Wednesday, September 26, 2007

Thursday Talking Points Memo

The Wal-Mart Environmental Moment: The Green Epiphany of CEO Lee Scott and Wal-Mart


In his column in today's New York Times, "Lead, Follow or Move Aside," Thomas L. Friedman talks about what he calls the "Wal-Mart environmental moment" (there actually are two "environmental moments") for Wal-Mart CEO Lee Scott.

The first "environmental moment" Friedman describes this way: "The first Wal-Mart environmental moment starts with the Ceo (Scott) adopting a green branding strategy as a purely defensive, public relations, marketing move. Then an accident happens--someone in the shipping department takes it seriously and comes up with a new way to package the latest product and saves $100,000. This gets the attention of the CEO, who turns to his P.R. advisor and says 'Well, isn't that interesting? Get me a sustainability expert.' Let's do this some more."

Friedman continues, "The company then hires a sustainability officer (They did), and he starts showing how green design, manufacturing and materials can save money in other areas. Then the really smart CEO's realize they have to become their own CEO--chief energy officer--and they start demanding that energy efficiency become the core to everything the company does, from how it's employees travel to how its products are manufactured."

This is the transition that Lee Scott, Wal-Mart's CEO, has presided over in the last few years, says Friedman in the column. We generally agree with Friedman's thesis on Scott's green transition and that of Wal-Mart.

In the column, Friedman then sites Scott's second "environmental moment," which was told to him by that sustainability officer, Wal-Mart's vice president for sustainability Andrew Rubin. Rubin tells Friedman a story from a trip Scott took in July to Las Vegas to look at stores on a day when the temperature in the desert city was over 100 degrees.

Rubin tells Friedman CEO Scott noticed styrofoam coolers--a Wal-Mart staple--weren't being promoted in the store that day despite the 105 degree temperature outside. "Lee walked into the store and said, 'It's 105 degrees. Why aren't we selling any coolers?' The associates said, 'We don't want to sell styrofoam coolers because of their impact on the environment,' Rubin told Friedman. "So Lee called us afterward and said: 'We're going to have to figure this out.' By that he meant innovation of a different kind of cooler that doesn't come from petroleum-based styrofoam, which is not biodegradable and usually not recycled," Rubin told Friedman.

Talking Points Memo believes this second "environmental moment" was the real epiphany for Scott. He realized Wal-Mart's green program not only had become more than a P.R. and marketing devise to him but also to the retailer's employees--all the way down to store-level. As such we believe Scott realized at that point (the epiphany) there was no turning back. In fact, he realized it was time to move forward even more on the environmental initiative front at Wal-Mart.

Others disagree of course and continue to say Wal-Mart's green strategy remains merely a P.R. and marketing campaign. What has come to be referred to as greenwashing. For example, a coalition of 23 environmental and civic groups recently released a report ("Wal-Mart's Sustainability Initiative: A Civil Society Critique") in which they essentially conclude the chain's environmental sustainability program isn't living up to Scott's commitments and that it is more show than reality. (You can read a summary of their critique and comments here. There's also a link to the full report there.)

We've read the group's report, and although we do think they make some good points, we don't agree with their conclusions vis-a-vis Wal-Mart's environmental seriousness or progress on the chain's green initiative. Perhaps they could move faster, as the report says, but that is arguable by reasonable people. The key point we believe is that Wal-Mart is moving. For example, this week CEO Scott made three important announcements as part of the chain's overall green initiative and program.

The first was that Wal-Mart would begin selling its own private label CFL light bulbs in over 3,000 of its stores. On the face of it this isn't such a big deal. Is it? However, the fact the bulbs will be considerably cheaper at retail then current brand name bulbs--which Wal-Mart already sells--is important since it will allow many middle and lower income consumers to purchase the energy-saving floresent light bulbs. Wal-Mart also is a retail leader and we expect to see other chains follow with their own private label CFL brands, which will over time lower retail prices on the items even more.

The second announcement Wal-Mart made this week was that the chain would begin selling (in May, 2008) only concentrated liquid laundry detergent products in the liquid laundry detergent category in its U.S. stores. (read more here.) We see two important environmental developments this announcement will lead to. First, in the short term it will save water, plastic and cardboard. (Wal-Mart says the initiative will save more than 400 million gallons of water, 95 million pounds of plastic and 125 million pounds of cardboard. Not bad. The chain says they obtained these estimates with the help of an independent source. The statistics haven't been disputed as of yet.)

Far more important though is that because Wal-Mart is the largest retailer in the world--and sets the pace with consumer packaged goods supplier companies--this initiative will serve as a shot fired across the environmental bow in terms of sustainability by manufacturers and other retailers. Imagine if 80% of U.S. (not to mention gloabal) retailers adopted this initiative. Then multiply the amount of total retail sales in the laundry detergent category this 80% represents and pretty soon we have saved a significant amount of water, plastic and cardboard use. Now that Wal-Mart has made this initiative part of its sustainability program we believe the 80% will follow--and soon.

Wal-Mart's third environmental announcement this week--and by far its most significant--is that the retailer is partnering with the non-profit Carbon Disclosure Project (CDP) and will measure its own and its suppliers carbon emissions. Wal-Mart and the CDP will begin by measuring seven product categories--DVD's, toothpaste, milk, soap, beer, soda and vacuum cleaners. From there they said they will move on to additional product categories. (More on the Wal-Mart/CDP partnership here.)

Regardless of what the critics say, this not only is a major global environmental initiative for Wal-Mart but, for developed societies and nations as well. In fact in his column today Friedman suggests China should use the Wal-Mart/CDP program as a model to begin doing something about the rapidly developing country's series environmental issues.

We think the U.S. and other countries should follow suit, not only China. The fact is Wal-Mart's partnership is more aggressive in the carbon emission's arena than that of the U.S. federal government and most other western countries with the exception of the United Kingdom.

The state of California also recently passed a comprehensive law which involves carbon measurement. Additionally, a few other states in the U.S. are currently considering similar initiatives. Retail chain Tesco in the UK, and to a slightly smaller degree Mark's & Spencer, are the only other two retailers in the world presently embarking on carbon measurement programs equivelent to Wal-Mart's. But we believe others (and not just retailers) will follow soon on the heels of Wal-Mart's announcement.

Talking Points Memo sees this last Wal-Mart initiative--carbon emissions measurement--as a key point or sea change in global business behavior viv-a-vis the environment. It's critics will disagree with us, perhaps even call us bias--which we aren't. They also might say it's too little at too slow a pace.

We aren't alone in this assessment either. On the same day he made the announcement of the carbon measuring partnership with CDP, Wal-Mart's CEO Scott shared a stage in New York City on the opening day of the Clinton Global Initiative conference with former U.S. President Bill Clinton, Vice President Al Gore, President Karzai of Afghanistan, the President of the Philippines, African Archbishop Desmond Tutu and Robert Zoellick, president of the World Bank. The esteemed group's topic of discussion was titled "The Need For Global Action."

The global environment was front and center during the discussion. President Clinton said he invited Scott because he believes Wal-Mart is "the eco-leader" in the global business community in terms of environmental issues and initiatives. At one point in the discussion Clinton suggested to the World Bank's Zoellick that Wal-Mart's environmental practices could be used by the international bank as a template for developing countries.

We believe Scott has had his green epiphany--perhaps on that sweltering day in the Las Vegas Wal-Mart when a handful of associates told the big boss they didn't want to sell styrofoam coolers because they didn't like the negative environmental impacts the stuff made. A wise man once said about leadership--either lead, follow or get out of the way. It's too late for Wal-Mart to follow, and they aren't about to get out of the way. Rather, the world's largest retailer has the opportunity to also be the world's corporate leader when it comes to positive environmental behavior and initiatives.

So far we believe the retailer is pretty much on track--especially after this week. We also hope this week's announcements weren't the exception but rather are a harbinger for more to come. We also believe other industry companies are going to follow the carbon measurement program--and do some leading themselves--like Safeway Stores is doing with solar power and Marks & Spencer is doing in Scotland with its new eco-stores. However, those that choose to merely get out of the way when it comes to environmental initiatives are likely to find themselves with a shrinking bottom line. Green leadership is coming to mean more than just environmental leadership--it's also increasingly becoming the color of money, profits and jobs.







Mid-Week Roundup

News, Information and Ideas You Can Use

Locally Grown Foods

In the spirit of the "locally grown" food movement a new film called Tableland is premiering on Monday, October 1 in New York City. Tableland, made by award-winning Canadian director Greg Noble, describes and talks with farmers who operate local, small-scale farms. The film also features chiefs and retailers who support these farmers and sell their crops, and consumers who eat, enjoy and advocate for seasonal, fresh foods produced by small growers throughout North America.

