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    Published on: July 6, 2022

    One of the things I learned in the Bahamas was the importance of perspective in our business and personal lives.  Sometimes we think the stuff that happens to us is the be all and end all … and then we go to a place that was almost wiped off the planet by a hurricane.

    Published on: July 6, 2022

    Amazon this morning announced that "Prime members in the U.S. can enjoy a free, one-year Grubhub+ membership with no food-delivery fees on eligible orders. Members can use this new perk in more than 4,000 cities with hundreds of thousands of restaurants across the country when ordering on Grubhub."

    The Wall Street Journal writes that as part of the deal, Amazon has an option to acquire a two percent stake in GrubHub, which is owned by Netherlands-based Just Eat Takeaway, though the parent company says it will continue to explore a sale of the US division.

    The Journal goes on:  "The deal brings Amazon further into food-related services through its Prime membership program. The online commerce giant has provided grocery benefits to Prime members under its Whole Foods Market division as a way to make its annual subscription program more valuable … Amazon last year said that millions of Prime members in the U.K. and Ireland would get discounts through U.K. food delivery firm Deliveroo, in which Amazon invested in 2019."

    KC's View:

    Amazon is linking the GrubHub deal to next week's broader Prime Days promotion, which it also is using to promote its upcoming series, "The Lord of the Rings: The Rings of Power," as well as its rights for Thursday Night Football in the US.

    Bolstering Prime membership always has been a major priority for Amazon, let's remember - people who are Prime members tend to spend significantly more on the site than non-Prime members.

    Published on: July 6, 2022

    CVS Health, the nation's largest chain drug store chain, said yesterday that it no longer will be a member of the National Chain Drug Association (NACDS), the nation's largest retail drug store trade association.

    Politico notes that "CVS pharmacies made up almost a quarter of the nearly 40,000 pharmacies NACDS says it represents, and the company’s departure will also cost the trade group a nice chunk of change. CVS Health reported paying $1.6 million in dues to NACDS last year, less than only its membership dues for America’s Health Insurance Plan, Better Medicare Alliance and the Pharmaceutical Care Management Association."

    Company spokesperson Matt Blanchette tells Politico, "“While we have made the decision to step away from the association, we are fully committed to advancing and supporting the value of pharmacy and the critical role that pharmacists play as health care providers in their communities."

    Politico writes that while "Blanchette did not explain the reason behind CVS’ split with NACDS," the CVS decision "comes amid a broader push in the pharma ecosystem to blame rising drug costs on PBMs, which health insurers, employers and the government hire to manage prescription benefits for their health plans. CVS Caremark controls the largest chunk of the market among PBMs, one of three companies that controls 80 percent of the PBM market, according to Health Industries Research.

    "NACDS has applauded state legislation to regulate PBMs and last month, it praised an announcement that the FTC would probe PBM practices as contributing to momentum for PBM reforms.":

    KC's View:

    We've been writing here for some time about how CVS has been redefining its role within the health care business, with what I would describe as being inconsistent and varying degrees of success.  But the intention clearly is there, and so perhaps it is not surprising that the company would decide that the goals of a traditional retail-centric trade association are not in synch with its interests.

    I have to think that this scenario has to be of some concern to every trade association with members that are trying to redefine themselves outside the traditional lanes in which they've traveled.  If they do so to a sufficient degree, these members may see trade associations as defending the status quo as opposed to helping to clear the trail for disruptive interests;  and if the association does facilitate disruption, then the more traditional members may seem under-served.  I'm not saying that this bifurcation cannot be accounted for in associations and by association leadership that are savvy enough to do so, but it has to be a challenge.  And, in its own way, disruptive to a traditional business model that has focused on lobbying and education.

    Published on: July 6, 2022

    Taste has an excellent piece called "The Case for the Supermarket Supershopper," in which it analyzes the unique allure of the grocery shopping experience.

    An excerpt:

    "The word 'ritual' is thrown around colloquially today, but sometimes it still carries the weight of religious ceremony. For supermarket supershoppers, as we might call them, these stores themselves, with their floor-to-ceiling shelves and flickering freezers brimming with food that’s available for purchase, are a sanctuary that transcends faith, race, and economic status. Grocery shopping is an intimately personal act - deciding what to put in your body and what to feed the people you love - performed in public. And like altar boys shuffling through the aisles in quiet unison, we’re all carrying it out together.

