Friday, October 31, 2008

Halloween Memo: A Really 'Great Pumpkin' Charlie Brown: Stay At Home Dad Wins Safeway Stores' Pumpkin Weigh-Off Contest With Massive 1,528 Pound Gourd

Thad Starr (pictured at left with his prize-winning pumpkin), a 41 year old stay at home dad from Pleasant Hill, Oregon USA is the winner of the 35th Annual Safeway World Championship Pumpkin Weigh-Off in Half Moon Bay, California.

This is Starr's second consecutive year to win the annual competition sponsored by Pleasanton, California-based Safeway Stores, Inc.

Safeway Stores, the third-largest U.S.-based supermarket chain, has a supermarket in Half Moon Bay, which is about 40 miles from its corporate headquarters in the San Francisco Bay Area.

The stay at home dad and grower of mighty pumpkins won this year's contest on October 13 with a massive 1,528-pound gourd. Starr's 'Great Pumpkin' is the second-biggest pumpkin in the world weighed to date this year.

In just his third year of growing competition pumpkins, Starr won for the second year in a row, taking home $9,168 in prize money ($6 per pound) and topping the Half Moon Bay record he set last year. He easily defeated a formidable, veteran field of sixty five heavyweight contenders to win the coveted title and a "starring role" in the Half Moon Bay Art & Pumpkin Festival, which was held October 17-19, where his colossal guard was featured on display along with the top five overall winners' pumpkins.

The Safeway World Championship Pumpkin Weigh-Off is a part of the annual Half Moon Bay, California Art and Pumpkin Festival, which is held in the coastal Bay Area city each October. This year's festival was the 38th annual. Half Moon Bay is a major pumpkin-growing region. Safeway Stores has been sponsoring the weigh off contest for 35 years.

Click here for a list of additional Great Pumpkin winners, along with some additional photographs and information about this year's event.

The Safeway-sponsored Pumpkin Weigh-Off contest and related community festival is lots of fun for the residents of Half Moon Bay and the nearby communities who attend the vent in the thousands. However, for the competitors in the 'Great Pumpkin' Weigh-Off competition it's serious business. Like competitive eaters, chili cook-off contestants and competitive grilling masters, these growers of the giant gourds prepare all year for the big day.

We can imagine now that Thad Starr has won the contest two years in a row, the other competitors are going to be gunning for him next year, looking to prevent him from achieving that perfect trifecta (three years in a row) as the King of Pumpkin growers.

Wine Category Memo: Organic Chilean Wine 'Syrah Palin' Getting Lots of Attention in U.S. Because of its Namesake, Republican VP Candidate Sarah Palin

With just five days to go until the 2008 U.S. Presidential election, a certain brand of Chilean organic wine imported into the U.S. by Berkeley, California wine importer and distributor North Berkeley Imports , is getting an unusual amount of attention.

It's not all positive attention though. In fact, consumers' attitudes and opinions about the organic Chilean wine, named Syrah Palin (pictured on display at top, left), seem to be more about whether or not they support the Republican Presidential ticket of John McCain and Sarah Palin or the Democratic ticket of Barack Obama and Joe Biden rather than whether or not they like the taste of the wine.

Yes, the "Syrah" (Sarah) variety wine, spelled Palin (pronounced "Pay- Leen) just like the Republican Vice Presidential candidate's last name, has a political season ring to it. And in Berkeley, arguably the most liberal city in America, it is raising a few eyebrows.

According to the wine importer and distributor's Web site, the vintner's (Palin wines) and wine's name "describes a ball that was used in an ancient game played by the Mapuche, a group of people indigenous to central Chile, where the vintner is based. It has nothing to do about Alaska, governors, moose hunting, $150,000 wardrobes or other attributes involving Senator John McCain's Vice Presidential running mate, Sarah Palin.

However, wine drinkers in Berkeley, the San Francisco Bay Area and other parts of the country where the organic wine is being distributed by the importer, are obviously connecting the Syrah Palin wine to the Governor of Alaska, who wants to be the next Vice President of the United States. Some consumers are getting a chuckle out of the resemblance, others are not as happy about the namesake wine.

For example, Chris Cavelli, the co-owner of San Francisco's Yield Wine Bar, which is offering Syrah Palin organic wine for sale by the glass, says "they (customers) just are basically saying, 'Oh, I don't want to drink that. That's too close.' It reminds them too much of Sarah Pain," he says.

Cavelli adds that prior to Governor Palin getting the Republican Vice Presidential nomination, Syrah Palin wine was selling briskly at the wine bar. "I actually think the whole thing is pretty funny," he says. Cavelli said he plans to keep it on the wine list at Yield Wine Bar.

The political nod away from Syrah Palin wine at the San Francisco wine bar isn't surprising though. No Republican in modern history has won the majority of the vote from San Franciscans. San Francisco voters tend to vote in about an 80% majority for the Democratic Party candidate for President in every election. And its the Green party that gets the majority of that remaining 20% rather than the Republican candidate.

But in other parts of the Bay Area and elsewhere, importer David Hinkle, owner of North Berkeley Imports, says there's been an "uptick in sales of the Syrah Palin organic wine since the Governor of Alaska was nominated as John McCain's Vice Presidential running mate.

Hinkle avoids any political connection to the wine. Since he imported it from Chile long before Sarah Palin was nominated, such a thought was the farthest thing from his mind.

"The wines (Palin brand) are outstanding," he says. "Very rich, full-bodied. There's nothing political about the wine in any way."

Well, at least intentionally.

Of course, we suspect a few San Francisco Bay Area Democrats are buying the Syrah Palin wine anyway. Perhaps as a keepsake. Or maybe they are planning to break the bottle against a John McCain-Sarah Palin campaign sign celebration style if Barack Obama and Joe Biden wine the Presidency on November 4?

On the other hand, Berkeley wine importer Hinkle might want to call Sarah Palin and pitch his Syrah Palin as the wine of choice for the Presidential victory parties in the event the McCain-Palin ticket wins on November 4.

We also could see big in-store displays on November 5, the day after the election, if McCain-Palin wins. But if they lose, well...'Que Sera Sera (pronounced Saraaah) [Whatever will be will be],' (pronounced Sarah) as Doris Day sang in the famous song of the same name.

Thursday, October 30, 2008

Specialty Foods Retailing Memo: A Love of Good Italian Olive Oil Leads to A Thriving Business For Two Specialty Foods Entrepreneurs

Natural~Specialty Foods Memo Editor's Note: Lea Ann Vessels, a former employee of consumer packaged goods giant Proctor & Gamble, and Marta Miranda, a University professor, have turned a love of good Italian olive oils and good food in general into a thriving specialty foods store, along with their own brand of award-winning premium Italian olive oil that has developed a cult following, and a line of Italian tomato and pesto sauces.

The partners operate the Abbondanza specialty foods store in Lexington, Kentucky USA, where they also bottle their Oliva Bella brand (which means beautiful olive) olive oil and a recently introduced line of Italian tomato and pesto sauces.

The two specialty foods entrepreneurs started out in 2004 bottling some olive oil they imported from Italy and then selling it at the local farmers market. They built a customer following, then opened their specialty foods store. They added additional varieties of olive oil under their own brand, then expanded the inventory in the store into other specialty and gourmet foods categories, along with creating their own line of Italian tomato and pesto sauces.

Business is booming. But they are keeping the store small and niche-oriented by design. It's their point of differentiation, along with marketing and selling their own brand of Italian olive oils.

The food-loving partners are branching out into offering food education classes and seminars through the store, allowing them to not only put a focus on their olive oil line and the other products they offer for sale in the store, but to also further explore and share with customers their love of good food and the good food lifestyle.

Writer Cynthia L. Jones has a profile of the two owners of Lexington, Kentucky's Abbondanza specialty foods store in Southsider Magazine, a publication that focuses on lifestyle and other topics in the Lexington region. Read Ms. Jones' feature article below:

A Bottled Bounty
Abbondanza owners know how to keep customers coming back
Southsider Magazine, Lexington, Kentucky USA
October 30, 2008

When Abbondanza co-owners Lea Ann Vessels (at left in the photo) and Marta Miranda began peddling their extra virgin olive oils at the Lexington Farmers' Market in 2004, they dreamed of its success, but never expected the cult following it has acquired.

Today, the savvy co-owners have customers calling them at home after hours for oil. "One customer called and said she had an olive oil emergency," Vessels said. "She said even if I could put some in a mason jar that she would pay whatever." Vessels sent the customer home with olive oil in an empty wine bottle.

Vessels, who has even received calls on New Year's Day from customers, says she tries to be accommodating. Another customer who was having a dinner party called on a Sunday asking for oil. "She apologized for the Sunday call," Vessels said. "And I told her to meet me down at the shop."

The two began their venture by importing 200 liters of olive oil, which they sold in two months time. With a growing customer base from the farmers' market, Vessels and Miranda opened a tasting room, located at 406 S. Broadway, for their Oliva Bella oils imported from farms in southern Italy. Since opening last summer, the owners have expanded their products to include fine balsamic, pastas and specialty cheeses. Last year, the company began selling their homemade pomodori agrodolce (slow roasted tomato sauce), cipollini (roasted onion) and pesto sauces that have also become wildly successful.

The idea for bringing olive oil to Lexington began when Vessels' work with Proctor & Gamble took her to Italy. She began tasting oils that her colleagues would bring to her from their own family groves. Vessels explained that the difference in quality was striking. "I had always loved olive oil," she said. "But I realized I had never really tasted fresh olive oil until then." As Vessels began tasting fine oils, she began to realize there was a need in Lexington for oil of this caliber.

Vessels then joined with Miranda, a friend and partner in other business ventures. "We are people who are passionate about good food," Miranda said. "We love to put things together in a healthier way." Miranda is an associate professor and director of the Office of Multicultural Affairs and Women and Gender Studies at Eastern Kentucky University. Miranda grew up cooking with her father in his restaurants' kitchens. At age 5 she had a special stool in order to be tall enough to stir the pots.

The owners have purposely kept the shop small and quaint to give it that corner store feel. "People are starving for the old fashioned way of the community or neighborhood market where they can visit and talk about food," Vessels said. She explained that the customer base is very diverse. "It's not just high end," she said and explained that the store attracts everyone from cancer patients looking for the medicinal benefits of fresh olive oil to retirees and college students.

Vessels and Miranda came up with the name, Abbondanza, because it means "abundance" in Italian. Vessels said the idea of fullness or having enough for everyone at the table fits perfectly in description, value and name for the company. "Since we were importing olive oil from Italy," Vessels said, "we wanted to weave in the beautiful Italian language as well." The two named the oil Oliva Bella, which means "beautiful olive"–a name they feel is easy for customers to remember.

Miranda and Vessels believe it's important to teach their customers about the differences their fresh olive oils provide not only in taste, but also in healthful benefits. "A big part of our business is educating people," Vessels said. "Once people taste it, they can't go back to their supermarket bottles."

Anyone who wanders inside the tasting room will be invited to try their products and learn about the advantages of using oils made from hand-harvested olives. The nutritive benefits of the olive oils remain in their high antioxidants and low acidity levels. As a result, each bottle has the harvest date on the back to help customers understand the importance of keeping it fresh. To ensure their commitment to selling fresh oils, the owners keep the oil shipments to a minimum and bottle the oils themselves. Loyal customers, however, have been disappointed when the supply was gone. Ralph Brown, a Lexington customer, said he ran out of oil before the next shipment. "I came into the store every day asking, 'Okay, where's the oil?'"

The oils recently won the 2007 silver medal award at the Los Angeles International Extra Virgin Olive Oil Competition. Oliva Bella competed against over 400 oils, most of which came from outside the United States.

Vessels said that the company does very little advertising and added that most of their business is from word of mouth. Many new customers also stop in as a result of seeing displays on white butcher paper. Each day, Vessels writes catchy, hand-written signs inviting them to stop into the store. After taste testing their products, customers will be offered a small cup of Miranda's Cuban coffee.

The most recent venture of Abbondanza is their cooking parties that take place in the tasting room kitchen. "The idea is to teach people how to creatively put things together," Miranda explained. "Cooking for people is one of the most important ways to love and nurture them."

Miranda explained that the secret is having few ingredients and putting them together in a way in which most people hadn't thought. For instance, Vessels came up with the idea of using peaches wrapped in prosciutto or adding a tablespoon of cream cheese into their tomato sauce to make a very rich and creamy rosato (pink) sauce.

Before opening Abbondanza, Vessels says she would spend her Sundays cooking all day and delivering food to friends. "Food is my therapy," she said. "It's what I think about all the time, it's how I de-stress; it's my nightly entertainment."

She says she loves reading food magazines and cookbooks and watching the Food Network; the food is what she wants to talk about most of the time. "When I greet friends," Vessels said, "I am more likely to ask, 'What did you eat last night' than 'How are you?'"

Several Kentucky restaurants are already using the oil in their recipes. Holly Hill Inn, in Midway, and several others in Louisville are among them

[Photo Credit: Photograph above by Robbie Clark for Southsider Magazine.]

Wednesday, October 29, 2008

Supply Side Memo: Current Credit Crunch and Financial Crisis Beginning to Have Negative Impact on Smaller Specialty and Natural Foods Companies

The current credit crunch and financial crisis in the U.S. is starting to have a negative impact on smaller specialty foods manufacturing companies, particularly those who had embarked on growing their product lines and distribution prior to the crisis emerging so strongly in September to the present.

Yesterday's San Francisco Chronicle profiles one such specialty foods company in a credit jam, Napa, California-based The Perfect Pear, which produces and markets homemade specialty pear sauces, oils, marinades and jams.

The Napa specialty foods company was founded in 2003 by former corporate marketing executive Susan Knapp, who left her corporate job to live her dream, to become a specialty foods industry entrepreneur.

Today The Perfect Pair produces 19 different pear-based specialty foods products and has annual sales of $700,000.

Not bad for a self-funded,start-up niche specialty foods company that's not yet five years old.

But that's the good news.

The not so good news is that Susan Knapp needs $200,000 right now to fill current orders from customers like Whole Foods Market, Inc. and others, as well as to meet the increased demand from retail customers for her products, she tells the San Francisco Chronicle staff writer Julian Guthrie in the story.

Normally that wouldn't be a big problem for the specialty foods industry entrepreneur, since her company has good credit, she has fairly strong sales, and has an existing retail customer base, along with new customers wanting to buy her pear-based specialty products.

But because of the frozen credit markets Susan Knapp has been unable to obtain a working capital loan. In order to hold on, she is using her credit cards, asking friends and associates for loans or to invest in the company and searching out private investors who if the deal is right she is willing to sell a stake of her self-funded specialty foods company to in return for working capital so she can fulfill her orders. Investors in small companies like hers are very hard to find in good times let alone now though.

Read the story, "Successful pear products firm in a credit jam," from yesterday's San Francisco Chronicle here.

Susan Knapp's specialty foods company is far from alone in experiencing the freeze in the credit markets, even for short-term, working capital loans. In recent weeks we've spoken to a number of smaller, entrepreneurial specialty, natural and artisan foods manufacturing companies facing the same issue.

Most of these companies are doing well. They just need short-term loans to produce inventory. In most of the cases we've come into contact with there are orders from distributors and retail customers for this to be produced inventory. It's cash flow that's lacking. And crdit is tight.

Unlike larger manufacturing companies, these entrepreneurial specialty companies don't have the sales or cash flow to always fund production. This is expecially true if they get a new customer like a Whole Foods Market, Inc., who's initial order of such a product for all of its U.S. stores can easilty be 400 -to- 1,000 cases. or more Most of these smaller firms don't keep that much extra inventory on hand since doing so isn't financially prudent.

Another difficulty is in the current poor economic climate distributors and retailers often hold back their payables a bit longer than normal. Going say just an extra 30 days without being paid by a couple major customers can play havock on the cash flow of these smaller specialty producers.

Another problem many smaller specialty, natural and artisan foods manufacturers have is they may not have noticed the coming economic downturn like bigger companies did. Therefore they didn't cut expenses or make other preparations soon enough. Of course in the case of the current credit crisis, not even the largest U.S. banks and corporations, let alone the Bush Administration and Congress, appeared to have had any idea it was on the way. And despite the $700 billion taxpayer bailout of financial institutions we have yet to see any thawing in the credit markets.

Unfortunately for these smaller, entrepreneurial companies the current credit crisis is just the tip of the iceberg. Most U.S. economists believe the country has now fallen into recession, and that things are going to get far worse before they turn around.

As a result, for smaller specialty foods companies this not only means a continued period of frozen credit markets. It also means the possibillity of decreased sales to retail customers because the demand for more expensive specialty and natural products is decreasing. There is across the board evidence of this, as consumers are trading down to lessor-quality, cheaper food and grocery products -- and shopping more at discount rather than natural and specialty stores -- in significant numbers all across America.

This means less sales, cash flow and resources for these smaller specialty foods companies. It also means those who are going to survive need to look at their operations from stem to stern and cut costs whereever they can -- from procurement and production to administrative and operations.

This week's Newsweek magazine has an informative article suggesting small businesses of all kinds need to do just that now -- to shift into cost-cutting mode.

Read the Newsweek article, "Shifting into Cost-Cutting Mode," here.

Now is the time for smaller specialty, natural and artisinal food companies to cut costs. The longer and deeper into a recession it gets the harder it becomes to realize proper savings. And to survive.

Below are a few suggestions we have for smaller specialty companies looking to and needing to cut costs now:

>If you use a co-packer sit down with him or her and talk costs. Also talk to one or two competing co-packers and find out what they would charge you compared to what you currently are paying. There is usually money to be saved by doing this exercise.

>Cut any extra administrative costs to the bone. Do you really need those two company vehicles? Can you pay yourself a smaller salary for a while? What are you paying for office supplies? Probably too much. Lastly, can you afford the current number of employees you have working for you?

>Cut back on travel. Do you really need to attend the number of food shows you have been? Coudn't you cut back to two or three key shows and still be fine? Do you really need to travel to the number of customer calls out of the region you have been? Can you cut back on this expense -- air fair, hotels, meals when on the road -- a bit in order to save big dollars without hurting sales.

>Look at packaging. Packaging is one of the biggest money wasters smaller specialty companies neglect. Talk with your suppliers. Get estimates from competitors. Could you save by say going from glass to plastic, for example. Maybe you should reduce the size of your package from say 16oz to 14oz so you can make a bit better margin per unit of sale. Notice how the traditional gallon of bleach is now a few ounces less than an actual gallon? That's because Clorox and the other big guys have reduced package sizes in order to gain a few extra pennies per unit in gross margin. It's the same with various food products from numerous major manufacturers. They've been reducing package sizes by small increments since last year.

These are just a few examples of places smaller specialty, natural and artisan food companies can look to cut costs.

Generally speaking, cost-cutting isn't going to solve the need for cash that Susan Knapp and her The Perfect Pear has, although cutting costs to the bone without harming sales is the first thing she needs to do if she hasn't already done so.

However, we've never seen one smaller-size (under $10 million in annual sales say) specialty or natural foods company that couldn't cut costs, be it cutting back on excess travel, trimming administrative costs, doing better with marketing and sales, shopping around for better deals on co-packers and packaging, and other key operational, production and related expenses.

It's also important that along with cutting costs right now these companies make sure they are collecting receivables on time. There is a time-honored practice by some customers to hold their accounts payable for as long as possible in recessionary times. Even an extra week can be negative to the cash flow of a smaller specialty foods company.

Therefore, keep on top of receivables. Also, if things get real bad check into factoring companies. These companies will advance you cash on your unpaid customer receivables, taking a percentage cut of course, which in the case of seriously outstanding accounts can mean the difference between surviving and folding up the tent in terms of needed cash flow.

Now is the time for smaller specialty and natural foods manufacturing and marketing companies to take a comprehensive, rational look at every aspect of production and operations. Doing so will allow you to whether the current recessionary storm.

Also such companies should be all over their Congressional representatives about the $700 billion bailout's not yet having even a minimal affect on thawing the credit markets. After all, its is small business, such as specialty and natural foods companies, that provide the majority of new jobs in America, as is said by both Presidential candidates multiple times a day on the campaign trail. These very same small businesses need access to the credit markets in order to create these jobs.

[Photo credit: Credit Crunch Cereal graphic courtesy: That's Federal Reserve Bank Chairman Ben Bernanke pictured on the front of the cereal box.]

Tuesday, October 28, 2008

Small-Format Food Retailing Memo: The Small-Format, Neighborhood-Oriented Food and Grocery Retailing Trend Continues to Emerge and Grow in the U.S.

Giant Eagle, Inc's (supermarket chain) first Giant Eagle Express small-format, neighborhood-oriented food and grocery store in Harmonville, Pennsylvania is about 15,000 square feet. (Photo credit: Pittsburgh Post Gazzette.)

Neighborhood Food Retailing USA

We've been writing extensively about what we termed the "small-format food retailing revolution" in the United States, and what we call the "international small-format food retailing revolution," since we started Natural~Specialty Foods Memo in August, 2007.

In conjunction with our small-format focus, we've written extensively about what we have called a return to neighborhood food retailing in the U.S., which goes hand-in-hand with the re-emergence of smaller-format food and grocery stores in the country.

We've received lots of correspondence from the mainstream press about our small-format food and grocery store and neighborhood food retailing reporting, coverage and analysis, including from reporters from the New York Times, Los Angeles Times (and other U.S. papers), business publications and daily papers from Canada, Mexico, Europe and Asia, and other mainstream publications, along with Blogs.

It has been interesting to receive this correspondence.

What we've also started to notice is that the mainstream press has discovered what we've been writing extensively about for 15 months -- that small-format food and grocery retailing and neighborhood food retailing is indeed a growing trend in the United States.

For example, on October 3, the Pittsburgh Post Gazette ran this story, "Tight economy has shoppers, grocers looking to neighborhood stores." The piece, by staff writer Teresa F. Lindeman discusses many of the issues we've been writing about since last August in terms of the external and economic factors involved in the small-format grocery store trend in the U.S.

It also talks about Tesco's Fresh & Easy Neighborhood Market, Wal-Mart's Marketside, Giant Eagle's Giant Eagle Express and SuperValu, Inc's Urban Fresh by Jewel" all small format chains, all which we've written about extensively.

And today, the Associated Press, which is syndicated to nearly every newspaper in the U.S., ran this feature story, Like shoppers' budgets, grocery stores shrink, which so far has been picked up and published by a number of American newspapers.

The AP piece also features a discussion of many of the issues we've been writing about, and suggested last summer would be occurring now, for the last 15 months regarding small-format food retailing in the U.S. and the greater focus on neighborhood markets.

Our analysis of the growing small-format food retailing trend in the U.S. isn't one that says smaller format, neighborhood grocery stores, which have never gone away completely in the U.S., are going to replace larger supermarkets and mega discount stores like Wal-Mart Supercenters, Costco club stores or Super Target combination food, grocery and general merchandise stores.

Rather our analysis is that the growing small-format trend, which is a unique event because major chains like Wal-Mart, SuperValu, Safeway, Tesco and others are driving it in the U.S., is a new layer of an old concept -- the independent neighborhood grocery store -- which is an American original.

Mega stores aren't going to go away. However, in our analysis fewer of such stores will be built and more smaller, neighborhood-oriented food stores will be built over the next decade.

We already are seeing evidence of this emerging. For example:

>Wal-Mart recently said it will built fewer of its combination food, grocery and general merchandise Supercenters (which average 180,000 square feet) next year and in 2010 than its original plans call for.

Wal-Mart also is building numerous smaller Supercenters and of course opened its first four small-format food stores, Marketside, in the Phoenix, Arizona Metropolitan region on October 4.

>Target Stores has recently decreased the size of some of its new Super target grocery and general merchandise mega-stores, and in some cases even shrank the stores significantly and decided not to add the grocery side in a few cases.

>Costco is looking at building smaller club stores in urban areas like the store it has in San Francisco's South of Market neighborhood. This even includes the possibility of building smaller, multi-story Costco stores in large cities.

>Supernatural foods retailer Whole Foods Market, Inc. has decided to downsize a number of the new stores it has in development. The retailer also is questioning whether or not it will even continue to build and open any additional stores in the 60,000 -to- 80,000 square foot range, something it has done a lot of in the last five years, in the future.

Our analysis is that just as cars, houses, bank accounts, retirement fund portfolios and other key aspects of American life are getting smaller, and will continue to do so for most Americans for the next few years, so too in many cases will food and grocery stores trend towards getting smaller.

But although size does matter, it's not just smaller square footage that's important in this analysis. What is equally important is that the reason the small-format trend is here to stay for a significant number of years is that it's neighborhood-driven. In other words, small-format food stores aren't just growing in quantity and popularity because they are small. They are doing so because they are designed to serve as neighborhood markets -- just like the independents have done and continue to do in the U.S. -- although to a far-lessor degree today than in the past because of the emergence of the big box chain store.

This means a few things.

First, it offers a new opportunity for the big chains to create small-format operations in conjunction with their larger store operations. Doing this can provide some real cost savings for retailers like Wal-Mart, Tesco, Safeway and the others.

Second, it's our analysis the small-format food retailing trend provides a renewed opportunity for independent grocers to thrive in the U.S. Independents are the original small-format neighborhood grocers and still do it the best.

Third, we see the small-format, neighborhood food retailing trend providing a new opportunity for traditional convenience store operators.

These chains and independents sit right between convenient retailing and neighborhood food retailing, straddling that definitional fence. As such, they can create new formats, as many are currently doing, that are hybrid grocery and convenience stores.

This offers the c-store chains particularly a new way to broaden their offerings away from the traditional c-store staples of alcoholic beverages, cigarettes, gasoline and "gut buster-quality" ready-to-eat foods, all of which are declining categories, into a more diversified product category mix. Not closing their traditional c-stores but diversifying with a new format. Pennsylvania-based Wawa is a good model of a very successful hybrid convenience store/grocery store retailer.

There is still a long way to go in the small-format trend in the U.S. We are just seeing the beginning of it at present. Our analysis is that the neighborhood retailing aspect of the small-format trend will get even stronger and we will see various different formats, as we are beginning to see at present, emerge to serve neighborhood residents' food shopping needs.

We will be covering and analyzing the small-format and neighborhood food retailing trend, as we have been for the last 15 months, extensively. We may even have a couple more new terms to coin.

Independent Grocer Memo: Going Where A Chain Store Used to Be; Texas Independent City Market Welcomes the Opportunity

Neighborhood Food Retailing USA

The Minyard supermarket chain may have given up on its store in the Westcliff Shopping Center at 3511 West Biddison Street in Fort Worth, Texas USA because it was underperforming. But that didn't stop independent grocer Kurt Jaeger from buying the store and spending a serious chunk of change to remodel the market from floor to ceiling.

Jaeger, who already owns an independent supermarket in nearby Burleson, Texas, says in a story published today in the Fort Worth Star-Telegram, that he knew the former Minyard supermarket could be a success if remodeled and given the proper independent touch the moment he toured the empty store.

So he bought it. Took it over and named it City Market, which is the name of his first store.

In July, Coppell,Texas-based Minyard Food Stores sold 37 of its stores to Grocer's Supply Co. of Houston. Grocer's Supply is Jaeger's wholesale supplier, and he acquired the site from them.

The store has been completely revamped. Walls and murals are freshly painted, shelves have been rearranged and restocked, and several new freezer cases have been installed. The produce section has been expanded, as has the selection, and the beer and wine offerings have also grown, according to the Forth Worth Star-Telegram. Tomorrow the store celebrates a big grand opening.

You can read the story, "Neighborhood grocery returns to Westcliff area," by staff writer Sandra Baker here.

As we often write, the independent food and grocery retailing sector in the U.S. is a vibrant one. Every so often a pundit or two will state that independents are an endangered grocery retailing species. However, American independents prove those pundits wrong each and every day, opening new stores and very seldom closing existing ones compared to other types of retailers.

Despite the growth of huge supermarket chains with a near national reach in the U.S., along with the discounters like Wal-Mart, Target and Costco that do have a national presence, the independent neighborhood grocer not only continues to survive in America, most are thriving.

Most independents survive and even thrive by sticking to the basics -- and then adding their own unique touches.

On the financial side they don't generally over-leverage themselves. They tend to follow a prudent pay-as-you-go philosophy of doing business.

On the merchandising side successful independents know the neighborhoods their store or stores are in like the back of their hands. They then create and nurture a niche -- be it upscale, natural-specialty or discount -- based on this knowledge of the market area.

In terms of customer service, independents invented this concept in grocery retailing. Nothing can be to high touch for many independents, be it offering carry out service, home delivery, special product orders or other neighborhood-oriented customer services features for their customers.

Successful independents also become part of the community rather than just being a grocer that has a store in the community. And like this community focus, most successful independents also create a sense of community and family among their employees and customers.

Another very important key to the success of independents in the U.S. today is the way their wholesale suppliers work closely with the retailers, offering financing, store design services, marketing, advertising and merchandising support, and other forms of expertise and help, like Grocer's Supply is doing with Kurt Jaeger and his now two City Markets stores.

Kurt Jaeger and his two City Markets supermarkets are a good example of creating a niche, offering superior customer service and focusing on community. The independent grocer has been very successful with this approach at his City Market number one. And we have a feeling if he follows that same formula he will make his City Market number two in Forth Worth, Texas equally as successful.

[Photo Credit: Paul Moseley: Forth Worth Star-Telegram.]

Monday, October 27, 2008

Retail Memo: Sprouts Farmers Market Store Number Eight Sprouts in Texas; Deep in the Heart of Whole Foods Market Country

Fast-growing, Arizona USA-based natural products retailing chain Sprouts Farmers Market opened its newest store in Whole Foods Market, Inc.'s home state of Texas on Friday (October 24) in a new 570,000 square foot shopping complex, Murphy Marketplace, in Murphy, Texas. Murphy is a suburb of Dallas.

The new Murphy Marketplace Sprouts is the natural grocer's eighth Texas store. It has additional natural markets set to open in the Lone Star State, where supernatural foods retailer Whole Foods was founded and is headquartered, in Austin. The national and international natural grocery chain currently operates 15 stores in its home state of Texas. Sprouts Farmers Market currently has stores in Arizona, California, Colorado and Texas.

The new Murphy, Texas Sprouts Farmers Market unit opened on Friday. But a big grand opening celebration by the grocer and the developer of the shopping center is planned for this Wednesday, October 29.

The $90-million Murphy Marketplace shopping and lifestyle destination center of which the new Sprouts natural market is a part is owed and was developed by Langford Property Company. The center is located at the intersection of FM 544 and Murphy Road in Murphy, which is in East Collin County. The Sprouts' store is the first natural-specialty market in the county, according to Eric Langford, president of the development company.

Langford says the joint Sprouts-Murphy Marketplace grand opening event will kick off with a ribbon-cutting ceremony at 10:30am at the Sprouts natural market. In conjunction with the ribbon-cutting ceremony, Langford says the center will dedicate a special clock tower, which was donated for the shopping center by the area Chamber of Commerce. The tower cost $10,000 and adds a historic flair to the lifestyle shopping center, Langford says.

The new Sprouts' store will hold all sorts of grand opening activities on Wednesday, including food tastings, special promotions and events tied-in with the clock tower dedication ceremony.

Like its other natural products markets, the new Murphy Marketplace Sprouts Farmers Market store specializes in farm fresh produce, purchased from local growers when possible. Sprouts also offers a large selection of vitamins and supplements, all natural meats, fresh seafood, bins full of bulk foods, an extensive selection of natural, organic and specialty grocery items, imported cheeses, deli meats, prepared foods and more.

Sprouts Farmers Market stores average about 15,000 square feet.

The Sprouts' natural market is the retail food anchor of the new Murphy Marketplace center which covers about 76 acres. Among the center's other retail tenants include: a Lowe's big box home improvement store, 24-Hour Fitness, Wachovia Bank, Saxby's, Massage Envy, Monarch Dental, Red Brick Pizza, Smoothie Factory, Planet Tan, Mattress Giant, Azura Nail Spa, Firehouse Subs, Cristina's Fine Mexican Restaurant, T-Mobile, Whataburger and more, according to the developer.

Being the only natural-specialty grocer in the county gives Sprouts a competitive advantage in this fast-growing and changing part of Texas. In fact, Sprouts has been locating a number of its Texas stores in regions in the state where no natural-specialty markets exist but where the emerging demographics and growth patterns offer good current and near term opportunity.

For example, According to the City of Murphy, the median household income for the city is $111,000-plus. Nearly 90 percent of the city's residents are college-educated. College-education is one of the key demographic variables that correlates to prime natural foods consumers. In fact, education-level is the top criteria Whole Foods Market uses in terms of locating one of its stores in a city or neighborhood.

Murphy's population has more than quadrupled since 2000, from 3,000 residents to more than 14,000 in early 2006. East Collin County, where the city is located, also is one of the fastest-growing counties in Texas. The new shopping center is regional in its scope, so the Sprouts' natural market is expected to draw from a much larger population base than just Murphy's 14,000 residents.

According to research conducted by the city, county and the developer of the new shopping center, FM 544 (the highway where the center is located) supports traffic of nearly 40,000 vehicles per day. In other words, at least 40,000 vehicles drive past the Murphy Marketplace daily.

The city of Murphy was established in the late 1800s during the time the railroad was extended into the area. It quickly became a shipping hub for the local farming and ranching families. As it did for other Texas towns, the railroad gave Murphy residents the opportunity to import building materials that were not locally available. Bricks that were mass-produced in Bedfordshire, United Kingdom and slates from North Wales were incorporated into the construction of new buildings.

Along with these new materials came the "Victorian" architectural style. The Victorians invented a way to make big panes of glass, called "sheet glass." So Victorian houses had bigger windows. Victorians also loved to decorate their houses by embellishing these large windows and by adding bay windows, iron railings, Flemish bonding and other decorative brickwork patterns. Early Murphy residents were quick to adopt this affluent style into their new homes.

Murphy Marketplace has blended many of these local design elements into the architectural design of the retail center. The center's -- and the new Sprouts natural market's -- design features include the use of soft earth tone colors, simple building lines, colorful canopies, decorative lighting and extensive landscaping in keeping with the community's design theme. Walking paths, shade trees, water features and gathering areas also provide a place to stroll, play and visit with friends, creating a strong sense of place in the center.

Memo to FTC: Whole Foods' Hegemony is baloney

In this October 21 piece, "Retail Memo: Natural Grocers Joining Sunflower Farmers Market in Opening First Stores in Whole Foods Market's Home City of Austin, Texas USA," we wrote about how two other fast-growing natural foods retail chains, Sunflower Farmers Market and Natural Grocers, are joining Sprouts Farmers Market in opening stores deep in the heart of Whole Foods Market, Inc. country -- Texas.

That Sprouts already has opened and currently operates eight natural foods markets in Whole Foods' home headquarters state, with more new stores on the way -- a new Sprouts store is planned to open in McKinney Texas in the summer of 2009 and another in Coppell, Texas in late 2009, for example -- demonstrates the marketplace (and Sprouts) disagrees with the argument by the U.S. Federal Trade Commission (FTC) that Whole Foods Market, Inc. has a monopolistic or hegemonic position in the natural and organic products retailing space as a result of its merger with Wild Oats last year.

Do smaller competitors really open stores in an aggressive manner in the home state of a retailer that has a monopoly in the natural and organic products retailing segment? Of course not. They do so because they see a niche and an opportunity to compete, which means competition exists.

Add to Sprouts the fact Sunflower and Natural Grocers are both opening stores in Texas and the FTC's argument becomes even more silly.

Further add the significant competition in Texas from supermarket chains like H-E-B and United Supermarkets' Market Street banner, Safeway-owned Randall's, Costco, Wal-Mart and a few others in the state (all retailers deep into the natural and organic foods categories) and the FTC's argument looks like pure folly.

And Texas is far from an isolated example. It's the same all over the U.S. Whole Foods Market is faced with stiff (and getting stiffer) natural and organic category competition from regional natural foods chains like Sprouts, Sunflower, Natural Grocers and others, including independents and Co-operatives in some places, and national and regional supermarket chains (and local independent grocers), as we wrote about in this October 19 piece focusing on the Colorado market.

Also toss in the national mass merchandisers and club chains: Wal-Mart; Target; Costco; BJ's Wholesale; and Wal-Mart's Sam's Club. All are deep in the natural and organic products categories -- and getting deeper. Then there is Trader Joe's. And we are just getting started. Tip of the iceberg stuff. There is no lack of category competition at retail for Whole Foods Market.

This competitive fact is true in California, Oregon and Washington State, the Midwest, the South, and the eastern U.S. In all U.S. regions natural foods retailers and supermarkets -- national, regional and independent -- all are challenging Whole Foods in the natural and organic products retailing segment in various ways. We can't find one region in the U.S. where a person with real knowledge of natural products retailing could say Whole Foods has a real monopolistic position. Rather, the supernatural retailer is actually fighting for its life nationally.

Despite this market reality, the FTC plans to hold a new hearing in February, 2009 to discuss what it says is Whole Foods Market, Inc.'s monopolistic position in the natural and organic category retailing segment. This despite the fact every shred of empirical evidence shows it isn't the case. We even wonder how many of the current members of the FTC will be around in 2009 when a new President has taken office following next week's election?

Perhaps it's time to have a Boston Tea Party in front of the FTC offices in Washington, DC as a symbol of how this government agency continues to waste resources and U.S. taxpayer money in its non-marketplace reality-based pursuit of a natural and organic products category retailing monopoly that doesn't exist. We suggest organic tea of course.

There are real monopolies out there after all. Whole Foods Market, Inc. just isn't one of them.

[Editor's note: Natural~Specialty Foods Memo owns no stock in Whole Foods Market, Inc. Nor does it have any sort of business or professional relationship with the company.]

Sunday, October 26, 2008

Independent Grocer Memo: The Battle of the Brooklyn Independents Need Not Be a Battle; It's All About Finding and Exploiting the Niches

Neighborhood Food Retailing USA

America's neighborhood independent grocers are often faced with competition from the "big guys" when a big national or regional grocery chain opens a store in the city or neighborhood where the independent has been doing business for years.

It's less often the case that another independent food retailer moves in and challenges the more established independent grocer on its home turf in the neighborhood.

However the dynamism of food and grocery retailing in the U.S., where thousands of independent grocery stores exist and more new stores open every week, is such that this occurs far more frequently than is commonly reported or discussed.

In fact, what is usually the case is in any given neighborhood in America at any given point in time, one finds multiple independents going not only head-to-head with supermarkets owned and operated by national and regional chains but with fellow independent grocers as well.

Al Sale (pictured at top left in his store), the 54-year-old owner of Good Food Supermarket (pictured in the second half of the photograph at top, left) on Court Street near Fourth Place in Carroll Gardens, Brooklyn, New York USA, has been one of the more fortunate independent grocers in America. Mr. Sale, who with his brother, Michael, has run Good Food for 30 years, has been blessed during those three decades by not having a competitive grocery store nearby -- neither a chain unit or fellow independent -- according to a story in yesterday's New York Times.

But that all changed about two weeks ago when a new independent grocery store opened near the Sale brother's (interesting last name for a grocer by the way) Good Food supermarket in the Carroll Gardens neighborhood.

That new independent supermarket, Gourmet Fresh, has been opened in the neighborhood by a family who formerly ran a Key Food chain supermarket in the area.

Al and Michael Sale hadn't been too worried about the new store since the name, Gourmet Fresh, suggested to the brothers the store would be selling specialty, gourmet and premium foods rather than a full selection of basic food and grocery products like their Good Food Supermarket offers.

But then the trucks started arriving. Al Sale tells the New York Times when he saw products like Coca-Cola and other basic groceries being unloaded at the Gourmet Fresh Market he began to worry a bit.

It appears Gourmet Fresh is offering items that match its name. But the new neighborhood supermarket also is offering basic food and grocery items, thereby serving as a direct competitor to Good Food Supermarket.

The Sale brothers are worried. The new independent supermarket is bigger than their store. It's more upscale in design and is offering more products than Good Food Supermarket stocks.

However, if our observations over the years are correct, Al and Michael Sale will figure out, like nearly all independent grocers do, how to not only survive the new competition but also how to thrive against it. It's all about finding a niche and becoming the best at it. This is something -- adaptation -- America's independent grocers are very good at doing.

And in the case of the Sale's and their Good Food Supermarket, they may have not had competition close by in the neighborhood for 30 years. However, lasting 30 years still takes hard work and dedication.

We suggest the Sale brothers place close attention to what the new independent Gourmet Fresh supermarket is doing for a couple months. Then figure out what they do best at Good Food Supermarket -- be it service, quality, niche merchandising, pricing, ect. -- and then do it even better than they have done it for the last 30 years.

Also, the brothers shouldn't forget about all the customer loyalty they've built up over the last 30 years in the neighborhood. Maybe it's time to thank those loyal customers with a valued-shopper discount program? Or hold a customer appreciation day -- reminding all who attend that the store has been around for 30 years and plans to be around for another 30 or more years.

Additionally, since Gourmet Fresh has just moved into the neighborhood, it's likely they are paying much higher monthly rent than the Sale's, who've been in their location for 30 years. Gourmet Fresh also has start up costs involved in creating and stocking the new supermarket.

This means Good Food Supermarket is at an advantage in terms of overhead. That could mean offering a few weeks of super hot, discount price sales promotions for the Sale Brothers. Offer basic and specialty groceries at hot prices so the store's regular customers might check out the new Gourmet Fresh store but will still load their pantries with sale priced items offered by the Sale brothers. Make those regular customers a price offering they can't refuse. Have some fun with the promotion: Call it the "Sale's Sale of Sales," for example.

Good Food Supermarket can't do anything about the fact Gourmet Fresh is a larger and more upscale looking store. But the brothers can play up on the fact they are the longtime local guys; the neighborhood guys. That's a niche worth making even stronger, especially in the face of the new competition, which almost always makes a grocer better than before.

Read the complete story from yesterday's New York Times, "Trouble, Two Doors Down," here

Friday, October 24, 2008

Food & Culture Memo: America's Up-and-Coming Food Capitals and the Growing Food Culture in the United States

Salt Lake City, Utah (above) is one of America's Up-and-Coming food capitals.

Americans no longer have to live in cosmopolitan cities like New York, Boston, San Francisco, Los Angeles, Miami or Chicago in order to have a wide range of top-quality food shopping and eating choices available to them, including natural, organic, specialty, gourmet and ethnic food products.

The explosion of upscale independent grocers and regional food retailing chains, specialty stores and national chains such as Whole Foods Market, along with farmers markets and culinary-focused restaurants, throughout America has changed the food culture and availability of premium-quality foods in what used to be referred to as "second-tier" food cities in the United States.

Not too many years ago, if a consumer wanted a decent selection of say fresh organic produce, Asian grocery products or gourmet delights in cities like Phoenix, Arizona, Salt Lake City, Utah or Baton Rouge, Louisiana, it was slim pickings in terms of retail food stores and other shopping venues that carried products in these and other natural, organic, specialty and premium foods categories. The same was true in the case of quality ethnic or healthy foods-oriented restaurants.

For the most part though, those days are gone. American cities like these and many others, including even smaller cities of under 100,000 residents, today have in most cases numerous food shopping choices, from the organic to the super premium, available to residents. There's supermarkets that stock an abundance of natural and specialty products, natural foods stores, specialty markets, farmers markets, combination grocery stores featuring premium, prepared foods and much more. And even more so, this food culture is growing rapidly.

Today's focuses on this fact in an article it calls "America's Up-and Coming Food Capitals."

In today's piece, Forbes looks at those "second cities" like Salt Lake, Phoenix, Baton Rouge, Chapel Hill, North Carolina and a few others, which the publication calls America's emerging food capitals.

Along with food stores such as Whole Foods and others, Forbes takes a look at farmers markets, restaurants, specialty shops and market halls on the retail side, and writes about the specialty ans artisan food purveyors in these cities who are making the emerging food culture possible with their respective creations and innovations.

For example, here is what the Forbes feature says about the emerging food culture of Salt Lake City, Utah:

"That's right. In Salt Lake City, a group of local farmers, cheese makers, bakers and chefs are remaking the city's culinary image. Rockhill Creamery, Beehive Cheese and Drake Family Farms utilize area grazing pastures to produce a variety of cheeses, including goat's milk, Gouda, feta and Gruyère. Crumb Brothers Artisan Breads hand-crafts olive, sourdough and ciabatta loaves, as well as other breads and pastries. And establishments like Bambara, a Kimpton Hotel restaurant that uses ingredients from local growers and ranchers, prove that Salt Lake can compete with the standard-bearers."

In terms of food retailing, Whole Foods not too long ago opened one of its bigger natural and gourmet food emporiums in Salt Lake.

Additionally, local multi-store independent supermarket chains Harmon's and Dan's Foods are major sellers of natural, organic, specialty and gourmet food and grocery products. There also are farmers markets in Salt Lake and numerous gourmet food and wine stores helping to establish the city's culinary reputation, in addition to fine restaurants and other premium food venues.

A major engine behind these emerging American food capitals is the "local foods" phenomenon. Artisan food producers have and continue to spring up all over America, focusing on producing products made from locally-grown fruits, vegetables and grains, along with locally-raised and produced animals, eggs and dairy products.

Local retailers (and branches of national retailers like Whole Foods and many others) and local restaurants are supporting these purveyors by buying and selling their local crops (in the case of growers) and products. Farmers markets also serve as a showcase for these locally-produced and created bounties.

An example of this is the Durham-Chapel Hill Metropolitan region in North Carolina, which Bon Appetite magazine recently named "America's Foodiest Small Town." There are 120 small farms within a 50-mile radius of Chapel Hill, according to the magazine, and close relationships between chefs and farmers are helping the town gain credibility as a culinary destination.

You can read Forbes take on these emerging culinary cities here. Forbes also offers a more in-depth look of the topic at this link: In Depth: America's Up-And-Coming Food Capitals.

The growth of an American food culture beyond these cosmopolitan cities is good for the food industry as a whole, especially the natural, specialty, gourmet and related segments.

The growing local foods movement also is good for communities. It allows for the building of an agricultural and entrepreneurial food industry in these cities and regions which in many cases disappeared decades ago when mass-market distribution meant the cheapest food, regardless of how far away it came from, was King. It gives local growers a local market. This means they can sell their crops for more more than they would get by selling it to outside manufacturing companies or national food chains.

A stronger food culture also offers more opportunities for retailers, particularly local independents, to create a niche in which they can compete in against the mega chains.

Lastly, this emerging food culture in the U.S. is just plain good for communities and residents. More choices means fresh, better quality foods, be it at supermarkets, natural foods stores, restaurants or farmers markets. More consumers of quality food also means the prices will come down, since such a food culture creates more demand for more natural, premium and locally-produced foods.

Thursday, October 23, 2008

Food & Politics Memo: It's Zen and the Art of Chocolate Making For City Council Member Turned Chocolatier and Confection Company Entrepreneur

Oakland, CA city council member Nancy Nadel shows off some of the chocolates that she has made from beans. Nadel spends her summers in Jamaica cultivating a cooperative of cacao farmers to supply her with fermented beans. (Photo Credit: Mike Lucia/Oakland Tribune)

From the Natural~Specialty Foods Memo Editor's Desk: Who says food and politics don't mix? Not longtime Oakland, California USA city council member Nancy Nadel.

Her honor, perhaps finding a lack of sweetness in her position as a local politician and lawmaker, decided to seek her sweet delights elsewhere: She founded a confections company, Oakland Chocolate Company, specializing in chocolate, and named it after the city she serves.

Nancy Nadel remains on the city council, she just added a second hat (well, a hair net actually) to her already busy life.

The Oakland Tribune newspaper profiled city lawmaker/chocolatier Namcy Nadel and her Oakland Chocolate Company in a recent article. We enjoyed the story, including the interesting juxtapositon of local politics, chocolate-making and small business building. We thought you would enjoy it too. Read it below:

Oakland council member finds her Zen in chocolate
By Cecily Burt
Oakland Tribune
October 18, 2008

After a grueling week immersed in the city of Oakland's problems, Councilmember Nancy Nadel unwinds in a unique way. She puts on a hair net, cranks up the reggae, and loses herself in swirling vat of warm, rich, dark chocolate.

Nadel has become a chocolatier in her (very little) spare time, launching the Oakland Chocolate Company with its roots in Jamaican soil.

"It's like my Zen," Nadel said last Sunday, the only day of the week she isn't buried in budgets and voluminous agenda packets or other issues affecting her West Oakland district. "The preparation and even the clean up, I get into it. When I give people my chocolate they are happier than when I talk about my progressive policies."

No doubt. But Nadel's progressive policies have a way of steering her life choices, and the decision to dabble in chocolate is no exception.

The story can be traced back to the last vacation Nadel and her late husband, West Oakland activist Chappell Hayes, took to Jamaica before he died. She has returned year after year during summer breaks from council business, staying with friends in the rural reaches in the parish of St. Mary on Jamaica's north coast.

Cacao farmers such as Steve Belnaviz eke out a living selling their just-picked beans to the government, which sends them to a state-run fermenting plant. Many of the poor farmers that Nadel met have land, but no money to harvest their cacao trees. Some have cleared the trees that shade the cacao to plant other crops.

"It's a beautiful place but it has the same kind of (economic) problems as Oakland," she said.

At first Nadel wondered whether she could help the farmers get better prices for their beans by helping them organize a fair-trade cooperative. The cooperative would ferment its own organic beans and sell the product in bulk to chocolate companies, basically removing the middle man. Then she thought, why not try her own hand at farming and making chocolate?

"As a city council member I've talked about sustainable issues and farming for a long time," she said. "My goal is to put my money where my mouth is."

So she took a weeklong class at UC Davis in chocolate technology and hasn't looked back. The Oakland Chocolate Company started small and Nadel intends to keep it that way for the foreseeable future, given the demands on her time.

For a time Nadel rented kitchen space at Brown Sugar restaurant on Mandela Parkway. But that arrangement required her to bring in her supplies and pack it all out at the end of the day. She recently subleased space from the maker of Barlovento artisan chocolates in Jack London Square. She bought a bigger machine for melting her chocolate and she can leave all her equipment, ingredients and finished products there.

Nadel is averaging about 200 pieces of filled chocolates or dipped nuts and fruits each Sunday, plus molded chocolate leaves and textured chocolate crunch bark. She eagerly gives visitors samples of nutty-tasting cocoa nibs to munch on as she describes how the milky white beans are harvested from football-sized pods that grow from the trunks of cacao trees, and then placed on trays and covered with banana leaves to dry and ferment.

It's taken years of research and outreach, but Nadel and her partners in Jamaica gathered with cacao farmers for the first time in February to discuss their plans for a cooperative and fermentary, and efforts to join the Jamaican Organic Agriculture Movement.

And it will be some time yet before a production-sized fermentary is established and the farmers can produce enough fermented beans to provide a steady supply to her company and other chocolate makers.

Still, the seeds are starting to take root.

"Two weeks ago was the first time I made chocolate from beans that I had picked, fermented and dried, and brought back 3,000 miles," said Nadel, sounding like a proud parent. "It's an incredible feeling."

A portion of the sales from the Oakland Chocolate Company will go to help build a production-sized cocoa bean fermentary in Jamaica.

To learn more about the company and the Jamaican farmers, or to order chocolates, visit

Wednesday, October 22, 2008

Food Retailing & Society Memo: Wal-Mart Foundation Gives New York USA Food Bank System Over Half Million Dollar Cash Donation

Volunteers at this Manhattan food pantry, which is one of the hundreds located in communities throughout New York that are supplied by the food bank network and other donors, pack food boxes for fellow New Yorkers who need food assistance.

The Food Bank Association of New York state USA said yesterday it received a check for $577,000 from Wal-Mart Stores, Inc. to be used by the state's food bank network to provide food and groceries for the increasing number of New York residents caught in the nation's severe economic recession.

A spokesperson for New York's food bank network told Natural~Specialty Foods Memo that because of the network's size and ability to purchase food and grocery products at bargain rates from manufacturers, it believes it can leverage Wal-Mart's $577,000 donation into as much as $6 million dollars worth of food to distribute to the state's needy.

Wal-Mart broke down its donation to the food bank network this way, in order to localize the monies as well as to provide a significant portion to the main food bank network: it gave a lump-sum cash grant of $322,000 to the New York Food Bank Network from its Wal-Mart foundation, and an additional award of $25,000 to seven of the Food Bank Association's eight affiliates. On top of that it gave an $80,000 grant to the Food Bank of New York City.

Yesterday, Wal-Mart representatives and leaders of New York's food banks also announced the mega-retailer would hold a major food drive at all of its New York state Wal-Mart and Sam's Club stores beginning next month and continuing over the following 12 months.

Scores of Wal-Mart-New York store associates also said on Tuesday they are planning to volunteer at the food banks and in other activities designed to help those in need of food assistance.

At yesterday's announcement, Wal-Mart also donated a semi-truck full of food and grocery essentials to the food bank network.

Last year, Wal-Mart Stores, Inc. gave more than $7 million in cash and in-kind donations to causes and organizations throughout New York state, according to audited records.

The retailer has a strong and growing presence in the Empire State, with 92 Wal-Mart Supercenter and Discount stores, 17 Sam's Clubs, and three distribution centers.

Wal-Mart gets lots of flack, some of it deserved, for being a big bad corporation and mega-retailer. However, we should note we did a little checking and none of New York's investment or commercial banks -- the ones with their headquarters in New York City and the ones that the American taxpayer is now bailing out to the tune of $700 billion -- have donated anything even coming close to the $577,000 Wal-Mart donated in just this one check to the state's food banks.

Love it or hate it, or remain in between, but Wal-Mart isn't asking the American taxpayer for any sort of bailout. And in these tough economic times it is emerging as one of if not the major corporate charitable contributor in the U.S.

If you are hungry and in need of food assistance in New York and elsewhere in the U.S., you're going to be mighty happy that Wal-Mart is willing to write half a million dollar checks, along with conducting year-long food drives and other activities which will raise even more than that for the state's food banks. In fact, Wal-Mart is making similar cash donations and conducting similar food drives throughout the U.S.

Meanwhile, many of those New York investment banks that should be giving big donations to the New York Food Bank Network this year are instead asking New York and American taxpayers for a bailout because in numerous instances, unlike Wal-Mart and other retailers that do business the old fashion way -- they buy goods and sell them for a profit, adding value along the way to consumers -- these financial institutions created a way of doing business that made a few rich at the expense of many. In fact, it is safe to say the behavior of many of these financial institutions is having a direct effect in adding more Americans to the food insecurity roles.

Packaging & POP Memo: Lights, Sound, Video - On Packaging and In-Store Point-of-Purchase Displays

From the Natural~Specialty Foods Memo Editor's Desk: High technology is making its way to product packaging and in-store point-of purchase displays. Specifically, according to a report in the marketing and advertising publication Advertising Age, lights, sounds and streaming video are beginning to show up on product packages and in-store point-of purchase (POP) displays.

Perhaps in today's 24/7 electronic, plugged-in world, packaging and in-store displays are the next logical extension of technologies such as streaming video? On the other hand, do consumers really care, especially when it comes to packaging? And will the added costs of such packaging enhancements really lead to increased sales for the brands and products that use the electronic elements on the product packages?

Perhaps in the case of in-store point-of-purchase displays, features like electronic lights, video and sound can help draw attention to the displays and thus lead to increased sales. After all, various types of interactive POP displays have been around for many years. They just aren't as sophisticated as the ones mentioned in the Ad Age piece.

When it comes to product packaging we are skeptical. In some special cases, depending on the nature of the product, such technology might have some merit. And in the case of new product introductions it might be interesting to create a limited run say of the new products' labels featuring electronic ink or some form of streaming video for promotional purposes.

But in the case of the majority of food, grocery and health and beauty care-general merchandise items we are hard-pressed to think at this point in time consumers will be drawn to such bells and whistles on the outside of the product -- it's labels.

Rather, we think brand building the good old fashion way will still be what's key. Quality, value, price, an attractive package or label, marketed to generate trial and then to build brand isn't going to be replaced by technology applied to packaging in the vast majority of cases.

We are far from Luddites though, so we welcome the innovation, especially for in-store POP displays, and in those particular product packaging cases like we describe above for product packaging. Generally, the more options the better.

And we like enjoy the "Gee Whiz" factor at times as much as anybody.

Of course there is the "green factor" as well. Such as since the packaging will be electronic, won't it have to be disposed of in special ways like most electronic waste is. That could be a real kettle of worms. It's also something it appears to us the developers and users of this new packaging have yet to take into serious consideration.

Read the report from the October 20, 2008 issue of Advertising Age below:

Soon, Your Mayonnaise Label May Have Sight, Sound, Video
Electric Ink Could Be Low-Cost, Energy-Efficient Option for Advertising
By Jack Neff
October 20, 2008

BATAVIA, Ohio ( -- In-store displays and product packaging are getting a whole lot flashier -- literally, with lights and streaming video.

Henkel's Right Guard is testing use of printed electronics to power flashing lights in corrugated in-store displays at Walgreens stores in the Chicago area, a first step for a technology from Arizona start-up company Nth Degree that could eventually bring low-cost streaming video to printed displays, packaging, direct mail or magazine inserts.

Other tests are in the works involving other marketers and formats, according to people familiar with the matter, including one expected next year involving printed electronics on packaging for a Procter & Gamble Co. brand, believed to be a tissue-towel brand. P&G declined to comment on the project.

Anil Selby, VP-business development for Nth Degree, declined to comment on tests involving marketers, though he said the company has been in discussions with P&G, General Mills, Coca-Cola Co. and PepsiCo, among others.

Even for hardened marketers, it's hard to get past the gee-whiz factor. "It's just incredible what they're doing," said Tom Owen, director of in-store merchandising for Henkel of America (formerly known as Dial Corp.), when Nth Degree executives showed him an 8½-by-11-inch sheet of paper running a video snippet from the original "Star Trek" series. (Moving newspaper photographs in Harry Potter movies come to mind.)

Limited rollout

Henkel is taking a disciplined approach to evaluating the technology's commercial potential, which it's been testing in 27 Chicago-area stores, compared with a control group using the same basketball-themed display without the electronic enhancements in 27 other Chicago stores.

"When it comes to investing in something nationwide, cost will be a factor," said Mr. Owen, who has been working with the Alliance in-store marketing unit of corrugated display maker Rock-Tenn Co.

Nth Degree, based in Tempe, Ariz., near Henkel's Scottsdale headquarters, uses "wafer printing," employing conventional presses to print layers of ink that act like circuit boards.

The Right Guard displays use battery packs, but Mr. Selby said it's also possible to affix a wafer-thin power source directly onto paper or a package. He said he sees printed streaming video as part of a second phase of the technology's rollout.

The wafer-based inks are 90% more efficient than fluorescent lighting, environmentally friendly and can be powered using solar collectors, Mr. Selby said. The technology can be mass-produced cost effectively for as little as 20¢ per unit, he added, though initial installations are in the $3 to $10 range. That's one reason the company has targeted store displays that can reach hundreds or thousands of people at once.

Scale, individual attention

Mr. Selby ultimately sees the technology being used for outdoor ads, or as a cost-effective replacement for LED video displays in retail. Nth Degree can make displays individually addressable, allowing different messages in different stores.

Magazines also have been taking a look at electronic-ink technologies, most notably in the case of Esquire, which used it on the cover of its 75th- anniversary issue. Get a behind-the-scenes look at how that cover was put together in a 3 Minute Ad Age.

Supply Side Memo: Long Live Newman's Own and its Charitable Mission: Famous Name Food Maker on New Product Introduction Rampage; Next Up Frozen Pizza

Ladies and gentlemen, start your ovens -- natural and premium foods company Newman's Own is getting into the ready-to-bake frozen pizza business.

The food company founded by and named after actor, race car driver and entrepreneur Paul Newman, who passed away last month, plans to soon introduce four varieties of all-natural, premium, frozen ready-to-bake pizzas called Newman's Own Thin and Crispy frozen pizza. The all-natural and premium frozen pizza pies come in four varieties: Supreme; Four Cheese; Roasted Garlic and Chicken; and Uncured Pepperoni.

According to Mike Harvard, vice president of marketing for Newman's Own, the all-natural, premium frozen pizza's will be competitively priced with the leading national frozen pizza brands. This has been one of the keys to the fabulous success of the Newman's own brand in fact. While offering a premium-quality product, be it salad dressing, pasta sauce, popcorn or ready-to-drink lemon aid, the food company always made sure to price the brand close to or just slightly higher than other national, mass market brands in the respective categories, even though its products are all-natural and of premium quality.

Asked why frozen pizza's are the newest line extension for Newman's Own, Harvard says: "For 25 years, our consumers have loved our all-natural products that help make delicious meals. So, we figured, why not make it easier and provide the whole meal. Our new pizzas deliver what consumers want --delicious, convenient meal solutions the whole family will love."

"I guess you could say we've jumped from the salad bowl onto the pizza pan," Harvard adds.

Of course he is referring to the fact the very first category Newman's Own began with 26 years ago was ready-to-pour salad dressings. We see lots of potential synergies between the two product lines, such as salad dressing and frozen pizza FSI coupon cross promotions, in-store tie-ins and the like.

The new frozen pizza line is being launched in stores this month in five test market areas. Those market regions are: New England; Albany, NY; Milwaukee, WI; Minneapolis, MN; and Charlotte, NC. Harvard says Newman's Own has plans to expand to other U.S. markets next year and roll the frozen pizza line out nationally by 2010.

Newman's Own Thin and Crispy pizza retails for a suggested price of $6.49-$6.99 for pizzas that range from 12.3 oz. to 14.7 oz, according to marketing vice president Harvard.