The film examines four main issues: sustainability, economics/marketing, health and taste education, and eating locally and seasonally. Noble says these issues are discussed intensely and often humorously by the farmers, chiefs and others in the film. "They are passionate people committed to their cause and bound by principles," says Noble.

The October 1 NYC premiere is a 7:00 p.m. at the Anthology Film Archives located on 32 Second Avenue (at Second Street) in Manhattan. Following the NYC premiere the film will be shown in cities throughout the U.S. and Canada. You can learn more about the film and watch an online video trailer here.

Do American Consumers Spend Too Little Money On Food?

Speaking of buying locally produced fresh foods, Barb Stuckey, executive vice president for the food industry product development firm Mattson in Foster City California, says American consumers actually spend too little money for good food and as a result are eating less-healthy foods. Stuckey says American's have their food priorities all wrong, and even if the cost of fresh, healthier foods costs a bit more it's still an overall bargain to buy and eat them in the long run. She also discusses her work in food product development for U.S. food companies and how often their priorities and direction to her firm to produce fresh, upscale quality foods doesn't mesh with the cost structures they give Mattson. Read her piece here.

Stuckey also recently interviewed Michael Pollan, author of the popular book on food trends and the food industry called the "Omnivor's Dilemma." The two discuss this dilemma and more in the interview. You can listen to a podcast of the 30 minute interview here. You also can read a profile about Mattson, the innovative food and beverage product development firm, in today's New York Times business section.

Bringing the Farm to the Kids

A new PC-based game gives children (especially urban ones) a feeling for what it's like to live and work on a farm. The simulation game is called Alice Greenfingers and can be downloaded from Yahoo Games here. The full simulation costs $19.99 but Yahoo provides an extensive FREE trail at the site linked. By playing the simulation kids can learn how to grow, water and harvest a wide-variety of crops as well as how to raise a barnyard full of animals. Once they learn how to produce the crops and livestock the game then shows them how to bring their bounty to the town market and price it for sale to shoppers. The simulation is realistic yet simple and fun for kids and will leave them with a solid understanding of what it takes to produce and sell the foods most of them are only familiar with from the supermarket.

Home Refrigerator Market Research

We've found what we think is one of the more interesting, as well as voyeuristic, websites on the internet. The site is called Fridgewatcher.com and it features pictures, sent in by readers, of the content of their home refrigerators. The pictures are detailed and complete. Some home refrigerators are full of junk-type foods others are filled with natural, organic and specialty foods, with most a mix containing a little of everything.

Anthoropologists have a method of studying people and societies called "Ethnographic" research. Essentially is means living with and closely observing people and societies in order to learn about their habits, social norms and the like. You can take a peek into the refrigerators of folks like Sabine in the Netherlands (she likes champagne and natural foods), college student Lindsay in Louisiana (she has lots of student convenience foods) and those of many others and do your own ethnographic consumer research (its fun as well) and see what people keep in their refrigerators. Click here for Fridgewatcher.com.

Industry News Briefing

Junk Foods or Not? New U.S. Nutritional Laws On the Way

U.S. Senator Tom Harkin (D-Iowa) has authored new federal legislation that would limit the sale of certain high-calorie beverages, candy and snacks in America's schools. The bill would have the government set new nutritional standards for the foods and drinks sell to students outside cafeterias. The legislation if passed would effect not just soft drink companies but new- age and vitamin water-type bottlers as well. It also will have an effect on candy and snack food manufactures. The problem with the legislation thus far is what the new nutritional standards will be. And that's a subject of serious debate involving the Senate, the food and beverage industry, consumer groups, academics and others. Read more here.

The Anatomy of the Hostess Twinkie

Speaking of "junk foods," do you know what a Hostess Twinkie has in common with sheetrock, hair shampoo, laundry detergent and rocket fuel? Give up? All five contain cellulose gum, calcium sulfate and polysorbate 60 as active ingredients. Still hungry? These are only three of the 39 ingredients that make up a Twinkie. All but one of those ingredients is processed, according to Steve Ettlinger, who spent five years tracking down the source of every ingredient in a Twinkie for his book Twinkie Deconstructed.

in the book Ettlinger details where each of the 39 ingredients come from as well as discussing the history and other aspects of this favorite junk food. Popular you say? Yes, over 500 million Hostess Twinkies are sold each year. There also are numerous websites and blogs devoted to the worship of the golden, cream-filled cake. Well, about the cream filling. It's actually not cream. "There's no real cream in the middle," Ettlinger says. "It's almost all Crisco. Ettlinger also found that many of the Twinkie's ingredients come from petroleum, and at least five come from rocks he says. "The vitamins, artificial flavors and colorings all come from petroleum and phosphates from limestone make Twinkies light and airy," he says.

For it's part Hostess, maker of Twinkies, says merely "Deconstructing the Twinkie is like trying to deconstruct the universe. We think the millions of people would agree that Twinkies just taste great." Somehow this makes me picture astrophysicists Stephen Hocking sitting in his chair, eating a Twinkie as he deconstructs the universe.

Food Giant General Mills Has Soul (Food)

General Mill's Betty Crocker icon is turning her attention to something new for the food giant, soul food. Using Betty as the spokesperson the food company is launching a major recipe initiative targeted to African American and other consumers to help them prepare authentic soul food at home. GM has created what they call the "Supper Club" as part of the promotion and has launched a Supper Club website called ServingUpSoul.com where consumers can get tips, advice and recipes for easy soul food cooking and entertaining from popular celebrity hostess B. Smith.

General Mills commissioned a survey of 504 African American women that found 70% want to play hostess but are afraid to because they lack confidence in the kitchen. This finding led to the creation of the promotion, the relationship with B. Smith, the website and recipe program. As part of the overall promotion GM is going to hold a series of "Supper Clubs" throughout the U.S. These will be real gatherings where woman can meet with chefs, professional hostesses and others and discuss and learn about soul food cooking and entertaining. The first Supper Clubs begin this fall in Baltimore, Maryland and Birmingham, Alabama.

Pomegranate-Juice Inspires New Alcohol Beverage Products

Researchers have found the pomegranate to be a rich source of antioxidants and believe the fruit may help destroy cancer cells, help with kidney disease and offer other health benefits. This research has created a market for such products as POM Wonderful pomegranate juice and other brands. Prior to just a couple years ago pomegranate juice was a rarity in most parts of the world. Now a number of companies are introducing a variety of beverages made with pomegranate juice. Many of these new products contain alcohol. The popular pomegranate juice-based Mojito cocktail, served in bars and restaurants around the world, also is an inspiration for these new juice and booze-based beverage products. Read more here.

Better-For-You Confections Steal the Show

Healthier, all natural, organic and fortified confection products were the star of the just-concluded All Candy Expo show in Pittsburgh, Pennsylvania. Premium chocolate products fortified with everything from vitamins, nutritional supplements and coffee and chai tea were featured at the show, along with a slew of organic and premium gourmet dark chocolate items. Not just smaller natural and artisan confections companies are getting into the upscale, healthy chocolate market either. Big players like Mars and Hershey also introduced all-natural, fortified and premium chocolate lines at the show. You can read all about the confection industry and it's going upscale and healthy here.

Fine Foods: Aussie U.S. Food Invasion

Peter Brennan, the Washington, D.C.-based food and beverage specialist for Austrade, the Australian Trade Commission, says he is aggressively encouraging Aussie food and beverage producers (especially natural and specialty foods purveyors) to get more active in exporting products to the U.S. Brennan is in Sydney, Australia this week attending the Fine Foods Australia event and show, the major fine foods convention in that country, and says he is encouraging all attending to get more involved in the (more than trillion dollars overall) U.S. food and beverage market. "By tapping into the world's largest importer (the U.S.) of processed food the local Australian sector can generate more business and income by exporting their products to the U.S. which imports about 11% of its consumption needs," says Brennan. "The U.S. natural and organic food market is estimated to be in excess of $10 billion U.S. a year." Brennan wants Australian natural and specialty foods companies to participate more in U.S. trade shows like the three annual Fancy Food shows held in New York, Chicago and San Francisco.

Retail News Briefs

Tesco to Expand Fresh & Easy Stores into Northern CA

Tesco, which has been leaving the guessing about its full plans to publications like Natural~Specialty Foods Memo (NSFM), has announced it will expand from its current Southern California, Arizona and Nevada market focus into the San Francisco Bay Area and elsewhere in Northern California possibly as early as next year. Tesco also detailed the precise locations of its 48 stores currently under construction and planning in Southern California.