    "It’s well-studied to the point of cliché that shopping offers a high—the brain releasing dopamine, the same chemical that signals love. It’s why we’ve coined (somewhat contradictory) phrases like 'shopping addiction' and 'retail therapy' over the last several consumerist decades. A great deal of reports on this phenomenon suggest or flat-out scold that this physiological reaction to shopping is unnatural and not in our best interests - a survival instinct gone haywire. But when the bulk of these purchases are food and household goods like almond milk, garbage bags, and Pine-Sol, things you have probably purchased hundreds of times in your life, the allure becomes more complicated, or perhaps more boring. Strip away the satisfaction of providing for others, and grocery shopping approaches something like self-care."

    You can read the entire piece here.

    Published on: July 6, 2022

    The Wall Street Journal reports that "Ben & Jerry’s is suing parent company Unilever PLC to block the sale of its Israeli business to a licensee, the latest twist in a rift over the ice cream maker’s decision to end sales in Israeli-occupied West Bank and contested East Jerusalem.

    "In a complaint filed in U.S. District Court in Manhattan on Tuesday, Ben & Jerry’s said Unilever’s decision to sell the business in Israel last week was done without the approval of Ben & Jerry’s independent board of directors.  The board held a special meeting on Friday in response to Unilever’s decision and voted 5-2 to file a lawsuit against its parent company, according to the complaint. Two Unilever appointees on the board were the dissenting votes, the lawsuit said."

    The conflict goes back to Ben & Jerry's decision last year to stop selling its products in Jewish settlements in the West Bank and parts of East Jerusalem because of policy decisions there "inconsistent with our values."  The move created a backlash both inside and outside Israel, and a lawsuit from the company there that had the right to make and distribute Ben & Jerry's.

    Sine its acquisition by Unilever in 2000, Ben & Jerry's has had the right to make its own decisions about its traditional social mission, and the Ben & Jerry's board says it was surprised by the Unilever move.  

    The Journal writes that "Unilever said in a statement that it had the right to enter the arrangement.  'The deal has already closed. We do not comment on pending litigation,' a company spokesperson said."

    KC's View:

    It seems amazing to me that it has taken 22 years for this kind of public conflict to break out between Unilever and Ben & Jerry's.

    Published on: July 6, 2022

    Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary… 

    •  In the United States, there now have been a total of 89,731,799 cases of the Covid-19 coronavirus, resulting in 1,043,879 deaths and 85,389,870 reported recoveries.

    Globally, there have been 556,558,114 total cases, with 6,364,767 resultant fatalities and 530,925,445 reported recoveries.  (Source.)



    •  The Centers for Disease Control and Prevention (CDC) says that 78.3 percent of the total US population has received at least one dose of vaccine, and 66.9 percent is fully vaccinated.  The CDC also says that 47.3 percent of the total US population has received one vaccine booster dose, while 27 percent of the 50+ population and 33.7 percent of the 65+ population have received the second vaccine booster.



    •  Axios reports this morning that Covid was the third-leading cause of death in the US during 2020 and 2021, "accounting for 1 in 8 lives lost."

    Only heart disease and cancer claimed more lives during that time, the story says.

    Axios adds that "the virus exacted a huge human toll even after vaccines became widely available. It indirectly affected other causes of death, including heart attacks and strokes, in part by discouraging some Americans from seeking care."

    Published on: July 6, 2022

    •  Data and market research company Numerator is out with Amazon Prime Day-related projections, saying that "with 53% of US Households as Prime members and two thirds of shoppers planning to shop the sale, Amazon is poised to capture a record-high 20%+ CPG share this Prime Day."

    The data suggests that this has historical precedent:  "Day-of CPG share grew from 16.2% on Prime Day 2019 to 18.3% on Prime Day 2020 to 19.1% on Prime Day 2021. While growth has recently slowed (+0.8 points from 2020 to 2021 vs. +2.1 points from 2019 to 2020), day-of CPG share is expected to surpass 20% on Prime Day 2022."

