business news in context, analysis with attitude

Published on: February 22, 2016

by Kevin Coupe

The New York Times has a story about how UK retailer Tesco has stopped selling croissants in their traditional curved shape, and now is only selling a straight version, offering a "decidedly British rationale: It is easier to spread jam on the straight variety."

“The majority of shoppers find it easier to spread jam, or their preferred filling, on a straighter shape with a single sweeping motion,” Tesco’s croissant buyer, Harry Jones, said in a statement. “With the crescent-shaped croissants, it’s more fiddly, and most people can take up to three attempts to achieve perfect coverage, which increases the potential for accidents involving sticky fingers and tables.” Tesco also says that sales of traditional croissants were declining.

The decision, the Times writes, has earned Tesco some measure of derision on both sides of the English Channel.

A Daily Telegraph editorial, for example, "noted that the virtue of the traditional French croissant was its foreignness. 'They must not be sliced in two, like buns to be buttered' ... 'They must be torn, and each morsel eaten with jam, even alien apricot jam, if wanted ... Otherwise nature is outraged, floods will again sweep the land and murrains strike our cattle. Or we could just stick with toast'."

At least one French newspaper suggested that the move could presage a possible British decision to leave the European Union.

And Tesco also was the subject of attack in social media, where some observers expressed "their disbelief that British jam-spreaders were unable to navigate a traditional croissant’s curved edges."

The ultimate irony? The Times notes that croissant means “crescent” in French. (Though the Times also notes that "while the croissant is associated with France, the pastry originated in what is now Austria, as a crescent-shaped roll called a kipferl.")

In some ways, this strikes me as the kind of Eye-Opening moral battle that could only break out between the English and the French. But I also have to admit that I'm a little skeptical about Tesco's explanation ... I have a feeling that it may actually be cheaper and more efficient to manufacture straight croissants. Tesco's recent history suggests that this is more about its own issues than the problems people may be having spreading jam on a crescent-shaped pastry.

And if that's the case, well, people will go buy their croissants elsewhere. C'est la vie.

Published on: February 22, 2016

The Hill reports that "Sen. Pat Roberts (R-Kan.) has unveiled legislation to pre-empt states from issuing their own mandatory labeling laws for foods that contain genetically modified ingredients." The bill would require "the Secretary of Agriculture to establish a national voluntary labeling standard for bioengineered, or GMO, foods."

The story notes that the Roberts bill "is similar to the Safe and Accurate Food Labeling Act of 2015 that passed the House in June, outraging consumer groups lobbying for mandatory labeling laws."

Trade groups lined up to support the Roberts proposal.

"We are very pleased that Chairman Roberts has scheduled a markup on legislation that meets an urgent need to avoid the inevitable chaos the food industry faces if left without a federal government-created standard definition that eliminates multiple state approaches,” said Jennifer Hatcher, a spokeswoman for the Food Marketing Institute (FMI). “Without immediate action, costs in the supply chain will escalate rapidly and once the resources are expended, consumer costs will inevitably rise.”

Peter J. Larkin, president/CEO of the National Grocers Association (NGA), said that "NGA and its members believe consumers should have clear and consistent information to make informed buying decisions, which is why NGA supports a uniform and voluntary standard, regulated by the U.S. Department of Agriculture (USDA), to ensure that GMO labeling of food products is consistent and transparent to consumers nationwide. We applaud Chairman Roberts for his efforts to implement a federal legislative solution.”

Opponents, however, were not persuaded.

""This bill is a desperate attempt by the junk food and chemical industries to keep Americans in the dark about what we feed our families,” said Lisa Archer, Friends of the Earth Food and Technology program director. “93 percent of Americans want GMO labeling and this effort to try and stop the consumer demand for transparency that has shaken Big Food to its core will ultimately fail."

Published on: February 22, 2016

Fortune is out with its annual list of the world's 50 most admired companies, and Apple makes the top of the list, followed by Alphabet (parent company to Google), and Amazon. Rounding out the top 10 list are Berkshire Hathaway, Walt Disney, Starbucks, Southwest Airlines, FedEx, Nike and General Electric.

Other relevant companies on the list include Costco (#12), Coca-Cola (#15), Whole Foods (#24), Walmart (#42), PepsiCo (#44), and Publix (#49).

Meanwhile, the Harris Poll is out with its 2016 Reputation Quotient survey, and it is a retailer - Amazon -- that sits atop the list. There are, in fact, 23 retailers in the top 100, including Public (#6), Costco (#13), Meijer (#21), Kroger (#35), Whole Foods (#44), Target (#49), Starbucks (#62), Safeway (#65), and Walmart (#72).

Apple is ranked second on the reputation list, followed by Alphabet/Google in the third position.

The survey says that 63 percent of respondents said that retailing has a good reputation in general, second only to the technology industry, which gets a 78 percent approval figure.

Published on: February 22, 2016

The Wall Street Journal has a story about Whole Foods co-CEO John Mackey, described as a resolute "conscious capitalist" and frequent provocateur on a wide range of issues,, though he says he is trying to become circumspect because of the negative impact on his company when he opines about global warming, unions and national health care policy.