The majority of these stores will be located in the fast growing Inland Empire region of Southern California. The chain confirmed its average Fresh & Easy store size will be about 10,000 square-feet, which most observers have been quoting but until wasn't confirmed by Tesco. The first stores are scheduled to open in November, with about 30 more opening in February, 2008. Tesco says an additional 100 stores are in the pipeline and scheduled to be opened in the next 2-3 years.

Tesco also gave details about its large food processing and distribution facility in Riverside, California. The food kitchen there will prepare fresh and healthy private label prepared foods for the stores. Tesco says it expects to employ nearly 2,000 people at the distribution facility in the next five years. The retailer also said the initial 48 stores will employ about 1,400 people. the fresh, prepared foods will be made without any added trans-fats, artificial colors or flavorings, said Tesco Fresh & Easy chief commercial officer John Burry. The prepared foods also will be made with a restricted amount of preservatives Burry said.

Private-label prepared foods will be the centerpiece for the stores but they also will merchandise and extensive selection of name brand conventional, specialty, natural and organic groceries, beverages and perishable goods across all categories. Burry also said with Tesco's distribution facility and offices in Southern California the retailer plans to source as many products as it can from local producers and suppliers.

The announcement of the expansion into Northern California perhaps as early as next year means Tesco will become a major retailing presence in the golden state with it's Fresh & Easy stores. This will add some competitive pressure on both supermarket retailers and convenience store operations in the state. In fact, Steve Burd, CEO of Pleasanton California-based Safeway Stores, Inc. has already said (as we have reported) that the chain is researching the market for the possible introduction of it's own Fresh & Easy-like upscale convenience-style retail format. Safeway is the food retailing market share leader in California. It operates Safeway banner stores in Northern and Central California and the Vons banner in Southern California.

First-Of-A-Kind Whole Foods Store Opens Today

As we reported last week, Whole Foods Market, Inc.'s new "food hall" design store is having it's grand opening today in Oakland, California. See our previous story here. The store's design is a first-of-a-kind for Whole Foods. It's also different than nearly every other supermarket design in the U.S. the store, inspired by food halls in Europe, has a unique U-shaped design. All of the 55,000 square-foot store's perishable departments are grouped together in the U in the center of the store. The grocery sections are around the perimeter. Shoppers excess the store departments via a loop, which takes then from one area to the next. Large floor displays of fresh produce, wine and cheese pull shoppers farther in to the core of the store.

The new Oakland store has a "Market Bistro" restaurant located front and center. It has large windows looking out on Bay Place which is the new downtown Oakland development the store is located in. This is the second "Market Bistro" chain-wide for Whole Foods. The first one is in its new San Francisco store in the Potrero Hill neighborhood. That store opened last week. The Oakland "Market Bistro" features food entrees from around the world, keeping with the stores international food hall theme, as well as soups, salads, rotisserie items, sandwiches and a wood-fired pizza oven for fresh pizza's made in house.

Other features of this first-of-a-kind food hall store for Whole Foods include a large full-service bakery, a fresh juice bar, a coffee bar/cafe, a live shellfish display area, aged prime meats, upscale chocolates produced by local Bay Area artisan confectioners, and a Gelato stand with Gelato made locally by a company called Galeteria Naia.

The food hall format store is located in a former car dealership building which Whole Foods completely renovated to look like a European food hall yet fit into its urban location in Downtown Oakland. The area is increasingly being gentrified and is filled with office workers during the day. New urban housing developments also have been built in the area making it an increasingly popular residential area in the city as well. You can read more about the details of the new Oakland Whole Foods store here along with details of some promotions and community service activities the grocer is doing as part of the store's grand opening.

Promotions: Balducci's Goes Greek

New York City-based Balducci's, an operator of ten gourmet grocery stores in New York, Connecticut, Maryland, Washington, D.C. and Virgina, is going Greek with a Greek foods and wine promotion at its Bethesda, Maryland store beginning on September 29 and running through October 21. The event will run all day every Saturday for the next four weeks. The gourmet retailer will feature a wide variety of foods and beverages from greece, ranging from grocery items to cheeses, meats, bakery goods and wines. Among the grocery items will be imported gourmet preserves, honeys, condiments, olive oils, flavored vinegars and more. Greek perishable items include the upscale Greek Table line of prepared foods, which are making their debut during the promotion at all Balducci stores in Maryland, D.C. and Virginia. Balducci chefs also are cooking up homemade Greek dishes for sale in-store during the event. Each Saturday the store will feature tastings of Greek foods, cooking demonstrations by guest chiefs and promotions on scores of Greek items. The retailer also is having a drawing for a free trip to Greece as part of the promotion.

Promotions: CP World Market Celebrates Oktoberfest

Specialty foods and beverages retailer Cost-Plus World Market is featuring an Oktoberfest German food and beverage promotion in all of its 300 stores nationally in the U.S. The specialty retailer, which sells products such as furniture, kitchenware, household goods, food, beverages, coffees and other goods imported from throughout the world, is featuring a large selection of imported German foods, beers, wines and non-alcholic beverages in its large international specialty foods and beverages departments. The chain also featured the German foods and drinks in its weekly advertising circular which it direct-mailed to households in all the regions it has stores. Among the imported German foods and beverages featured in the promotion include condiments, preserves, sausages, bread mixes, cookies, confections, mineral waters, wines and beers packaged in special beer keg-like cans, which is an Oktoberfest tradition in Germany.

German Oktoberfest is celebrated throughout Europe, the U.S. and other countries. It officially began on September 22 and runs until October 7 but is generally celebrated throughout October in most of the Western world. The mayor of Munich, Germany officially kicked-off the celebration on September 22 by hammering a tap into Oktoberfest's first barrel of beer in Munich to announce the beginning of the near month long beer drinking and eating festival. Retailers like Cost-Plus World Market and others, restuarants and pubs, celebrate the early fall event with promotions and celebrations. Beer companies and distributors and specialty foods importers and distributors offer retailers and bars numerous Oktoberfest-themed promotional marterials as does the German Agricultural Marketing Board in the U.S. Last year the marketing board funded Oktoberfest retail promotions in 26 U.S. states, Canada and with online retailers. The group has retail promotions lined up and going on for this year as well.

Anugu International Trade Fair Coming Up

October, 2007 also brings the world's largest international trade show. The Anugu International Trade Fair runs from October 13-17 in Cologne, Germany. The trade fair is attended by food and beverage industry professionals from throughout the world. In 2005 6,294 suppliers and 158,817 visitors from 156 countries attended Anuga, which is held every other year. The theme of this year's trade fair is "Taste The Future." More information about Anugu, which is for food and beverage industry professionals only, can be found here.

Wal-Mart to Invest $100 Million in Argentina

A representative of Wal-Mart's Agentina retail unit announced today at the United Nations in New York City the company plans to invest $100 Million this year in that country to build new stores. That comes on the heels of the $150 million Wal-Mart spent in Argentina last year. Read more in this report by Reuters. The announcement was made at U.N headquarters as the President of Argentina, Nestor kirchner, was there attending the annual U.N. General Assembly meeting along with nearly all of the world's leaders.

Wal-Mart Gets Presidential Endorsement For Green Efforts

Former U.S. President Bill Clinton highlighted the efforts of Wal-Mart today at the opening day of his annual Clinton Global Initiatives conference in New York City. Clinton began the conference last year, timing it to occur during the United Nation's annual General Assembly, a time when most of the world's leaders are at the U.N. building in NYC. At Clinton's side today at his global conference was Wal-Mart CEO Lee Scott. Clinton said "if the company generates wealth and jobs while reducing its carbon footprint, then other businesses will follow suit." The former two-term U.S. President, who's wife Senator Hillary Clinton is running for the Democratic Party nomination for president, also urged the World Bank to work with and encourage developing countries to mimic Wal-Mart's environmental practices. Read more about Wal-Mart at the conference today here.

New Hispanic Supermarket Goes Upscale

Mike Pina and his two brothers, Oscar and Armando, are ready to take on all comers with their new, upscale Hispanic Supermarket which just opened in East El Paso, Texas. The Pina brothers aren't afraid of the "big boys" either. There's a Wal-Mart Supercenter and a SuperTarget food and general merchandise mega-store right nearby the Pina's 40,000 square-foot upscale Vista Central Market. You can read more here about the new store's (they currently have three) upscale features and how the family-owned independent ethnic grocer plans to be the Hispanic customer retail leader in the area with their new store.

Big Screen TV's, In-Store TV Network Hitting Supermarkets

Virginia's Ukrop's Supermarkets is the latest food retailer to sign up with SignStory Networks for its in-store Digital television network. SignStory places big-screen digital TV's in the stores and through its relationship with CBS Television and Meredeth Publishing provides an in-store TV network where shoppers can watch famous chefs cook, get recipe ideas and tips and watch food and lifestyle-oriented programs produced by CBS and Meredith Publishing. Advertisements also are shown between programs. Other retailers currently participating in the in-store media program include Pathmark, Save Mart Supermarkets, Price Shopper and other regional chains. Read more here. Ukrops operates the upscale Joe's Market, a regional specialty and natural foods retail format, and plans to have programing in those stores geared to its upscale demographic.

