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Monday, September 18, 2017

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Monday Morning Eye-Opener: Fat Chances

by Kevin Coupe

The New York Times has a long and detailed story about how there is a broad transformation taking place “of the food system that is delivering Western-style processed food and sugary drinks to the most isolated pockets of Latin America, Africa and Asia. As their growth slows in the wealthiest countries, multinational food companies like Nestlé, PepsiCo and General Mills have been aggressively expanding their presence in developing nations, unleashing a marketing juggernaut that is upending traditional diets from Brazil to Ghana to India.”

This shift, some public health experts tell the Times, “is contributing to a new epidemic of diabetes and heart disease, chronic illnesses that are fed by soaring rates of obesity in places that struggled with hunger and malnutrition just a generation ago.

“The new reality is captured by a single, stark fact: Across the world, more people are now obese than underweight. At the same time, scientists say, the growing availability of high-calorie, nutrient-poor foods is generating a new type of malnutrition, one in which a growing number of people are both overweight and undernourished.”

You can read the whole, Eye-Opening story here.

This is a complicated story, and it doesn’t just mean that big food is selling unhealthy food to poorer countries. That’s part of it, sure, but it also has to do with economics and aspirations - as people get more money, they see it as almost a mark of their prosperity that they are able to afford and eat the kinds of foods that they perceive as being American. Maybe the question that needs to be asked is why certain kinds of behavior are seen as being typical of our country and people. Maybe our common denominator ought to be a little higher?

It isn’t an entirely fair comparison, but it reminds me of what the tobacco companies have done as smoking has become less prevalent in the US, and in fact has become stigmatized. They decided that since they couldn’t addict Americans to their poison they way they used to, they might as well addict the rest of the world, especially folks who didn’t know any better.

(For new MNB readers, I probably should point out here that I have a major problem with tobacco companies - my mother died of lung cancer after having smoked for close to 40 years ands finding it enormously difficult to quit - and have a long standing belief that a special circle of hell is reserved for executives of such businesses.

I would make an exception though. If the tobacco companies are going to addict and poison people in other countries, you’d think they could do a better job in North Korea, where it would be kind of nice if the Supreme Leader would cough up a lung or two.)

Walmart’s New Home Will Be Where Its Heart Is

Walmart on Friday announced that it plans to build a new headquarters on a 350 acre tract of land in Bentonville, Arkansas, not far from its longtime home.

“We’ve been here in Northwest Arkansas for over 50 years and we’re preparing now to cement the roots for the next 50-plus years,” Wal-Mart spokesman Randy Hargrove said.

No cost has yet been estimated for the project, which is said to be in the early stages of planning and design. The Arkansas Democrat-Gazette writes that it is expected to take five-to-seven years to complete the project.

According to the story, “Wal-Mart’s current home office operations include about 20 different buildings spread throughout Bentonville. The company said one purpose for building a new headquarters is to consolidate more of those operations on one campus to improve collaboration and efficiency. The company also said a new home will be an attractive tool to recruit future workers in a retail environment that is rapidly changing because of technology.”

The quotes an internal email from CEO Doug McMillon as saying that the current “corporate campus - a hodgepodge of more than 20 buildings spanning several communities - are ‘significantly beyond their shelf life.’

The new facility, McMillon wrote, will be better suited to a more “digitally native work force” with “improved parking, meal services, fitness, and natural light — yes, natural light.”

KC's View: Betcha there won’t be any lawn chairs in the lobby that will emphasize with an exclamation point how frugal the company is. (Though how great would it be if there were…?) I’ll also betcha this means that Arkansas will be one of the few place sin the country not getting into the Hunger Games-style sweepstakes to try and get Amazon’s planned second headquarters.

I also wonder if it kind of irritated the folks at Walmart that Amazon made its HQ announcement first. Not that it matters, and they’ve reportedly been contemplating this move for some time. But it had to annoy them a little bit that Amazon got the PR jump on them.

This is smart, though. Walmart is a global force that needs a 21st century headquarters that will attract the best and the brightest to move to Arkansas and pursue their career ambitions there.

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From MyWebGrocer...

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More Than 100 Competitors Vie To Be Site Of Amazon’s HQ2

The Seattle Times reports that “at least 101 cities, states, provinces and counties in the U.S. and Canada have indicated they are interested in the Seattle company’s second headquarters in the week since Amazon announced it was seeking bidders for the megaproject.”

