business news in context, analysis with attitude

Published on: April 7, 2017

by Kevin Coupe

Northern California-based Draeger's long has had a reputation for exceptional specialty food marketing in an up-market, aspirational setting. Founded by Prussian immigrant Gustave Draeger during the early 20th century, the store is known not just for great food, but also for a broader view of the consumer's kitchen, with an upscale housewares department that seems designed to save the shopper a trip to Crate & Barrel.

During last week's trip to Silicon Valley for the GMDC "Retail Tomorrow" conference - where we mostly spent time in internet accelerators, on the Google campus, and looking at non-traditional retail formats - we also visited a touchstone of traditional food retail ... Draeger's flagship store in San Mateo. (Its other three stores are in Los Altos, Blackhawk, and Menlo Park.)

It was early morning, so there weren't very many customers in the store, but Draeger's sparkled nonetheless. There are some pictures below, but I did want to point out the most Eye-Opening thing in the store ... that with all the fine foods and wines available for sale, the $7.99 bottles of wine were merchandised with all the same care as the $70 bottles of wine. I think that's important, and I wanted to share a little bit of the experience.

Enjoy.

Article Text.

Published on: April 7, 2017

The New York Times this morning reports that the US Food and Drug Administration (FDA) will for the first time allow a company - in this case, 23andMe - to sell genetic tests that will allow consumers to determine their vulnerability to 10 diseases, including Parkinson's and Alzheimer's.

According to the story, the decision is a reversal of a position taken in 2013, when the FDA concluded that, in essence, 23andMe's marketing had gotten ahead of the science. It is "expected to open the floodgates for more direct-to-consumer tests for disease risks, drawing a road map for other companies to do the same thing."

The Times writes that "customers will have to specifically say that they want that information. The company’s website offers links to genetic counselors for those who are weighing whether to be tested. If they want those results they will be included at no extra charge, though patients have to pay for the counseling separately."

The story goes on: "The process for customers is simple. A customer spits into a tube and then mails it to 23andMe. The company’s lab extracts DNA from the saliva cells and tests it with probes that find genetic markers using a special chip for genotyping. In about six to eight weeks the company sends the customer an email saying the results are in. By logging onto an online account, the customer can see the report and its interpretation."

Published on: April 7, 2017

The San Antonio Express-News reports that H-E-B will open a new San Antonio store in August that will feature not just curbside grocery pickup (available at the moment in just 22 of its stores), but also a barbecue restaurant with a drive-through window.

"The drive-thru at True Texas BBQ — the San Antonio-based supermarket chain’s new barbecue restaurant — will be a first for H-E-B," the Express-News writes.

"True Texas BBQ, which will also serve breakfast, will open as part of a new 118,000-square-foot store that will anchor Bulverde Marketplace, a retail center being developed by local firm Fulcrum Development on the southwest corner of Loop 1604 and Bulverde Road." Spokesperson Dya Campos tells the paper that "the fast-casual restaurant will serve 'fresh, natural meat' smoked in the store as well as tacos with freshly-made tortillas and eggs during the breakfast rush."

In addition, the story says, "H-E-B will expand its convenience store portfolio at the Bulverde location with its own food offerings, filling station and car wash. H-E-B currently has nine convenience stores in Texas with six in the San Antonio area."

Published on: April 7, 2017

Media Post reports on a new study by BI Intelligence concluding that 83 percent of survey respondents say that they see a reason for a home voice assistant, such as Amazon's Alexa or Google Assistant. Just 18 percent say they see no reason to have one.

That's not to say that people don't see a downside, especially potential security issues - more than 40 percent worry about the security issue.

Published on: April 7, 2017

Fox Business quotes Costco CEO Richard Galanti as saying, "We want to get you into the store because you’re going to buy more." But, the story says, "in an era where people are shopping online for giant packages of everything from dog food to disposable diapers, more investors and analysts are pressing Costco to focus on e-commerce. Meanwhile, online retailers such as Amazon.com and newer players like Boxed.com are making inroads with consumers looking to buy in bulk."

The implicit question is this: While it generally agreed that Costco has been late to the online game, is it too late to the online game?

You can read some of the answers here.

Published on: April 7, 2017

• CNBC has a story saying that Amazon "is now worth almost double Wal-Mart's market value — in case investors need yet another reminder of the revolution in retail. The Seattle-based giant has a market capitalization of over $430 billion, according to FactSet data. In comparison, Wal-Mart's market cap sits below $220 billion as of Wednesday morning."

Published on: April 7, 2017

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

• Bloomberg has an interview with Nestle SA CEO Ulf Mark Schneider, in which he says that he believes that "many food and beverage companies are focused so much on cutting costs that they will undermine their growth prospects ... While focusing on efficiency, Nestle also plans to boost investment in the company’s fastest-growing businesses ... Nestle also plans to expand e-commerce, where sales are rising 20 percent, and digital ventures.

“Many companies are focusing on radical cost-cutting to deliver higher profits in the short-term,” Schneider said. “This approach is not sustainable.”

Or, as someone wise once put it, you can't cut your way to growth.


• PCC Natural Markets, the Seattle-based co-op, said yesterday that it plans to open a store in Burien, Washington, in early 2018. It will be the company's 12th store, and its southernmost.

The announcement added that "since 2013, PCC has added new locations in Seattle’s Green Lake and Columbia City neighborhoods and, last year, in the city of Bothell. It plans to open its 13th store in Seattle’s Madison Valley neighborhood in 2019. The community-owned food market also complemented store growth with the addition of online delivery in 2016 through partnerships with Instacart and Amazon."


• In Minnesota, the Star Tribune reports that Target, looking to add "a new twist to the launch this weekend of its design collaboration with Victoria Beckham ... sent about 500 of its Redcard-carrying customers invitations for them and a friend to attend prelaunch events on Saturday night at five stores around the country, including the Nicollet Mall store next to Target’s headquarters in downtown Minneapolis. Those shoppers will get first dibs on Beckham’s women’s and girls’ collection for Target, but will be limited to six items apiece to ensure there’s enough inventory left when it goes on sale to the general public the next morning.

I realize that I am defining myself as hopelessly out of touch with certain things, but I wouldn't know Victoria Beckham if she were wearing a sign. But I have read Kate McMahon's columns about her Target deal, and my sense is that if Target screws up the supply issue and disappoints more customers than it satisfies, it is going to have a problem.

Published on: April 7, 2017

• Weis Markets announced the hiring of William England as the company's new Vice President of Asset Protection. England most recently worked for Southeastern Grocers where he was a member of the management team responsible for banner transitions for Harveys, Fresco y Más and Winn-Dixie stores located in South Carolina, North Carolina and Florida.

Published on: April 7, 2017

Don Rickles, who over six decades enjoyed a stand-up comedy career based largely on his ability and willingness to insult anyone and everyone, passed away yesterday of kidney failure. He was 90.

Published on: April 7, 2017

Yesterday we reported on how Voodoo Doughnuts suspended a doughnut-eating challenge after one of its customers died while trying to win it; I expressed a certain ambivalence about gluttony-oriented promotions. Which led one MNB reader to write:

I joined Sara Lee in 2005  at a time when the organization was going through a big restructure and centralization of the HQ’s of many subsidiaries into one location outside of Chicago.  Shortly after my arrival, the Ball Park Franks group held an employee hot dog eating contest in the cafeteria at lunch in what seemed like a continuation of a long held tradition prior to the group arriving at the new HQ.  Personally I found this pretty off putting.  The scene was a  bit disgusting with contestants jamming food down their throats, but I also felt like they were cheapening their brand in the eyes of the other non Ball Park groups.  My sentiment was- if this is what your product stands for, any quality messaging is secondary.

A few of my co-workers expressed similar thoughts, but the sense was, well this is their brand, they know how to promote and showcase their products. Turns out many of the non Ball Park folks had similar thoughts, expressed them  to senior management and ultimately caused this event to be cancelled.  A victory over bad behavior, bad optics and likely bad messaging.




Regarding Amazon, one MNB reader wrote:

As the evil Amazon continues to destroy more and more working class jobs not to mention the collateral damage from the harm done to malls, I find your views, as well as those of Tom Furphy’s, both narrow and simplistic.

According to a report by PwC, 38% of jobs in the U.S. will be replaced by robots and artificial intelligence over the next 15 years. Blame it on the retailers if that’s your default (and yes, I understand they deserve some of the blame) and yes, I understand there will also be some job creation created by these “advancements”, but this is not the industrial revolution. I would expect intelligent people like you who obviously have an understanding of the world to be insightful enough to see the harm caused by Amazon and what happens when the willing can’t find work.