Vancouver B.C. Gourmet Grocer On an Upscale Roll

Vancouver, B.C.-based gourmet grocer Urban Fare is opening its second upscale grocery in Vancouver this Sunday. The specialty retailer not only merchandises a large selection of specialty gourmet foods, beverages and prepared foods but also offers a taste of the exotic such as fresh Texas rattlesnake meat and fresh poilane bread ($100 per loaf) air-shipped from France daily. Exotics are the exception rather than the norm though. The retailer's focus is specialty and gourmet foods and beverages from all over the world at fairly resonable prices, in addition to its own signature prepared foods, baked goods and fresh items. Urban Fare is rapidly expanded its gourmet concept. In addition to the 21, 500 square-foot new store opening Sunday in Vancouver, the upscale grocer plans to open at least four more stores in the international city in the next 3-4 years.

Mid-Week Roundup Ender

The acai berry is hot. the Brazilian berry, which is full of omega fatty acid and nature-blessed with antioxidant-rich nutritional properties, has become the latest trend in the functional foods category and is finding its place in numerous food and beverage products such as smoothies, teas, juices, muffin mixes and more.

We even reported last week about two new interesting beverages based on the wonder-berry, one a Mojito-like cocktail alcoholic beverage which was served backstage at last weeks Emmy Awards in Hollywood, and the other a juice called MonaVia which is endorsed by such luminaries as Viacom CEO Sumner Redstone as the "healthiest beverage he has ever drank." The Sydney Morning Herald (Australia) newspaper (9-25-2007) has a well-written feature article describing this trendy berry, it's nutritional attributes, and how its currently being used in foods and beverages. You can read the story here.

Monday, September 24, 2007

Monday Morning Java

News, Facts, Fun and Information to Start Your Week Off With a Jolt

Super Donuts and NFL-Themed Milk
Pittsburgh, Pennsylvania-based Super R Foods, owned by former NFL football great Franco Harris, and Kroger Co. are introducing Super Donuts and Super Buns to Kroger stores this week just in time for the start of the NFL football season. Super Donuts and Buns are a new line of nutritionally fortified baked goods marketed by Harris' baking company. The company has been selling them to schools, health care institutions and the military since 1990 but never at retail until now. The super baked goods will be sold exclusively by Kroger, beginning first in the chain's Ohio and Pennsylvania stores.

Franco Harris was a star running back for the Pittsburgh Steelers. The products are the only nutritionally fortified baked goods certified by the USDA to be sold in U.S. school districts. The Super Donuts and Buns are frozen and come in 12oz packages. The packages sold in the Ohio stores will feature a picture of Cincinnati Bengal's Safety Madieu Williams. Williams will be blitzing Ohio Kroger stores making personal appearances tied-in with the super baked goods introduction. The packages sold in Pennsylvania will feature the likenesses of famed Penn State coach Joe Paterno and Pittsburgh Steelers reciever Hines Word for a local marketing angle.

Not to be outdone in the NFL theme and marketing front, the Midwest Dairy Association, based in Overland, Kansas, is rolling out a line of NFL-themed milk products called Gridiron brand. The milk is packaged in 8oz plastic resealable containers and features all 32 NFL team marks/logos as well as themes from NFLRush.com, the NFL's interactive website for kids. Omaha, Nebraska-based Roberts Dairy Co. is handling the distribution of the Gridiron line to retail food stores and schools.

The NFL-inspired milk line includes regular milk , chocolate and strawberry flavors in fat-free, 1 %, 2% and regular butter fat gradations. The milk is being marketed to food retailers throughout the Midwest. The Midwest Dairy Association represents dairy farmers in Kansas, Nebraska, the Dakotas, Iowa, Arkansas, Illinois, Missouri and eastern Oklahoma.

The NFL season got underway in full earnest on television yesterday. Does anyone else see a cross-promotion with the Super Donuts and Buns and NFL Gridiron Milk? We think the Midwest Dairy Association needs to call Franco Harris and Kroger, or vice-versa.

Monday Morning News Briefs

Specialty Soda Beverage Sales Booming

Coca Cola and Pepsico still control 80% of the carbonated soda pop market. It's a huge market however and as such the remaining 20% makes for serious business. It's within this 20% where more and more consumers are looking for alternatives to the basic cola product. And an increasing number of specialty or new age beverage companies (and the big guys too) are marketing a vast array of soda options to these consumers. Every thing from exotic flavors to all natural and organic to retro varieties from decades past. And retailers are making more room on their shelves for these beverage products as they see the demand growing for them. You can read more about the exploding specialty soda pop market in this article from today's Chicago Tribune here.

Super Chilled Coca Cola

Smaller, specialty beverage companies may be nipping at Coca Cola's marketing heels but the beverage giant is far from being asleep. Coca Cola has come up with an innovative new way to keep their sodas in the can ice cold. The technology is called "super chilled" and it makes ice cubes right in the can. Read more here.

A Devil of a Micro-Brew

Canada's Great Lakes Brewing company is having a Devil's good time with its latest specialty beer--Devil's brand Pale Ale. The new brew completes the Satanic theme by being packaged in a black can which features a 666 road sign on it and the tag line..."The Devil Made Me Brew It." The company promises they aren't influenced on a day to day basis by the forces of dark. And in fact they do have a number of other brands, none of which mention Satin either in name or even in passing. Read more here.

Is There a Market For Pizza and Wine?

Speaking of beer, it's been the favorite companion to millions of consumers internationally when it comes time to choose a beverage to have with pizza. In fact the words "pizza and beer" almost go together as one. However, Ohio-based JZ wine Company believes pizza and wine is a pretty good choice as well (as do many French and Italians) and the company is introducing the Pizza Vino wine brand. The new pizza-friendly wine line consists of three single grape varietals (Pinot Grigio, Pinot Noir and Cabernet Sauvignon. The bottle labels have humerous and catchy phrases that reinforce the idea of pairing the wines with pizza.

An Austrailia winery also is joining the "pizza and wine" marketing movement. The australia Pizza Wine Company has introduced Pizza Red, a red wine the company says is the perfect companion to pizza. You can read more about both wine companies and their marketing efforts to make wine at least a part-time consumer companion to pizza here.

Consumer Research Briefs

The Supermarket as the Medium and the Message

The retail store may some day soon replace television and other media as the primary place for advertising by food and grocery manufacturers and marketers. A research project being conducted by Proctor & Gamble, 39 other companies and Kroger CO. supermarkets could lead the way. Over the past five months the companies have placed infared sensors throughout supermarket aisles in an attempt to track and document how likely shoppers are to buy packaged foods, health and beauty aids and other grocery products influenced by in-store media messages. The results could not only effect where and how companies advertise but also how stores are laid out and designed. Read more about the fasinating research and its possible marketing implications here.

Ethnic Marketing: Hispanic Influence

Culture and ethnicity goes far beyond our personal lives. Our ethnic background and cultural traditions not only represent who we are but we influence others based on our nationality, where we were born and the cultural traits and behaviors we carry from our ethnic backgrounds. The recently just released Yankolovich Monitor Multicultural Marketing Study points to these fact calling them the "commercialization of culture." For example the study shows that in 2004 34% of non-Hispanic whites thought Hispanics were influencing everyone's lifestyle. Today, just three years later in 2007, the study shows that number has increased considerably to 44%. These "influencers" also increase consumer behavior dramatically the study says. You can read a full summary of this important annual study here. This is the fourth year Yankolovich has been studying this phenomenon.

U.S. Chocolate Market Growing Upscale and Natural

With U.S. total sales of $16 billion dollars this year, the chocolate market is predicted to grow by $2 billion in the next five years, for total sales of $18 billion by 2011. This rapid growth will be primarily increased consumer demand for premium and all natural, organic and Fair Trade chocolate and increased merchandising of these products across all retail channels, according to a new report from market research firm Packaged Facts. You can read a complete summary of this growing chocolate market, fueled by premium and natural confection products here.

Premium Chocolate Maker Lindt Sweet Record Profits

One of the largest premium chocolate and confections companies in the world, Lindt & Sprungli, is cashing in on the growing demand for premium chocolate products in the U.S. and elsewhere. The confections company recently reported sweet profit growth for it's first half 2007 sales. The company reported its U.S. sales were particularly strong and said that although premium chocolate sales worlwide are flat they continue to grow in the U.S. You can read more here.