The winner of the sweepstakes will be get some $5 billion in investment and 50,000 employees from Amazon, plus investment and employees from all the ancillary businesses that will line up to provide products and services to the company.

The Times notes that Amazon’s requirements include “proximity to a major airport, a population center of at least a million people, and ample housing and mass transit.” While Boston already has been rumored to be the front-runner (and the city reportedly is hinging its pitch on the site of the soon-to-be-closed Suffolk Downs racetrack), Amazon has said that the competition is wide open and just getting started.

The competitors “range from obvious big-city candidates” like New York, Boston and Chicago, “to a joint effort by smaller towns in North Carolina tobacco and textile country, and a push championed by the University of Maryland in suburban Washington, D.C.”

The deadline for filing formal initial paperwork is October 19.

The Times goes on to say that “Amazon has invited tax breaks and other incentives in its request for proposals, and economic-development experts say some regions are likely to respond with packages valued in the billions.”

KC's View: I know it is unlikely, but I actually think it would be a great message if Jeff Bezos were to make a public statement that the choice of a location will not depend on tax breaks and incentives, but rather on the degree to which localities invest in public services, especially public education. I’d like it if Bezos would say that he wants to know that the school districts serving the HQ2 location believe that there is nothing more important than having elementary, middle and high schools that put academics first (certainly ahead of putting lights in the high school football field), that emphasize math and science, that are inclusive of minorities of all kinds, that don’t engage in the kinds of stereotypes that slot boys into certain categories and girls into others, that hire and invest in administrators and teachers who understand that it is critical to teach the child, not just the subject and to the test.

Tax breaks and incentives will be important, and at least the initial reports suggest that Amazon is not focused on opening its HQ2 in an area that requires remaking and rehabilitation. But Amazon will do best if it has an educated workforce and consumer base, and I think this would be a terrific place and time to drive this fact home.

The Fermenting Of A New Food Trend

The Wall Street Journal has a piece about the latest food trend that seems to be taking hold, in which “good-for-you food has never been this good. Fat is no longer ingredient non grata. Vegetable dishes are often the most exciting items on the menu. American chefs draw on a global pantry for nutritional powerhouses such as kimchi and chia seeds. If there was once a wall between health food and serious cooking, it’s been kicked in.”

The trend is being seen in restaurants in Los Angeles and, gradually, New York, where they are adopting a “sunny, vegetable-centered, fermentation-happy all-day-eating mode,” in which food is more or less healthy, will make you feel good, and that strikes a balance even as “the trend continues toward eating more meals per week outside the home.”

The theory seems to be that if people are going to eat out, it might as well be the kinds of foods “that have sustained good health for millennia in traditional cultures around the world, including regular doses of butter and other saturated fats, enzyme-rich pickles and fermented foods, and a variety of meats as well as grains and legumes.”

KC's View: I have to admit that very few of the menu items described in the story - which sound very much like food for the elites - would be likely to be at the top of my wish-list for a meal. But I love adventure, so I guess I’m going to have to find out if I like them or not.

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From The Path to Purchase Expo...


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Study: Consumers Show Major Concern About Online Privacy

AT Kearney is out with a new Data privacy study, in which it concludes the following:

• “While digitally-active consumers overwhelmingly (96%) express being "somewhat" to "extremely" concerned about data collection and use, more than 75% engage in digital payment transactions at least once a month. As a result, a large portion of consumers are looking for stronger tools and controls to manage access and use of their personal and transaction data in digital commerce.”

• “The incidence of card-on-file being the primary payment method for digital purchases grew from 38% in 2015 to 44% in 2016. Strikingly, among those who keep cards on files with retailers as primary payment method for digital purchases, 44% have already given their payment credentials to be held on file to more than five retailers.”

• “A clear divide exists in the consumer market where 34% of consumers consider the use of their payment/purchase data to be ‘an invasion of privacy that should be prohibited,’ while a counter-balancing 36% of consumers can see some benefit from data sharing if appropriate consumer compensation is rewarded.”

• “Among consumers who engage in digital commerce and are prepared to share their data, 65% of consumers rated their primary bank as a provider with whom they were comfortable sharing personal information. Banks' high rating compared very favorably to lower consumer ratings for Amazon (34%), Apple (22%), Google (17%), and large national retailers (10%).”

KC's View: The importance of data security certainly is top of mind right now because of the Equifax hack, and I think institutions of all kinds need to take current disquiet extremely seriously.

