essentially nothing he could do about it.”

    When Bernau challenged Joe Wagner - described by the Wine Press as “the 36-year-old founder and winemaker of both the Willametter Journal and Elouan, another Copper Cane Pinot Noir brand claiming Oregon as the provenance of its fruit” - Wagner’s response was to file a petition “to rescind Willamette Valley Vineyard’s nearly 40-year-old trademark” and claim that Willamette was now “a winemaking region, and were no longer worthy of a trademark.”

    And so, the debate is playing out in the courts, where Bernau and Wagner will face off over whether Willamette Valley Vineyard’s trademarks are protected and the degree to which the area’s designation as an American Viticultural Area (AVA) should be preserved and protected from people like Wagner.

    Wine Business writes that Wagner’s labels “make references to Willamette Valley, Umpqua Valley and Rogue Valley,” calling them “coastal wines” - but Pinot Noir is not grown on the Oregon coast. Furthermore, “Oregon law requires a wine must contain 90 percent of the fruit from a given variety like Pinot Noir for a label to mention that grape<‘ with advocates saying that “these wines should contain 100 percent Pinot Noir grapes from Willamette Valley in order to be labeled a Willamette Valley Pinot Noir.”
    KC's View:
    Two things.

    In the interest of full disclosure, I want to mention that I have a number of friends who are Willamette Valley wine growers. Jim Bernau is one of them. And, because I love Oregon and love Pinot Noir, I’ve invested a little bit of money in his Willamette Valley Vineyards … I always wanted to be a vineyard owner, and this probably is as close as I’m ever going to get. So let me be clear - I have a horse in this race. But … I’d feel this way even if I’d never been to Oregon, and anybody who has been reading MNB for any period of time won’t be surprised by my take on this.

    Everything you need to know about Joe Wagner is in this story in the Oregon Wine Press:

    First … Just days before the most recent crop was going to be harvested, “Copper Cane informed 15 growers in the Rogue and Illinois valleys - all their suppliers in this region - that their 2018 contracts were being canceled. The reason? Smoke taint from wildfires that had burned in the region during the summer. Because of Copper Cane’s enormous sourcing needs, the contracts amounted to 2,000 tons of fruit, which alone could produce up to 130,000 cases of wine -10 times more than a typical, above-average-sized Oregon winery produces in a year. It amounted to a devastating $4 million blow to the local winegrower community.”

    There was a lot of debate as to whether this was a legitimate complaint, but here’s what Jim Bernau did. He organized a group of local Willamette Valley wineries in an act of “solidarity” to buy as much of this crop as possible, so these winegrowers would not be put out of business.

    Who would you want to work with?

    Second … it strikes me from all the available evidence that Wagner is playing games here, that he’s trying to diminish the importance of provenance, which is the same thing as lowering standards. He is promoting the lack of transparency, hoping that through smoke and noise accuracy will mean less ethically and commercially.

    We have damn few enough standards these days, and I have a real problem with this. Always have. Labels matter. Words matter. Accuracy matters.

    I hope Wagner loses these court battles, loses big and loses publicly. A rebuke to this sort of crap cannot be too transparent.

    Published on: November 12, 2018

    Walmart has announced the launch of an “Intelligent Retail Lab” inside one of its stores in Levittown, New York.

    According to TechCrunch, “The idea is to test both associate and customer experiences. For example, Walmart wants to use artificial intelligence to better identify when items are running low on stock so that it can proactively replenish the stock. Led by an internal team called Kepler, Walmart also envisions using the technology to identify spills, better understand when shopping carts are running low near the entrance and identify when items are on the wrong shelf.”
    KC's View:
    I’m always impressed by companies that experiment far from headquarters - it always strikes me as being a greater investment. Levittown is about 1300 miles from Bentonville … that’s far enough, I think.

    Published on: November 12, 2018

    China-based Alibaba Group’s annual Singles Day holiday generated $30.8 billion in sales on November 11, up from the record $25.3 billion that it generated last year.

    Alibaba is not a retailer, but rather a platform on which retailers sell their wares, and so the Singles Day benefits were felt by a number of companies.

    The New York Times writes that “China’s biggest online shopping company kicked off the country’s biggest shopping day with its usual ostentation. Its Saturday night gala event in Shanghai featured the singer Mariah Carey, the retired basketball star Allen Iverson and Miranda Kerr, the Australian supermodel. A Chinese girl group performed a song called ‘Wanna Buy Wanna Buy’ as backup dancers pushed shopping carts bearing the logo of Aldi, the German discount grocer.”

