business news in context, analysis with attitude

Published on: January 27, 2017

by Kevin Coupe

A site called PopDust that serves as a platform for pop music and its fans, now is getting into the wine club business with a new "Tasting Room" concept.

Here's the pitch:

"We all love wine. In fact, most nights of the week our editors sip a glass or two to wind down after work. The liquor store nearest us doesn't always have the best selection, or the best prices for that matter. They have limited shelf space, and store employees don't always recommend bottles we'll enjoy. Liquor stores are focused on volume and margin (it's not their fault rent is expensive) leaving many people reaching for the yellow-labeled bottle with the kangaroo they stick in the front of the store. But Tasting Room seeks to change that."

When you sign up for Tasting Room, the company says, it will send you "a six-bottle tasting kit which is where the fun begins. Log on to the site and you're guided through an engaging, interactive tasting in which you pit the wines against one another. You simply click on the wines you prefer in the head-to-head matchups, and based on your ratings, Tasting Room makes informed wine selections for you in the form of Wine Profile ... Soon thereafter, you'll receive a 12-bottle case of different wines tailored to match your preferences. The club ships you a case of wine as often as you'd like for about $12/bottle. You can easily customize your shipment date(s), size, and contents on the site ... Plus, every bottle comes with a satisfaction guarantee, so if you ever receive a wine that doesn't match your taste preferences, Tasting Room will replace it or issue you a wine credit to purchase another bottle ..."

I think this is interesting, and not just because it points to yet another competitor for business that traditional bricks-and-mortar stores used to take for granted. Perhaps even more importantly, they're seeking to turn people into more frequent customers by putting more product into their hands, and making that product as relevant as they to their tastes.

That's smart, and it is a pretty good bet what the next step will be - a premium Tasting Room club that offers more expensive wine, and looks not just to get people to drink more wine, but better wine.

That's how to grow a business. It is an Eye-Opener.

Published on: January 27, 2017

USA Today reports this morning that if a proposal to impose a 20 percent tariff on Mexican imports into the US is voted into being by the US Congress and signed into law by President Donald Trump, "American consumers may have to pay more for products ranging from Toyotas to vegetables to beer."

The story notes that Mexico is the "second-biggest provider of agricultural products" to the US, "with imports amounting to $21 billion in 2015."

Tom Stenzel, President and CEO of the United Fresh Produce Association, tells the paper that "it is very troubling for world food and agricultural markets for Administration spokespersons to bandy about terms like a 20% tax on all imports from Mexico or other countries ... Consider the impact on American consumers of a 20% hike in the cost of foods such as bananas, mangoes and other products that we simply cannot grow in the United States. Consider also what other countries would do to block U.S. exports in retaliation. As the Administration looks to incentivize manufacturing jobs in the U.S., we urge President Trump to consider the unique nature of food and not place a new food tax on American consumers.”

There was some confusion about the exact nature of the proposal yesterday, as the New York Times writes that President Trump "appeared to embrace a proposal by House Republicans that would impose a 20 percent tax on all imported goods. The White House press secretary, Sean Spicer, told reporters that the proceeds would be used to pay for the border wall, estimated to cost as much as $20 billion. But a furious uproar prompted Mr. Spicer to temper his earlier remarks, saying the plan was simply 'one idea' that might work to finance the wall."

The New York Times paints the broader picture: "The idea of a broad tax on importers is suddenly at the center of the Washington policy debate, with the inevitable counting of potential winners and losers.

"Such a tax could hit retailers the hardest if it takes full effect, with their heavy reliance on products as varied as microwave ovens from China and T-shirts from Bangladesh. But few sectors of the American economy and few consumers would be unaffected.

"If such a tax were imposed on imports from around the world, automakers could face hefty tax bills not only for cars imported from Mexico and elsewhere but also for the many auto parts they buy from overseas for their assembly lines in the United States. Chemical companies, supplying practically every industry, could find themselves paying more for feedstocks. And energy companies could wind up paying more for imported oil."

However, there would be winners if the GOP plan were to become law, since it seems as if any border tariff would be combined with a large cut in corporate taxes.

Published on: January 27, 2017

There is an excellent piece in the Washington Post by columnist George F. Will, in which he writes about the retail evolution from Gimbels to Macy's to Walmart to Amazon, and while some level of destruction has taken place in this evolution, it likely is both necessary and good.

Will begins the column this way:

"When the president speaks of closed factories scattered like 'tombstones' across America, has he noticed the shuttered stores in shopping centers, and entire malls reduced to rubble? He promises 'protection' to prevent foreigners from 'destroying' manufacturing jobs by exporting to America things that Americans want to import. Does he know that one American company might be 'destroying' more American jobs than China is? And that this supposed destruction is beneficial?"

And Will also poses a question: "Why should manufacturing jobs lost to foreign competition be privileged by protectionist policies in ways that jobs lost to domestic competition are not?"

"Protecting the economy," Will argues, "can end up killing it."

Excellent piece, and you can read it here.

Published on: January 27, 2017

The Syracuse Post-Standard and a number of other publications report that Albertsons "has reportedly dropped its efforts to buy Schenectady-based Price Chopper," a purchase that some estimates suggested would cost it $1 billion.

Albertsons is said to be more focused at the moment in going through an IPO.

Price Chopper is owned by Golub Corp. Golub operates 136 Price Chopper and Market 32 stores New York, Vermont, Connecticut, Pennsylvania, Massachusetts and New Hampshire. A purchase by Albertsons would have given it a significant presence in a part of the country where it is under-represented.

Published on: January 27, 2017

The Associated Press reports that Starbucks is blaming the "disappointing results" for the quarter ending January 1 on too many people in its stores.

The company said that "congestion" in its stores prompted "some people to leave without buying anything," the AP writes. "Starbucks said the popularity of its mobile order-and-pay option, which was supposed to make getting a drink easier, has caused bottlenecks at the areas where people pick up their drinks."

The coffee company said that while "US sales rose 3 percent at established stores ... the increase was the result of higher spending per visit, with more people tacking on items like breakfast sandwiches and other food." Traffic, in fact was flat.

Published on: January 27, 2017

Fox News reports that the site of the last Howard Johnson's restaurant in America is up for sale.

"Property owner Joe DeSantis confirms Wednesday that the parcel that includes the HoJo's in the New York village of Lake George is for sale," the story says. "He denies reports that say the orange-roofed eatery has closed, saying he believes the restaurant's operator is running offseason hours." However, "A phone number listed for the restaurant isn't in service."

The restaurant opened in 1953, and has gone through several owners.

The two other operating HoJo's - in Lake Placid, New York, and Bangor, Maine, closed in 2015 and 2016, respectively.

Published on: January 27, 2017

• Advertising Age reports that Walmart has hired four Hollywood directors - Antoine Fuqua, Marc Forster and filmmaking partners Seth Rogen & Evan Goldberg - to make three 60-second "short films" based on the items and prices listed on a Walmart receipt.

The six items: bananas, paper towels, batteries, scooter, wrapping paper and video baby monitor.

The short films will run during the Academy Awards program on ABC on Sunday, February 26. It will be the first time Walmart has advertised on the Oscars broadcast.

""Being a part of the Academy Awards is a great way to connect with our customers in a fresh, new way," said Walmart U.S. Chief Marketing Officer Tony Rogers. "As the world's largest brand, and a company that sells just about everything, we plan to be more involved, more engrained in the cultural moments that our customers care about, starting with the Oscars ... We think of our business beyond simple transactions."


• The Wall Street Journal reports that "two years after raising minimum wages for store employees to $9 per hour, Wal-Mart Stores Inc. is making adjustments to the way it hands out pay increases and trains store employees. The retailer will abbreviate a training program that new employees must complete to earn $10 per hour. The six-month program introduced last year will now take three months to complete, said company executives."

The company says it plans to stick with "an annual raise system it first implemented last year, in which most store employees get their raise on a single day. That changes a longtime practice of linking store employees’ annual raises to performance, doling them out on each employee’s hire-date anniversary ... This year employees hired on or before Oct. 31, 2016 will get a 2% raise on Feb. 18th.  Longtime workers who make the most their job title allows get a onetime lump sum of 2% of their annual pay, as they did last year."

Walmart says its average hourly salary is $13.69, or about $25,000 a year for a full-time employee.

The goal of the changes, the company says, is to help employees "advance faster" and become more skilled in their work, which hopefully will translate into better and more efficient store operations.

Published on: January 27, 2017

• Bloomberg reports that "Oprah Winfrey, who gave a boost to Weight Watchers International Inc. by becoming the face of the company, is now embarking on a plan to sell refrigerated meals with Kraft Heinz Co.

"The media magnate is starting a joint venture with Kraft called Mealtime Stories, aiming to make nutritious food more widely available, according to a statement Wednesday. Kraft will develop and sell the new line, which will initially focus on ready-to-eat refrigerated dishes."


• Bloomberg reports that Target has introduced what is called "a sweeping new policy governing chemicals in products, a move that will push hundreds of suppliers to list ingredients in everything from fragrances to floor cleaner. The guidelines, due to be unveiled Wednesday, include removing perfluorinated chemicals and flame retardants from textiles in the next five years, as well as eventually disclosing ingredients in all products.

"Target’s new rules come amid growing consumer demand for green goods -- whether it’s organic food, natural cosmetics or cleaning products -- that have fewer controversial ingredients."

Published on: January 27, 2017

Mike Connors, who played private detective Joe Mannix on the TV series "Mannix" for eight seasons from 1967 to 1975, passed away yesterday of leukemia. He was 91.

Published on: January 27, 2017

Regarding Target's woes, one MNB reader wrote:

I live in the Boston area and their stores here are incredibly disappointing and are just not competitive. This disappointment relates to two issues. The first is a supreme lack on interest in their store personnel to provide any sampling of passion for what they are doing which is clear in any of the stores that you walk into here. The second relates to merchandising and in stock (which are cost of entry factors for any retailer in today’s environment) where they continue to be lacking.

I have written to their Facebook page several times to express my experiences and all I get back is apologies for my recent visits- no solutions. In my view their operations group needs a complete makeover and they need to ingrain passion once again to those representing the brand in their stores. People need to want to win and have the passion and aggressiveness to do so. Unfortunately that does not exist in their current organization and perhaps they need a charismatic visionary to lead them out of their doldrums.

And from another reader:

Target is not the same, fun experience it was years ago. It used to be hip, offer nicely styled things, a nicer shopping experience and better quality brands. Now, not so much. Our shopping has gone way down with them and I seldom, if ever, impulse buy something there when we stop. And I don’t think I’ve ever used their e-commerce site. Their grocery sets are weak and well, weird and feel nothing like food really. They really lost something and yeah, I don’t think it’s e-commerce that’s kicking them.

Published on: January 27, 2017

I've now watched the entire two seasons and 20 episodes of "The Man in the High Castle," the Amazon-produced series, based on a Philip K. Dick novel, about an alternative history in which the Nazis and Japanese won World War II and have occupying forces in the country we know as the US. While I've watched both seasons, I cannot say that I completely understand what the hell is going on. But I am fascinated, could not wait to see what would come next, and already am looking forward to the third season, whenever Amazon decides to offer it.

In this alternate history, it is the early sixties, and Nazi Germany controls the eastern and midwestern part of the country, and Japan occupies what we think of as the western states; there is a Neutral Zone serving as a buffer, mostly in the Rockies. But while we see pockets of resistance cropping up, some from unexpected places, there also is a "Twilight Zone" element to the plots - films, supposedly made by the titular Man in the High Castle, that purport to show a different reality in which the US won the war.

There is a ton of dramatic tension between these two basic plot lines, and the visuals are remarkable - the Nazi flag flying over Times Square, and the Japanese flag over San Francisco. The period touches are extraordinary, and the performances excellent ... and the basic premise, of regular Americans fighting back against authoritarian, totalitarian dictatorships, is compelling ands resonant.

I'd suggest that you watch all 20 episodes, and don't worry if it all doesn't fall into place. The piecing together of the puzzle is just beginning.



I had a terrific beer this week that I'd never tasted before - the Figueroa Mountain Danish Red, from California, which is rich and refreshing and delicious, and perfect with the grilled salmon sandwich - served with pastrami spice and Russian dressing - that I had at Simmzy's in Manhattan Beach, California. Good stuff.



That's it for this week. Have a great weekend, and I'll see you Monday.

Slàinte!

Published on: January 27, 2017