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    Published on: October 22, 2012

    by Kevin Coupe

    The growth of the medical marijuana industry has been enormous over the past few years and it is fascinating, when one is in the place where it is legal, to see how dispensaries are popping up on various corners.

    I went into my first medical marijuana shop a few weeks ago when I was in Boulder, Colorado; I was feeling fine and didn't have a prescription, but I'd never been in one and I was curious. What was most interesting to me was the fact that this dispensary seemed more like a private bank or a really exclusive doctor's office than I expected.

    But I never really thought about where the marijuana was coming from.

    Which made the piece this weekend in the Sacramento Bee particularly Eye-Opening...because it detailed how "a rush to profit from patient demand for pot has resulted in irresponsible forest clearing, illegal stream diversions, and careless pesticide and fertilizer use that has polluted waterways and killed wildlife."

    The story goes on to note that "the problem has become so big and so unregulated that the California Department of Fish and Game has resorted to aerial surveys to assess its scale. It has a new high-resolution, computer-controlled camera mounted in the belly of an aircraft to help pinpoint problem marijuana areas," and points out that the emergence of marijuana farms has been, in some areas, astounding.

    To be clear, this is not always the case. Some growers are religious about being environmentally responsible. But there are both legal and illegal growers who are less so, and who, in their approach to the land, are careless and irresponsible, creating problems both current and potential: "The environmental problems they create are similar, in large part because the state's ability to regulate marijuana cultivation remains hazy. Though state law makes it legal to grow and use medical marijuana, it provides little guidance on how to regulate it.

    "In addition, medicinal grows remain illegal under federal law, putting state and local agencies on uncertain ground when they attempt to set limits."

    I was surprised by all this. Not sure why, but I was sort of working under the premise that legal growers of marijuana were behaving within a legal and organic framework. But the reality is, not so much.

    It is a great business lesson in the importance of context - of understanding that sometimes how a product is created can be important as what it does, and understanding that if you cut corners on how you produce a product, it can become a headline in a newspaper and a topic for social media.

    Context matters. Always. It's an Eye-Opener.
    KC's View:

    Published on: October 22, 2012

    Bloomberg BusinessWeek reports that both FedEx and United Parcel Service (UPS) "are testing strategies for a same-day delivery market fueled by Web retailers trying to match the instant gratification their brick-and-mortar competitors offer shoppers." There are some estimates that the same-day delivery business could grow to be a $12 billion segment, triple the size of the business in 2007, the story says.

    Some excerpts from the story:

    "Delivery programs under way at Internet retailers such as Inc. and eBay Inc. signal an opportunity in business- to-consumer shipments for delivery firms where the high-value overnight market between companies has been hurt by a slower economy. It’s a space that larger companies have mostly ignored since the collapse of Inc., which was partially backed by Amazon, in 2001."

    "Traditional retailers are already adapting, offering same- day service through their websites to fend off e-commerce rivals. Wal-Mart Stores Inc. enlisted UPS for a holiday pilot program that charges customers a flat fee to deliver popular items such as toys, electronics and sporting goods. Conducted in four markets, the service costs $10 for buyers in northern Virginia, Philadelphia and Minneapolis and $5 to $10 for customers in the San Jose/San Francisco area, Wal-Mart said."
    KC's View:
    It is extraordinary how the same-day delivery option has become the hot topic so quickly ... and this does not feel like something is going to go away, because it seems directly related to hotter competition between Amazon and Walmart, and between both of those giants and everybody else.

    BTW... Tom Furphy, of Consumer Equity Partners (and the guy who helped create Amazon's CPG and Fresh businesses), and I will be doing a session on Friday morning at the Produce Marketing Association (PMA) Fresh Summit, and we'll be exploring this and other issues. I hope you'll join us.

    Published on: October 22, 2012

    There is an interview in the Business Journal with Robert Mariano, chairman/president/CEO of Roundy's Inc., in which he is asked if Roundy’s parent company, Willis Stein & Partners, happy with the current stock price of about $6.

