Published on: November 4, 2022
A Wall Street Journal column last weekend focused on "wine ruts," or when people drink the same wine over and over. But the lesson is that one person's "wine rut" is another person's "comfort wine," reminding one of a place or a time or a meal with enormous emotional resonance. (I have some personal examples.) The challenge for retailers is figuring out how to tap into that.
Published on: November 4, 2022
Bloomberg reports that a Washington State judge has ordered that Albertsons delay a $4 billion special dividend payment, scheduled for next week, while the move undergoes regulatory review. The delay was requested by the Washington State Attorney General's office.
The story says that "the ruling Thursday upends Albertsons’ plan to reward shareholders including Cerberus Capital Management. Several states argued the payments would weaken the company’s ability to compete if its takeover by Kroger is blocked.
"While Albertsons has said the dividend was planned before the companies started talking about a potential $24.6 billion merger, they disclosed the payout 'as part of the transaction' when they announced their agreement Oct. 14.
"California, Illinois and the District of Columbia filed a separate request for a temporary restraining order against the two grocers in federal court in Washington, DC, on Wednesday … Jonathan Mark, senior assistant attorney general for Washington, asked Judson to 'simply preserve status quo,' arguing that doling out the dividend could result in Albertsons experiencing liquidity issues and difficulties investing in its employees and restocking shelves to meet consumer needs."
The delay will be in place until November 10.
Albertsons responded with the following statement:
Albertsons Cos. intends to seek to overturn the restraint as quickly as possible because the temporary order was based on the incorrect assertion that payment of the Special Dividend would impair its ability to compete while its proposed merger (the “Merger”) with The Kroger Co. (“Kroger”) is under antitrust review. A hearing on the State of Washington’s request for a preliminary injunction is scheduled for November 10, 2022.
Albertsons Cos. continues to maintain that the lawsuit brought by the State of Washington, and the similar lawsuit brought by the Attorneys General of California, Illinois, and the District of Columbia are meritless and provide no legal basis for canceling or postponing a dividend that has been duly and unanimously approved by Albertsons Cos.’ fully informed Board of Directors. Albertsons Cos. is a thriving business which has delivered over $75 billion in revenues in the rolling four quarters ended September 10, 2022, following strong performance of $71.9 billion in revenues in fiscal 2021. Albertsons Cos. is well-capitalized, with limited debt and significant free cash flow and is in a strong position financially. The size of the dividend reflects the Company’s strength, rather than the illogical and damaging accusation that it is an attempt to weaken the Company.
"The Company’s plan to return capital to stockholders is part of its long-stated capital-return strategy and does not change the fact that Albertsons Cos. is in the strongest financial position it has ever been. The Company remains fully committed to investing in the associates, stores, and digital capabilities that have made its recent growth and strong performance possible. Albertsons Cos. is confident that it will continue to make strategic progress following the payment of the Special Dividend, given its strong cash flows and low debt profile. After payment of the Special Dividend, Albertsons Cos. will have approximately $3.0 billion of liquidity, including approximately $500 million in cash and approximately $2.5 billion available under its already existing asset-based lending facility, and expects to continue to generate strong revenues and positive free cash flow, furthering increasing liquidity."
I'm not a lawyer, so I have no idea if the various Attorneys General are overstepping on this. I do know that the optics aren't great for Albertsons, and that is just the beginning of the legal, legislative and regulatory challenges that Kroger and Albertsons are going to face over this deal.
Their argument is going to be that this deal is going to be great for shoppers, but they'll be fighting the perception that it actually is best for shareholders, and that larger will not necessarily equal low prices.
A perfect example is a column in the Los Angeles Times today by business writer Michael Hiltzik, who asks who the shareholders are who will most benefit from the dividend payment:
"Six of them are corporate insiders, defined as holders of more than 5% of Albertsons shares each.
"The big dog among them is the private equity firm Cerberus Capital Management, which owns nearly 30% of the shares and holds two seats on the company’s board of directors. The other five are investment and real estate funds that hold a total of an additional three board seats.
"The six investors control about 75% of Albertsons shares. Combined with the three current and former Albertsons executives on the board, they hold a majority of seats. In other words, they voted themselves a multibillion-dollar handout."