Manufacturer Says New Chocolate Bar Heart-Healthy

In a bid to take advantage of the growing market for fortified chocolates, Innovative Life Sciences Co. has developed and introduced the "The Heart Chocolate," which is claims benefits people with Type-2 diabetes or high cholestrol. The chocolate bar contains a combination of cinnamon and bitter melon (the fortification) which the company claims can lower blood sugar and lower cholesterol. You can read more here.

Food Retailing Briefs

Research Report: Retailers Ready For Trade Promo Changes

This year retail trade promotion spending it at an all-time high after beginning to drop in 2005. However according to a new research study from Cannondale Associates, Inc. This isn't such great news. Rather the research report says manufacturers and marketers tend to use trade promotion spending to achieve short term sales gains rather than part of an overall marketing program--and this is frustrating retailers. You can read a summary of this new study here.

Wal-Mart Expanding Green Goals to Suppliers

Wal-Mart announced today its launching a detailed program and will set out how it plans to cut its carbon emmissions chain-wide. The retailer also plans on including its numerous suppliers in this green process. The mega-retailer will ask many of its suppliers to detail to Wal-Mart how much and what types of carbon is used in producing the companies products for sale at Wal-Mart stores. The retailer will begin this as a pilot program called the carbon disclosure project but grow it over time adding more suppliers. This article from today's Financial Times describes Wal-Mart's announcement and plans regarding their own carbon emmissions as well as the supplier pilot program.

C-Stores Include Going Upscale in Expansion Plans

With supermarkets elbowing in on the traditional C-store features like gas stations, Convenience store operators are looking for ways to create new categories for their stores as a way to be able to expand and grow. Two such positioning points for C-store industry leaders Wawa Markets and Sheetz are to create more upscale looking stores that feature more specialty product offerings and fresh prepared foods. Wawa already is the leader in upscale C-store retailing and Sheetz isn't far behind. And of course there's the multi-store gorilla Tesco lurking in the wings with its Fresh & Easy convenience-style format ready to begin operating in the U.S. in November. You can read what these C-store retailers are doing in the areas described above as well in other areas to expand and grow their businesses here.

Cape Cod Independent Grocer to Turn Waste to Energy

Ring Brothers Marketplace, an independent grocer on Cape Cod, has recieved a $195,00 grant from a group called the Massachusetts Technology Collaborative's renewable Energy Trust for an energy system that breaks down organic wastes using anaerobic digestive technology. The new system creates renewable energy to power the store by using waste as its fuel. The system also will allow the independent retailer to sell the renewable power to the local power company when production exceeds the store needs at any given time. Read more here

Monday Morning Feature

Is Ecological Farming the Future Ag Paradigm in the U.S.?

Jim Cochran, owner of the Swanton Organic Berry Farm near Santa Cruz in coastal Northern California, says today's traditional, coventional farmers--those who take government subsidies and use chemicals in growing their crops--are going the way of General Motors and Ford. Cochran says Organic and sustainable farming are the future paradigms in American agriculture, and like Toyota and Honda passed up GM and Ford without the auto giants even realizing what happened, ecological agricuture will do the same to conventional, subsidized farming, and those still practicing it haven't realized it yet. But it's not too late.

"It's parallel to the sea change that took place in Detriot in the 1970's," Cochran told the San Francisco Chronicle's Carolyn Lochhead for a series of articles she wrote in yesterday's paper about federal farm subsidies, conventional agriculture, and ecological and organic farming. "They laughed at Toyota in the same way the people in (Washington) D.C. laugh at organics," Cochran says. "And the same way they laughed at the first Whole Foods store. And they are about to get the daylights knocked out of them."

In her main Sunday piece here Lochhead discusses the U.S. farm subsidy payment system. Among numerous other points, She sights the fact that even though California is the nation's largest agricultural producing state by a huge measure, it ranks near the bottom in recieving federal farm subsidy payments. This is because California produces a diverse array of fresh food crops (including organic) rather than focusing just on commodities like wheat, corn and cotton which are the top three crops the U.S. government pays out for in cash assistance to farmers.

Lochhead also has a couple companion pieces to the main feature linked above. The story featuring Jim Cochran quoted below if here. A second companion piece here piece talks about cotton subsidies in the U.S. and how cotton farmers get paid for what they don't grow as well as grow. Both of these pieces go with the main feature. The theme of the special report is the status of federal farm subsidies and whether or not they have outlived their usefulness in light of the changes in modern farming, particularly the growing movement towards sustainable and organic farming methods, food production and retailing. The report is excellent and we suggest it as important reading for our readers regardless of what segment of the food industry you are involved in.

























Saturday, September 22, 2007

Retail Whispers

Heard on the Street
Tesco Fresh & Easy Store Watch:

Los Angeles: Our friends at the "Curbed LA" Blog received an email and pictures over the weekend from a reader in Los Angeles who spotted the Fresh & Easy sign lights on (see picture at left) at the near-completed new store in the Glassel Park area of Los Angeles. The LA resident who took the picture at left also said it looks like the store in very near completion as workers were doing what looked like touch-up and clean-up work around the store as well as testing the sign lighting. Could this be the first Fresh & Easy store to open? Tesco has said it's possible the first store could open in October even though November is their target month. October is only nine says away and the lights are working at the Glassel park store. Could it be the first Fresh & Easy to open its doors to shoppers? We'll keep you posted.

Brooklyn, New York: Specialty grocer Trader Joe's is hoping to be able to convert the ornate former Independence Savings Bank building( pictured below left) on the corner of Court Street and Atlantic Avenue in Brooklyn into a new TJ's store. There's been no official announcement as of yet from the grocer or anybody else involved but Retail Whispers' commercial real estate sources tell us TJ's is in the process of buying the currently vacant bank building (pictured at left).

The site is located close to three affluent Brooklyn neighborhoods--Brooklyn Heights, Cobble Hill and Boerum--which makes the location prime for Trader Joe's merchandising style and product mix. It might not be an easy deal for the specialty grocer though as there are a few issues surrounding the site such as potential historic preservation problems, parking issues and a couple others. However many neighborhood residents desire a specialty store in the area as do a number of city officials and planners. The old back should make an interesting venue for the specialty foods emporium. We doubt if TJ's will need to use the bank's vault for its popular $1.99 "Two Buck Chuck" wines however. Perhaps for the the truffles and rare caviar though.

Albany, New York: While Trader Joe's might have some potential problems in locating a store in the Brooklyn bank site, it should be clear sailing for the grocer, if it wants to build a store in upstate Albany. A number of Albany residents have started a letter writing campaign urging California-based TJ's to locate a store in their town or at least nearby, reports the Long Island, NY-based LI Business Blog. Retail Whispers checked it out and it's true. The specialty grocer currently has six stores in Long Island, two in New York City (with another on the way, see above) and three in Westchester County. ( A new Tj's is being built in Queens currently.) However there aren't any TJ's at all located in upstate New York. Perhaps one will soon be in the planning stages if the residents' letter writing campaign is successful? We'll keep you posted.

Washington, D.C.: Yes! Organic Market is set to become the first retail store at "The Flats at Union Row," a new eight-story, 208 unit condominium building located at the corner of 14th and V Streets NW in the capital city. Developer PN Hoffman says the deal is done and the store is scheduled to open in the spring of 2008. The store's owners signed a lease with the developer this week. The urban organic market will be 6,000 square-feet and housed in the ground floor of the condo building. In addition to organic groceries, produce and other perishables the store will feature prepared foods and a sushi bar. The ground floor has a total of 26,000 square-feet for retail. The 6,000 square-foot organic grocery will be the retail anchor.

Yes! Organic Market currently has four stores, all located in D.C. The company is owned by brother and sister Gary Cha and Kathy Rachels. The retailer also has another new store in the planning stages for 2009. That store is to be located at 4100 Georgia Avenue NW in D.C. The two new stores will give the independent organic grocer six stores in the capital city. The word on the street is they want to build more as well. Learn more about Yes! Organic Market here.

New York City: Last week Retail Whispers reported that NYC-based Amish Markets, an upscale specialty foods retailer, was slated to become the first grocer at the huge Long Island City development in Queens. Yesterday The New York Sun newspaper reported the grocer also is set for a major expansion. According to the Sun, and Amish Market owners David Selek and Sean Eren, the upscale grocer is planning to open 13 new stores in the Metro New York region over the next 3-4 years. The addition of the 13 new stores would give the high-end grocer a total of 30 units in the next 3-4 years. You can read more about the company here in the The New York Sun (9-21-2007) article.

San Francisco, California: Last week we reported Whole Foods Market, Inc. is scouting San Francisco's Haight Ashbury (Hippies, Summer of Love) neighborhood for a site to build a new store. This week we learned from the grocer's Northern California Region president this is just the tip of the iceberg in terms of desired new stores in the Bay Area. Regional president Anthony Gilmore says Whole Foods is looking to build new stores in the Bay Area cities of Berkeley, Albany, Emeryville, Layfayette, Dublin and Fremont. Fremont is in the Southeastern part of the Bay Area and the other five cities are in the East Bay. Except for Berkeley, where Whole Foods has had a store for years, the other five cities would be new markets for the supernatural grocer. Additionally, Berkeley, Emeryville and Albany are all cities within a few minutes drive of each other. Four stores in such close proximity (one existing in Berkeley and three new stores) would give Whole Foods lots of critical mass in that dense urban region of the Bay Area.

As we reported here in Natural~Specialty Foods Memo (NSFM) Whole Foods is set to open its new store in Oakland next week on September 26. The grocer also opened a new store in San Francisco's Potrero Hill neighborhood last week, and the week before it opened a new store in the Silicon Valley city of Campbell, in the South Bay Area not too far from San Jose. With the recent new store openings--and desired or planned new locations--the supernatural grocer's Bay Area growth pace is starting to remind us of that television commercial for Diamond brand Almonds where the voice over guy says: "A Can a week, That's All We Ask" (consumers to buy). To paraphrase that ad in terms of Whole Foods' Bay Area new store plans one might comment: "A New Store a Week, That's all Whole Foods' Asks." We'll keep you posted.

Oakland, California: Trader Joe's also is coming to Oakland. The specialty grocer has been building a new store in the city's Lakeshore neighborhood, which is going through an urban revitalization process. The office of Oakland City Councilwoman Pat Kernighan, who's district the Lakeshore area is in, tells Retail Whispers the TJ's will have a "soft" grand opening on October 6, along with some of the other new and remodeled retail stores in the up and coming shopping district.

Orange County, California: Gourmet grocer Dean & Delucca (D&D) is planning to open its first Southern California store at the trendy Fashion Island shopping center in Newport Beach. (For those of you with teenagers who watch the MTV show "Newport Beach" that's the center where the show's teens are frequently filmed shopping and eating.) The new upscale D&D store will be 23,000 square-feet (pretty large for the gourmet retailer). According to our Orange County (OC) sources plans call for the store to be a gastronomical mecca. Store features are said to include an upscale in-store restaurant with a prepared-foods-to-go market attached, a combination upscale bakery and cafe/coffee house, a large fresh produce department, full-service fresh meat and seafood departments (with lots of specialty meats), a cheese shop featuring hard to find imported and domestic artisan cheeses, and a wine shop which will focus on small production wines from all over the world. The store also will carry an extensive selection of gourmet, ethnic and natural groceries and perishable goods from around the globe, in addition to upscale cookware and kitchenware.

The store is slated to open in fall 2009. New York City-based gourmet retailer Dean & Delucca (D&D) currently has 15 retail stores and cafes in the U.S. It's only current store on the West Coast is in Napa in northern California's wine country. The upscale retailer also has nine stores located in Japan and on the island of Taiwan. Leslie Rudd, D&D's chairman, says the retailer is looking to grow considerable both in the U.S. and internationally.

The addition of the new D&D to the OC is going to create some interesting upscale retailing competition. There's an upscale Bristol Farms supermarket just a mile away from the D&D new store site. Southern California-based Bristol Farms (now owned by Supervalu, Inc.) is Southern California's favorite hometown Gourmet grocer. Whole Foods just opened a large, upscale lifestyle-oriented store nearby as well. And Tesco is opening six of its upscale Fresh & Easy Neighborhood Market stores in Orange Country, the first of which are slated to open in November. Two of the stores are fairly close to the new D&D store site. Based on what we're hearing the new Dean & Delucca store will be the most "gourmet" of the bunch, both in product selection and pricing.

More OC Whispers: Arizona-based Sprouts Farmers Market, a natural and organic products grocer, also is headed to Orange County. The natural grocer plans to build a new store in the OC city of Seal Beach at a new addition called "The Shops" at the Rossmor shopping center on Seal Beach Blvd. The store will be Sprouts' second in Orange County. (The first Sprout's store in the OC is currently being built in Irvine and is set to open in November of this year.) The natural grocer currently has 23 stores in Arizona (15), California (4) and Texas (4). Sprout's new Seal Beach store is slated to open in summer 2008, according to out commercial real estate sources in the OC.

Los Angeles: Large U.S. cities have been working hard to lure supermarkets to their downtown's as part of an overall program to revitalize the city core and make it what it once was: The center and hub of a city's activity. Nowhere has this effort been more focused on over the past decade than in downtown Los Angeles. Ever since the Watts Riots in the 1960's downtown Los Angeles has been viewed as a place to avoid rather than spend time in. However, that's been changing considerably over the past ten years as the city and country of Los Angeles and private developers have poured billions of dollars into downtown LA, creating office and residential skyscrapers, a huge concert hall (the Disney), public works projects, restaurants, entertainment venues and other features all designed to attract not only employers and visitors but residents as well.

One of downtown LA's recent achievements was to attract locally-based Ralph's Supermarkets (owned by Kroger Co.) downtown, where the retailer has built and recently opened a new 50,000 square-foot supermarket in an increasingly upscale section called South Park. The new Ralph's store is located in the ground floor of a new residential building called "The Market Lofts." The new store, which currently serves about 2,000 shoppers a day, is exceeding all of the chain's expectations for the location. In fact, Ralph's believes the store is on its way to becoming one of the chain's top grossing stores, joining the small group of retail units they have which gross $1 million per-week. The new urban store already is doing $100,000 more per-week in sales over pre-opening projections. Sunday's (9-23-07) Los Angeles Downtown News has an article describing the new Ralph's store in downtown Los Angeles and how it's part of an urban retail and residential revitalization in the city. You can read the story here.

Pasadena, California: Whole Foods Markets, Inc. is preparing to open its flagship Southern California store in Pasadena. An official date hasn't been set yet by the supernatural grocer but we're hearing it will be around November 6-9, 2007, just a little more than a month away. The new Pasadena store is almost 77,000 square-feet and is built on two-levels. This will be Whole Foods' largest store to date in the Western U.S. and one of its top five largest in the U.S. More to come on this new store soon.

Gilbert, Arizona: UK retailer Tesco plans on building three of its Fresh & Easy Neighborhood Markets in the fast-growing Phoenix suburb of Gilbert. According to our Phoenix commercial real estate sources, and confirmed by Tesco, the stores are to be located at Lindsey and Warner roads, Greenfield and Warner roads and Higley and Ray roads. The new stores are slated to be in the 10,000 square-foot range, Tesco's average for the convenience-type upscale markets. Tesco currently has a couple Fresh & Easy stores almost completed in the Phoenix region and is shooting for a November opening for those stores. Gilbert is a fast-growing suburb and the fact Tesco will build three stores in the community shows the retailer is serious about building critical mass by locating multiple stores in communities the states of Arizona, California and Nevada in a relatively short time span.

North Fulton County, Georgia: The growing Atlanta suburb of Alpharetta and the surrounding communities of Johns Creek, Milton and Rosewell are on the retail radar of numerous upscale food retailers as a key place to have a store in Georgia. Trader Joe's has a store in the city as does Whole Foods (next door in Johns Creek), Harry's Farmers Markets, Fresh Market, Kroger Publix and a couple others. Our friends at the "North Fulton Blog," which is published by local commercial real estate agent Kevin Warmath, tell us Whole Foods is planning to build a second, much larger and more upscale, store in Alpharetta. According to Warmath the Whole Foods store will anchor a new retail development called Prospect Park. The new development is located at Old Milton Parkway and GA-400. Warmath also says he's hearing the store will be one of Whole Foods' largest to date and, according to the developers he talked with, could contain as many as four to six in-store restaurants. The four-city area of Alpharetta, Johns Creek, Milton and Rosewell are close enough together to have spill-over retail shopping by residents.

North Fulton County also is changing demographically as well as growing rapidly. New Jersey-based Asian Supermarket chain Super H Mart just opened a supermarket in Johns Creek to serve the growing Asian population in North Fulton Country. The store also appeals to the growing international food tastes of non-asians in the area. Super H stores feature large fresh foods departments, along with a full selection of basic groceries, in addition to Asian products. Super H Mart is a Korean-owned chain but also sells Asian foods from throughout the region, including Japanese, Chinese, Indian and other Asian cuisines. The stores also sell lots of non-foods including small kitchen appliances, electronics and even laptop computers.