    In addition, "Prime Day takes share from both smaller retailers and major retailers’ in-store locations. On Prime Day 2021, smaller retailers collectively saw a -10.5 point CPG share decline vs. the month prior. Walmart saw an in-store decline of -2.1 points, followed by Kroger (-1.4 points) and Costco (-1.2 points). Target.com saw a slight share boost of +0.8 points on Prime Day."

    Part of this can be traced to Amazon's success in promoting the event:  "Almost half of Amazon shoppers are aware of Prime Day 2+ weeks in advance. As of June 24, 47% of Amazon shoppers knew the dates of Prime Day 2022, and more than a quarter (28%) said they were informed on the day Prime Day was announced.   Prime Day awareness is significantly higher than Walmart+ Weekend. 33% of Walmart.com shoppers said they were aware of the Walmart+ Weekend sale event as it was taking place."

    Published on: July 6, 2022

    •  The Wall Street Journal reports that Walmart has warned its suppliers that they may be charged a new fee "to transport goods to its warehouses and stores … the latest example of how businesses are looking to offset rising costs for things such as transportation and fuel."

    According to the story, "Companies that use Walmart to transport goods to the retailer’s warehouses and stores will be charged a fuel surcharge and a 'collect pickup charge' starting Aug. 1, said the memo. The shift 'is a result of Walmart adapting to the significant transformation and increased cost seen in the transportation industry over the past few years,' said the memo sent to suppliers last Friday.

    "The collect pickup charge is calculated as a percentage of the cost of goods received by Walmart, the memo said. The fuel surcharge is based on the cost of fuel to transport the goods."

    Walmart says that suppliers have the right to stop using its transportation services, and instead arrange and pay for good to be shipped into the Walmart supply chain.

    Some suppliers have complained that the new fee is being imposed precipitously and without enough specificity;  Walmart has promised more details shortly.

    Published on: July 6, 2022

    With brief, occasional, italicized and sometimes gratuitous commentary…

    •  The Los Angeles Times has a piece about how California cuisine is becoming increasingly popular in Europe, an ethos that focuses on "brightness, lightness and freshness."

    "In the last year, L.A. cooks Nancy Silverton of Mozza and Kris Yenbamroong of Night + Market have opened locations in London. Eggslut, the brioche egg sandwich chain that began as an L.A. food truck, now has three cafes in this city. Toca Madera, the club-like West 3rd Street spot where vegan enchiladas are paired with $16 margaritas, opened a rooftop outpost in Marylebone. A restaurant in a hotel in the financial district lures in patrons with two words — Malibu Kitchen — before offering 'superfood salads, cured fish and meat, and plant-based dishes.'

    "Even in Paris, a city skilled at contempt for things American, a chic hotel north of the Seine recently opened Santa Barbara-inspired Montecito. And a chef who once worked the kitchens at Venice’s Gjusta and Gjelina is cooking up California-meets-Nashville cuisine in the 10th arrondissement and will soon launch a spot in the 11th.

    "In Munich and Milan, bright, yellow-accented cafes advertising sunny dishes and avocado toast have popped up with cursive neon signs and wall murals that could pass for a West Hollywood scene made for Instagram. In Ljubljana, a violet-hued cafe is introducing Slovenians to poke bowls inspired by Los Angeles and Honolulu."

    "Brightness, lightness and freshness."  Sounds good to me … and, in fact, these words, when applied to food, are a recipe for meals that, in the words of Jimmy Buffett, are "good for the body, good for the soul…"  California continues to get a bad rap in some circles, and some of that is deserved … it isn't easy managing a state with the world's sixth largest economy.  But in so many ways, California continues to lead the way, and cuisine is one of them.

    Published on: July 6, 2022

    •  The GIANT Company announced that Ted Williams has been named director of non-foods effective July 5.  

    Williams previously worked in Ahold USA as a category management business consultant and with Giant Food as the director of retail pricing and the director of grocery category management.  Most recently, Williams served as the chief operating officer at HLS-Higher Level Solutions, helping founder-led CPG companies develop their brand while launching into eCommerce and physical retail.