    To which Mariano responds:

    "The stock will do what the stock will do. Probably we’d like it to be a little higher, but there’s a host of reasons why it’s not. I can’t control what the stock market does. What I can control is what happens with our stores, the experience our customers have, the number of customers who come through the door."
    KC's View:
    True enough. That's all that retailers really can control ... and the food retailers that worry more about stock market share prices than share of stomach are the ones that, in my view, are making a mistake.

    Published on: October 22, 2012

    Retailers and associations that object to the proposed settlement of antitrust litigation over interchange fees - or "swipe fees" - imposed by credit/debit card companies plan to hold a conference call today to give voice to their continued opposition, saying that "it will continue to allow the credit card industry to take advantage of merchants and their customers while blocking competition and choice."

    According to the announcement, "The named class plaintiffs opposing the proposed settlement include: Affiliated Foods Midwest, Coborn's, Inc., D'Agostino Supermarkets, Jetro Holdings, Inc. and Jetro Cash & Carry Enterprises, National Association of Convenience Stores (NACS), NATSO, National Community Pharmacists Association (NCPA), National Cooperative Grocers Association (NCGA), National Grocers Association (NGA), and National Restaurant Association (NRA).

    "The named plaintiffs have been joined by a growing chorus of members of the merchant class in the litigation including the National Retail Federation (NRF), Retail Industry Leaders Association (RILA), and National Association of College Stores (NACS), who have come out in opposition to the proposed settlement. The associations opposing the proposed settlement represent hundreds of thousands of stores with trillions of dollars in sales, which is a demonstration of the fundamental problems with the proposal."
    KC's View:
    It is hard to imagine how this settlement gets approved. And I'm not sure how named plaintiffs that object to the settlement can be ignored.

    Published on: October 22, 2012

    MNB had a story and subsequent "Your Views" discussion last week about the stated US Department of Education goal of getting more students to move to e-books, away from traditional paper-and-ink textbooks. Which led one MNB user to forward us a story from Cleveland's WKYC News, which reports that more than a dozen middle school students in the area have been robbed of their iPads while going from from school over the past few weeks, with officials saying that the students are being targeted because people know that they are shifting to iPads away from traditional textbooks.
    KC's View:
    get that there always are reasons not to move to new technologies. And I get that these robberies are a problem. But I cannot accept the idea that this is a good enough reason not to shift to e-books. There are too many compelling reasons to do so.

    Published on: October 22, 2012

    The Wall Street Journal reports that Kroger has decided to "no longer sell fresh sprouts due to the potential safety risk."

    "Sprouts present a unique challenge because pathogens may reside inside of the seeds where they cannot be reached by the currently available processing interventions," says Payton Pruett, the company's vice president of food safety. Pruett also says that the company "will stop procuring other foods that are produced on the same equipment as sprouts ... Mr. Pruett said Kroger may revisit its policy when new technologies and practices show that farmers can consistently produce sprout seeds that don't internalize pathogens, and when sprout-processing environments can be enhanced for safety and cleanliness."
    KC's View:

    Published on: October 22, 2012

    Crain's Chicago Business reports that the new Kraft Foods Group - just two weeks old since being created when the old Kraft Foods Corp. was split into two companies, the other being Mondelez International - is considering the sale of both low-profile brands and those without a big market share, as it focuses on "jewel brands" that it thinks have a higher upside.

    Among the prominent names mentioned as potential divestiture targets are A1 steak sauce and Grey Poupon mustard, because they don't seem to fit into Kraft's broader portfolio goals; Breakstone was another brand previously mentioned as likely to be sold.

    To be clear, these options are largely being articulated by analysts trying to divine what Kraft's next moves will be; Kraft itself says that it does not comment on "rumors and speculation."
    KC's View:

    Published on: October 22, 2012

    The BBC reports that Carrefour, which has been operating 72 hypermarkets and 20 other stores in Colombia, is selling the entire business to Chilean group Cencosud for the equivalent of $2.6 billion (US).

    "This transaction is in line with Carrefour's new strategy of focusing on geographies and countries in which it holds or aims to develop a leading position," the company said in a statement. Carrefour already has pulled out of Singapore and Greece as it looks to divest stores in non-core markets.