Palm Beach Gardens, Florida: Publix will open its first Greenwise natural and organic foods dedicated format store in Palm Beach Gardens on Thursday, September 27. As we reported a few weeks ago the Greenwise stores are a new concept for Publix. The retailer has had "Greenwise" natural and organic foods sections in its stores for a number of years and borrowed the name for the new store format from these sections. The retailer has plans to convert regular Publix format stores in Florida ( Boca Raton, Tampa, Coral Springs and Vero Beach) to the upscale natural and organic format this year. Publix also plans on building some new Greenwise stores. The natural and organic format stores offer lots of prepared foods, natural, organic, specialty and gourmet products as well as some conventional groceries.

The upscale, prepared foods offerings are a big emphasis of the store. Publix says overall there are four separate restaurant or in-store prepared foods concepts included in the store, including a 135-seat mezzanine cafe/coffee shop which offers free online wi-fi service for cafe patrons. The prepared foods area also features a walk-up window and curbside delivery service. The store is 39,000 square feet and is located in the Legacy Gardens shopping center in Palm Beach Gardens.

The store's other upscale features include: A selection of more than 300 international cheeses and a cheese aging cave where customers can have their cheese selections aged up to 25 days to their personal preference, a full service bakery offering over 350 items including 20 bread varieties, an in-store cooking demonstration area and free in-store event planning and consulting service.

Naples, Florida: Like North Fulton County in Georgia, the Naples, Florida region is another rapidly growing community in the south. The Gulf Coast region also is heating up in terms of upscale food retailing. A new upscale Sweetbay Supermarket is being built at the Magnolia Square shopping center in Naples and should be open later this year, according to Alice Miller of Keating Real Estate in Naples. Sweetbay is a three-year old upscale format of Kash n' Karry, the Florida-based supermarket company owned by Brussels Belgium-based Delhaize Group.

The Sweetbay stores offer a combination of conventional groceries, lots of fresh foods, and specialty and natural foods offerings. The stores are designed using bright colors and graphics meant to convey an upscale, fresh image, yet one in which prices are competitive with mainstream supermarkets. Realtor Miller says there is a popular The Fresh Market upscale store nearby in addition to a Publix store and an upscale independent named Wynn's Market.

Woodland Park, Colorado: Mega-retailer Wal-Mart has built a new Supercenter store in Woodland Park near Colarado Springs that looks like no other Supercenter the chain has every built before. That;s because Woodland Park, a city nestled between the Rocky Mountains, has strict architectural design standards for commercial and residential development so as to protect its natural setting and environment. Wal-Mart agreed with these standards and worked with the city and an architect to create a store that fits into the local landscape without compromising Wal-Mart's format and merchandising goals. The store, which opened last week, is done in brown and green earth tones on the outside and has natural stone and wood timbers used on the front. There's even a life-size brass statue of a mule deer buck out front to greet shoppers as they enter the store. The brass deer isn't a substitute for Wal-Mart's in-store human greeters though; they are inside the store. You can read more about the "local" supercenter here in this article from the Colorado Springs Gazette.
International Food Retailing

United Kingdom: The food retailing sector in the United Kingdom (UK) has been under constant government scrutiny and investigation for the past year over the issue of anti-competitiveness. The government claims the nation's major supermarket chains have been pressuring and strong-arming their suppliers for better deals (the suppliers say unreasonable ones) and other give-backs and perks.

In many cases, the government claims, the largest chains like Tesco have set the wholesale prices themselves, telling the suppliers if they don't accept what the retailers want to pay the chains will stop doing business with them. As a result of this supplier behavior the government claims these big chains are then pricing the goods in their stores at retail price points that independents can't come close to matching. In other words this is the crux of the government's anti-competitive argument. Tesco, the UK's largest chain (and the third-largest food retailer in the world) has been getting the brunt of the Uk anti-competitive government commission's attention.

In this interview in the Sunday Times of London (09-16-07), Tesco Chairman and CEO Sir Terry Leahy, talks about the anti-competitive investigation for the first time in detail. You can read the full interview here. Sir Terry argues the investigation is misguided, and in the interview talks about the changes happening in international food retailing and in the UK, and defends the industry and its practices. Tesco is preparing to enter the U.S. with the first of a least 100 planned Fresh & Easy Neighborhood Markets. The stores are upscale convenience-style markets of about 10,000 square-feet. The stores will feature fresh prepared foods, specialty and natural foods and other upscale and fresh offerings. The stores are modeled on Tesco's "Express Market" format which the retailer has introduced throughout the developed world. Additionally, This article from Forbes.com describes the Bristish government's current probe into price-fixing in the dairy products sector, which is one area the regulators are focusing on.

Dot.Com Food Retailing

Seattle, Washington: Online Mega-retailer Amazon.com has began an online-ordering, home- delivery service test in three Seattle, Washington-area communities. Amazon already carries a large selection of basic, specialty, natural and organic gorceries and perishables which can be ordered and shipped to shoppers' homes just like the other products the E-retailer merchandises.

The new delivery service features basic groceries, produce, meats and seafoods as well as specialty and natural foods items. It's similar to other online delivery services such as those operated by Safeway Stores and Albertson's in the West and FreshDirect and others in the east and other parts of the U.S. During the test Amazon is delivering the grocery orders to online shoppers homes for free. The company has bought colorful delivery trucks which include refrigerated, frozen and dry grocery compartments in the trailor sections. Delivery drivers wear kaki pants and special Amazon Fresh (the name of the service) polo shirts. There is currently no word on how long the test is or when the online retailer will expand to other Washington state cities. Amazon is based near Seattle.

Safeway Stores has been operating an online delivery service in Washington State and Oregon for a number of years and has gotten pretty good at it. Even though Amazon is well known in the region and used fequently by shoppers for online purchases the E-retailer will be up against some serious competition in its backyard from Safeway. The chain knows supermarket retailing, has the buying power, and a solid track record based on numerous years of online grocery selling and delivery. These are all vital things Amazon will need to learn "on the job."

Maryville, Tennessee: Two employers of packaged goods giant Kimberly Clark have created an online startup company called eMilkman.com. The online grocery delivery service is a modern version of yesterday's milkman, who used to deliver milk, dairy products and other goods to the front doorstep every morning. In the case of eMilkman.com, started by Maryville residents Josh Burgess and Jeff Rule, their service is more like an online convenience store with household delivery.

So far the pair has about 1,800 items available for online order and home delivery. The items range from fresh milk and dairy products to juices, fresh breads, grocery items, pet foods, cleaning supplies and numerous other products in a variety of different categories. They're adding more items to their site daily the "modern milkmen" said. The service currently is charging about $10.00 per home delivery. All deliveries are made at night and shoppers have to be home to get the goods--no leaving it in a box in front of the house when nobody is home like yesterday's milkman did. The pair sets delivery days based on the various zip codes in their service areas. Currently the service area covers Eastern Tennessee but if all goes well the pair plans to expand within the entire state.

The new e-milkmen are focusing on time-pressed consumers in the region, younger people as well as older ones. "We like the image of a milkman coming to the door (delivery people dress like the milkman of the past) and we're going to try and emulate that wholesome image of someone you trust," says the pair in describing their mission for the new company. You can read more about the modern internet milkmen and their company here.

Food Retailing Operations

New York City: The Whole Foods store at Columbus Circle in Manhattan has come up with a new (to the United States) method of keeping its customers in line. The grocer has trained and employed "line directors" whose job it is (politely) to keep the lines of customers at the stores checkout stands moving in a nice and orderly fashion. The line directors are charged by Whole Foods' store managers to try to make sure busy shoppers at the store are able to get in and out of line at the checkout in five minutes. Unlike nearly all other retail food stores (and other formats) in the U.S., which use a single line behind each checkstand methodology, the Columbus Circle Whole Foods employs the method used throughout Europe, where shoppers form a single line and then go (in this case guided by the line directors) to the first avaliable checkstand for checkout.

The store has 41 checkstands. Each has a light visible to the "line directors," and when the checkstand is available the light flashes. The "line directors" watch for the flashing lights and guide the next person waiting on line whenever one flashes signaling an open checkstand. It's a "high touch" service in a "high tech" setting. The process is always evolving with the line directors finding better ways to help shoppers get in and out fast and gently. Customers seem to like it as well, as the store has become not only the favorite place for grocery shopping in the area, but draws customers from miles away. It's also become a place to hang out, have lunch and meet in Manhattan.

Mergers & Acquisitions

Montvale, New Jersey: The Great Atlantic & Pacific Tea Company (A&P) and Pathmark stores have agreed to notify the U.S. Federal Trade Commission (FTC) at least two weeks prior to the close of A&P's proposed $679 million acquisition of Pathmark. A&P said it will notify the FTC by October 6 as it hopes to have the acquisition completed about two weeks after that date.