    CNN writes that “the shopping extravaganza regularly racks up bigger sales than Black Friday and Cyber Monday combined. But this year's Singles Day comes as Alibaba’s growth is coming under pressure from China's slowing economy, new rivals in the e-commerce industry and the trade war with the United States."

    And Bloomberg writes that “with a brewing trade war, a cooling economy and rising competition from smaller platforms such as Inc. and Pinduoduo Inc., Alibaba is seeking to add new growth engines. The retail celebration on Nov. 11 dedicated to the nation’s unattached has become an important bellwether not just for the company, but also the world’s No. 2 economy.”

    It wasn’t just Alibaba and its retailers that benefitted. TechCrunch writes that while Alibaba “may have pioneered the concept of Singles’ Day …, Alibaba’s biggest rival in China, just announced that it sold RMB 159.8 billion ($23 billion) in goods for its Singles’ Day campaign.

    “Unlike Alibaba, which racked up $31 billion in GMV in the 24-hour sale on November 11, JD’s festival ran for 11 days starting on November 1. That said, a large chunk of Alibaba’s sales are queued up in the days ahead of November 11 as retailers aggressively push deals, but JD is more open about its shopping period beyond the core 24 hours.”
    KC's View:
    Things may tighten down the road, but it remains extraordinary to contemplate what Alibaba has done here, essentially creating an enormous sales driver out of thin air. They’re really smart, and I have to think that they’ll continue to grow and innovate.

    One can only imagine the impact it would have if it decided to have any sort of major presence in the US.

    Published on: November 12, 2018

    ABC News reports that a New Hampshire judge has ordered Amazon “to hand over recordings taken by an Echo device in the Farmington, New Hampshire, home where Christine Sullivan lived with her boyfriend. Sullivan was found murdered in the backyard of the home on Jan. 29, 2017, along with Jenna Pellegrini, who was staying at the home.

    “The bodies were left in the backyard, under a tarp, and a knife was buried nearby, police said.”

    Police seized an Amazon Echo from the home, and, while it is “unclear whether there is any audio evidence on the device,” the court “found probable cause that the speaker could have recorded ‘evidence of crimes committed against Ms. Sullivan, including the attack and possible removal of the body from the kitchen’.”
    KC's View:

    Published on: November 12, 2018

    Ad Exchanger has an interview with Micky Onvural, the CEO of Bonobos, which was acquired by Walmart last year for $310 million.

    Onvural said there have been few changes at the company since its acquisition: “One of the reasons Walmart bought us was to understand disruptive, direct brands. We’ve been able to leverage their buying power and things like shipping fees or credit card fees. But it’s more about how we lean into our core value proposition.”

    One change that is taking place - that doesn’t seem to have much to do with Walmart’s ownership - has to do with a growing emphasis on bricks-and-mortar stores.

    “We’re about 70% ecommerce right now,” Onvural said. “It changes naturally as we evolve and add more stores, but I’d say you can expect that split to remain in the same kind of ratio, with majority online sales … Our shops for instance we consider a big part of our marketing mix. That’s a massive experiential marketing play and a billboard. And we’re starting to understand how that plays into our upper funnel activity.”

    And, she says, “The focus is always on growing your addressable market. We’re fortunate in the sense that there are 17 million American men who make $100,000 or more per year and shop online. Getting into big and tall fittings was a way of expanding our addressable audience. We’re also thinking about how we can bring women into the brand.
    KC's View:

    Published on: November 12, 2018

    • The Wall Street Journal reports that Procter & Gamble plans to “revamp its management structure, shrinking the number of business units from 10 to six and giving the heads of those products control over regional sales teams as well as some functions previously run by headquarters.” The move “is part of an effort by the maker of Pampers diapers and Crest toothpaste to streamline its operations. The company has been under pressure to improve its performance from activist Trian Fund Management, which waged a proxy fight last year and whose co-founder, Nelson Peltz, now sits on the P&G board.”

    “There is a need for greater agility,” says CEO David Taylor.

    • Albertsons said last week that its has received letters from a law firm that says it is representing shareholders in Safeway - which Albertsons acquired - “alleging that the incurrence of liens securing the Albertsons/Safeway term loan and asset-based revolving credit facilities violated the indenture governing such notes.”

    Whatever that means.

    Albertsons says that it believes that “the allegations in the letters are without merit.”

    • The New York Times reports that “in a landmark move bound to further shake the tobacco industry, the Food and Drug Administration plans to propose a ban on menthol cigarettes next week as part of its aggressive campaign against flavored e-cigarettes and some tobacco products, agency officials said.