"“I tend to be a very candid person,” he says, adding, “I obviously want to be honest and not deceive people, but at the same time I don’t want to hurt Whole Foods Market,” he says. “I’m happy to express my views to people in private but because I’m the co-founder of the company…people make a very close identification between Whole Foods and me. It might not be fair, but it’s just reality.”

Mackey also says that the price of healthy foods has to come down, which is one reason why Whole Foods is launching a new "365" format later this year: "Instead of having 30 kinds of salsa you’ll find just a few and they’ll be low priced," he says.

You can read the entire piece here.

Published on: February 22, 2016

The Associated Press reports that industry groups from Vermont to Michigan sent a letter to the Food and Drug Administration (FDA) complaining about companies that label foods as "maple" but don't actually contain any: "They say products such as Quaker Oats Maple & Brown Sugar Instant Oatmeal and Hood maple walnut ice cream are misbranded in violation of FDA regulations because maple syrup is not listed on their labels. Quaker Oats said it did not have a comment, and a Hood spokeswoman said she was seeking more information but could not confirm if the ice cream’s flavor was derived from real maple syrup."

According to the story, "Roger Brown, chairman of the Maple Industry Committee of the Vermont Maple Sugar Makers Association, said maple syrup — derived from heating sap from maple trees — is a premium product and sweetener and for that reason a number of companies imply that a product contains maple without the ingredient being present. He said the association has asked the FDA to investigate so that consumers get what they’re looking for, and maple producers get compensated for their hard work."

The FDA says it is reviewing the complaints.

Published on: February 22, 2016

USA Today reports on the tragic shootings in Kalamazoo, Michigan, in which an Uber driver "may have been picking up fares as he continued on his shooting rampage."

Here's how the paper frames the story:

"Jason Dalton, 45, was arrested Sunday after the wave of attacks Saturday evening. Uber released a statement confirming Dalton was a driver and said he had passed a background check ... Kalamazoo County Prosecutor Jeffrey Getting said Dalton has no prior criminal record and was taken into custody without a struggle.

"Uber bills itself as a safe way to travel, and the ride-sharing service tries to live up to that billing by putting prospective drivers through background checks. People applying to be an Uber driver must provide their full name, birth date, Social Security number, driver’s license number, insurance and vehicle documentation.

"Once that information is collected, Uber uses a background investigation service, Checkr, to dig a little deeper. Checkr runs a Social Security trace to find out where the applicant has lived the previous seven years and cross-checks the addresses with national, state and local databases for convictions ... Potential drivers are disqualified if they appear on any sex offender registries or have convictions for DUI or drug-related offenses, fraud, violent crimes, fatal accidents, 'acts of terror,' resisting arrest or any felony."

The Washington Post reports that the Kalamazoo incident "came just weeks after Uber settled two class-action lawsuits for $28.5 million after the company was accused of exaggerating the safety of its background checks. Despite using phrases such as 'safest ride on the road' and 'industry-leading background checks,' the suits claimed, the company did not check drivers against the national sex-offender registry or employ fingerprint identification."

Published on: February 22, 2016

The Washington Post has a story about how Adidas is becoming "a player in the subscription-box game, having joined with the hope that the move will help it appeal to female shoppers — and in doing so grab back market share from high-flying rivals Nike and Under Armour ... The service is called Avenue A, and subscribers will receive a quarterly delivery of a curated box of sneakers, apparel and other workout gear. The mix and style of the items will always be a surprise, with Adidas promising only that the pieces will be seasonally appropriate. Some items will be exclusive or limited edition and others will be widely sold retail fare."

But the Post also suggests that there could be flaws in the Adidas business model:

"Adidas says it imagines the core subscriber will be a woman who has running at the heart of her fitness routine but also regularly incorporates other activities such as Pilates or barre class.
Avenue A boxes cost $150 each, so that means a subscriber is spending $600 a year on workout clothes. Surely there are women out there who drop that much money annually on exercise attire. But it stands to reason that if someone is spending that much, she’s not casual about her gym routine. More likely, she is a bona fide fitness junkie, someone who competes in triathlons or starts every day with a visit to the CrossFit box.

"In other words, this person is probably someone who has specific performance needs and preferences for her gym attire. It’s an open question: Is she going trust that Avenue A will consistently deliver a running shoe that is ideal for her gait? Or leggings that have the precise level of compression that she likes?

"The woman who exercises more casually might be more open to this kind of serendipity around her gym clothes, and she might place more value on having a revolving array of looks. But if she isn’t an exercise obsessive, it’s hard to imagine she’s spending $600 a year for these goods. In fact, that may be more than she spends on her overall wardrobe in a given year."

Published on: February 22, 2016

• The Seattle Times reports that Amazon "may soon employ more people than any other Fortune 500 company except Wal-Mart.

"The tech and retail giant had nearly 230,800 employees at the end of 2015, not counting the 100,000 seasonal workers it hired for the holidays. That’s a nearly 50 percent jump from the previous year. The 76,700 bump was about the size of oil giant Exxon Mobil. Or not far from the whole of Amazon in 2012, when the company had 88,400 employees ... Amazon’s swelling job numbers are the latest indicator of how the Internet retailer, which last year surpassed for the first time the $100 billion revenue mark, and also left Wal-Mart’s market value in its wake, has become a pivotal economic force not only in sales, but as an employer, too."

One important note: the vast majority of the new Amazon employees are not "highly paid techies," but rather in "the sprawling infrastructure that moves a growing share of the world’s merchandise in ever shorter delivery times."


• Reuters reports that Amazon "wants to set up a network of parcel lockers across Europe to enable people to pick up their own orders as it seeks to widen delivery options and cut costs," similar to the setup that it currently uses in both the US and the UK.

The story says that "the world's biggest e-commerce company has posted several job adverts in recent weeks that suggest it wants a broader range of pick-up options, including lockers, in continental Europe. This is part of a broader drive to speed up delivery times and rein in its growing multi-billion dollar logistics bill."

Published on: February 22, 2016

...with brief, occasional, italicized and sometimes gratuitous commentary…

• The Associated Press reports that "Coke and Pepsi want to shake their Big Gulp image and cultivate a more hipster appeal," with Coke using "more stylized cans and bottles of Coke and the expansion of Mexican Coke" (which uses sugar rather than high fructose corn syrup), and Pepsi "pushing craft sodas" as a way of differentiating themselves.

The simple problem is that the reality is that people are consuming fewer soft drinks. "If they're selling less soda," the story says, "Coke and Pepsi at least want to charge more for it by giving it more cachet." Experts say that both Coke and Pepsi are using the beer market - where higher priced craft beers seem to have all the enthusiasm and growth - as a model.


• The Street reports on rising speculation that Kroger may be interested in acquiring South Carolina-based Ingles Markets, which also could be of some interest to hedge funds and private equity groups.

The story says that Ingles "is a more vulnerable regional chain largely confined to the Southeast, with stores in Alabama, Georgia, North Carolina, South Carolina, Tennessee and Virginia ... In fact, grocery chains similar to Ingles that have the second- or third-largest market share or footprint in their region are the most likely targets, simply because they have a more difficult time competing on price" with the likes of Publix and Walmart.

Kroger's recent acquisitive behavior probably means that there will be some analysts who will predict that it is interested in buying everything and anything. I think everybody needs to calm down.


• KeHE, the organic and specialty products supplier, announced that it has acquired San Diego-based Monterrey Provision Company, described as a "distributor of products for the perimeter departments at retail grocery stores." Terms of the deal were not disclosed.

Published on: February 22, 2016

Got the following email from MNB reader Brad Morris:

I wish I could say I was surprised by the finding of wood by-products in processed Parmesan Cheese. I dare anyone to take a piece of real Parmigiano-Reggiano, grate it, and compare it to any of the tube cheeses out there. There is almost no relationship between the two.

I know that you too are a “foodie” and appreciate a finely crafted meal.

I once had the opportunity to work in the kitchen of the great chef, Charlie Trotter, as a guest-chef of sorts. There I learned that great food is first and foremost about great ingredients. At that time Chef Trotter received daily deliveries of ingredients from 63 separate companies to get just the right products to craft his menu. There were no freezers in the restaurant, and the only refrigerator was smaller than that in the average home. I would add that he had not one wine cellar, but six.

While working at my prep station I was given a small piece of sushi-grade tuna by one of the line chefs. It was very good. Then I was given another piece with just a pinch of Fleur de Sel (sea salt from Normandy, France) on it. The second tuna was just more… more of everything. It was fantastic.

Now that sea salt was $27 per pound, but a small pinch took an already great ingredient and made it extraordinary.

We live in a country where most of us are blessed with an overabundance of food. Perhaps we should focus less on the quantity we ingest and more on the quality. That means knowing what is real and what we are buying. That is where proper labeling comes in, and just enough regulation and inspection to protect us from criminals like Castle Cheese.

The good stuff can cost a lot more, but you will find that you need much less of it to have a meal that is satisfying; nutritionally, emotionally, and, dare I say, spiritually.

And, from MNB reader Craig Espelien:

It is always interesting when an issue comes up (I am shocked, shocked that there is gambling at Ric’s café).  Folks act like it is something new – when in fact, this has been an issue for over 20 years.  Cellulose is a cheap filler (and necessary binding agent) – and if you are not paying attention, your co-manufacturers (focusing on private brand here) will get their cellulose level out of whack either through inattention or in a focused attempt to make more margin.  If you test your product regularly and have your specifications set at the “acceptable” level (the 2% to 4% you mention) that is the common standard for the industry and what the FDA allows.

We would review this product at least twice per year to make sure that we were getting what we paid for – and suppliers who were found out of compliance faced stiff financial penalties as well as the potential of losing some or all of the business (depending on how egregious the offense – 8% - you’re fired, 5% show me the money).  All would then be put on a more aggressive (and random) testing pattern that they had to pay for.

Shame on the retailers if they are not paying attention (I could share stories) and shame on the consumer if they only focus on buying the cheapest product on the market (lower end products is where this would have a tendency to manifest).