The deal will create a 550-store supermarket chain operating in the Eastern U.S. in New York, New Jersey and Pennsyvania, down to Washington, D.C. and Maryland in the Mid-Atlantic, and in Michigan and Louisiana. A&P was once the number one food retailing company in the U.S. as well as in the Western world (hence its full title which remains today). Many decades ago A&P's then president paraphrased the United Kingdom's famous empire-days saying when he said about A&P's international retailing empire, "The Sun Never Sets Over the A&P." Today the chain is a mere shell of its size in those days due to lots of sell-offs over the years as well as some hard times. However, A&P has started to turn around in recent years (despite some bumps in the road), and the Pathmark acquisition shows the once retail empire-builder is far from being in retreat.

Stuart, Florida: Milam's Markets, an upscale, muti-store independent grocer based in Miami, Florida, is buying the Stuart, Florida store of another Florida-based upscale independent, Stuart Fine Foods. Retail Whispers has decided to identify this as a new trend called "upscale food retailing tit for tat acquisitions." (remember you read it here first.) Miami-based Milam's Markets (an independent IGA banner retailer) operates five stores in Miami-Dade County.

Stuart's Fine Foods is a long-time local upscale grocer in the community. Both Stuart's Fine Foods and Milam's Markets are family-owned and managed. Joe Mazetti Sr. and his son Joe Mazetti Jr. are the current owners of Stuart's Fine Foods. They also own and operate another upscale store in nearby Palm City, Florida. Plans call for them to continue running that store although they have had some financial probelms which led to the decision to sell the Stuart store.

Milam's is know for its large selection of specialty, natural and organic foods as well as extensive wine selection, prepared foods offerings and other specialty features. Stuart's Fine Foods has a similar merchandise mix and upscale positioning so the store's customers won't miss a beat in terms of the reasons they shop the store. Like the Mazetti's, Milam's stores take a very "high touch" approach to customer service, including bringing in nearly any specialty foods item a customer might request. In reviews of Milam's, superior customer service and community support, are always mentioned by local consumers as major reasons they shop at the grocer's stores.

Austin, Texas: The Whole Foods' deal to sell Wild Oats' Henry's Farmers Markets and Sun Harvest stores to a subsidiary of Los Angeles-based Smart & Final, Inc. (S&F) is expected to be completed by the end of this month or in early October. S&F is owned primarily by private equity firm Apollo Management. The Henry's stores are located in the Western U.S. and the Sun Harvest stores are in Texas. The stores are a natural foods/specialty foods hybrid format and don't have the (all natural) product attribute restrictions the Wild Oats banner stores do. Whole Foods didn't feel the two formats/banners fit their merchandising style so decided to sell them to Smart & Final. Whole Foods currently is operating the stores pending the sales finalization in a week or two.

Smart & Final's store's are a "club store type" operation. They cater to medium-size and small food service operators as well as the general public. It will be interesting to see what the retailer does with the Henry's and Sun Harvest stores since they are much different in format that the S&F stores. Perhaps that's why S&F created a new subsidiary to operate them.

Consumer Retail Insights

Norfork, Virginia: Supermarket retailer Farm Fresh opened a new, upscale supermarket in Norfork, Virginia on Friday (09-21-07). The store even has a name, "The Market at Harbour Heights." The store is located in downtown Norfork, which has become a popular place not only to dine and shop but to live as well. A resident of Norfork visited the store for it "soft" grand opening last night. You can read that customers review of the new store plus the reviews and comments of a few other consumers--and potential customers of the store--here. Retail Whispers thinks getting direct insight from shoppers is great market research for retailers, even if the reviews and comments aren't about your own stores. With today's internet technology it's easy to do--and interesting to read.

American Canyon, California: For three years Wal-Mart fought to build a large, combined food and general merchandise Supercenter store in American Canyon, which is located next door to Napa in the Northern California wine country. There was much opposition to the Supercenter from community residents, activists, small business people and some elected officials. After much debate and rangling, Wal-Mart finally obtained approval for the store, which just opened. The Napa Valley Register, the local community newspaper, posted a question in it's Saturday (09-22-07) paper asking residents their opinions on the new store and the overall issue of its location in the community now that it's open. You can read the numerous comments from community residents and shoppers here. It's an interesting and varied group of opinions.

Food Retailing Personalities

San Bernardino, California: For decades Stater Bros. Markets has been the "retail king" of Southern California's Inland Empire region. For most of those decades Stater Bros. has been a low-key, conventional supermarket retailer, that prided itself on being the locally-based grocery chain that provided shoppers with a strong overall product selection at reasonable prices. And as the local-guy it's been the grocery chain most involved in community and civic affairs in the Inland Empire, using community support to show why shopping with a locally-owned and operated grocer pays dividends to shoppers beyond just the price of groceries.

For most of this time Jack Brown, Stater Bros. CEO, has been at the helm, growing the chain from its humble beginnings to 163 stores, almost 18,000 employees and $3.5 billion in gross sales today. Stater Bros. under brown also has become "less conventional" in the last few years as the Inland Empire region has seen competition from upscale grocers. Today the retailer's new stores are much more upscale than they have traditionally been and merchandise a much larger selection of specialty, natural and organic products across all store categories than ever before.

In California grocery industry circles Brown is known as a down to earth, savvy retailer who also is somewhat of a character, with a true "rags-to-riches" story. Brown's mother had TB when he was young and his father died when he was eight. At age 13 Brown started working in a grocery store. From there he went to college on a scholarship and then joined the U.S. Navy. In 1960 while on the South Pacific Island of Formosa on leave, Brown purchased Burt, an Eagle carved from a driftwood root for $12, a pricely sum for a sailor on leave in 1960. Today that simple sculpture has a special place in Brown's office at Stater Bros. to remind him where he came from. In 1994 California State University San Bernadino named its new business school building Jack H. Brown Hall in honor of his multi-decade business career, community service to the region, and his efforts to help students and others in their persuits and careers.
In 1992 Brown was one of 10 Americans named that year to the Horatio Alger Society, an organization which honors successful people in the U.S. who have come up the hard way from disadvantaged backgrounds. Three of the other nine American's named along with Brown that year were Henry Kissinger, poet Maya Angelou and supreme Court Justice Clarence Thomas.

Brown, 67, doesn't seem eager to retire anytime soon. Nor can those who know him well and work with him imagine him doing so just yet. The late Don Beaver, the long-time president of the California Grocers Association, once said of Brown that he (Beaver) has never met a businessman more humble, modest and down to earth than Jack Brown. Yet at the same time never letting those traits get in the way of building and selling Stater Bros. Others call Brown a supermarket industry "Statesman."

Earlier this year when representatives of the United Food and Commercial Workers Union (the retail clerks union in California) sat down with management from Von's (Safeway-owned) Albertson's (Supervalu-owned) and Ralph's Supermarkets (Kroger -owned)--the "the big three" chains in Southern California--the union reps sighted Jack Brown as their model for negotiating with industry leaders and they suggested to the chain representatives they might want to follow Brown's lead since the union leaders has already worked out a contract agreement with him. Friends and collegues of Brown say this is just another example of how he creates consensus and helps others to achieve their dreams like he has been able to achieve his.

New York City: 75 years ago New York City-based and family-owned D' Agostino Supermarkets was founded by the Nicolas D' Agostino Sr. The first store, a small, modest grocery market in Manhattan's Upper East Side, has grown into an iconic 18-store upscale supermarket chain today. There are 15 stores in Manhattan and three in Westchester County. Shoppers simply call the stores D'Ags. The stores have appeared in many movies and television shows. For example, in the popular TV situation comedy "Will and Grace" the show's two main characters, Will and Grace, met in a D'Ags store in Manhattan. The stores' popular "D'Ag bags" are seen being used by shoppers all over Manhattan, not just in the grocer's stores.

D'Agostino's Supermarkets is managed by second and third generation family members, Nick D' Agostino Jr. and his son Nick D' Agostino III. The family-owned retailer was one of the first supermarket operators in the U.S. to go upscale and merchandise extensive selections of specialty, gourmet, ethnic and natural foods. It's also been a leader in prepared foods offerings and upscale store design with its newest stores. The family-owned grocer's newest store in Rye Brook, New York (that's Nick D'Agostino II pictured at left in the Rye Brook store) is D' Agostino's largest and most upscale, and will serve as the model for the retailers's future stores outside of Manhattan, according to Nick D' Agostino II.

D' Ags celebrates its 75th anniversary this fall. The retailer plans numerous in-store special events and promotions to celebrate its seven and one-half decades in Manhattan. You can read more about the D' Agostino family, their stores, and future retailing plans here in this (09-19-07) article from the (NY) Lower Hudson Journal News.