    Published on: July 6, 2022

    We got several reactions to the Scott Moses piece about why the Federal Trade Commission (FTC) needs to take a different approach of mergers and acquisitions in the grocery sector, in a way that reflects reality and allows smaller grocers to gain the benefits of scale in a way that in turn benefits consumers.  The current construct favors giant companies, he argued, in a way that hurts smaller retailers struggling to survive and consumers who benefit from their existence.

    One MNB reader wrote:

    It is is easy to confuse size with scale.  There are lots of big retailers who do not generate economies of scale because of transaction intensive business processes and inefficient, bureaucratic organization models. 

    Reviewing FTC business concentration guidelines makes sense, but it won’t necessarily improve competitive position for regional retailers.

    And Robinson Patman’s cost justification criteria for pricing differentials still will favor the biggest, most efficient operators…as from a consumer perspective they should.   

    I think Scott would argue that in the grocery industry, there is a direct correlation between size and both economies of scale and profit, which, along with lower-cost debt capital (larger companies statistically have better credit ratings and therefore a lower cost of debt) can then be reinvested into the productivity loop to acquire and retain more customers (ie, more sales), which lead to more scale efficiencies and even more profit, which can then be reinvested, etc…  It is a flywheel with which smaller entities simply cannot compete.

    Scott's argument would be that regional grocers’ competitive position will improve when they are allowed to merge and grow, so they can experience a lower cost of capital and more of a productivity loop.  Leveling cost of goods with Robinson-Patman is unlikely to level the playing field given the lower cost of capital and other scale benefits larger operators have, but it likely would lead to higher prices for more customers, which would be awful during this hyper-inflationary grocery environment.

    Another MNB reader wrote:

    It is probably pass the time for traditional grocery to make money by selling product and not via slotting allowances and the like.

    I'm a big believer that retailers should make money on the sell, not the buy … but I think this is more of a factor for big retailers than small ones.



    We also had a story yesterday about a 27-year employee of a Burger King in the Las Vegas International Airport operated by HMSHost, whose years of service were recognized in pathetic, insulting fashion by his employer.  The situation went public via social media, garnering the man enormous public support and widespread derision for HMSHost.

    One MNB reader wrote:

    This sounds like the perfect opportunity for the entire exec team from HMS to rethink how they they want to recognize loyalty from their staff. And go big with their new program.   A program that will become part of their culture and outlast the tenure of the current exec team.

    To me, this is an easy one.  The CEO needs to get on a plane to Las Vegas and fix it … and then engage in a systemwide assessment and recalibration of the company's culture.



    And, we had a piece yesterday about how, when the Los Angeles Dodgers honored their legendary pitcher, Sandy Koufax, with a statue in front of Dodger Stadium, Koufax used the moment to thank the people - from a sandlot baseball coach to clubhouse managers to fellow Dodgers players and ownership - who helped him in his life and career.

    I commented:

    Koufax - one of the greatest pitchers of all time - understood that his greatness was enabled by others, built on the hard work of others.

    In doing so, Koufax displayed remarkable leadership … the kind of leadership that business leaders - even those, especially those at the highest levels of compensation and achievement - ought to demonstrate.  They may occupy corner offices, they may enjoy extraordinary compensation packages, but they are only there because their achievements and careers have been enabled by others.

    It was an Eye-Opening performance by Koufax, who once again showed the world that he knows how to pitch.

    One MNB reader responded:

    One of my favorite players of all times.  Obviously, also a great person.  You mentioned that a lot of business leaders could learn from him.  I would like to add that a lot of political leaders would also be smart to also learn from him and recognize that it is the team around them that is the most critical part of their success.  I have worked for both types and can clearly say that the Koufax approach inspires and wins all the time. 

    And, from another reader:

    I was fortunate to grow up in Southern California and see Sandy pitch on numerous occasions. Every time he took the mound there was the potential to pitch a no hitter. Watching Sandy pitch and Vin Scully announce the game is something that every baseball fan should have had the pleasure of enjoying. These are two of the finest men in baseball lore.