    The story notes that "Cencosud already has operations in Chile, Brazil, Peru and Argentina, as well as in Colombia since 2007."
    KC's View:

    Published on: October 22, 2012

    • Supervalu said last week, according to the Wall Street Journal, that it is in talks with several companies that have expressed an interest in acquiring all or part of the company, though the company also said that while there have been "a number of indications of interest ... there can be no assurance that this process will result in any transaction."

    • The Los Angeles Times reports that Starbucks has opened its first store in Mumbai, India, and plans to open two more next week. The openings, the story suggests, presage what is likely to be a fast-growth strategy in India, modeled on Starbucks' approach in China.

    The Times writes that Starbucks "plans to have 1,500 stores in China alone by 2015, making the Asian superpower Starbucks’ second largest market. India could be on the same track. Chains such as Barista Coffee, Café Coffee Day and Java City, along with more recent foreign arrivals such as Costa Coffee and Gloria Jeans, have primed the Indian market for the arrival of massive players such as Starbucks."

    HealthDay News reports on a new study presented at the American Association for Cancer Research's annual prevention conference i saying that "six cups of green tea a day may slow the progression of prostate cancer ... The notion that the polyphenol compounds found in green tea might have a protective effect against prostate cancer has yet to be confirmed outside a laboratory setting. However, this latest report builds on previous Italian research that suggested that consuming green tea extract may help lower the risk that a precancerous condition will develop into full-blown prostate cancer.

    "And related research that was also presented at the cancer research conference suggested that the flavonoids found in fruits and vegetables may be associated with a lower risk of developing aggressive prostate cancer."
    KC's View:

    Published on: October 22, 2012

    George McGovern, the former bomber pilot who flew 35 missions over Europe during World War II, going on to become a two-term US Congressman and three-term US Senator from South Dakota, as well as the Democratic candidate who was devastated by President Richard M. Nixon in the 1972 national elections, passed away over the weekend. He was 90.
    KC's View:
    Based on a lot of the reading I've done as well as personal impressions, it is my sense that McGovern was widely respected on both sides of the aisle for his lifelong commitment to public service, as well as a gentlemanly demeanor that might be out of place in today's politics. And it is worth noting that if Robert F. Kennedy had not been assassinated, it is at least possible that McGovern - hardly a perfect presidential candidate - would never have faced off against Nixon, never would have chosen Thomas Eagleton as a vice presidential candidate, and might not have become the anti-war face of the Democratic party.

    But he did. And while he was crushed in the 1972 election by Nixon, who had to resign two years later in the wake of the Watergate scandal, McGovern seemed to remain remarkably without bitterness.

    We talk a lot about relevant public policy here on MNB, and politics almost always enters into it ... and we do our best to keep the conversation civil. I never talk about my specific choices in the voting booth, except to say that they probably would surprise some MNB readers. But since it has been 40 years, I think it is safe to reveal one specific: I voted for George McGovern in 1972, the first time I ever voted. And I've always been proud of that vote.

    Published on: October 22, 2012

    We keep getting emails about the various studies about the efficacy of organic foods, vs. mainstream foods.

    One MNB user wrote:

    Kevin, the "organic enthusiast" is the minority. I field questions from the members in my store about why we don't carry more organic items all the time.  As I engage our members about what they would like to see, I ask them what they are looking for in an organic item. I almost always get the same response... It's supposed to be healthier.  Rarely do the environment or pesticides come up.

    The vast majority of consumers are buying based on incorrect data and it is a tough sell to point one of my members to a great brand that is not certified organic when the decision has been made in their mind.  My company is careful to bring in only what we see as a successful item based on our format and is expanding our array of organic items, because our member is asking for them.  It's a shame that most consumers could save some money buying healthy non-organic items but are being conditioned to believe otherwise.  As a retail manager, I would love to see my members be able to spread their grocery money into more of my non-foods categories.

    MNB user Philip Bradley wrote:

    You omitted one key reason why many of us buy organic food, particularly the produce--because it simply tastes better!