    “The proposal would have to go through the F.D.A. regulatory maze, and it could be several years before such a restriction took effect, especially if the major tobacco companies contest the agency’s authority to do so. None of the major tobacco companies would comment on the possibility of barring menthol cigarettes at this early stage.

    “But such a move has been long-awaited by public health advocates, who have been especially concerned about the high percentage of African-Americans who become addicted to menthol cigarettes.”

    • The Associated Press reports that “Pabst Brewing Company and MillerCoors are going to trial, with hipster favorite Pabst contending that MillerCoors wants to put it out of business by ending a longstanding partnership through which it brews Pabst’s beers … Pabst’s attorneys have said in court documents and hearings that MillerCoors LLC is lying about its brewing capacity to break away from Pabst and capture its share of the cheap beer market by disrupting Pabst’s ability to compete.”

    According to the story, “The 1999 agreement between MillerCoors and Pabst, which was founded in Milwaukee in 1844 but is now headquartered in Los Angeles, expires in 2020 but provides for two possible five-year extensions. The companies dispute how the extensions should be negotiated: MillerCoors argues that it has sole discretion to determine whether it can continue brewing for Pabst, whereas Pabst says the companies must work ‘in good faith’ to find a solution if Pabst wants to extend the agreement but MillerCoors lacks the capacity.”
    KC's View:

    Published on: November 12, 2018

    Content Guy’s Note: Stories in this section are, in my estimation, important and relevant to business. However, they are relegated to this slot because some MNB readers have made clear that they prefer a politics-free MNB; I can't do that because sometimes the news calls out for coverage and commentary, but at least I can make it easy for folks to skip it if they so desire.

    CNBC reports that Howard Schultz, the former chairman/CEO of Starbucks has assembled “an elite public relations team as he prepares to release a civic-minded new book and considers running for president in 2020. A key player in Schultz's growing team is Steve Schmidt, a former vice chairman at public relations powerhouse Edelman who managed Republican Sen. John McCain's presidential campaign in 2008.”

    According to the story, “Schmidt got to know Schultz through Edelman's partnership with Starbucks. The two have kept in touch since Schultz left Starbucks earlier this year, people familiar with the relationship have said. Schmidt has continued to do private consulting work for Schultz on a variety of issues, including guiding him ahead of his upcoming book tour … Schmidt is a political analyst for MSNBC. He is a strident critic of President Donald Trump, and he left the Republican Party earlier this year.”
    KC's View:
    The Schultz-Schmidt combo strikes me as being a potent team … one thing they’re both very good at his storytelling, and Schmidt tends to frame his narratives in terms of history. Schmidt also is a John McCain guy, which may tell us something about how he’d frame a Schultz campaign.

    Published on: November 12, 2018

    My friend Phil Lempert has asked me to bring to your attention a new podcast that he’s doing, called “Farm Food Facts,” which is is designed to offer CPGs, retailers, sustainability supply chain leaders and food trade media “an opportunity to hear and discuss top news in the food and agriculture space, and engage directly with a farmer or rancher in real-time about top questions surrounding sustainability and food production. Agricultural thought leaders will also offer insights into today’s food trends and perceptions of farming practices.”

    This new podcast will stream Wednesdays from 11:30 a.m. to 12:00 p.m. CST, starting November 14th, 2018. You can find out more about it here.
    KC's View:

    Published on: November 12, 2018

    On Friday, we referenced an Advertising Age story about how Levi Strauss has “moved beyond its single-product roots into a more diversified mix of apparel offerings, including a robust global T-shirt business nearing $1 billion in sales. At 165 years old, Levi's is a lifestyle brand for the masses,” extraordinarily relevant for a brand of its age.

    And I commented:

    I’m utterly devoted to 541’s … wear them almost every day, and it feels good to be patronizing a company that is an American icon.

    MNB reader Gary Loehr wrote:

    Are your 541 Jeans actually made in America?  I thought I read a few years ago that the last pair of Levi’s made in the US had been shipped.  If that is the case, they are no longer an “American” icon.

    MNB reader Joe Gilman agreed:

    An ‘American Icon” that makes most if not all of their products somewhere but in the United States! Sorry, not for me.

    MNB reader Mark P. O’Brien wrote:

    It seems to me that Levi is just copying Lucky. Try Lucky jeans and shirts. I’m retired and live in Lucky, Under Armor & Nike wear.

    From another reader:

    I’m not surprised Levi’s has nearly $1 billion in t-shirt sales. While vacationing this summer France, the plain white t-shirt with iconic Levi’s logo was being worn by teens and twenty-somethings in every town I visited -  enough for me to comment on it to the people I was traveling with. Levi’s has managed to continue its “classic American” image to the world, while engaging young consumers and innovating to stay relevant (I too have come back to the brand since discovering 541s!).