I think it ought to concern every retailer that banks (does anyone really like their bank?) are seen as more trustworthy than they are, and it ought to concern traditional retailers that Amazon is seen as three times more trustworthy - especially since Amazon has so much more actionable data and actually acts on it.

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Toys R Us Faces Supplier Squeeze As It Considers Bankruptcy

The Wall Street Journal reports that expectations that Toys R Us could file for bankruptcy within weeks have led to “nervous suppliers” deciding to tighten terms for the retailer, “including holding back on shipments unless Toys ‘R’ Us is able to make cash payments on delivery.”

This development comes just weeks before the beginning of the crucial end-of-year holiday shopping season. “While Toys ‘R’ Us already has received a majority of its holiday shipments, it is still without a portion of the goods and could soon be cut off from receiving any fresh inventory,” the Journal writes. The holidays can account for as much as 40 percent of the retailer’s annual revenue, even as it faces toughening competition from both bricks-and-mortar and online retailers.

The Journal writes that Toys R Us “has been in talks with holders of more than $5 billion in debt to extend 2018 maturities and stave off a chapter 11 filing. Still, the company and its restructuring advisers are considering filing for chapter 11 protection in the U.S. Bankruptcy Court in Richmond, Va.”

KC's View: I feel sorry for the folks who work at Toys R Us, but I have to admit that I feel absolutely no sentimentality about the days when my kids were young and I’d have to go there from time to time. I hated every time I went to Toys R Us, and I made the transition to Amazon as soon as I could.

E-conomy Beat

Bloomberg reports that increasingly groceries-focused Amazon “is selling a lot more chips, chocolate and candy. The e-commerce giant saw U.S. revenue from sweets and snacks climb 42 percent to $215 million in the first eight months of the year, according to research firm One Click Retail. Last year, Amazon posted total sales of $240 million in those categories.”

FastNewsBeat

• The Wall Street Journal reports that McDonald’s “is dropping the Minute Maid apple-juice box from its Happy Meals and replacing it with a watered-down organic juice with less sugar made by Honest Kids.” The change is described as “the latest step in the evolution of the Happy Meal toward healthier options and one that shows how shifting consumer tastes have prompted Coca-Cola Co., which owns both Minute Maid and Honest Kids, to broaden its portfolio of beverages to include lower-calorie options.”


The Street reports that bricks-and-mortar retailers are likely to “struggle to fill the many positions they're posting for the holiday season.

The reason? A tightening labor market that makes it much harder to attract people to work low-wage, temporary jobs.


• The Wall Street Journal reports that “Dole Food Co. is exploring a sale, months after filing to go public,” with the first round of bids due last week. The story says that “private-equity firms are among those that have expressed interest in Dole Food.”

The Journal points out that “the so-called dual-track process, in which a company weighs a sale as it also prepares for a public offering, isn’t uncommon.”

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From the National Grocers Association...


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Your Views: The Top Line

Last week MNB took note of a Fortune story about how many CEO changes there have been in the food industry over the past 18 months, in both the retail and supplier companies. Some of the retirements are because of age, and some because of pressure, but there’s also a recognition that old answers won’t address new questions.

This prompted one MNB reader to write:

Kevin, all CEO’s of CPG / FMCG companies are in unchartered waters.  Increasingly consolidated customers, low consumer discretionary spend, dispirited workforces chasing stock price increases (where middle rank workers are participating at a lesser rate each year) compounded by a Board of Directors which cares more about governance than growth are a few impediments.  There are some exceptions obviously, but most CPG / FMCG companies are focused on bottom line, not topline. Why?   There is no one single reason, but I would argue that a key root cause stems from a prioritization of finance people being appointed CEO vs. those with a sales / marketing pedigree.

I personally believe that CEO’s (painting with a broad generalization) fail at two things:  First, not getting to ground zero often – really understanding the work their organization needs to deliver through their own eyes. This is consistently one of the central messages that comes through in the TV series “Undercover Boss”.  Secondly, not taking teammates on the CEO journey – pushing them & teaching them.  Not just the identified successor leaders, but others who express the interest further down in the organization. There’s not one thing in any CEO job responsibility that keeps them from doing this – most simply consider both of these areas work they delegate to their leadership team.

In times of low growth,  true diversity (of thought, experience) is needed, companies increasingly don’t have internal bench strength, therefore going to recruiters to find outside talent. This comes with a high price tag, including pre-developed exit agreements, since those being recruited know they are likely to have a short (under 4 year) tenure.   A lot is said about industry compensation differences based upon gender; another disparity never addressed is that between internally promoted CEO’s and those brought in from the outside.