You're right, this isn't the industrial revolution ... but it is a technology revolution with implications equally as profound. You're also right that for both people and companies, it is a matter of adapt or die.

While I believe that the nation needs a public policy approach that deals with this shift and works with private enterprise to help people and companies make the necessary changes so they can thrive in the new environment, I do not believe that the way forward is to move backward. It never is.

I don't think this makes us narrow or simplistic. We'll have to agree to disagree on this one.




Responding to our ongoing warnings about the potential impact of Lidl in the US, one MNB reader wrote:

There will be lots of hoopla, even media frenzy around Lidl launch. However, let's remember that Aldi and Sav A Lot have been in USA for 40 years, occupying a niche......rarely see an article on their USA market share trends and they have over 3,000 stores!

European retailers always overestimate USA consumers' interest in private label dominated stores. Why buy private label when you can always find your favorite national brand on sale at your local supermarket, club, Walmart, Amazon etc?  Reports suggest that Lidl USA will be a cross between Aldi and Food Lion and that does not excite me. At best, just another store to cherry pick.




I was pretty tough yesterday on the new Pepsi commercial that got pulled almost as fast as it got posted, writing, in part:

The Pepsi ad struck me as a diversity ad thought up and produced by middle-aged white guys.

The Pepsi ad didn't actually stand for anything except more sales. That may have been the worst sin it committed. Except, perhaps, for the use of Kendall Jenner.

I must confess that if I'd never read any of the coverage, I would have had no idea who she was just by watching the commercial. I have no knowledge of or interest in the Jenner-Kardashian universe ... except for having a sense that these people are popular for being notorious. Or maybe notorious for being popular. Beats the hell out of me, though the whole syndrome seems to be indicative of the decline of western culture and civilization.

Somehow suggesting that a child of privilege, self-promotion, media overexposure and reality television has any freakin' ideas what the real world is like, much less any passion for social justice, ought to be a poster child for such things, strikes me as offensive in the extreme ... and it puts the lie to any suggestion that Pepsi is sincere in being serious, or serious about being sincere.

Which prompted MNB reader Christy Meyer to write:

I think you’re taking it a little too far when you said you were offended by the idea that a famous person (albeit, famous for being famous) might have a passion for social justice. Does that make Matt Damon’s passion for clean water any less relevant? Or what about Bono, Leonardo DiCaprio, Sean Penn … Any famous person with a cause? Because Ms. Jenner happens to be a young model with a famous family doesn’t mean she isn’t passionate about social injustice. Maybe she is, maybe she isn’t, but maybe you shouldn’t judge.

While I take your point, I do have two observations.

First of all, judging is kind of what I do for a living.

Second, my problem isn't with famous people. I think it is fine when famous people decide to do the work required to be knowledgeable about issues. What I dislike are dilettantes.




Yesterday, MNB took note of a Wall Street Journal story suggesting that with all the strategic and tactic issues challenging Target, its position on allowing customers and employees to use restrooms corresponding with their gender identities has proven to be nettlesome. "For Target," the story said, "the posting of what was its long-held practice quickly became an expensive and distracting lesson about the perils of combining the web’s megaphone with touchy social issues."

I commented:

I have to be honest here. I have several readers who, every time we have a story about Target's issues, have come back to the bathroom issue and have suggested that I was blind to the impact that it had on the company's business.

If the Journal story is to be believed, they are right and I've been wrong.

I still think that this issue may be more divisive in some regions of the country than others, but maybe it has been a mistake to underestimate how it resonated with some folks. My miscalculation on this can be traced to a certain epistemic closure on my part - I'm a child of the northeast with urban predilections, and I'm happy to own that. But sometimes it means I miss things.

MNB reader Lisa Malmarowski responded:

Hmmm… maybe the bathrooms were an issue, but seriously, Target’s shopping experience has been going down hill and combine that with the ease of shopping online for so many of the things one would go to Target for, and there’s your downward trend. As someone who believes the most important thing about the bathroom is that you wash your hands, I can say their policy didn’t influence me to shop more, despite my ardent belief it was right. Now, make shopping there better, offer the cool brands they used to, and I’d be tempted to shop more often.