At the moment, I think it is a coin flip which argument will succeed … though if I were Albertsons and Kroger, I would not be comforted by the successful efforts - so far - to derail the Penguin Random House/Simon & Schuster merger.
Published on: November 4, 2022
Amazon said yesterday that it is freezing corporate hiring "for the next few months," a move that it said "is due to the economy and 'in light of how many people we have hired in the last few years'," the Seattle Times reports.
The story notes that "Amazon already has paused hiring in its corporate retail division, which includes online and physical stores, its marketplace for third-party sellers, and its Prime subscription service. The company also reportedly stopped hiring for its advertising business and at Amazon Web Services, its cloud computing arm and one of the most profitable parts of the company.
"The freeze has now expanded to 'other businesses,' Beth Galetti, senior vice president of people experience and technology, wrote in a message shared with employees Wednesday and posted publicly Thursday."
The Information reports that "the memo said that Amazon would continue to backfill roles of departing employees and that the company would hire incrementally in 'targeted places.' The company … still intends to hire a 'meaningful' number of people next year, the memo said."
CNBC writes that "CEO Andy Jassy has … aggressively curtailed expenses across the company in recent months amid fears of a recession, rising inflation and soaring interest rates. Amazon has shed warehouse space, halted some experimental projects, and shuttered its telehealth service.
"In the third quarter, Amazon’s headcount grew just 5% year over year to 1.54 million employees worldwide. That’s after the company’s workforce contracted for the first time in years in the second quarter."
I wonder if this is more a message to investors, who have seen Amazon's stock price drop precipitously in recent months, than it is to current and prospective employees.
Tom Furphy said it in The Innovation Conversation this week - Amazon, like a lot of companies facing economic turmoil, will continue to spend and innovate, but also will be more surgical and strategic about it.
The end of the world isn't at hand. Not yet anyway.
Published on: November 4, 2022
The Detroit Free Press reports that discounter Aldi announced this week that it is "rewinding prices" for Thanksgiving in the US, rolling them back to 2019 levels as customers deal with significant food inflation.
"Foods included during this price drop include appetizers, desserts, and beverages. Brie cheese, prosciutto, cornbread stuffing, wines, fresh brown-and-serve rolls, macarons, and apple pie are just a few of the foods that may be discounted," the Free Press writes.
A clear, concise message - Aldi is making the case that it is an agent for the customer, and while Thanksgiving dinner may be the short term subject, the message is designed to be longer term.
Percentages don't even matter in this case. The words "2019 prices" are enormously evocative.
Retailers not making the case that they are doing their level best - and explaining how and why - to give their shoppers affordable, value-centric options are guilty of a kind of retailing malpractice.
I actually don't even think this is hard. Just requiring message discipline and a clear mindset.
Published on: November 4, 2022
Holiday commercials are coming online from several big food retailers, and the tone ranges from sweet/bittersweet to screwball.
• Kroger has launched its new campaign, under the theme, "Today's Holiday Moments are Tomorrow's Memories," and it portrays a widower who finds solace and promise in memories and recipes left for him by his wife. Musical accompaniment is by Colbie Caillat.
• Asda goes for the comedy, hiring Will Ferrell to bring back his Elf character, portraying him as applying for a holiday job with the chain.
I actually like the Kroger ad more than the Asda ad … I think it plays on a lot of levels, and showing the end result - a family meal - for the products that are bought in the store resonates for me.
The Asda ad is good, but I'm one of those people who thinks that Will Ferrell is funnier and more effective when he doesn't seem quite so desperate for laughs.
Published on: November 4, 2022
California Attorney General Rob Bonta said this week that his office "sent letters to seven manufacturers of plastic bags demanding that they substantiate their claims that the bags are recyclable. The seven manufacturers provide a large portion of the bags used by California grocery retailers and have certified that these bags meet recyclability requirements as required by state law SB 270.
"However, despite the manufacturers' claims and widespread consumer belief in recycling, plastic bags do not, in fact, appear to generally be recyclable, let alone 'recyclable in the state,' as required for such bags sold in California. Under Business and Professions Code sections 17508 and 17580, the Attorney General demands that the manufacturers produce evidence to substantiate their claims by November 16, 2022, or face potential enforcement action."