Headhunters themselves are to blame; their own research will show that diverse experiences are needed, but they aren’t willing to say to the Board Chairman (who, by the way, owns CEO bench strength as one of their personal deliverables) “Hey, we think that you need someone who possesses these skills, knowledge and experiences” because they will lose the placement fee.  Many in your community likely get frustrated with retained search because they are very “square peg, square hole” in building their list of candidates.  I’ve been told personally by a couple of big name retained search firms that they know new skills / abilities are needed in a particular search, but they can’t risk losing the account.  After all, the Board Chair needs the CEO roles filled quickly. They often focus more on one’s “widget experience” than they do leadership skills, the key exception being when an industry has high competition restraint clauses.

Another key issue, rarely addressed, is a new definition of “scale” (or its verb, scaling) is emerging, (which is often a key success measurement for CEO’s).  Globalization is all but over for well-known CPG brands; they have completed their “flag planting”. Infusing online channel sales into bricks and mortar is presently more a share shift than growing the total pie for most legacy CPG’s.

With the emergence of big data and private label, CPG CEO’s are realizing that heretofore tactics like “raising price” or “add 2-3 line extensions” or “adding topline through acquisition” or “using CMA agreements to buyout shelf in small format stores” are short term, not long term tactics, not to mention that retailers hold the data which challenges these tactics success.  Successfully scaling is going to require multiple, likely unrelated streams of work going on simultaneously. Some of which will fail.

Which for me, points towards future CEO appointments from sales / marketing heritage vs. finance.   “Selling more” simply needs to be a priority; of Boards and their CEO’s.





Another MNB user had some thoughts about the importance of being prepared to be relevant in a changing economy:

Personally, I have been on a learning path for the last year to be prepared for the coming way of AI/machine learning. I’ve worked with Walmart, and other retails thankfully, for well over thirteen years and I see the coming changes. One good example is the layoffs that happened at Walmart after the new OTIF replenishment system went live. The system uses machine learning to forecast and has far less need for human intervention than the previous version. It’s far from perfect, but that doesn’t mean it’s going away.

My point is this, you don’t need to pursue an advanced degree to get prepared. The basic idea is to find a way for the software to work for you and not the other way around. If you work for the software, eventually you will be programmed out of the equation and I believe that reaches into any field that can be programmatically done such as, finance. I tell my friends that are category managers to learn programming languages that are centric to data analysis such as, R and Python. You don’t need to be an expert, you just need a good working knowledge of the software to go deeper and faster than your peers.

Again, you don’t need an advanced degree or any degree to be marketable. There are tons of free resources available from Harvard, MIT, and the University of Michigan or one could use a service like Lynda.com, which is often available through the local public library. To build your portfolio, simply apply what you learn to real problems you have at work and matter to you.

Programming isn’t sexy and at times it’s hard (because thinking critically is hard), but it can teach a person to think logically and to problem solve better. Both of which seem to be absent from public schools these days.


It reminds me of the scene from Hidden Figures, when Dorothy Vaughn, played by Octavia Spencer, decides that since it appears that NASA would like to replace her human “computers” with machines made by IBM, the humans better learn how to program the IBM mainframes.

Adapt or die. No excuses.




On another subject, from MNB reader Kirk Altmanshofer:

As I read this piece on Panasonic's concept of a roaming delivery refrigerator, I couldn't help but wonder if this is an example of life imitating art. In this case the art being Disney Pixar's Wall-E. Of course the Terminator franchise also comes to mind. Everything seems cool until the machines rise up against us. A roaming refrigerator is a scary enough adversary, but let's arm it with a hotplate just for kicks. But if I was working for the aforementioned Disney, I'd be contacting Panasonic now to discuss licensing deals for an R2D2 version. There has to be a potential market already waiting for something like that.

From The MNB Sports Desk

In Major League Baseball, the Houston Astros defeated the Seattle Mariners 7-1, clinching the American League West division championship.




In Week Two of National Football League action…

Cleveland 10
Baltimore 24

Buffalo 3
Carolina 9

Arizona 16
Indianapolis 13

Tennessee 37
Jacksonville 16

Philadelphia 20
Kansas City 27

New England 36
New Orleans 20

Minnesota 9
Pittsburgh 26

Chicago 7
Tampa Bay 29

Miami 19
LA Chargers 17

NY Jets 20
Oakland 45

Dallas 17
Denver 42

Washington 27
LA Rams 20

San Francisco 9
Seattle 12

Green Bay 23
Atlanta 34

Another Apology

This morning’s Wake Up Call, sent at 2 am, unfortunately ended up linking to Friday’s MNB when a server problem reasserted itself. I’ve gone back in and reposted the Monday MNB, and resent the Wake Up Call, and hopefully we have everything straightened out. Thanks, as always, for your patience.