    And from MNB user Craig Espelien:

    Here is how I always see the difference between the traditional Organic consumer and the mainstream consumer…

    The Organic consumer typically pursues Organics as a Lifestyle – rather than a set of products (much like the green or sustainable consumer).

    The mainstream consumer is the consumer who defines value in ways other than living an Organic lifestyle.

    The mainstream consumer is more concerned with price and “total value” of the product (price and quality for the use or occasion).  This stems from primary research I have done in a variety of circumstances that support the Stanford study – Organic foods provide little to no incremental health or nutrition benefit to the person consuming them while natural products tend to have more nutritional benefits that can be identified – and the cost increase for going natural vs. going Organic is wildly less – which fits into the mainstream consumer’s value equation.

    The reason, from my perspective, that the Organic consumers get fired up about studies like this is that their lifestyle is much closer to their emotional triggers than for the mainstream consumer – meaning anything that is perceived as attacking their lifestyle is “bad” or “offensive” or just plain wrong.

    Most manufacturers would be well served by understanding the difference between the two consumer sets and working to achieve a balance – since there are probably 95-99 mainstream consumers for every one Organic consumer, figure out how to appeal to both with potentially different items – but that is simply sound business advice so I am sure everyone already knows that (just kidding – not sure too many folks have thought it through this far).

    Regarding the California referendum on the mandating of labels for foods containing genetically modified ingredients, one MNB user wrote:

    I just filled-out my ballot and couldn't help but think of your dogged support of California Prop 37 while doing so.

    Seems to me it is tantamount to plastering targets onto the foreheads of a specific, otherwise harmless group of products for mischief-makers to shoot at and reminds me of why a lot of people thought it was unfair to force Jews to walk around wearing yellow stars.

    I didn't vote, nonetheless, for the genetically-modified President.

    Gee, that's offensive on just so many levels.

    Let's forget about the fact that I'm not sure my position could fairly be described as "dogged," since I've also pointed out what I perceive as flaws in the proposed law.

    You really want to compare a law that would mandate companies to be transparent about ingredients in the foods they market to a policy that resulted in the murder of millions of Jews? Really?

    And I don't even know how to respond to the "genetically modified President" crack, except to say that I'm glad this remark is not typical of the discourse on MNB. (I'm only posting it because I've always believed in the line from U.S. Supreme Court Justice Louis Brandeis, who once said that "Sunlight is the best disinfectant."

    And that line requires a lot of disinfectant.

    We had an email last week from an MNB user who said that he had a right to drink a jumbo soda because it would make him happy, and he has a Constitutional right to life, liberty and the pursuit of happiness.

    I should have picked up on this ... but I want to thank the numerous MNB users who wrote in to point out that "life, liberty and the pursuit of happiness" is not a line from the US Constitution.

    It's from the Declaration of Independence.

    Finally, responding to my review of the movie Knuckleball last Friday, MNB user Steven Ritchey wrote:

    Charlie Hough pitched for the Texas Rangers for many  years, and for most of those years, was the opening day starter, tells you what kind of pitching staff we had in those days doesn’t it?

    Anyway, when he was here, he gave one of my favorite all time baseball quotes to a reporter,  “95% of my pitches are knuckleballs, the other 5% are prayers”.

    Great line. Sounds like my approach to MNB...
    KC's View:

    Published on: October 22, 2012

    In Game Six of the National League Championship Series, the San Francisco Giants defeated the St. Louis Cardinals 6-1, again staving off elimination and sending the series to a seventh and deciding game tonight. The winner will face off with the Detroit Tigers in the World Series.

    In Week Seven of the National Football League...

    Dallas 19
    Carolina 14

    New Orleans 35
    Tampa Bay 28

    Washington 23
    NY Giants 27

    Baltimore 13
    Houston 43

    Cleveland 13
    Indianapolis 17

    NY Jets 26
    New England 29

    Jacksonville 23
    Oakland 26

    Tennessee 35
    Buffalo 34

    Green Bay 30
    St. Louis 20

    Arizona 14
    Minnesota 21

    Pittsburgh 24
    Cincinnati 17
    KC's View:

    Published on: October 22, 2012

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    KC's View: