business news in context, analysis with attitude

Published on: May 15, 2014

This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy, reporting in this week from Portland, Oregon, which is why I've spent most of the week with a smile on my face.

I came here to moderate a couple of panel discussions at the Portland State University (PSU) Center for Retail Excellence Executive Forum, one of them on the subject of GMOs. And based on that conversation, and various discussions I've had with retailers and manufacturers, I think I have the solution to the GMO labeling issue. It has the advantage of probably not making everybody happy, which is probably all one can ask of a solution for such a contentious issue.

First of all, I'd label everything. Every packaged food product would have, as part of its nutrition panel, the words "contains GMOs" or "no GMOs." We can negotiate the font size, but this way we avoid the debate about which way makes more sense … and the people who want to know will have the information will have their way, and the people who don't care…well it won't matter.

There would be no labels required on the front of packaging, though of course companies would be free to use them if they wished. But the required labels would fall into the category of information, not condemnation, not demonization. They are there for people to look at if they want to, and if they want more information, it is up to them to get it.

This would be a federal standard. It is the only way to avoid the patchwork of regulations that multiple states could pass, which would create enormous problems for manufacturers and consumers.

This means that the food industry is off the hook - it cannot be accused of obfuscation. Bt the way, a lot of retailers tell me that they think this approach is inevitable, and that they think that if things continue to go in the direction they currently are, this will be an issue on which retailers and manufacturers will have to part company. Plus, I think that there has to be a tipping point…a number of states that, having passed individual laws, will force the federal government to act and manufacturers to acquiesce. That number may be 20, it could be 12, or it could be seven. But there's a number…and don't think for a moment that it doesn't scare the hell out of manufacturers and biotech companies.

Now, this won't be an easy pill for some manufacturers to swallow. But if the Grocery Manufacturers Association (GMA) and the biotech companies spent as much time and money lobbying for a consistent federal standard as they do fighting state-by-state proposals, this issue would have been put to bed a long time ago. They need to wake up to the idea that we live in an information-driven society, and hiding it makes no sense at all. in fact, in the long run it hurts you.

Of course, we all know that if manufacturers and biotech companies are going to support a federal mandate, they'd rather have a law saying that states can't pass their own laws. because they think that this is a winning strategy. Here's what they'll propose next, if I had to bet … a federal law that says if someone wants to sue either a manufacturer or a biotech company because of the affects of a GMO, they'll have to do it within five years of the original consumption of the GMO. Because to them, that's the kind of federal law that would make sense.

My idea is for simple labels that don't demonize anything … but just give consumers - most of whom have not nearly enough scientific background to be able to tell what most of these scientists are talking about - basic information about GMOs. Which is what they seem to want. By the way, either one of those labels will give shoppers confidence that the manufacturer knows its supply chain, which I think is a good thing.

Finally, I don't want to hear any whining about how hard, costly and time consuming it is to change labels. Because here's the deal. If scientists discovered tomorrow that XYZ compound, which happens to already be in 60 percent of all packaged food products, happened to help people's sex lives, CPG manufacturers would find away to slap new labels on all affected products in about 48 hours.

Because that's what they do when they think it is good for business.

Consumer have to persuade food manufacturers and the biotech companies that wanting information is not the same as being anti-science. It is just wanting information. At the same time, trying to suppress basic information that consumers want? Well, I think we have to make clear to them that it is bad for business.

That's what is on my mind this Thursday morning. As always, I want to know what is on your mind.

Published on: May 15, 2014

by Kevin Coupe

USA Today reports that Target CMO Jeff Jones has taken an unusual approach to public criticisms of the company's leadership aired online by a mid-level employee.

He said the person had a point.

According to the story, about a week ago Gawker "published an anonymous rant from a Target corporate employee that further revealed the extent to which the retailer's massive data breach has affected both employee and customer morale … the employee writes about Target's unproductive staffing strategy, which the employee says rewards socializing in the office above producing results, and Target's copy-cat tendency to follow what other retailers are doing instead of innovating. The employee calls for a leadership overhaul," and the posting said that "if Target doesn't make a serious change in their leadership and culture, it will end up being a Kmart, a Sears, or even worse, a Circuit City."

Jones then went on LinkedIn and posted a response under the title, "The Truth Hurts."

"While we would have preferred to have a conversation like this with the team member directly, speaking openly and honestly, and challenging norms is exactly what we need to be doing today and every day going forward," Jones wrote, adding, "Target is not the first brand in history to hit a rough patch. And we won't be the last brand to do what it takes to recover."

To be fair, Jones is the only senior executive that the anonymous employee did not want to be fired. But it is a very smart response … and probably different from what a lot of companies might have done. (I can think of a few that would've preferred to seek out and fire the offending employee.)

The fact is that the truth hurts. But ultimately - and this is an Eye-Opener - the truth also helps.

Published on: May 15, 2014

The Organic Trade Association says this morning that "sales of organic products in the United States jumped to $35.1 billion in 2013, up 11.5% from the previous year’s $31.5 billion and the fastest growth rate in five years." An OTA survey suggests that "growth rates over the next two years will at least keep pace with the 2013 clip and even slightly exceed it."

Additional details from the survey:

• "The growth rate of organic food sales, which has averaged almost 10% every year since 2010, has dwarfed the average annual growth of just over 3% in total food sales during that same period."

• "A product breakdown of the organic food sector shows that the fruit and vegetable category continues to lead the sector with $11.6 billion in sales, up 15%. With more than 10% of the fruits and vegetables sold in the United States now organic, the $1.5 billion in new sales of organic fruits and vegetable represented 46% of the organic sector’s $3.3 billion in new dollars."

• "The relatively small organic condiments category posted the strongest growth, at 17%, to reach sales of $830 million. Also showing double-digit growth were the organic snack food sector, up 15% to $1.7 billion; organic bread and grain sales up 12% to $3.8 billion; organic meat, poultry and fish sales up 11% to $675 million, and the rapidly expanding organic packaged and prepared food sector up 10% to $4.8 billion."

• "Just two categories of the organic food sector showed single-digit growth rates. The $4.9 billion dairy sector grew by 8%, and sales of organic beverages slowed to a 5% growth rate to around $4 billion."

Published on: May 15, 2014

Greenpeace is out with its eighth annual report ranking 26 major retailers for seafood sourcing and sustainability, and it concludes that Whole Foods and Safeway are at the top of the list, followed by Wegmans, Trader Joe’s, and Hy-Vee. It is the first time Hy-Vee that has been evaluated by Greenpeace, and it immediately was lauded for its seafood policies.

According to the report, "four supermarkets - Roundy's, Bi-Lo, Save Mart and Publix - failed altogether. Kroger, the fifth biggest food retailer in the world, is exposed for selling the most Red List species of any U.S. grocery chain, for the third consecutive year." (Red list fish are those that Greenpeace has identified as being either overfished, caught using destructive methods,, or in short supply, and potentially endangered.)

One interesting point raised by Greenpeace: that once Safeway's acquisition by Albertsons has been completed, its "significant progress" in this area "could be severely undermined if its merger with Albertson’s means taking on Albertson’s inferior seafood policies and practices." Albertsons is ranked at #20, just above Kroger, which is #21.

Beyond the top five, the major chains are, in order, Harris Teeter (which was ranked before its acquisition by Kroger), Aldi, Target, Ahold, Delhaize, Meijer, Walmart, HEB, price Chopper, Costco, Giant Eagle, A&P, Supervalu, Wakefern, Albertsons, Kroger, WinCo, Publix, Save Mart, Bi-Lo and Roundy's.

"Despite progress made by the retail sector overall, overfishing, destructive fishing, and illegal fishing are still major problems for ocean conservation and the economies of developing countries," Greenpeace says in the report. "Populations of the ocean’s top predators like sharks, tuna, and swordfish have dropped by as much as 90% over the past half-century.  Bycatch - where species like sharks and turtles are caught unintentionally in the process of fishing, then thrown back into the sea dead or dying - threatens marine ecosystems as well as global food security."

Published on: May 15, 2014

Delhaize-owned Food Lion has unveiled a new chain-wide strategy that it says " launches a multi-year initiative to make shopping easier for Food Lion customers at the company's more than 1,100 stores, while keeping the low prices customers expect." The initiative uses the slogan, "Easy, Fresh and Affordable...You Can Count on Food Lion Every Day!"

"Today, we are officially embarking on a new strategy to make shopping easier for our customers," said Beth Newlands Campbell, president of Food Lion. "Our customers have told us that they want a grocery experience where it's easy to shop, easy to save and easy to figure out what is for dinner tonight. Based on their feedback, and continuing to build on Food Lion's longstanding heritage of low prices and convenient locations, we will work to own the easiest full shop experience in the Southeast, anchored by a strong commitment to freshness, affordability and the communities we serve." 

The announcement goes on to say that "the new strategy includes a variety of elements, large and small.  One example of a small change that makes a big impact for customers is new blue bags, in addition to traditional white bags.  The blue bags are used for cold and frozen items to make them easily identifiable and make unpacking groceries easy for customers at home, especially in warmer months. An example of a big change is expanding product variety based on consumer research."

The company also is getting a refreshed logo, which "provides a more modern look for customers, while preserving the history and heritage of the lion and the 'Food Lion blue'."