As a contrast, look what happened to Penzey’s Spices when they loudly and repeatedly spoke out against the current administration, they lost some customers but gained a lot of new ones. Because they have an amazing product.

PS - It’s never wrong to be on the right side of history.

And another MNB reader wrote:

I got a good chuckle out of your use of the phrase "urban predilections" because only someone with urban predilections would consider using the term urban predilections. I need to start weaving that description into my conversations. Keep up the great work.

I gotta own who and what I am.

Published on: April 7, 2017

The Discovery is an interesting movie that has found a home in a perfect place - Netflix, where it debuted a week ago. When I call it a perfect home, it is because a little movie like this might get lost in theaters, but here it can find an audience in a more leisurely fashion than a theatrical release would allow. And when I say it is an interesting movie, it is because it is the kind of film that requires thought and discussion after you see it.

Directed by Charlie McDowell (who also made The One I Love, which was a movie I loved) from a screenplay he wrote with Justin Lader, The Discovery has at its core a starting premise - Thomas Harbor, a scientist played by Robert Redford (great in a very un-Redford like performance), has found definitive proof of an afterlife. This discovery has had unintended consequences - an enormously high suicide rate, as people decide that they need not make the best of this life since they now know there is another one.

Harbor's son (Jason Segal) visits his father because he's concerned about the impact the research has had and the cult that seems to have grown up around him; on the way he meets a young woman (Rooney Mara) who seems intent on joining the cult, and who is suffering from a tragedy in her life that seems to be pointing her in the direction of suicide.

From this, the movie becomes a character-driven meditation on science vs. faith, and it seems to play out on a variety of levels. Decisions have consequences, choices are not always what they seem, and when the movie ends, there is enough ambiguity to prompt lots of discussion.

I like movies that do this. The canvas is small, but the ideas are big, which is a lot better than when the canvas is big and the ideas are small. "The Discovery" is worth discovering - not always successful, but always thought-provoking.




I've now watched the first two episodes of "Brockmire," the new comedy series on the IFC cable network. Hank Azaria is Jim Brockmire, a major league play-by-play announcer who has a boozy, profane breakdown in the booth during the middle of a game. (He has good reason ... and the actual breakdown is both funny and sad, a line that Azaria walks with great skill.)

Years later, his career in shambles, Brockmire is hired to announce games for the very, very minor league Morristown Frackers; he's a total burnout, having been reduced to calling cockfights in Manila, but he can't shake his passion for baseball, or at least what passes for baseball in Morristown. So he decides to make a last stand.

Let's be clear. "Brockmire" is alternately depraved, profane and subversive, but it also is surprisingly literate and charming. Azaria is fabulous, funny and just pathetic enough to sell the premise; he's never so funny as when he actually is doing the play-by-play of his real life. And Amanda Peet is utterly, raunchily charming - and really funny - as the Frackers owner who cannot help but believe in her team.

I love the laugh-out-loud funny "Brockmire." Can't wait for more episodes.




This week, I had the opportunity to spend a few hours on the campus of the State University of New York at New Paltz, where I participated in a panel discussion for a Food Marketing Summit put on for both students and area food business executives. It was great fun for me, largely because it is fun hanging out with smart, ambitious students. (It also was fun because I was actually on the panel, rather than serving as moderator ... that rarely happens, but it was hugely enjoyable.)

Kudos to Dr. Russell Zwanka, who is driving the development of a food marketing program on campus; he's doing a great job, and getting lots of regional support.

I also got to meet Tommy Keegan, brewmaster at Keegan Ales, a brewery based in New York's Hudson Valley that supplies a variety of beers up and down the east coast. Which is a long way to get to my next point - that, based on his recommendation, I bought and brought home his Hurricane Kitty ale, which is sort of an IPA crossed with an amber ale.

It was delicious, with lots of hops and not much smooth about it - it has a nice edge that was perfect for a rainy, chilly night. It also made me happy to know that Hurricane Kitty was named after Tommy Keegan's grandmother, who used to get frequent speeding tickets from local policemen.

Making it even better - today, apparently, has been christened National Beer Day, commemorating the signing of the Cullen-Harrison Act, which legalized the sale of beer. (Who knew?)

That's my idea of a holiday worth observing.




That's it for this week.

Have a great weekend, and I'll see you Monday.

Sláinte!!