    I also continue to get email about my stick shift metaphor.

    One MNB reader wrote:

    Having driven stick shifts most of my life (British sports cars and Audis) I have often lamented the demise of the manual, but have found the dual clutch tranny with paddle shifters to be the next best thing. Sure, the computer will take over if you wait to flick the paddle in time, but you can still get a feeling (albeit somewhat superficial) as you row up or down through the gears.

    MNB reader Brian Blank wrote:

    Weighing in on the stick-shift story from the other day.  I guess I’m a lapsed stick driver.  In my youth, I had assorted Rabbit and Datsun manuals, and my first new car was a Golf 5-speed.  But, like the reader from Minneapolis, eventually the reality of sitting in stop-and-stop traffic on a daily basis put the kibosh on 3-pedal driving.  So until I find that winning lotto ticket and can afford a stick shift Giulia just for a weekend toy….
    As a minor point to your original tale at the hotel in Boston, I would suggest that the actual number in that situation is much much MUCH lower than 2% for the simple reason that the vast majority of their clientele who park a car there during their stay are probably driving a rental, which in the US is guaranteed to be an automatic.  I guess my point is…when you take your Mustang to a valet, keep a nice big bill handy to reward the one person on duty who can fetch it for you.  (Or in movie terms, ‘stop trying to make fetch happen’.)

    I mentioned having made a spicy but blackened salmon the other night, though noted that “I cheat in how I make it, because cooking it in a pan full of butter strikes me as the wrong way to go when it comes to heart health.”

    One MNB reader responded:

    Please share the recipe. Love blackened fish, but they can be a mess as well as unhealthy!

    It is really simple. I get a nice piece of salmon, with the skin trimmed off, and put it in a pyrex pan. I drizzle a little olive oil on it, then layer it with a nice cajun rub. It then goes in the oven - I broil it on high for eight minutes, and then flip it for another 7-8 minutes. During the last eight minutes, I often will put some green beans or asparagus under the broiler … also with just a bit of olive oil and some rub. That’s it.

    On Friday, I did a piece about a bad experience in my local Ahold Delhaize-owned Stop & Shop, which I’ve found is a good example of a retailer that does not bring its A-game when it comes to competition; I’d done a similar piece about a year earlier, and in this case, found out-of-date light cream in the dairy case two weeks in a row. (In fact, it appeared that they returned the expired cream back to the case even after I pulled it and brought it to the customer service desk.)

    Interestingly, a number of people pointed to a similar problem … in my behavior.

    MNB reader Peter Talbott wrote:

    "'The definition of insanity is continuing to do the same thing over and over, and then expecting different results,' Einstein famously proclaimed.

    Another MNB reader wrote:

    Why do you keep going back to a place? Find a store that is bringing their A game. Stores don’t bring their A game if they don’t need to.

    Fair point. The thing is, Stop & Shop is the only local store that carries the Land O’Lakes brand of light cream my wife likes.

    But I wouldn’t blame Land O’Lakes if it decided to pull out of Stop & Shop. I know other brands that have done it.

    Finally, from MNB reader Jeremy E. Couture, about a movie recommendation I made last week (after my daughter, a special ed paraprofessional, made it to me):

    I just wanted to drop you a quick note thanking you for the recommendation of Life, Animated.  I’ve seen parts of it, but haven’t sat down for the whole thing.  I have twin sons (13 years old) on the autism spectrum, so this hits home for me.  We’re very fortunate in that both of my boys are on the higher functioning end of the spectrum, but there still are challenges.  One of my sons is a movie buff, as well, owning well over 300 DVD’s (he wants to be a film director).

    Mainly, I wanted to write to say that I think there is a special place in heaven for people like your daughter.  Our boys would not have made the huge gains they have without the paras they’ve been fortunate enough to work with.  Please pass on my thanks to her for her service.

    I did. And I agree with you.
    KC's View:

    Published on: November 12, 2018

    In Week 10 of National Football League play…

    Washington 16
    Tampa Bay 3

    Arizona 14
    Kansas City 26

    Buffalo 41
    Ny Jets 10

    Jacksonville 26
    Indianapolis 29

    Detroit 22
    Chicago 34

    New Orleans 51
    Cincinnati 14

    New England 10
    Tennessee 34

    Atlanta 16
    Cleveland 28

    LA Chargers 20
    Oakland 6

    Seattle 31
    LA Rams 36

    Miami 12
    Green Bay 31

    Dallas 27
    Philadelphia 20
    KC's View: