Mid-Week Roundup

Industry news, ideas and information you can use

Whole Foods Gets It Right With New San Francisco Store

Above is a photograph of Whole Food's new store located in the City's Potrero Hill neighborhood. The store is the anchor of a mixed-use development which includes upscale condominiums above and on the sides of the market.

Whole Foods Market, Inc. opened it's newest Northern California store last week in San Francisco's Potrero Hill neighborhood. The store is 42,000 square-feet and is the retail anchor of a mixed use development in the neighborhood. NSFM wrote about the store, which we call a hip, lifestyle neighborhood store, last week. You can read our piece here

John King, the urban design writer and critic for the San Francisco Chronicle, says in an article and review today that Whole Foods got the store just right, creating a retail marketplace that not only fits perfectly with the neighborhood but also is inviting and welcoming for shoppers. "The new Whole Foods Market in San Francisco shows with meticulous precision why upscale grocery stores are coveted by communities that want to see themselves as fully rounded or on the map," says King in his article in today's Chronicle.

King isn't as crazy about the condominium project located above and around the Whole Foods store but nearly waxes poetic about the store's design elements and architecture. "The new Whole Foods is the supermarket equivalent of an iphone or Mini Cooper (car)," he says in his review. "It's designed to send a message that anyone using it is on top of their game."

King loves the store's Market Bistro restaurant (a new feature for Whole Foods) which has a bar made of recycled glass and red bar stools crafted from recyclable leather scraps.

In the review article Whole Foods' regional president for northern California Anthony Gilmore tells King about the new store, "We want to evolve and give our customers a continual since of discovery. I'll sit down with consultants and review every color, every texture, every piece of the design. It's this attention to detail and openness to design that makes King like the store so much. It's also what makes NSFM, who has visited the store, love what Whole Foods as done with the store in terms of incorporating the Potrero neighborhoods industrial past with its more upscale present in creating not only a retail food store but a shopping and lifestyle experience.

Read John King's full review in today's edition of the San Francisco Chronicle here. The photograph at top is from the San Francisco Chronicle. You can view a mini slide-show of the new Potrero Hill district Whole Foods store here.

Shoppers Rate New San Francisco Whole Foods Store

For an interesting look at what shoppers think of the new Whole Foods Market in San Francisco's Potrero Hill neighborhood you can take a look at the yelp.com review site. The sites slogan is "real people real reviews." You can read reviews from real live customers about their experiences at the new store here. So far the store has 4 out of 5 stars with 31 shoppers reviewing. Five stars is the best.

An Urban Design Expert's Thoughts on Whole Foods

Washington, DC-based Historic preservation and urban revitalization consultant Richard Layman has a related story on his blog titled "The seduction of Whole Foods Market." In it he mentions the new Potrero Hill neighborhood Whole Foods and talks about Whole Foods from his perspective as an urban revitalization and historic preservation professional. You can read his thoughts here.

Breaking News: New Whole Foods Store to Open in Oakland

Whole Foods Markets has more retail tricks up its sleeves when next week (on Wednesday, September 26) it opens its newest San Francisco Bay Area store near downtown Oakland, across the Bay Bridge from San Francisco.

The new store is something very new in terms of design for Whole Foods. The store has been designed to resemble a European Food Hall. Whole Foods' northern region president Anthony

Gilmore says he studied food halls in various countries and ended up modeling the new Oakland Whole Foods store after the Galeries Lafayette market in Berlin, Germany. (Read about Europe's Galeries Lafayette chain, owners of the Berlin store Whole Foods is modeling its new Oakland food hall market after here.

Gilmore says the grocer wanted to design a food hall rather than a conventional grocery store to celebrate what he calls Oakland's and the surrounding area's rich, progressive food culture. He says the Oakland store/food hall is an international food market with an international flair.

It's interesting to note that many years ago there was a popular international-style food hall called "Housewives Market" right near the new Whole Foods store in downtown Oakland. By choosing an international food hall design for this new store Whole Foods is paying homage to the downtown's historic roots as well as offering residents a completely new shopping experience. This will be the first Whole Foods for Oakland, which has a population of about 450,000. The new store is located at 230 Bay Place on 27th and Harrison Streets near Oakland's popular Lake Merrit.

The new food hall-style store is designed so the first thing shoppers encounter when they enter the store is the produce department. The store's architect's have then designed the store in such a way that its flow leads the shopper to each in-store attraction in a lively manner. Unlike the traditional supermarket, which generally has its perishables departments around the store perimeter and its dry grocery area in the center or core-of-the-store, the new Oakland Whole

Foods reverses that design. The perishables departments are in the center of the store while dry groceries are located on the perimeter.

The store has an indoor restaurant with an outside dining patio, similar to the Market Bistro Whole Foods debuted last week at its new store in San Francisco's Potrero Hill neighborhood. Specialty, ethnic and natural foods from all over the world also will be merchandised in the store in keeping with its international food hall design and theme.

The store is about 50,000 square-feet and is built in what was once a large Cadillac dealership building which the grocer completely renovated to create its food hall market. The original structure dates back to 1890 when it was built and first used to house a power-generating station. The building was renovated three times before Whole Foods bought it, the last tenant being the car dealership. It had been vacant for some time prior to Whole Foods buying the property.

The property and site are important to Oakland's history and community so Whole Foods' type of community and local retailing should make it not only a popular retail store but a community focal point and gathering place as well.

Retail Briefing

Hypermarkets Booming in China

Hypermarkets, those huge combination supermarket-department stores, are taking hold in China thanks to the lure of low prices, convenient one-stop shopping, accessible locations and the integration of other retail facilities such as restaurants, cinemas and coffee houses that can turn a shopping trip into a full day outing for Chinese consumers, according to a new study conducted by China-based TNS Worldpanel, a market research firm. The research firm says the growing popularity of hypermart shopping is creating a new shopping culture in China. You can read a complete summary of the research report here.

Wal-Mart Canada Going Fresh, Local in New Supercenters

Tomorrow (September 19) Wal-Mart Canada Corp. is opening five new supercenter stores in Alberta. The stores, which will all have grand opening festivities tomorrow, are in Wainwright, Vegreville, Lethbridge, Pincher Creek and West Edmonton.

The stores range in size from 101,000 to 205,000 square-feet and all include a complete selection of fresh foods and groceries as well as other standard supercenter offerings including fashion, electronics, home goods and more. The stores are said to stock over 120,000 products and will be the largest retail stores in Canada, according to Wal-Mart Canada.

Wal-Mart Canada is going upscale and employing local marketing concepts with these new supercenters. For example, the stores will feature a "Your Fresh Market" concept which is exclusive to Wal-Mart's Canadian stores. The Fresh Market will feature ready-to-eat prepared foods, artisan baked breads and deserts, and other prepared foods selections, all of which will be prepared in store.

The five supercenters also have expanded natural, organic, ethnic and specialty foods selections including perishable products as well as groceries. Organic fresh produce will be merchandised in the produce departments right along-side conventionally-grown. The stores are putting an emphasis on "Fresh" and the produce, meat, deli and seafood departments will reflect that fresh emphasis in their size (large), decor (upscale) and selection (broad).

Wal-Mart Canada is putting a local merchandising touch on the stores as well as part of what the retailer says is a major effort to make the supercenters "community" stores. The supercenters will feature Canadian produced beef, veal, chicken and pork. Among the Canadian-produced meats will include Paradise Valley free-range pork and Diamond Willow certified organic beef, which are produced in the local Alberta cities of Wainright and Pincher Creek.

Wal-Mart Canada is expanding this upscale, fresh, natural, organic and specialty format to its other supercenters in Canada after the five new stores open. The retailer opened its first Canadian supercenter about one year ago. There currently are 17 supercenters in the country and the company plans to have 28 of the units open and operating in Canada by early 2008. In addition to the current 17 supercenters Wal-Mart Canada has 270 standard discount stores and six Sam's Club Warehouse stores. The supercenter, Fresh Market format is the retailer's major emphasis at present in Canada.

Wal-Mart Canada is much more popular in Canadian communities than it's U.S. counterpart division. More than 100 communities in Canada have lobbied or petitioned the company to have supercenters located in their towns. Wal-Mart Canada also scores high in annual ratings of the "best companies to work for in Canada" surveys. There also has been little if any opposition from communities in Canada when Wal-Mart announces its desire to build a supercenter, unlike the case in the U.S. where communities in many parts of the country are conducting efforts to prevent the chain from building supercenters in their towns and counties.

Tesco Says its 'Locked and Loaded' For Fresh & Easy Launch

Tesco CEO Sir Terry Leahy told a reporter for the Dow Jones News Service that the grocer is "locked and loaded" and ready for its November, 2007 launch of its Fresh & Easy Neighborhood Market upscale convenience-type stores. (NSFM reported here that the first store might open as early as next month in Las Vegas.)

Leahy told the Dow Jones reporter on the sidelines at a media conference late last week the retailer's three main priorities in the U.S. with the Fresh and Easy stores will be community,

environment and nutrition. You can read the full report from Dow Jones here.

Kroger Co. Second Quarter Profits Soar

Kroger Co., the largest U.S. supermarket chain, saw its second quarter profits soar by 28% from the same period in 2006. The mega-chain raked in profits of $267.3 million for the period ending August 18, which was 58.3 million more than its Q-2 profits of $209 million in 2006. You can read more here from Forbes.com. Last year Kroger launched as one of its major initiatives a dramatic increase in merchandising and selling higher margin natural and organic products in most of its many store banners. This initiative gained steam late last year and has picked up even more momentum this year. Kroger's CEO is a major force behind the initiative saying he wants Kroger to be the retailer who brings organics to the masses at reasonable prices. It looks like the chain is doing something right based on these second quarter profit numbers.

From Clerk to VP: Woman Grocer makes Good At Kroger

Although it's changing somewhat, the retail supermarket industry has long been "a man's world" when it comes to high-level management and executive positions at food retailing companies. However, it's also historically been an egalitarian industry from the standpoint of formal education, giving entry-level workers a chance to move-up based on their job performance. One hasn't traditionally needed an MBA, or even a BA in many cases, to climb the ranks and become an executive.

In the case of Pam Matthew's, vice president of merchandising and marketing for Kroger's Central Division in Indiana, she's proven that gender shouldn't matter when it comes to climbing the corporate ladder. In fact she was recruited to her current position at Kroger by a man, who picked her over all the other potential candidates--who were all male. (See it's changing.) Matthew's, who doesn't have a college degree, also took advantage of the industry's promote-from-within ethic, combining determination with hard work to get to her current position. you can read a feature profile about Pam Matthews in today's Indianapolis Star here.

Industry News and Information Briefing

Aussie Food in Big Demand Globally

Australia's clean, green image of its fine foods and wine is attracting buyers from the new middle classes in emerging economies worldwide in such countries as China, Indonesia, India and other emerging regions, according to an Australian government report detailed in an article in today's The Age, an Australian publication. "In terms of food (and wine) our markets have traditionally been in high income countries like Japan, the United States, the United Kingdom, New Zealand and Hong Kong," says Tim Harcourt, the chief economist for Austrade, the country's economic and trade organization. You can read more about the growing market for Australian foods and wines here.

New California Food Legislation Could Be Trend Setting

The California legislature has passed two new legislative bills in the area of food health and safety which could portend changes in other states as well. The first new law requires manufacturers to clearly label any food intended for human consumption that contains products from a cloned animal or its progeny. The second bill requires fast food chains with 15 or more outlets to provide nutrition information for their products served in the restaurants, including clearly posted information on trans-fat content, sodium, carbohydrates and more. The Governor still needs to sign both bills before they become law. You can read about the two bills in more detail here.

Consumer Behavior: Business By the Numbers

The Economist magazine (09-13-07 issue) has a fascinating article about how businesses are increasingly turning to the use of mathematical algorithms (they have nothing to do with how Al Gore moves) to track and analyze consumer and shopper behavior. At its core an algorithm is a step-by-step method for doing a job. For example, a recipe is an algorithm for preparing a meal. Also, those decision-tree posters that hang on doctors office walls which help them to work out what is wrong with a patient from his symptoms are called medical algorithms, step-by-step methodologies for pin-pointing a cause in this case.

In the business world companies are increasingly turning to the mathematical science of algorithms to learn more about their customers and consumers in general better. A case in point is the Tesco Supermarket chain. Tesco, with the help of a marketing consulting firm named Dunnhumby, has dumped all of the data from the chains loyalty card users into a huge database and is using algorithms to analyse these shoppers, learn more about them and develop ways to meet their every grocery shopping need. You can read the Economist article here. This information has great utility for all business sectors in the natural and specialty foods industries.

Confection Industry Giant Mars Says No to Vegetable Oil

NSFM has reported on the move by some major confection industry makers and industry trade groups to get the U.S. Governemnt to allow chocolate-makers to add up to 5% vegetable oil to their products rather than using 100% cocoa butter, which currently is the case, and still be able to call the confections product chocolate or pure chocolate. Yesterday confection industry giant Mars announced it's against this move by the other candy-makers and said it opposes any such legislation. "Today Mars U.S. chocolate products are pure, authentic chocolate and they are going to stay that way," said Todd Lachman, president of Mars Snackfoods USA. You can read more here.

The fastest growing segment in the confection industry is in high, quality premium chocolates and all-natural and organic varieties. Mars and others are going after that market via acquiring smaller, gourmet confection companies as well as creating new premium products. NSFM thinks Mars was smart to get out front and let consumers know the company is against any plans to "adulterate" chocolate quality. A nice way to differentiate themselves from the other large confections companies and to strike a blow in the effort to brand the company as premium. Mars CEO Lachman made this announcement yesterday at the "All Candy Expo" confections show in Chicago. We think that was a savvy move--making the announcement at the show with all the major confection industry players in attendance as well as the media.

New Categories: Yoplait's Fizzy, Carbonated Yogurt in a Tube

Yogurt maker Yoplait (owned by General Mills) has introduced a new carbonated, fizzy yogurt product that comes in a tube rather than a traditional plastic container. The product is named Fizzix. The company created the product for and is targeting it to the "Tween" demographic. This group consumes less yogurt than other demographics and is growing rapidly. Overall yogurt category sales are growing rapidly as well. Yogurt category sales more than doubled between 1998 and 2006. Health and convenience are the two primary factors attributed to this rapid growth in sales. You can read more about the new carbonated yogurt category and new Yoplait product here.

U.S. Department of Defense Grocers Go Organic

Sales of organic foods in the U.S. have grown by about 25% over the last seven years. And it hasn't just been the private sector food retailing industry that's taken notice and increased its organics product selections year after year. The grocers at the Defense Commissary Agency (DeCA), the U.S. Defense Department organization responsible for running the numerous supermarkets in the U.S. for members of the military, says it has more than tripled the number of organic products on its stores' shelves over the last few years.

"To ensure our patrons have available the products they want we keep an eye on trends," says DeCA CEO and director Patrick Nixon. "Because of this you will see organic selections on our store shelves. Organic alternatives are side-by-side with similar non-organic items (integration) throughout the commissary," Nixon says.

The Department of Defense-operated stores sell grocery products for about 30% less than the average for-profit supermarket, according to Nixon. This 30% price reduction applies to organic products as well making them relatively affordable for military customers.

The Defense Commissary Agency operates stores worldwide selling groceries to active-duty military members and retired veterans and their families. The agency doesn't make a profit on its products allowing it to price everything it sells in its stores at cost plus a 5% surcharge which goes to pay for building new commissaries and remodeling existing ones.

New Survey: Americans Prefer Domestic, Local Foods

A new survey conducted by the Leopold Center for Sustainable Agriculture at Iowa State University found that 85% of Americans have confidence in the safety of their local and regional food systems. However only 12% of those survyed expressed confidence in food produced and imported into the U.S. from anywhere else in the world. "American's remain extremely wary of foreign foods," says Richard Pirog, the deputy director of the Leopold Center and the co-author of a paper about the study's results and implications. "That was something that was very apparent (in the results).

These numbers are very stark." You can read a complete summary of the survey here. The survey's numbers are indeed very stark and if true--and varified by similar surverys--point to a particluarly troublesome situation for specialty and natural foods importers and for foreign food and beverage companies doing business in the U.S.

Unified Western Grocers to Acquire Seattle Wholesaler

Los Angeles, California-based Unified Western Grocers is acquiring Seattle, Washington-based wholesaler Associated Grocers. Associated Grocers shareholders approved the sale to Unified Western Grocers at a special meeting on September 14, 2007. Unified Western Grocers is the largest wholesale grocer in the Western United States and is member-owned. Associated Grocers has been selling groceries to independent retailers in the Pacific Northwest for almost 75 years.

Unified and Associated have been competitors in the Pacific Northwest market for a number of years. The acquisition makes sense for both companies since Unified is the larger of the two. Also the independent retail market in the region has consolidated considerably over the last 10 years and Unified is better able do its size and resources to provide not only the best wholesale cost of goods to independents but also provide the myriad of services they need to compete against the region's retail chains which include Safeway Stores, Kroger-owned Fred Meyer and numerous others.

Unified also has a large specialty and natural foods division called Market Centre Foods. The specialty & natural division serves Unified retail members and also chain operators including Raley's Superstores and Save Mart in California and Nevada as well as other chains throughout the Western U.S. You can read more details about the acquisition here.

Mid-Week Roundup Ender

Health and wellness is a growing movement among people of all ages. It's far more than even a trend. Rather, we see it as a movement that's here to stay--and will only get bigger as people continue to live longer and want to live healthier lives. The health and wellness movement offers huge opportunities for manufacturing, marketing and retailing companies as many have already discovered and others are beginning to. The wellness movement offers great opportunities for retailers and as an extension to their supplier companies. The current monthly issue of Grocery Headquarters magazine (Sept., 2007) has a cover story on health and wellness and the marketing opportunities it presents. You can read the story here.

Mid-Week Round-Up

Mid-Week News, Information and Ideas You Can Use

Whole Foods Opens Hip, New Lifestyle Store In San Francisco

Whole Foods Market, Inc. opened its newest store in San Francisco today in the City's Potrero Hill neighborhood. The new 42,000 square-foot store reflects the neighborhood's hip, diverse and upscale location. The neighborhood is a mix of professionals, artists, light manufacturing and has increasingly become one of the City's most desirable places to live. The 42,000 square-foot store is the largest of the grocer's three stores in San Francisco. Whole Foods currently has 21 stores in Northern California.

The store new hip, lifestyle-oriented store features a small in-store day spa, a first for any of Whole Foods' stores. The store also has a "street-side" bistro where diners can hang out at an upscale wine bar, eat restaurant-quality meals and snacks and listen to a live DJ spin various tunes. The bistro concept also is a new development for Whole Foods.

The new Potrero Hill neighborhood store also is making a commitment to selling locally produced foods from area growers and artisan producers. For example, the store features high-quality confections and chocolates created by local Bay Area chocolatiers. The bistro and the store also will carry an exclusive to Whole Foods, a Cabernet-Merlot wine blend produced by York Creek Winery, which is located just down the street from the store and owned by San Francisco entrepreneur Fritz Maytag, who also owns Anchor Steam Brewery. The brewery is located in the Potrero Hill neighborhood and the store is merchandising a large selection of the local brewery's micro-beer varieties as well.

The store features locally-grown organic produce, baked goods and natural and specialty grocery products and beverages. The bistro also has a complete selection of upscale prepared grab-and-go meals. The store also has a selection of Asian Stir-Fry and Italian foods kits for ethnic food lovers who want an authentic meal but either don't cook or don't want to. The kits include everything needed for an authentic Asian or Italian meal and the assembly takes the shopper just a few minutes at home.

The Potrero Hill store is having its grand opening today (Wednesday Sept. 12) and Whole Foods kicked the opening off with a full-page advertisement in the popular Food Section of this morning's San Francisco Chronicle. The grand opening day with the store's upscale coffee bar opening at 7:AM, followed by a special bread baking event in the in-store bakery at 8:45AM. The "street-side" patio bistro opened at 11:AM for lunch and has a DJ all day and throughout the evening playing music for shoppers and patrons.

The store also has creating a program called "Nickles for Non-Profits" which will give selected local non-profit groups five-cents in the form of a donation for every paper or plastic grocery bag shoppers bring into the store to be recycled. The first non-profit group to benefit from the "Nickles for Nonprofits" program is "Creativity Explored," a San Francisco non-profit visual arts center where artists with developmental disabilities create, exhibit and sell art. Read more about "Creativity Explored here. The new Whole Foods store will donate the nickle per bag to the group beginning today and for the rest of the year to support their programs.

Speaking of Whole Foods Market, Inc. and San Francisco...It seems the supernatural grocer is eyeing (and negotiating for) another store location in the City. With the new Potrero Hill store opening today this potential new location that would bring the retailer's current total store count in San Francisco to four--three current with the potential new location making it four.

A local San Francisco neighborhood newspaper, The Noe Valley Voice, and Natural~Specialty Foods Memo (NSFM) Sources report that Whole Foods is in negotiations with real estate representatives to purchase the Kroger-owned Bell Market on 24th street in the City's very upscale Noe Valley neighborhood. "It's not a done deal yet. I'm not going to verify one way or another," said Mark Compana, a broker who represents Bell Market's property owners. "They are going through due diligence," Compana told the Noe Valley Voice in verifying the deal talks were progressing,"and I don't want to comment beyond that."

Whole Foods also has a posting on its website under the "Stores in Development" section which says a 16,790 square-foot Whole Foods Market is coming to San Francisco's Noe Valley. That is the square-footage of the Bell Market and there aren't any other buildings in the neighborhood that approximate that size according to neighborhood real estate sources we talked to.

The Bell Market store size, 16,790 square-feet, is rather small by Whole Foods' current store size standards. For example the retailer's new store opening today in the Potrero Hill neighborhood is 42,000 square feet. However, the Noe Valley neighborhood is a perfect location for a Whole Foods store despite the site's existing store size. There isn't much if any room for expansion on the site.

The Bell Market store has always done well in its location. It was originally part of the Cala Foods/Bell Market chain, a long-time locally-owned 18-store grocer in the Bay Area. Cala Foods, the parent company, was purchased by Kroger Co. some years ago as part of its buyout of Ron Burkle's Yucaipa Companies supermarket holdings. Those holdings included Ralph's Supermarkets, Food For Less, Boy's Markets, Cala Foods and a number of other banners all based in California.

Kroger decided to sell the Cala/Bell stores last year as they were too small for Kroger's brand of merchandising as well as the fact that the chain decided they didn't want to remain in the Northern California market. Seven or eight Cala and Bell Market stores in San Francisco and Marin County were purchased by an independent IGA group called Delano IGA. The President of Delano IGA, Harley Delano, was at one time the President of Cala Foods when it was an independent operation.

Delano IGA and Kroger were unable to agree on terms for the purchase of the Noe Valley store so it remained under operation by Kroger's Southern California-based Ralph's Supermarkets operation. The store is a winner--in the mid 1990's the store was doing over $300,000 per-week in sales in less than 17,000 square-feet of selling space. It also was the most profitable of all the Cala/Bell Market stores in the region.

Should Whole Foods take over the site and open a store there it would be a perfect location for the grocer's merchandising philosophy. The neighborhood has a very high college educated demographic, including post-graduate and professional degree holders. It also has an age demographic that fits Whole Foods perfectly. Lastly, neighborhood income levels are among the highest in the City.

Additionally, the Bell Market site is the only decent sized supermarket in the neighborhood. There once was a natural foods store, locally-owned small chain Real Foods, right across the street but it closed a couple years ago do to an inability to come to a lease agreement with the building's landlord.

More New Store News of Note

Whole Foods to open New Florida Store Filled With Special Features

Whole Foods Market, Inc. has announced it will have the grand opening for its newest store, located in Coral Gables, Florida, on Wednesday, September 26. The new Florida store is nearly 48,000 square-feet.

Among the store's features include indoor and outdoor cafes's, a 3,000 square-foot produce department with over 500 varieties of fresh produce, large fresh meat and seafood full-service cases, and extensive in-store prepared foods offerings including an in-store smoked meats station, an old-world charcuterie (delicatessen) featuring hand sliced turkey, salami's and more, and numerous other in-store specialty and prepared foods offerings. The store also is including a major focus on prepared Latin Foods items and groceries for the region's large Hispanic population. Read more about the new Whole Foods' Florida store's many in-store special features and departments here.

Major New York Development Finally Gets a Supermarket: Amish Markets to Open Gourmet Supermarket in Long Island City

The massive Long Island City (LIC) mixed-use development in New York has for some time had a major drawback which has prevented many people from moving to the development...it's been without a supermarket or grocery store.

This is changing however according to New York real estate broker Andrew Fine. Fine says the developer has inked a deal with Amish Markets for the upscale market operator to locate a 20,000 square-foot gourmet supermarket in Long Island City. The store will be located at Center and 47th Avenue and is expected to open in February, 2008.

Amish Markets currently has five upscale gourmet markets in New York. Three stores are in Manhattan, one is in Hyde Park, and the newest store is located in Forest Hills. The new store in Long Island City will be the gourmet grocer's largest store to date.

Amish Markets puts an emphasis on fresh produce, baked goods and perishables and offers a large selection of specialty, gourmet and natural groceries in addition to basic grocery items. The stores also have fresh meat and seafood departments and in-store deli's featuring lots of prepared foods items. The stores also have upscale salad and olive bars and sell gourmet coffee drinks from an in-store coffee bar.

The store's also feature their own gourmet private label line called "Amish Fine Food." The line includes olive oils, spring waters, spices and extracts, roasted peppers, sundried tomatoes and other items. Amish Markets also operates a full catering program through its stores and online at its website.

Georgia C-Store Retailer Going Upscale, Gourmet With New Format Design

The Parker Companies, owners and operators of the Parker Convenience Store chain based in Savannah, Georgia, has hired a Tampa and Miami, Florida-based design firm called api (+) to develop what the family-owned retailer says will be an all new 8,500 square-foot gourmet convenience store format called Parker's Market.

The retailer currently operates two Parker's Market Gourmet Convenience Markets in Savannah, Georgia. The stores feature over 5,000 specialty and standard food products ranging from gourmet hot sauces to imported cheeses and deli items. The stores also offer fresh made breads and pastries, desserts and fresh prepared meals 24 hours a day, including entrees and special picnic lunch packages.

The upscale Parker's Convenience Markets also sell fresh cut flowers and a large selection of specialty wines and beers. The stores also offer many conventional convenience store features in their upscale setting including gas fueling stations, non foods, maps, batteries and other convenience-type items.

The new 8,500 square-foot concept is said to be more upscale and larger than the current two stores. The news stores will also feature expanded prepared foods offerings and an increased selection of specialty, gourmet and natural groceries and beverages. Once the format design is competed Parker plans to build stores in select locations throughout Georgia.

The company said in hiring api (+), a noted retail design firm that has done work for Whole Foods Markets, Inc. and Wal-Mart among others, it plans to have the firm position the Parker's Markets as "the premier upscale provider of food retailing and convenience in the market."

"Being an environmental branding and creating design firm, we are planning to position the Parker's Market as the "Better Convenience Store," says Juan F. Romero, president of api (+).

The Parker Companies operates a 23-store chain (all located in Georgia) of traditional Convenience stores called Parker's Convenience Stores, an oil and gasoline distribution arm called Parker Oil, A large self-service, upscale laundromat called Spin City in Savannah, and a self-storage facility called Urban Attic also located in Savannah, in addition to the two current Parker's Market upscale convenience stores.

Ethnic Marketing Research: Hispanic Consumers

The U.S. market for Hispanic foods and beverages continues to grow dramatically, fueled not only by the growing number of Hispanics moving into the U.S., but also by the desire for non-Hispanic Americans to buy and consume Hispanic foods.

A new research report by market research firm Packaged Facts takes this fact into account in its new (August, 2007) report, "Hispanic Foods and Beverages in the U.S. In the report the research firm says food and beverage manufacturers targeting the U.S. Hispanic food and beverage market should position their products within one of three category segments depending on the type of consumer targeted. The report reinforces the fact that growth in the $5.7 billion annual

Hispanic market is driven not only by the growth in the Hispanic population but also by the expanding taste's of non-Hispanic Americans.

Packaged Facts has broken down the Hispanic food and beverage market into three groups. The first group is called "Mainstream Mexican." This group encompasses products that have become mainstays in the U.S. packaged foods industry such as nachos, salsas and taco's. "Mainstream Mexican" products also include refried beans, tortilla chips, burritos and margarita mix. The report calls these products the "backbone" of the industry.

The second major segment is called "Authentic Hispanic." These are foods and beverages imported into the U.S. from Hispanic or Latin American countries. These foods may or may not be Hispanic but they were made across the border. For example, a canned corned beef product imported from Argentina or a canned fruit product from Costa Rica would be classified as "Authentic Hispanic" in addition to a traditional imported Hispanic items.

The "Authentic Hispanic" segment also includes products made in the U.S. but made using traditional recipes as well as basic staples made by Hispanic manufacturer's and carry what is described as an "authentic" brand, the report says.

The last segment, "Nuevo Latino," includes products with what the report calls a "South of the Border" flair. This includes traditional American made foods made with Hispanic ingredients and new creations that combine a variety of Hispanic flavors and food traditions.

The Packaged Facts report says it's important to understand these three segments and how a manufacturer's and marketer's product fits into them in order to properly target a product for maximum sales effectiveness.

The report also details the top ten product categories in the Hispanic food and beverage market as a whole today. They rank as follows: Tortillas/taco shells, salsa, entrees/hand-held items, refried beans, cooking sauce/marinade/sauce, bakery items, seasoning/spice mixes, cheese, picante, and rice/rice mixes.

Packaged Facts estimates the total Hispanic food and beverage market at about $5.7 to $6 billion. That's an increase of 21% in five years, from $4.7 billion in 2002. The research firm predicts growth of about 7% over the next 4-5 years with estimated total category sales of about $8.4 billion in 2011.

The major growth categories--all which will experience double-digit growth during this 2007-2011 forecast period are: entrees/hand-held items, fruits/vegetables, meat, milk/milk-style beverages and yogurt/cultured dairy drinks.

The major growth factor for the Hispanic food and beverage market is the continuing increase in the U.S. Hispanic population, especially for those products classified as "Authentic Hispanic," says the report.

The current Hispanic population in the U.S. is about 44-45 million people. Hispanics are today the largest minority group in the U.S. and make up almost 15% of the total population. By 2030 The U.S. Census Bureau projects that one out of every five U.S. residents will be Hispanic.

You can get information on how to purchase the complete Packaged Facts research report here.

September 15th Begins National Hispanic Heritage Month, September 16th is Mexican Independence Day

September 15 begins the month long national celebration of "Hispanic Heritage Month," from September 15 to October 15, 2007. The celebration is a month-long event which celebrates the Hispanic heritage and culture in the U.S. The observation began in 1968 by U.S. President Lyndon B. Johnson as "Hispanic Heritage Week" and was expanded by President Ronald Reagon in 1988 as a month-long celebration. you can learn more about the event here and also read more about "Hispanic Heritage Month" and Hispanic American's in the U.S. in this U.S. Census Bureau report here.

September 16, the day after the month-long heritage celebration begins, is the Mexican Independence Day Holiday ( El Grito de Independencia). This holiday is important to Mexicans and Mexican Americans. It celebrates Mexico's independence from Spain declared in 1810 and recognized by the Spanish in 1821. You can read about the history of Mexican Independence Day here.

A major aspect of the Mexican Independence Day celebration in Mexico and among Mexican Americans in the U.S. is a fiesta--a celebration of the day featuring lots of authentic Mexican foods and beverages, family and friends.

"Hispanic Heritage Month" and "Mexican Independence Day" present a unique opportunity for specialty and ethnic food and beverage manufacturers, marketers, brokers and retailers to create promotions focused on Hispanics and these important celebrations. In the U.S. this is a time when sales in the Hispanic food and beverage category explodes, lead both by Mexican Americans and non-hispanics who enjoy the celebration as well and buy and prepare Hispanic foods and beverages to celebrate.

For manufacturers in the Hispanic foods and beverage market this month-long celebration is an opportunity to partner with retailers to increase category sales significantly. For retailers the celebrations provide an opportunity to increase impulse sales in the Hispanic category dramatically with in-store events and promotions, media advertising and support of Hispanic cultural celebrations in the community.

For example, in California, the U.S. state with the largest Hispanic population, Modesto, California-based Save Mart Supermarkets devoted its entire mass-mailed advertising circular this week to a Hispanic foods and beverages theme. The chain is tieing-in store displays and tastings with the ad theme as well. The week-long promotion features hundreds of authentic and more common Hispanic food and beverage brands and items across all store categories--fresh produce, meats, groceries, perishables and non-foods. All the items have discounts for the week and many of the items are displayed in special point-of-purchase displays in-store.

Also in California specialty Department store retailer Macy's, which also merchandises a large selection of specialty, gourmet, ethnic and natural foods in it's Cellar Departments, is making a major promotional effort for "Hispanic Heritage Month." The retailer is a major sponsor of the International Mariachi Festival in San Jose, which is being held September 26-30. The festival is a 5-day celebration of Hispanic music, dance, food, culture and family. You can learn more about the festival here.

Macy's took out full-page color advertisements in today's San Francisco Chronicle, San Jose Mercury News and other major Bay Area newspapers, saluting "Hispanic Heritage Month" and the Hispanic American Community, also mentioning their support of the festival, where the retailer will have a special Macy's stage.

Pleasanton, California-based Safeway Stores, Inc. also is a sponsor of the festival as well as being a major sponsor of the Mexican Heritage Plaza facility in San Jose where the mariachi festival and Mexican Independence Day celebrations are being held.

Safeway Stores also is promoting Hispanic foods and beverages in their advertising circular and in-store leading up to Mexican Independence day on September 16th. Safeway has been a long-time promoter of Hispanic products at both its Safeway banner stores in Northern California and Von's banner in Southern California.

In neighborhoods where there are a high number of Hispanic residents Safeway tailors its stores so that they carry an expanded selection of Hispanic products across all store categories. The chain also promotes the category throughout the year as well as in September. The retailer also is a major supporter of initiatives in the Hispanic community and advertises on Spanish language TV and radio stations as well as in Hispanic print media publications.

Another sponsor of the International Mariachi Festival is Hispanic foods manufacturer El Mexicano, which is based in the San Jose area. The company produces and markets everything from Hispanic cheeses to canned and packaged Hispanic grocery products.

The company's products are sold throughout the Western U.S. and are making inroads nationally, especially in the Midwest. El Mexicano is promoted all of its products this month and participating in numerous promotions with supermarket chains and independent grocers.

It's Hispanic products are primarily "authentic" for Hispanic consumers but the company also has been coming out with more and more crossover items that appeal to non-Hispanic consumers as well as to Hispanics.

Many other manufacturers, marketers and retailers throughout the country are creating or participating in Hispanic food and beverage promotions and sponsorships this month. The Hispanic category is huge--and growing. It offers an opportunity for those involved in its selling space to build loyalty with Hispanic consumers as well as increase brand identity and sales.

Wal-Mart Begins Major Hispanic Heritage Month Promotion September 15

Wal-Mart, the largest retailer in the U.S., is participating in "Hispanic Heritage Month." About 400 Wal-Mart stores nationally will celebrate the month-long event with in-store Hispanic product promotions--including foods and beverages--radio station live remotes, live music in store parking lots, special store appearances by Hispanic personalities and numerous other promotional events and activities.

Wal-Mart is the largest private employer of Hispanic Americans in the U.S. The retailer says more than 154,000 Hispanic Americans currently work for the chain. Additionally, two members of the retailer's board of directors are Hispanic Americans. Read more about Wal-Mart's September 15 to October 15 "Hispanic Heritage Month" promotion and celebration here.

News and Information Briefs You Can Use

Better Nutrition Info Equals Good Marketing Too...

Packaged goods companies Kellogg and General Mills will begin putting symbols that represent and identify nutrition information on their breakfast cereal boxes as part of a growing trend to provide more nutrition information for shoppers at the point of purchase. The companies are doing this voluntarily but the FDA has invited food companies to show the agency how using front of the package nutrition labels can improve public health. Read the full story from the Associated Press here.

Aussies, Germans, Others Say Yes to Gourmet McCafe...

McDonald's Gourmet McCafe coffee shops are becoming a big hit in Australia, Germany, Portugal, Argentina and Brazil even though they have yet to gain popularity at home in the U.S. There currently are over 400 McCafe's in Australia and over 300 in Germany with plans to built more in both countries. McDonald's recently entered Japan with its Gourmet cafe format and plans on building numerous McCafe's in Tokyo and elsewhere in the country. Read more about McCafe's success and growth overseas in this Sept. 10, 2007 article in Advertising Age.

Speaking of Gourmet Coffee--and Organic, Fair Trade and more...

The coffee craze in the U.S. and elsewhere continues to percolate "full-steam ahead." The New York Times has an excellent feature article on how coffee purveyors are literally going "to the ends of the Earth" to find new coffee beans and varieties to meet this seemingly insatiable demand for the perfect cup. Read the Sept. 12, 2007 Times' article here.

Gourmet, Organic Confections to be Stars of This Show...

Gourmet, natural, organic and fortified confections are the four fastest growing sub-categories in the confections market and will be the focus of the upcoming "All Candy Expo" in Chicago beginning on September 17 and running until September 19. This year's show will feature a dedicated area on the show floor for luxury gourmet, all-natural, organic and fortified confections. This development demonstrates how consumers are trading-up to quality in the confection category. (Fortified confections refer to those fortified with vitamins, nutritional supplements and the like. It's a new but rapidly growing sub-category within the overall confections category.

Industry Food Fight Over Better Chocolate

This trading-up to quality by confections consumers comes at a time when a number of larger, mass-market confection makers are lobbying the Federal government to allow them to substitute a certain percentage of vegetable oil for cocoa butter in chocolate production. Cocoa butter, many confections experts say, is the "essense" of chocolate; in other words it's what makes it quality chocolate. The primary reason some large chocolate producers want this change is money: Even if one can replace only 5% of the cocoa butter content in a chocolate bar with vegetable oil that can add up to lots of extra profit.

The Grocery Manufacturers of America (GMA) and a number of large chocolate bar producers are advocating the change. Others, including Gary Guittard, president of chocolate-maker Guittard Chocolate, are against it. Guittard says replacing a percentage of cocoa butter with vegetable oil goes completely against the growing consumer demand for more premium and better varieties of chocolate. This Sept. 11, 2007 article by the Associated Press discusses the "chocolate war" and talks about how the same issue has taken 30 years to solve in Europe.

Mid-Week Round-Up Ender...

Welcome to Whole Foods Markets New York City Beer Room

The Whole Foods Market in New York City's Bowery District has created a 1,600 square-foot Beer Room adjacent to the store on Crystie Street and Houston. The Beer Room features over 200 different varieties of beer in a setting designed for beer lovers and the just curious as well. The Beer Room features "Whole Foods Growlers," half-gallon glasses used for toting your beer around with you.

The New York City-based adult beverage blog "Racked New York" recently toured the Bowery Whole Foods Beer Room with camera in tow. You can read about what they thought of the innovative Beer Room and view numerous pictures of the facility here. You can read Whole Foods' list of suggestions on how to best enjoy the Bowery Beer Room here in case you plan on visiting and enjoying a "Growler" or two when next in New York City.

Retail Memo: New Details and Analysis About Safeway's Small-Format Summer Bay Area Surprise for Tesco's Fresh & Easy Neighborhood Market

We were one of the first publications to report on December 10, 2007 that Pleasanton, California-based Safeway Stores, Inc. was developing a new, small-format (15,000 -to- 20,000 square feet) grocery store similar to Tesco's Fresh & Easy Neighborhood Market, which the San Francisco Bay Area-based supermarket chain plans to initially open in the San Jose area sometime this summer.

Tesco plans to open an initial 18 of its small-format, combination basic grocery/semi-upscale fresh foods and specialty grocery stores in the San Francisco Bay Area beginning in late 2008, or more likely in early 2009. A number of these 18 initial stores will be located in the South Bay Area, in San Jose and the surrounding communities.

Since we reported the Safeway small-format grocery store development story, we've followed up with a couple analysis pieces, and have been following Safeway's development process closely, doing research and talking to as many industry--and industry-affiliated--sources as we can. As a result we've learned some additional facts about the new small-format stores.

Stores likely to open in July or August, 2008

First, based on information from our various sources, we believe the first of the four -to- five pilot Safeway small-format grocery stores will open in either July or August of this year in the San Jose area. Part of Safeway's reason for wanting to open the stores this summer, is so that the retailer can have the intial stores opened for a significant period of time prior to Tesco entering the market in either late 2008 or early 2009.

It was initially believed Tesco would open the first of its Bay Area Fresh & Easy stores this summer. However, Tesco says it won't open stores in the region until 2009. We still believe its possible Tesco will try to open a few Fresh & Easy markets in the Bay Area in late 2008. The first store location lease (of the 18 signed to date) the British retailer signed in the Bay Area was for an empty Albertsons supermarket building on Bird Avenue in the city of San Jose, which it will remodel into a Fresh & Easy Neighborhood Market store.

Safeway wants to have its small-format grocery stores open and doing business before Tesco's Fresh & Easy even comes to town, so to speak. By opening the first stores in July or August of this year, it could give Safeway anywhere from six months to close to a year of retail operations before the first key is even turned in a Fresh & Easy store door by Tesco in the Bay Area.

Safeway small-format grocery stores: A few snapshots

We don't have a complete picture of what the Safeway small-format grocery stores will look like in terms of design or overall product mix. However, based on conversations with sources and much analysis ,we do have some pieces of the puzzle filled out thus far.

In terms of design, we expect something fairly upscale inside and out. However, the stores aren't going to be super upscale. Rather, they will be attractive in terms of design but also somewhat utilitarian looking. They aren't designed for only high-end consumers.

In October, 2007 Anthony Gilmore, the former Northern California Region President for Whole Foods Market, Inc. resigned his position with the supernatural foods grocer to accept an executive position with Safeway Stores, at its corporate headquarters in the East Bay Area city of Pleasanton.

While leading Whole Foods' Northern California division, Gilmore completed an aggressive and varied new store opening program for the supernatural grocer in the region. His strength was in being able to organize and lead the development of "new generation" Whole Foods' stores, giving each of the new stores its own local flair.

Small-format grocery stores aren't really a new development for Safeway. In fact, it's more of a retro, "back to the future" concept, if not in actual store format, at least in size. Pictured above is a small Safeway grocery store located in San Francisco, California circa the 1940's. The store was located in either the city's Nob Hill or Tenderloin neighborhoods. Notice the "tag line" on the Safeway sign, "Distribution Without Waste." It's a perfect slogan for 21rst century "green" grocery retailing. (The grocer might want to bring the slogan back.) Pictured below, is a small-format Safeway store which was located at 228 Seventh Street SE in Washington D.C. The market was built and opened in 1940 and remained open and profitable for 46 years, closing in 1986.

For example, under Gilmore Whole Foods built its biggest and most comprehensive food store in Campbell, California, which is located in the famed Silicon Valley, and is only a few miles from San Jose. This store, which is now called the Northern California flagship, is nearly 80,000 square feet. It's a double-story superstore, filled with numerous in-store dining venues, a wine bar, a mini day spa, and much more. The store also fits its location well, both in design and in its product mix.

Further, Gilmore lead the creation of what is arguably Whole Foods' most innovative store to date: its European-style market hall store in downtown Oakland, California. The store, which opened in October, 2007, is designed like a European food hall, yet contains all of the departments--and more--the supernatural grocer is famous for.

In addition, Gilmore pioneered the building of Whole Foods' lifestyle-oriented superstores as retail anchor stores for upscale multi-unit housing developments in the city of San Francisco.

For example, the newest San Francisco store, which is located in the hip, up-and-coming Potrero Hill neighborhood, is the ground floor retail anchor of a huge, high-end condominium development which is becoming a very popular place to live in the city. The store design is modern, like the condo project, but also incorporates the history of the neighborhood. Among the store's unique features are an indoor-outdoor wine bar and bistro which features a DJ who spins tunes for customers on weekend evenings.

Gilmore's charge in his position at Safeway is primarily retail format development. He's been working on the chain's successful lifestyle format, including a project which involves creating a "second generation" lifestyle format for Safeway's supermarkets. Some of these "second generation" developments are already beginning to show up in the retailer's new lifestyle stores.

What we refer to as the "second generation" aspects include more upscale design and interior packages--colors, flooring, shelving, and the like--and added in-store features like the fresh nut bars and similar new in-store venues appearing in a number of the grocery chain's recently-opened lifestyle supermarkets.

Gilmore also was brought on, in part, to work on the small-format grocery store project, both from a format design and product selection and merchandising standpoint. Expect to see his input in how the 15,000 -to- 20,000 square foot grocery markets look, the products sold in them, and how they reflect the communities (localism) they are in. We expect some unique and creative flourishes in the store's design and product selection.

Prepared foods to be central to the small-format Safeway stores

Safeway is nearing completion of a line of fresh, prepared foods which it will begin rolling out in its lifestyle stores soon. The prepared foods' line includes ready-to-heat and ready-to-eat entrees, side dishes and grab-and-go type foods. Some of the prepared foods' items will be under the retailer's O' Organics brand, others under its Eating Right healthy foods brand, and still others under one or more new brands. These prepared foods items will be sold in all of the grocer's lifestyle stores--as well as in the new, small-format grocery markets, we believe.

Safeway already has extensive prepared foods offerings--which it has grown dramatically over the last couple years--for sale in its lifestyle supermarkets. For example, it offers fresh soups, sandwiches, pizzas and other items under its Safeway signature brand. The grocer also offers prepared entrees and side dishes under various store brands, along with many other ready-to-eat and ready-to-eat items.

A little over a year ago, Safeway bought a restaurant in the San Jose area. The grocer has been using that restaurant to develop and test items with consumers as a way to develop its fresh, prepared foods items. Look for an extensive array of fresh, prepared foods in the new small-format Safeway grocery stores. These items should range from basic, inexpensive items, to much higher-end gourmet items, which are being developed by professional chefs at the company-owned restaurant.

A limited assortment of discount groceries

In a conference call with supermarket industry analysts last week, Safeway CEO Steve Burd said because of the inflationary and recessionary nature of the U.S. economy, consumers are increasingly filling their shopping carts with cheaper groceries in his stores. He even said the company is seeing more shoppers buying generic groceries in Safeway-owned stores.

Safeway's stock tumbled to a 52-week low last week, even though the grocer's fourth-quarter profit met analysts expectations. Analysts--and Burd--attribute this decline in stock value to the current bad economic climate in the U.S., which like Burd argued to the analysts is causing even middle-to-upper end consumers to buy more discount grocery products.

During the conference call, Burd described the current rate of grocery inflation as "the highest I've seen in my 15 years as Safeway's chief executive."

We wouldn't be surprised to see Burd and company use the new, small-format stores to merchandise a limited assortment of basic grocery items (say 60% store brand/40% national brand) at discount prices, along with the fresh, prepared foods and other offerings. (We don't know this for a fact, and nobody at Safeway has gone on the record with us either confirming or denying this. Our view is based on discussions with numerous sources, as well as our own analysis.)

Safeway has two very strong selling value-positioned store grocery product brands. One is a low-end, near generic line, the other a mid-range brand. They also have Safeway Select, a premium, yet competitively-priced multi-category store brand, in addition to a number of other store brands.

In fact, these three--low-end, midrange and premium--store brands are the top market share sellers in many of their respective categories, such as various canned fruits and vegetables and other packaged goods. These product brands--like the Safeway retail brand--are strong in the Bay Area. Unlike Tesco's Fresh & Easy store brand, which will be new to the region, Safeway's brands have extremely strong equity with Bay Area consumers.

For example, the San Francisco Chronicle, the region's highest-circulation newspaper, runs a column in its food section every Wednesday in which it compares at least 10-12 grocery brands in a different grocery products category each week. Safeway's store brands (even the value brands) frequently place in the top three, beating out in many cases the top national brand in a given category, which sells for much more at retail than the Safeway store brand.

Safeway has a huge advantage over Tesco in this approach. First, the grocer knows the Northern California (and especially Bay Area) market inside-out. It's far-and-away the number one market share leader in the region. Second, the grocer has decades of market-specific scan data in its databases. This is an invaluable tool when choosing a limited basic grocery products selection for a store.

Lastly, Safeway has over 20 years' of consumer/shopper data from its club card program. From a consumer-buying and behavior perspective, this information, combined with the market-specific scan data, can help the grocer not only choose the optimum limited-assortment basic grocery selection for its new, small-format stores, but also the club card data can guide the retailer in custom-tailoring the stores to each and every neighborhood. This is powerful information that even the world's number three retailer Tesco can't buy for any price. If they could, the retailer's Southern California stores would have a different basic grocery item product mix, and be tailored much better to the city's and neighborhoods they are located in.

What's in a name?

Lastly, and actually the most fun, is the question: What will Safeway name its small-format grocery stores?

While we don't have any specific information from sources inside or outside of Safeway Stores, Inc. who can provide us with information credible enough for us to go on the record and give you the name Safeway's new, small-format grocery stores will go by, we are willing to go out on a limb and offer a potential or even probable name, based on three key factors we've identified and anlalyzed. Those three factors are:

>First, Safeway Stores, Inc. likes the Safeway name and brand. All of its 271 stores in Northern California are branded Safeway, with the exception of a small division of warehouse stores called Pak 'n Sav. In addition, all of the grocery chain's stores in the Pacific Northwest, Arizona, Colorado and western Canada fly under the Safeway banner, as do the stores in the Washington D.C./Maryland/Virgina tri-state region.

All of the company's other banners--Vons, Pavillions, Dominicks, Randall's, Tom Thumb, Genuardi's and Carr's--were formerly independent chains which Safeway acquired, and as a result decided to keep the chain's names rather than change them to Safeway. The grocer sells its Safeway brand-named private label products, such as the Safeway Select, in all of these banner stores however.

The Safeway food retailing brand has strong consumer equity in Northern California, and especially in the Bay Area, where most of its stores are located, along with its corporate headquarters. As a result, we believe the grocery retailer is likely to use "Safeway" as part of the name for its new, small-format grocery stores when they open this summer.

Second, over the last four or five weeks we have floated a name for the small-format stores around to industry sources inside and outside of Safeway. We also have heard this name used by some Safeway suppliers, and others such as food brokers, who do regular business with Safeway at its corporate headquarters in Pleasanton.

While none of our sources (in the case of those outside Safeway) know for sure what the grocer will name the new, small-format stores, a number of them told us they've heard the name we put out there discussed among some fairly serious industry people in Northern California. In terms of people inside Safeway (who either don't know the name, or if they did likely wouldn't tell us) the name we floated received some interesting responses. Not one of the insiders dismissed the potential name for the new, small-format stores we mentioned out of hand to us.

All this is purely anecdotal, and we aren't claiming otherwise. Rather, its merely one part of the three-part puzzle we are analyzing, along with a couple other factors. (Did you really think we would give you everything?)

The third piece of this three-part analysis puzzle involving the possible name for the small-format, convenience-style grocery stores involves history. Many of our readers may not know this but there is a Safeway chain in the middle eastern country of Jordan.

Safeway Jordan isn't owned by or affiliated with U.S.-based Safeway Stores, Inc. However, there

is an historic connection. U.S.-based Safeway Stores, Inc. once was an international food retailing company. Among it's international operations was Safeway plc. in the United Kingdom. Safeway Stores, Inc. USA sold UK-based Safeway a long time ago. And non- Safeway USA-affiliated Safeway plc. was recently acquired by Britain's Morrison's supermarket chain, which has nearly completed removing the Safeway banner from the stores in the UK.

Prior to selling UK-based Safeway plc. to Morrison's, the companay owned Safeway Jordan and operated stores in that country and in Kuwait. In 2003, Safeway plc. sold its Jordan division to The Sultan Center (TSC), a Jordanian supplier and retailer of food, grocery, perishable and general merchandise items in the middle east. Jordan is a monarchy, so although it has a vibrant private sector, the ruling government family and business sectors are strongly tied-in together.

This is where the history gets interesting. Now, remember UK-based Safeway plc. was once long ago owned by USA-based Safeway, Inc. Safeway USA sold its UK operations to a group there who named it Safeway Plc. That group established Safeway Jordan, then sold the Jordan division to Jordanian-owned TSC.

TSC-owned Safeway Jordan operates three Safeway branded retail formats in that country. Those three retail grocery store formats are:

>Safeway service stores or supermarkets, which are similar to a western supermarket.

>Safeway Wholesale Center, which are a cash & carry-type format.

>Safeway Express, which is a hybrid basic neighborhood grocery store/convenience store/food-service store.

Yes, you guessed it: we are suggesting (not stating as fact or saying we have any confirmation) there is a decent probability that Pleasanton, California-based Safeway Stores, Inc. will name its new, small format grocery stores, which will open this summer in the San Francisco Bay Area, Safeway Express.

There's an added caveat for Safeway Stores, Inc. in going with the Safeway Express name for its new, small-format grocery markets as well: Tesco, parent company of Fresh & Easy Neighborhood Market, operates Tesco Express small format grocery stores throughout the UK and in other parts of Europe. These stores are the model from which Tesco created its Fresh & Easy grocery market format in the U.S. There are significant differences between the two formats--Tesco Express and Fresh & Easy--but also many similarities.

It would be ironic if Safeway names its new 15,000 square foot -to- 20,000 square foot grocery stores in the Bay Area--which will go head-to-head with Tesco's 10,000 square foot -to- 15,000 square foot Fresh & Easy grocery markets beginning at the end of this year or in early 2009--Safeway Express. In many ways, using that name for the stores would set the stage for an all out premptive summer surprise by Safeway for Tesco's Fresh & Easy Neighborhood Market in the Bay Area and elsewhere in Northern California.

Weekly Wine Industry Memo

Wine Industry Innovation

Coppola's wines-by-the-glass and mini sparklers: A wine offering 'you can't refuse'

Movie director and producer Francis Ford Coppola, who spends most of his time tending to his Napa Valley winery, specialty foods business (pasta and pasta sauces) and restaurants these days, has introduced an innovative wine-by-the-glass packaging option for some of his Napa Valley, California-produced wines.

Francis Ford Coppola Rosso (Cabernet Sauvignon) and Bianco (Pinot Grigio) wines-by-the-glass.

The ready-to-drink wines are designed to be popped open at events or at home when only a glass of wine is desired, rather than having the bottle go to waste or have to be refrigerated. As we all know, white wine never taste's as good after being opened and refrigerated. And in the case of red wine, the unfinished bottle has to sit out with the cork in it. The result: the wines' usually end up getting pured down the drain after a couple days.

New types of packaging such as Coppola's wines-by-the-glass is aimed at getting non-traditional wine drinkers to try the fermented fruits of the grape. In particular, this target market is focused on young people who tend to choose spirits or craft beers over wine. The idea behind Coppola's glass of wine serving option is that it will appeal to these younger consumers not only because it's different and unique but also because it's convenient. This convenience factor is designed to appeal to traditional wine drinkers as well of course--and get them to buy the wines-by-the-glass to drink at settings where they might not otherwise serve wine.

Coppola hasn't stopped its innovation with the wine-by-the-glass items however. The winery also has introduced "mini sparklers," sparkling wine varieties in a mini-can and in a juice-type box with a straw. The sparklers are named Sofia (after Coppola's daughter) and come in a slightly sweet Pinot Banc blend, Sauvignon Blanc, and Muscat Canelli. The sparklers are inspired by Italy's light and fruity Prosecco. Coppola also owns a vineyard and winery in Italy but the sparklers are made from California-grown grapes and produced in Napa.

Coppola Winery's mini sparklers; three varieties of sparkling wine in a can and in a mini juice-type container with a straw. We call them sippy cups for grown-ups.

This downsizing, or minis trend, exemplified by Coppola's wines-by-the-glass, mini cans, and juice-type container minis with a straw, are part of a larger trend in the wine industry to package wine in smaller containers and in alternative ways. It seems to be working according to recent AC Nielson research. Sales of single-serve minis (187 milliliters or 6.3 oz) have been increasing significantly more than those of the overall wine market. Minis sales are up 10.3% this year, compared to about 6% for all table wines. Wine industry experts say much of the growth in the sale of the minis is coming from young people, who are being drawn to wine because of the innovative and convenient packaging.

[For an interesting look at how one group of young people (generation Y college students) is embracing wine, read this story from the the Golden Gate Express, the student newspaper at San Francisco State University in San Francisco, California. The article, Fine Wine Strikes Generation Y, talks about how San Francisco State University students are exploring wine in large part because of the wine industry's new product development initiatives and packaging innovations, along with the fact that premium quality wines likes Charles Shaw's "two-buck-chuck" are in their price range.]

As a director, Coppola was know to be a bit of a maverick. It served him well in his movie making career, and just might do the same for him in the wine business. To paraphrase Don Corleone in Coppola's Godfather trilogy, "The wines-by-the-glass and mini sparklers might just be an offer younger drinkers just can't refuse."

Screw top wine bottles gaining ground for premium wines

The screw-cap fastener used to be reserved for inexpensive jug wines like Gallo's Carlo Rossi

or its infamous Thunderbird brand wines. However, that's been changing radically over the past five or so years. Premium wineries in California, and even in France, more and more have been using screw-top caps on their best wines of late, and it's a growing trend.

In fact, Tesco, the third largest retailer in the world, recently announced than more than half (55%-65%) of all wine sold in its stores now has screw top fasteners on the bottles. Tesco's supermarkets carry extensive wine selections, including lots of premium wines from all over the world.

Many Napa Valley, California premium wineries like Plump Jack, which was one of the first to do away with corks in favor of screw caps, also are using screw-cap bottles for their finest, and most expensive, wines. In fact, many wine experts argue that today's modern screw-caps are superior to natural cork, especially for red wines, in that they don't allow oxygen to reach the wines as they age and prevent contamination caused by chemicals in some corks which can make red wine taste musty.

Natural cork also is an endangered species. It's harder to obtain and as a result much more expensive. Hence, the reason you also are seeing so many synthetic, plastic-like corks in premium wines today, along with the expanded use of screw tops.

From sports nutrition bars to premium wine: Clif Bar makes a (long) line extension

Gary Erikson and Kit Crawford, the Northern California couple who founded the successful sports nutrition brand Clif Bar (as well as the Luna Bar), have diversified into the wine making business. And, not wanting to let a successful brand name go to waste, they've named their wine brand Clif Bar Wines. The wines are produced at the Clif Bar Family Winery and Farm, owned by the couple, in Northern California's Napa Valley.

On the farm, the couple grows organic fruits and vegetables, raises free-range chickens and turkeys, and produces bio-diesel fuel, which they run all the farm equipment and their own personal vehicles on. The couple is part of the Slow Food movement and supports small, artisan food producers through their businesses.

But, back to the wines. Clif Bar Family Winery sources the grapes for its wines from their Napa Valley neighbors and from grape growers on the nearby north coast. They say they try to buy either organically-grown or sustainable-farmed grapes for all their wines but it isn't always the case, depending on availability, price and other variables. The winery's mission is to produce sustainable, premium quality wines.

There currently are five wine varieties available under the Clif Bar brand. There's the 2006 vintage Climber, a white wine blend; the Climber 2006, a red wine made from North coast-grown grapes; Kit's Killer Cab (named after Crawford), which is a Napa Valley Cabernet Sauvigon; Gary's Improv (named after Erikson), which is a 2003 vintage Napa Valley Meritage; and lastly there's a 2004 Napa Valley Syrah. It has no special name like the others. Erikson is a mountain climber, which is where the first two wines get the inspiration for their names.

The wines use the same brand name and logo as the company's Clif sports nutrition bars. We aren't sure however if the wines give one the same energy lift that the sports nutrition bars do. We doubt it. In fact, if they did we would be disappointed.