Among the supermarket chains in the U.S. states mentioned above involved in the frozen, premium pizza pie line's introduction this month include: Shaw's supermarkets; Price Chopper; BigY; Hannaford; Demoula's Market Basket; Roche Bros.; Foodmaster; HarrisTeeter; CUB Foods; Piggly Wiggly; Woodman's Markets; Copps; Sentry; Byerly's; Lund's; Kowalski's and a number of others.

That Newman's Own is introducing its new line of frozen pizzas just shortly after the death of Paul Newman is particularly bittersweet because along with popcorn (and pasta and Lemonade), pizza is said to be the award winning actor's other favorite food.

The Newman's Own brand frozen pizza's go from the freezer to the oven, taking only 10-12 minutes to bake, according to the company.

All four of the premium, thin crust frozen pizzas are trans-fat-free. Additionally, The crust is made with flaxseed, all-natural cheeses are used in all the pizzas, the roasted garlic chicken pizzas are made with only all-natural white meat chicken, and the pepperoni on that variety and on the Supreme pizza is uncured. The Supreme Pizza variety contains sausage, uncured pepperoni, green, red, yellow peppers, onions and cheese.

There are no artificial ingredients or colorings in any of the Newman's Own frozen pizzas, according to company marketing chief Mike Harvard.

Newman's Own is on a new product introduction rampage.

The food marketer recently introduced a new line of ready-to-eat breakfast cereals, Newman's Own Sweet Enough breakfast cereals. As is the case with the frozen pizza category, the new cereal line is the company's first entry into the shelf-stable ready-to-eat breakfast cereal category.

It's not an accident the food marketer's two newest product lines are both in the ready-to-eat and ready-to-heat segments.

Mike Harvard says a major segment focus of the company's new product development efforts is in the meal solutions sector. These are food products of various types that are ready-to-eat with either zero or only a slight (like adding milk to cereal or baking a frozen pizza) effort needing to be added by consumers. In other words, most of the value has already been created and added by the products' manufacturer.

Prior to introducing the new breakfast cereal line, Newman's Own introduced a new line of shelf-stable marinades named Dress Up Dinner Marinades, along with a new line of salad dressings in sprayer-style bottles called Newman's Own Natural Salad Mists.

These two new lines fit into the meal solutions strategy from the opposite end in that they are convenient, value added products that can be used by consumers to aid in the preparation of and to enhance a meal with very little preparation -- marinading chicken with the marinades and then simply baking or grilling, and spraying the salad dressing misters on a packaged salad mix and simply eating, for example.

Newman's Own was founded on a lark by Paul Newman and his buddy, the writer A.E. Hotchner, in 1982 in the kitchen of Newman's Westport, CT USA home. Newman and Hotcher, who wrote a best selling biography of Ernest Hemingway and the famous memoir King of the Hill about his life growing up in St Louis, Mo. during the Great Depression, along with many other works, made up a batch of Newman's favorite salad dressing -- the company's first commercial product sold at retail stores -- and gave it away to friends and family members for Christmas, creating a label that said "Newman's Own" in part as a tongue-in-cheek joke.

From there as is often said -- the rest is history. The company was launched by the pair with one key proviso -- that all of its profits after expenses would be donated to charity.

Newman and Hotchner followed up the salad dressing line with popcorn, ready-to-drink lemonade and pasta sauce. Today Newman's Own produces and markets 175 different varieties of food products in the U.S. and internationally.

And of course Newman's Own has even produced its own food company offspring, Santa Cruz, CA-based Newman's Own Organics, which was founded by and is run by Paul Newman's daughter, Nell Newman.

Still based in Westport, Conn., the charitable mission of Newman's Own is expressed in its Company motto: "Shameless exploitation in pursuit of the Common Good."

The food company's charitable mission is reflected in the following statement that will appear on every package of Newman's Own products: "The Newman's Own Foundation continues Paul Newman's commitment to donate all after tax net profits from this product and related royalties for educational and charitable purposes," says company marketing chief Mike Harvard.

The statement is being added to every Newman's Own product package to reflect Newman's wishes and plans that the company and its charitable mission live long after his death.

The Newman's Own Foundation, which is the charitable arm of the food company, have given over $250 million to thousands of charities since its founding in 1982. That's impressive. And a wonderful legacy for Paul Newman to leave.

Tuesday, October 21, 2008

Retail Memo: Natural Grocers Joining Sunflower Farmers Market in Opening First Stores in Whole Foods Market's Home City of Austin, Texas USA

Fast-growing Lakewood, Colorado-based Natural Grocers by Vitamin College plans to open its first natural foods and products store in Austin, Texas USA, the city where Whole Foods Market, Inc. was founded, is headquartered, and operates numerous natural foods supermarkets. The store will be located at 39th and Guadalupe streets in the hip Texas city who's residents have a strong appetite for natural foods.

The Austin, Texas store, which Natural Grocers says is scheduled to open in January, 2009, will be the natural grocer's first Austin unit and its third store in Texas. Currently there is one Natural Grocers store in Dallas, at 7515 Campbell Road, which opened just last month. A second store is scheduled to open next month in Amarillo.

At about 11,000 square feet, the Austin Natural Grocers market is far smaller than the typical new Whole Foods Market store.

However, it's not much smaller than the small-format natural foods stores being opened by two other fast-growing chain's -- Sunflower Farmers Market and Sprouts Farmers Market. The stores of these two natural products retailers average about 15,000 -to- 20,000 square feet. The Dallas Natural Grocers store that opened last month is about 14,000 square feet.

Sunflower Farmers Market also plans to soon open a store in Whole Foods Market's home city of Austin, joining Natural Grocers in its backyard invasion of Whole Foods' home turf. In June of this year, as we reported, Sunflower Farmers Market announced plans to open its first store at 1901 W. William Cannon Drive near the intersection of Manchaca Road. We also reported Sunflower said at the time it plans at least three stores in the Austin area.

Natural Grocers also says it plans to open at least two more stores in Austin if the first store performs well. Those stores would be in the city's Arboretum area and in South Austin, according to Kemper Isley, who is the co-president of Natural Grocers by Vitamin Cottage.

Asked why the retailer is going to locate a store right in the heart of Whole Foods country, Isley says "Austin's demographics fit well with the company's model of a traditional natural foods store." He also says he's not concerned about going into the backyard of Austin-based Whole Foods Market, Inc.

The Austin Natural Grocers' store will be located across the street from Central Market, the upscale natural-specialty format banner of 310-store Texas-based food and grocery chain H.E. Butt (H-E-B). Central Market stores are popular in Texas. The markets feature lots of natural, organic, specialty, gourmet, international and fresh, prepared foods in an upscale setting.

"We've always considered ourselves synergistic with Whole Foods and I think we’ll be the same way with Central Market," says Isely.

In other words, Natural Grocers by Vitamin Cottage believes being located across the street from the Central Market and not to far away from a Whole Foods Market unit in Austin will actually help the store's sales rather than hurt them. At least the Colorado-based natural retailer is betting on that premise.

The Natural Grocers' stores are a bit more traditional or orthodox natural foods markets.

For example, the stores offer only organic produce items, no conventionally grown. Additionally, The company's product ingredient standards tend to be stricter than those of Whole Foods Market and other chain natural products retailers. The stores also put a heavy emphasis on selling natural supplements, devoting about 20% of the store's square footage to the category.

Natural Grocers' stores are modern though. In addition to selling natural and organic food, grocery and non-foods products, the stores also offer specialty and gourmet items as long as those products meet its standards, for example. The store design also is modernistic in look and approach.

Like Sunflower Farmers Market and Sprouts Farmers Market, Natural Grocers puts an emphasise on price, trying to offer everyday retail prices lower than those at Whole Foods' stores and other competitors.

Natural Grocers by Vitamin Cottage currently has 28 stores. All but three of the stores -- the current Texas store open in Dallas and stores in Santa Fe and Albuquerque, New Mexico, -- are in Colorado.

But like Sunflower Farmers Market and Sprouts Farmers Market, Natural Grocers is in a fast-growth mode. Company co-president Isely says the natural products retailer is looking at four locations in North Texas beyond its existing Dallas store and will look at other locations elsewhere around the state.

Additionally, he says the retailer is looking to potentially open stores in Utah, Wyoming, Arizona and Oklahoma. All four of these states would be brand new markets for Natural Grocers.

The retailer first ventured outside of its home base of Colorado in 2003, opening the two stores in nearby New Mexico. It wasn't until five years later that it opened its first store in a third state outside of Colorado, opening the Dallas last month. Now another store follows in Austin in January, 2009 -- and Natural Grocers' store count and new market growth appears to be in rapid-development gear.

Related Stories from Natural~Specialty Foods Memo:

>October 19, 2008: Retail Memo: First Two Sprouts Farmers Market Stores Sprout in Colorado; Another Challenge to What The FTC Says is Whole Foods' Category Hegemony

>October 21, 2008: Retail Memo: H-E-B Set to Open 127,900 Square Foot Hybrid Mega-Store in Houston, Texas Suburb; Aisles of Organics and Premium Delights

>Click here to read a selection of past posts about the FTC/Whole Foods-Wild Oats acquisition issue.