End of Week Natural~Specialty Foods Roundup

News, Information and Analysis:

Important information for specialty foods importers...The issue of food importation has been heating up of late do to a number of products from Asia found to be failing to meet U.S food standards. To address this issue and discuss food importation issues in general, the Association of Food Industries (AFI), a trade association serving the food import trade, will be sponsoring a meeting in Washington, D.C. next month, September 25-26 at the Double Tree Hotel. The two-day meeting will discuss pending legislation, U.S. food standards for imported foods, new and pending regulations, and what importers can do to protect their interests, according to the AFI. Additional information can be found here:http://afi.mytradeassociation.org/

It's all in a name...Save Mart Supermarkets, Inc. Modesto, Calif.., which purchased the Northern California Albertsons banner stores earlier this year from private investment firm Cerberus Capital Management, LP., made a decision last month to re-brand all of it's Albertsons stores in the Bay Area Lucky Foods. The Lucky banner once was a very strong brand in the Bay Area..When then Boise-Idaho Albertsons, Inc. bought American Stores, Inc. in the late 1980's Albertsons changed the Lucky store banners to the Albertsons. name.

The majority of Save Mart's stores are located in the Central Valley, from Stockton in the north to Bakersfield to the south. Prior to buying the Bay Area Albertsons banner stores the chain only had a handful of it's Save Mart banner stores in the Bay Area. As a result, after running the Bay Area Albertsons banner stores for a few months, Save Mart did an analysis and decided to bring back the Lucky banner for these stores. The Lucky name was a part of the equity in the sale of the Albertsons stores to Save Mart.

Not everybody agrees the Lucky name was included in the sale however. Prior to Save Mart buying the over 200 Northern California Albertsons stores, a Bay Area discount grocery chain, Berkeley,Calif-based Grocery Outlet, put the Lucky name on a new store they built in the Bay Area. The store was a different format than Grocery Outlet's traditional ones. The grocer wanted a different name to differentiate it form the other format. Grocery Outlet argues that Albertsons had abandoned the Lucky name and trademark by never using it in the Bay Area after buying Lucky Stores, Inc. from American Stores, Inc. Grocery Outlet also got an initial ok from a local court to use the banner.

Meanwhile Save Mart strongly believes they own the Lucky name along with everything else they paid good money for in the Albertsons Northern California division purchase from investment firm Cerberus. As such Save Mart has started re-branding the Bay Area Albertsons stores with the Lucky banner, including some new design schemes--store colors, graphics and the like--which go with the Lucky store signage.

Meanwhile Grocery Outlet CEO Eric Lindberg says his company will press on with a court case against Save Mart. Lindberg says Grocery Outlet has already won the rights to Lucky corporate product brands like Lady Lee, Harvest Day, and Key Buy, and that the company is in the process of releasing products for their stores under these brands. These brands were very respected by Bay Area consumers for the decades Lucky Stores operated supermarkets in the Bay Area. Lucky Stores, Inc. was the number two market leader in the Bay Area for years, right behind Pleasanton, Calif.-based Safeway Stores, Inc.

Analysis
This current dispute between Grocery Outlet and Save Mart shows the power--or potential power--of a brand. It also shows a brand can be strong enough that companies will feel like it should be brought back and used even though it has been absent from the market place over a decade.

Frankly I'm not sure the Lucky brand has that significant of brand equity at present. Many of today's Bay Area consumers were very young when the Lucky banner was having it's best consumer response. These key consumers are more interested in things like natural foods, specialty items, in-store food-service, and takeout and the like than they are the name of a store. They also have no personal brand identity to the Lucky name.

Many older Bay Area shoppers will likely have a connection to the Lucky brand. However, since the Lucky brand vanished from Bay Area food retailing, there have been many changes in the market. For example, Safeway Stores Inc. has greatly improved their stores and solidified their market share. Costco, Inc. has opened numerous club stores throughout the Bay Area. These stores feature extensive grocery product selections, specialty foods, natural foods, and upscale prepared foods selections. Target has opened large stores in many Bay Area communities which feature large grocery departments. Whole Foods Markets, Inc., which was a minor player in the market as little as 10 years ago, is now a major player with almost 20 supernatural superstores in the Bay Area, and more on the way.

Ordering groceries online also has become popular in the Bay Area. Safeway Stores, Inc. offers online ordering and delivery to a shoppers front door. Albertson's offered the same service on a more limited geographical basis prior to the stores being purchased by Cerebus, and then sold by Cerebus to Save Mart. However that service was eliminated when Cerebus bought the Northern California Albertson's division. This gives Safeway Stores, Inc. a market advantage with the internet savvy Bay Area shoppers as they are the only grocer currently in the market with an online/delivery operation.

The Bay Area market has grown, diversified, differentiated itself in retail grocery marketing terms, and changed considerably since the Lucky banner was in it's glory. As such it will be interesting to observe the level of brand equity the Lucky banner actually has when it is flying again on a significant number of stores. Obviously two grocery companies think it will be significant as one is willing to go to court to get the brand away from the other. Right now for both of these retailers it is all in a name.

More Natural~Specialty news, information and analysis:

Whole Foods probs leak of FTC proprietary information...Yesterday in our mid-week roundup we reported that the Federal Trade Commission (FTC) had released documents which detailed some of Whole Foods' plans, ideas and strategies regarding their buyout of competitor Wild Oats Markets, Inc. Generally such information is considered proprietary to a company--they have to disclose it to the FTC but the FTC is not supposed to publicly release it. As such Whole Foods is launching a probe into why the FTC released this information and related issues. This story from Progressive Grocer describes Whole Foods' probe.
http://www.progressivegrocer.com/progressivegrocer/headlines/article_display.jsp?vnu_content_id=1003626801

Speaking of Whole Foods...The current issue (July-August, 2007) of Stanford Magazine, the Stanford University alumni publication, has a profile of Whole Foods' Co-President Walter Robb. Robb is a Stanford alum. In the profile, titled Green Grocer, Robb talks about his life in the natural foods business, Whole Foods, the current state of the industry, organic and buying local, and other topics. Robb is a natural foods industry veteran and the piece is a good read both from an overall industry perspective and a personal one as well . http://www.stanfordalumni.org/news/magazine/2007/julaug/features/robb.html

Consumer Report.: Personal politics can influence food choices...An estimated 1-3 Americans choose to not eat meat. For many of them the choice has to do primarily with their personal politics. This August 14, 2007 Reuters story by Terri Coles discusses the intersection of personal politics and food choice and how some consumers make it an issue, deal with it, and in other cases balance their personal politics and food choices.
http://news.yahoo.com/s/nm/20070814/hl_nm/humane_farming_dc;_ylt=AtuVgUXzD6X89yNT2lrO13sQ.3QA
Specialty and gourmet foods research...Global Information Inc., a research firm specializing in the food industry, is offering a number of research reports focusing on various aspects of the specialty and gourmet foods industries and individual product categories. Some of their research reports are on specialty and gourmet retailing, product marketing, analysis of various gourmet foods categories, fresh foods, local foods, and much more. Information about who they are and what they offer the industry is available at their website linked below.
http://www.the-infoshop.com/topics/FD30_en.shtml
Canada's ethnic and specialty foods expo...Canada's premier specialty foods show, the Ethnic & Specialty Expo, will be held September 30-October 1, in Toronto. The ethnic & specialty show also features a natural foods pavilion called the "All Things Organic" pavillion. This combination of specialty, ethnic and natural foods under one roof demonstrates the growing convergence of all these sister industries. More information on the show http://www.ats.agr.gc.ca/events/4353_e.htm
Best merchandising ideas 2007...The current issue of Gourmet Retailer Magazine has a feature on what it's editors and writers feel are some of the best specialty and gourmet foods and related products merchandising ideas thus far in 2007. There are numerous merchandising ideas detailed in the feature as well as practical ideas for retailers and others which can be used on a regular basis in-store. The link to the feature is below:
http://www.gourmetretailer.com/gourmetretailer/magazine/article_display.jsp?vnu_content_id=1003622985