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"GOOD IS NOT GOOD WHEN BETTER IS EXPECTED"

In this fast-paced, interactive and provocative presentation, MNB's Kevin Coupe challenges audiences to see Main Street through a constantly evolving technological, demographic, competitive and cultural prism.  These issues all combine to create an environment in which traditional thinking, fundamental execution, and just-good-enough strategies and tactics likely will pave a path to irrelevance;  Coupe lays out a road map for the future that focuses on differential advantages and disruptive mindsets, using real-world examples that can be adopted and executed by enterprising and innovative leaders.

"Kevin inspired our management team with his insights about the food industry and his enthusiasm. We've had the best come in to address our group, and Kevin Coupe was rated right up there.  He had our team on the edge of their chairs!" - Stew Leonard, Jr., CEO, Stew Leonard's

Constantly updated to reflect the news stories covered and commented upon daily by MorningNewsBeat, and seasoned with an irreverent sense of humor and disdain for sacred cows honed by Coupe’s 30+ years of writing and reporting about the best in the business, "Good Is Not Good When Better Is Expected" will get your meeting attendees not just thinking, but asking the serious questions about business and consumers that serious times demand.

Want to make your next event unique, engaging, illuminating and entertaining?  Start here: KevinCoupe.com. Or call Kevin at 203-662-0100.

Now back to regularly scheduled editorial...

Editorial continues after a word from our sponsor...

Industry Drumbeat

Good Is Not Good When Better Is Expected

In this fast-paced, interactive and provocative presentation, MNB's Kevin Coupe challenges audiences to see Main Street through a constantly evolving technological, demographic, competitive and cultural prism.  These issues all combine to create an environment in which traditional thinking, fundamental execution, and just-good-enough strategies and tactics likely will pave a path to irrelevance;  Coupe lays out a road map for the future that focuses on differential advantages and disruptive mindsets, using real-world examples that can be adopted and executed by enterprising and innovative leaders.

"Kevin inspired our management team with his insights about the food industry and his enthusiasm. We've had the best come in to address our group, and Kevin Coupe was rated right up there.  He had our team on the edge of their chairs!" - Stew Leonard, Jr., CEO, Stew Leonard's

Constantly updated to reflect the news stories covered and commented upon daily by MorningNewsBeat, and seasoned with an irreverent sense of humor and disdain for sacred cows honed by Coupe’s 30+ years of writing and reporting about the best in the business, "Good Is Not Good When Better Is Expected" will get your meeting attendees not just thinking, but asking the serious questions about business and consumers that serious times demand.

Want to make your next event unique, engaging, illuminating and entertaining?  Start here: KevinCoupe.com. Or call Kevin at 203-662-0100.

Now back to regularly scheduled editorial...

Finally, a word from our sponsor...

Industry Drumbeat

"GOOD IS NOT GOOD WHEN BETTER IS EXPECTED"

In this fast-paced, interactive and provocative presentation, MNB's Kevin Coupe challenges audiences to see Main Street through a constantly evolving technological, demographic, competitive and cultural prism.  These issues all combine to create an environment in which traditional thinking, fundamental execution, and just-good-enough strategies and tactics likely will pave a path to irrelevance;  Coupe lays out a road map for the future that focuses on differential advantages and disruptive mindsets, using real-world examples that can be adopted and executed by enterprising and innovative leaders.

"Kevin inspired our management team with his insights about the food industry and his enthusiasm. We've had the best come in to address our group, and Kevin Coupe was rated right up there.  He had our team on the edge of their chairs!" - Stew Leonard, Jr., CEO, Stew Leonard's

Constantly updated to reflect the news stories covered and commented upon daily by MorningNewsBeat, and seasoned with an irreverent sense of humor and disdain for sacred cows honed by Coupe’s 30+ years of writing and reporting about the best in the business, "Good Is Not Good When Better Is Expected" will get your meeting attendees not just thinking, but asking the serious questions about business and consumers that serious times demand.

Want to make your next event unique, engaging, illuminating and entertaining?  Start here: KevinCoupe.com. Or call Kevin at 203-662-0100.

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