Published on: May 15, 2014

The Wall Street Journal reports that Kellogg Co. has made a deal with Danone that will result in some of its cereal being used as mix-ins for Dannon yogurt.

The story says that "Danone’s YoCrunch brand is known for mix-ins on top of its yogurt cups, which include granola, Oreos and M&M’s. The deal with Kellogg to do the same with Frosted Flakes and Froot Loops in YoCrunch Cereal Bowls that are hitting shelves this spring is the first for breakfast cereal, executives said, and a sign of the times for the morning meal."

It is hardly a new idea. The story says that "YoCrunch claims that about 40% of people who eat yogurt put cereal in it."

Published on: May 15, 2014

NACS is out with its monthly Consumer Fuels survey, saying that "41% of consumers say that they are optimistic about the economy, a drop from 44% the month prior … Nearly 9 in 10 (86%) consumers say that gas prices affect their feelings about the economy, and nearly 4 in 5 (79%) noticed that gas prices increased over the past 30 days, the highest percentage saying so since March 2013. And two in three (66%) consumers say that prices will increase over the next 30 days, the highest percentage saying so since NACS initiated monthly consumer surveys in January 2013."

Interestingly, "a majority (51%) of younger consumers — those ages 18 to 34 — are positive about the economy, but only 34% of those over age 50 are optimistic about the economy."

Published on: May 15, 2014

• Reuters reports that "Wal-Mart has settled lawsuits with the families of 23 people who died from a 2011 listeria outbreak traced to cantaloupe grown at a Colorado farm and sold by the retailer, both sides said on Wednesday. Thirty-three people died and 147 others across 28 states became sick after eating the tainted melons in one of the deadliest U.S. outbreaks of food-borne illness."

The story notes that "the cantaloupes were traced to now-bankrupt Jensen Farms in Granada, Colorado. Federal food inspectors concluded that equipment at the farm inadequately washed the fruit to remove listeria bacterium." Lawsuits continue to pending against other grocery chains "that sold the cantaloupes, a food broker, and an auditing company that gave the Jensen's farming operation a superior rating shortly before the outbreak."

Published on: May 15, 2014

The Motley Fool has an intriguing piece suggesting that there is a obvious - if somewhat unorthodox - candidate for a now-open, high-profile retail CEO job.

"Target is now looking for a new permanent CEO following the resignation of Gregg Steinhafel," the story says, and the company should seriously consider hiring Ron Johnson, who spent 15 years there before departing for the Apple Store. That hiring should made made "despite his colossal failure at J.C. Penney," the story says. "Johnson has had more than a year to reflect on his mistakes at J.C. Penney, and he is the type of visionary who could reinvigorate Target's image and help the company return to growth … Johnson's success in transforming the home department at Target 15 years ago makes him a logical candidate to lead a turnaround of the company's home and apparel businesses today. Many retail analysts believe that a drop in the quality of Target's design partnerships is a key reason that the home and apparel businesses are losing their appeal."

You can read the entire story here.

Published on: May 15, 2014

• The Los Angeles Times reports that a number of retailers, including JC Penney, Gap, Nike, Walgreen and Target "are joining forces with the Retail Industry Leaders Assn. to try to protect the industry from hackers and other cybercriminals. On Wednesday, the companies and the trade group launched an intelligence-sharing center designed to prevent the kind of data breach that struck Target Corp. over the holiday season … The new center will enable retailers to communicate among themselves about potential threats. The Homeland Security Department, Secret Service and FBI also will be involved."


• The Wall Street Journal reports that Sears Holdings "is considering a sale of its 51% stake in Sears Canada or a sale of the Canadian company as a whole, as it seeks to raise money and focus more closely on its troubled U.S. operations."

It was just a decade ago, the story says, that "Sears Chairman Edward Lampert was fighting with rival hedge fund manager William Ackman to boost his holdings in Sears Canada. Now, however, he has been carving out value from Sears' assets as sales continue to slump and efforts to remake the company into a more tech savvy enterprise have yet to tip the balance."

Published on: May 15, 2014

• Weis Markets announced the hiring of David W. Gose, most recently the senior director and regional general manager at Wal-Mart Ohio, to be its new Senior Vice President of Operations.


• Roundy's said yesterday that Don Hamblen, group vice president and chief marketing officer, has left the company, apparently a victim of the corporate restructuring that occurred as the company pulled out of the Twin Cities in Minnesota.


• Walmart.com reportedly has hired Kieran Shanahan, e-commerce director for Walmart-owned Asda Group in the UK, to be its new vice president of e-commerce operations, charged with supervising site to store and shipping to store operations.

Published on: May 15, 2014

…will return.