“Most Californians are under the impression that plastic bags are recyclable,” Bonta said in a prepared statement. “It's a logical conclusion: California has banned single-use plastics, and we see the 'chasing arrows' symbol or 100% recyclable printed on most every bag we get from the grocery store. But astonishingly, there's a good chance that most, if not all, these bags are not actually recyclable in California. As Attorney General, I'm committed to tackling the global plastic pollution crisis and the corporations behind it. I demand that manufacturers provide evidence to back up their claims about the recyclability of our grocery bags.”
Seems to me that bag manufacturers ought to be glad for the opportunity to prove that they've been honest, truthful and, now, transparent.
I cannot imagine why anyone would think that this requirement is a bad thing.
Published on: November 4, 2022
With brief, occasional, italicized and sometimes gratuitous commentary…
• Digital Signage Today reports that "Amazon's growing advertising wing has added a focus on grocery and consumer packaged brands, announcing a variety of expanded options for programmatic advertising in its brick and mortar Amazon Fresh stores during the annual Amazon unBoxed conference … Amazon DSP, the company's proprietary demand side platform, will incorporate omnichannel metrics for grocery and CPG advertising, and Amazon reports positive results of its preliminary testing such as a 40% increase in sales for select products from Kraft Heinz CPG brands."
"Now you'll be able to understand how your ads impact purchases of your products at other stores and outlets," Paula Despins, vice president of ads measurement at Amazon, said in the report. "In addition, we will soon be offering you the capability to automate budget optimization for the total impact of your campaign, inclusive of both the online and offline sales."
• ReposiTrak, a provider of supply chain, food safety and supplier management technology solutions, announced that it "is waiving the $2,000 setup fee for food suppliers connecting to the ReposiTrak Traceability Network," which is "the focus of the recently announced partnership with the National Grocers Association (NGA)," described as the "easiest way for suppliers and their wholesaler and retailer customers to share traceability data that will be required by a new U.S. Food and Drug Administration (FDA) rule for high-risk foods, scheduled to be issued this month.
"The partnership brings traceability resources to NGA’s independent grocer and wholesaler members, who represent more than one-third of U.S. grocery retail sales. Complimentary access to the ReposiTrak Traceability Network provides food suppliers with the opportunity to become traceability ready at no cost, making traceability easier for them as well as their retailer/wholesaler customers."
Full disclosure: ReposiTrak has been a longtime and valued MNB sponsor.
• Amazon and the U.S. Agency for International Development (USAID) announced that they "are launching a public-private partnership to address the gender inequities that exist for women in the climate finance ecosystem and to support female entrepreneurs with the resources they need to accelerate climate change innovations.
"Amazon will commit a total of $53 million to help accelerate women’s climate innovation, including $3 million toward the USAID partnership, and $50 million for Amazon to invest directly in climate tech companies run by women.
"Amazon will serve as a founding partner of USAID’s Climate Gender Equity Fund, a new climate finance facility designed to remove systemic market barriers that prevent women and girls from accessing climate finance. USAID will also match Amazon’s $3 million investment to help launch the fund.
"The Climate Gender Equity Fund will have a global focus and provide grants for businesses, NGOs, accelerators, incubators, and grassroots organizations working on women-led climate solutions. It also will fund efforts to help women access the networks and technical skills they need to accelerate the development of their climate change technologies."
• The Information reports that "Twitter employees will be notified by email by 9 a.m. Pacific Standard Time on Friday whether they will be laid off, according to a communication sent out to all Twitter employees on Thursday evening. It was the first employee-wide communication since Elon Musk closed his takeover of the social network a week ago.
"In an unsigned email, Twitter wrote: 'In an effort to place Twitter on a healthy path, we will go through the difficult process of reducing our global workforce on Friday. We recognize that this will impact a number of individuals who have made valuable contributions to Twitter but this action is unfortunately necessary to ensure the company’s success moving forward.'
"All offices will be closed on Friday and badge access will be suspended, according to the email."
As many as 3,700 staffers, or half of Twitter's head count, could be laid off, reports say.
The move comes days after Musk, having just bought the company, fired the company's CEOP and three other top executives and said he was doing it "for cause," which could allow him to avoid more than $100 million in severance payments. (Expect that assertion to be challenged in court.)
NBC News reports this morning that "a lawsuit was filed against Twitter on Thursday alleging the social media company … violated federal and state law that requires 60 days' notice of mass layoffs, according to a court document.
"The suit filed in U.S. District Court in San Francisco names five current or former workers as plaintiffs, one of whom was told he was terminated effective Tuesday, according to the lawsuit. It names Twitter as the defendant.
"Three other staff members have been locked out of their Twitter accounts as of Thursday with no formal notice of a layoff, which they interpret to mean they will lose their jobs, according to the lawsuit."
Ah, Elon Musk. Lots of class. All of it third.
Published on: November 4, 2022
• From the Associated Press this morning:
"America’s employers kept hiring briskly in October, adding a substantial 261,000 positions, a sign that as Election Day nears, the economy remains a picture of solid job growth and painful inflation.
"Friday’s government report showed that last month’s hiring remained near the robust pace it has maintained in the two-plus years since the pandemic recession ended. The unemployment rate rose to 3.7 percent from a five-decade low of 3.5 percent.
"A strong job market is deepening the challenges the Federal Reserve faces as it raises interest rates at the fastest pace since the 1980s to try to bring inflation down from near a 40-hear high. Steady hiring, solid pay growth and a low unemployment rate have been good for workers. But they have also contributed to rising prices."
• The Indiana Business Journal reports that Meijer plans to bring its new small format supermarket, Meijer Grocery, to Indiana next year with a 90,000 square foot store near Noblesville.
It will be the third small store in the fleet, the Business Journal says. "The first two Meijer Grocery stores will open in 2023 in Lake Orion, Michigan, and Macomb Township, Michigan … Meijer describes its new line of grocery stores, which will offer food, baby and health products, pet supplies and a pharmacy, as being 'built for speed'."
• Block Club Chicago reports that "Dom’s Kitchen & Market, a small-footprint grocery store from Bob Mariano, opened its second location Tuesday in Old Town.
"Shoppers flooded the store at 1233 N. Wells St. when it opened at 9 a.m., exploring its offerings of meats, produce and other groceries, plus its extensive selection of wines and alcohol and prepared meals for takeout.
"At 27,000 square feet, the new Dom’s store is 50 percent larger than the first Dom’s location, which opened in June 2021 at 2730 N. Halsted St. in Lincoln Park. It has 12,000 items, many of which are globally inspired, seasonally driven and locally sourced from Chicago and the larger Midwest, according to Dom’s leaders."
The company projects that it will have 15 stores open by 2025.
• Starbucks said that traffic in its US stores has rebounded to levels close to those achieved in 2019, as revenue for the most recent quarter reached $8.41 billion; North American revenue alone was $6.1 billion, up 15% from the same period a year ago.
CNBC writes that "net sales for the period rose 3.3% to $8.41 billion. Global same-store sales increased 7%, fueled by increased spending in its home market. In the United States, Starbucks reported same-store sales growth of 11% … he result of people spending more on average and a slight uptick in traffic. Prices were also up 6% from a year ago, but executives said they don’t plan to raise prices anymore for the time being."
CNBC also notes that "cold beverages accounted for more than three-quarters of beverage sales at U.S. company-owned cafes … the company’s loyalty program saw its active membership climb 16% to 28.7 million people in the quarter."
Published on: November 4, 2022
With brief, occasional, italicized and sometimes gratuitous commentary…
• HAC Inc., parent company to Homeland Grocery Stores, announced that it has hired David Criscione as president and CEO.
Criscione is a former senior vice president at Walmart International, EVP for e-commerce at Walmart Canada, vice president/general manager at Amazon, chief strategy and business development officer at Delhaize America, and SVP of Marketing, Strategy, and Business Development at Delhaize-owned Hannaford Supermarkets.
People who worked at Hannaford during that period of time, I've found over the years, usually bring with them a ton of street cred, because they come out of the Ron Hodge school of management and leadership. There are few people in the food industry, which I've been writing about since 1984, who I admire as much as Ron Hodge, and that aura extends to all the great CEOs that he trained during his tenure.
Published on: November 4, 2022
Responding to yesterday's mention in FaceTime about a New York Times piece about climate change, one MNB reader wrote:
On the Climate Change article, what was frightening was the statistic that by 2050, 100 million Americans will experience at last one summer day of 125 degrees temps. Living in Minneapolis, we are unable to comprehend such a number unless it has a negative sign in front of it.
Very few of us can comprehend such a number, and the impact it will have on our lives and infrastructure.
One of the things cited in the Times piece was how scientists are working to genetically engineer non-biting mosquitoes, on the theory that climate change will create a variety of diseases spread by mosquito bites.
MNB reader Andrew Huth wrote:
Messing with the genetic code of any species strikes me as a very dangerous road to go down. We have no idea what the unintended consequences will be. Female mosquitos are more than just an annoyance to humans, they are an integral part of the ecosystem. The idea that we would irreversibly damage the ecological balance of the entire earth so we can address a human need is the height of arrogance, and it is the kind of thinking that could lead to a catastrophe far, far worse than the illnesses caused by mosquito-borne illnesses. There are other ways to address that problem that will not put our blue marble at risk.
You sound like you are channeling Jeff Goldblum in Jurassic Park.
I got some feedback yesterday about my commentary about how advertisers seem to be nervous about Elon Musk's ownership of Twitter, with a number of folks objecting to my characterizing his tenure as a likely s-show. They thought I was trying to take away his right to free speech, which I wasn't … I'm just not inclined to spend much time on a social media platform owned by a guy who strikes me as having a warped sense of responsibility and an apparent willingness to use social media to spread misinformation, disinformation, and outright lies.
One MNB reader wrote:
You seemed a bit nonplussed by the blowback that followed your open-handed slap at Elon Musk. You probably thought the “eat the rich” readers would applaud any attack on the world’s wealthiest man.
You wrote: “I think there ought to be laws in this country assuring that if anyone posts something online in social media that directly (emphasis mine) encourages violence, or can legitimately be found to have encouraged violence, the people who post that stuff and the social media companies that gave these statements oxygen ought to be culpable.”
Here's the rub, KC: Liberals tend to infer things that they then identify as “direct” statements. “I know what he said, but what he really means is . . .”
As someone who frequently celebrates “nuance” and “gray areas” and dismisses black-and-white pragmatism, one would think you’d be an absolutist when it comes to free speech.
Nonplussed? Really? Because that's not at all the way I felt. Frankly, if I weren't willing to be challenged and disagreed with, I wouldn't have made the comments. All of which I stand by. Expect the shots at Elon Musk to continue, because I think he is a menace.
MNB reader Jeff Gartner observed:
Kevin, I just read the comments about your Twitter remarks. Why don’t people know that the 1st Amendment only applies to government restrictions against free speech and not to individuals or businesses or social media platforms?
BTW, you’re absolutely right about Twitter. Advertisers should be very wary of being there and that’s how Twitter gets its revenues.
Yesterday we cited a Yahoo Finance report that "Thanksgiving dinner essentials like turkey, cranberries and potatoes are more expensive than ever, leaving many Americans to wonder if it'd be cheaper to dine out." Much of the data came from Brad Rubin, Wells Fargo Food and Agribusiness Sector Manager of Specialty Crops.
One MNB reader responded:
Who cares what Mark Rubin has to say about the cost of dining out for Thanksgiving dinner. I could care less what he has to say about the cost of a turkey day dinner at a restaurant vs. having a big home cooked Thanksgiving Day dinner at home. Factor in the enjoyment of having family and friends together, sharing a great homemade dinner and a nice bottle or two of your favorite wine, and topped off with homemade pumpkin pie with whipped cream. The whole Thanksgiving Day dinner with family is the best. People make choices on how to celebrate eating out or dining at home, me, my choice is at home with family and friends. Besides, left over turkey for hot dinner sandwiches with gravy and cold turkey sandwiches, you cannot get that at a restaurant.
FYI, Safeway/Albertsons ran Butterball Turkeys for $1.37/lb. with a digital coupon this week.
MNB reader Joe Axford wrote:
I call BS on Mr. Rubin, frozen turkey prices in MA/NH right now are 89 cents a pound. Companies like Shaw's and Stop and Shop are likely to run them 49 cents a pound like they do every year, probably starting with their Nov. 18th Thanksgiving ad prices.
From another reader:
I haven't seen many 'meal solutions for $x' out there like we had in the past. I think retailers need to hit this hard and show what you get comparatively to feed your family vs eating out. Intuitively, I think people know this. But a reminder on how much feels very timely right now.
Regarding Albertsons' plan to pay investors a $4 billion dividend in advance of the company's proposed merger with Kroger, one MNB reader wrote:
The only question to ask is would this $4 billion dividend be paid if there was no merger in the works?
Albertsons says yes.
And finally, on another subject, one MNB reader wrote:
Commenting on the Howard Davidson response to the "Office Space" Walmart commercial – WOW….. I actually felt the opposite in that it made me chuckle and actually WANT to shop at Walmart. I thought It was so stupid funny. I was once told that to watch movies or shows like Office Space, the Office or Big Bang Theory that you needed to have a higher humor intelligence! LOL, maybe Howard just didn’t “get it” or was over thinking it!
And from another reader:
Not sure how the reader can say Office Space is a “longtime favorite” movie….and not understand the Michael Bolton reference! I mean come on!
Published on: November 4, 2022
Remember ... for most of us in the US, this weekend marks the end of Daylight Savings Time and a return to Standard Time. On Sunday, November 6, at 2 am, it will be time to turn your clocks back an hour. (Assuming, of course, you have clocks that require manual changing.)
Enjoy the extra sleep.
Published on: November 4, 2022
• Game Five of the World Series was a thriller, with the Houston Astros defeating the
Philadelphia Phillies 3-2, taking a 3-2 game lead in the best of seven series.
• In Thursday Night Football action, the Philadelphia Eagles defeated the Houston Texans 29-17.
Published on: November 4, 2022
I just watched the first episode of "Blockbuster," the new Netflix series about the last Blockbuster video rental store in America.
It is a 10-episode series. One episode was enough … I won't be wasting any more time with it.
The fact is, there is just one Blockbuster left in America. In Bend, Oregon. I've been there.
The actual store is a little sad and a little sweet, all at the same time. But it also seems very much of that place; Bend is a unique community, a little iconoclastic, and somehow the last Blockbuster fits in.
But "Blockbuster," the TV series, captures none of that. (I'm not even sure where it takes place.) It plays like a 20-year-old sitcom, featuring characters who don't act their age, with dialogue and plot that strikes me as reflective of many original movies and series on Netflix - they're big on concept, but so often they appear to have needed one more rewrite. (In the case of "Blockbuster," maybe two or three.)
It's too bad, because there is the germ of a good series here, about how small businesses can survive when battling against giant corporations, and about the connections that they can make with their shoppers and communities. But whoever wrote this thing appears to have never worked in a store, or talked to a retailer. There's no subtlety, no nuance, no fresh insights.
Damn. I wish they'd asked me to do one of those rewrites.
I must admit, I have a weakness for avocado toast. I hate the idea that it has become a kind of cliché, but I can't help myself.
This week, I tried to replicate a version that I had out in California … and, to be honest, I did a pretty good job. I may have liked mine better, in fact.
Here's how I built it:
Bagel. Avocado generously spread out. Crumbled feta cheese. Cubed bacon. Chopped tomato. Red pepper.
Yum. Try it, and thank me later.
My wine recommendation to you this week … the 2021 Bordeaux Blanc from Jean Marc Barthez, which is 95% Sauvignon Blanc, 5% Sémillon, and has a nice melon thing going for it without being too fruity - great, we found, with a Caesar salad.
Published on: November 4, 2022
I'm taking Monday, November 7, off, and will be back on Tuesday, November 8.
Have a good weekend, and I'll see you Tuesday.
Sláinte!