We also aren't sure if the line extension from sports nutrition bars to wines is a good one. Time will tell we suppose. Perhaps Clif Bar wine and sports nutrition bar tastings will take off as the next hot trend for parties? The bars give you energy, and the wine brings you back down again. All fun aside, the wines have received good reviews and are attractively packaged. You can read more about the wines and the Clif Bar Family Winery and Farm here.

Wine Industry Notes:

Fat Bastard Wines names top ten most pretentious figures in the U.S.: Fat Bastard Wines, a wine described by Newsweek magazine as a "Wine for the anti-snob," has built it's reputation in part by mocking the sense of self importance often seen in the wine world--and elsewhere in society. As a result of Fat Bastard's loathing of self-importance, the company created its "Fat Bastard Most Pretentious Poll, a poll of 100 lifestyle section newspaper editors from throughout the U.S.

This year's top ten is a who's who of media whores. Coming in at number one is Donald Trump, followed by Paris Hilton and Fox News host Bill O' Reilly. After the top three, fourth place honors go to Rosie O' Donnell, actor Tom Cruise, Presidential candidate Hillary Clinton, British spice girl turned Beverly Hills professional shopper Victoria Beckham, supermodel turned talk show host Tyra Banks, rap star and activist Kanye West, and last but not least, chairwoman of the "I hate underwear" club Britney Spears.

You can read more about these choices, including some choice comments about them, here. Something tells us we won't see any of these ten sipping a glass of Fat Bastard wine anytime soon. But come to think of it, since Fat Bastard is the wine for the unpretentious, we doubt if any of them has even tried it before.

Wine Retailing

Supernatural grocer Whole Foods Market, Inc. has been chosen as the 2007 Best Wine Retailer of the Year by the Wine Enthusiast Magazine. This is the first time a supermarket has received the magazine's prestigious Wine Star Award, which recognizes excellence in the wine industry.

The Wine Enthusiast said, in giving the award to Whole Foods, "Whole Foods Market has worked hard to establish its wine departments as must-visit destinations in a supermarket setting by focusing on providing a high level of customer service and a wide selection of wine varieties, characteristics and prices. Catering to each of its local communities, the wine departments at Whole Foods market stores also focus on locally produced wines."

The judges listed the following innovations by Whole Foods and its Wine Team members, which helped the grocer win the award. These features include: enomatic wine sampling stations in the wine departments which allow customers to try a wide range of wines by the ounce or the glass, wine seminars, food and wine pairings and tastings, and lots of signage and communications, educating shoppers about wines from the basic varieties to higher-end premium wines.

Whole Foods' new Market Bistro, like the one pictured above in its Potrero Hill store in San Francisco, is a combination restaurant and wine bar. The grocer is placing Market Bistros in most of its new stores.

Whole Foods also has been an innovator in selling organic, biodynamic and sustainable wines, including those in innovative "eco-friendly" packaging. The grocer also recently introduced a new in-store food and wine feature which it's putting in most of its new stores. That feature is an elaborate in-store wine bar/bistro called the Market Bistro. The wine bar offers an extensive selection of wines by the glass. Food items in the Market Bistro also are paired with wine selections for customers.

In accepting the award, Geoff Ryan, Whole Foods' national wine buyer, said the supernatural grocer is "working hard to change the face of wine purchasing and merchandising within the supermarket setting to provide high quality, affordable, unique wines." Ryan says the grocer's goal is to make its wine departments a destination for current and new shoppers. Creating the full experience of food and wine by pairing food and wine and creating complete dining experiences is part of that strategy for Whole Foods, according to Ryan.

Wine Enthusiast magazine has grown to be one of the most read and respected wine publications in the U.S. and internationally. It currently has a readership of about 700,000 per issue. The magazine rates and reviews wines in addition to writing about many aspects of the wine industry and the convergences between food and wine. It present its Wine Star award annually.

Wine Retailing Notes:

Big demand by Brits for big-bottled bubbly: Consumer demand for bubbly in big bottles causing holiday shortage in UK. Consumers in the United Kingdom (UK) have acquired such a huge taste for sparkling wines and champagne that retailers there are saying there likely will be a shortage of the bubbly for the holidays. Of particular concern, is premium bubbly in large bottles, which the Brits and others in the UK have learned to love.

According to a recent story in the Scotsman.com, famed UK wine merchant Berry Bros, & Rudd says it's considering instituting a waiting list system for customers who want magnums and jeroboams (the real big bottles) of champagne and sparkling wines. In fact, the wine merchant says its seen sales of bubbly double in just the last two weeks alone.

Consumer demand for the larger bottles of champagne and sparkling wine has been increasing so fast in the UK that production hasn't been able to meet it. Industry experts there say the trend caught bottlers by surprise, which is why they're so behind the demand curve with production. Additionally, the more premium and expensive the bubbly, the more in demand it is. Berry Bros. & Rudd says getting hold of the large bottles of the best champagne is getting near impossible as it gets closer to the holidays. Sounds like lots of celebrating is going on--in a big bottle way.

Organic wines at top of trends list: Organic wines, along with craft beers and signature cocktails, top the list of top restaurant beverage trends in the just released National Restaurant Association annual beverage trends survey. The survey of over 1,000 professional chefs found alcoholic beverages are among the hottest culinary trends in restaurants in the U.S. currently. the professional chefs, all members of the American culinary Federation ranked craft beers as the hottest trend, followed by energy drink cocktails, martini's, mojitos, artisan liquors, organic wine and specialty beers in the top 20 culinary trends for 2007-2008.

Organic wines aren't just popular diner drink choices. The chefs said they're using the wines in various innovative culinary ways. For example, the chefs said they are using organic wines (as well as other premium wines) in deglazing, reduction and sauce preparation. They also are using the wines to prepare wine-flavored ice teas. The most popular wine varieties for these interesting drinks are Chardonay, Cabernet and Merlot. Food and wine pairings are a growing trend the chefs say, and with the fast-growing popularity of organic foods, the organic wines are becoming popular for organic food and wine pairing events. Fruit-flavored and rose/blush wines also are hot say the chefs.

The growing popularity of organic wines at restaurants mirrors their growing popularity at retail. This trend also dovetails with the growing "mainstreaming" of organic foods and the sustainable, buy local and "green" food movements. In fact, the survey also identified what the chefs say are the hot food trends in their restaurants. At the top of the list are organic foods, local produce, sustainable seafood, grass-fed beef and free-range meats and poultry of all types.

A&P buys wine merchant as way to upscale wine merchandising: The A&P supermarket chain has decided to pursue an interesting strategy to grow it's wine merchandising capabilities. The supermarket chain has acquired Best Sellers, a New York City wine merchant/retailer famous for its Great Wines for Everyday Merchandising strategy. That strategy focuses on selling wines by flavor rather than origin, and does so at reasonable prices.

Joshua Wesson, Best Seller's co-founder and a wine expert, will join A&P as the grocer's director of beer, wine and spirits. Best Sellers has five retail locations. A&P says it plans to keep all the stores located in its core market, which is all but one which is located in Boston. That store will be sold. The larger strategy however isn't operating the Best Sellers stores as much as it is bringing the wine merchant's merchandising strategy, and Wesson's expertise, into A&P. The grocer will use this new talent to revamp the wine, beer and spirits selections in its stores using the Great Wines for Everyday Merchandising philosophy.

A&P has been revamping its food merchandising, moving from a conventional approach to more of an emphasis on specialty and natural foods, premium quality prepared foods and other upscale offerings. The move into more extensive and premium wine merchandising fits well with the grocer's overall change in merchandising strategy. Just as specialty, premium and natural/organic foods are the fastest growing categories at retail, so to are beverages in these categories. In particular, premium and organic wines, craft and specialty beers, and innovative signature cocktails are hot. The Best Sellers acquisition should give A&P a specialty food and beverage one-two punch in their new merchandising program.

Tesco's wine chief to Aussie wine industry: "Put the personality back into wine:" Dan Jago, who runs wine merchandising for British retailer Tesco, the world's third largest retailer, recently gave a scolding to Australian wine producers at the 13th Annual Wine Industry Conference in Melbourne.

At the conference yesterday, Jago told the winemakers they've been resting on their laurels. "I would really, really ask you to put the personality back into wine," he told them. "For too long you've been saying 'this is good because it's Australian.' You have to tell us why it's different."

Jago went on to expalin what he meant more specifically. "I would also urge you to make your wines lighter and more refreshing," he said. "Wines with 13 or 14 percent alcohol just aren't exciting anymore, and consumers are looking to the 'old world' for more refreshing wines."

Did the Australia winemakers listen? Well, Tesco is the largest overseas buyer of Australian wines, and one of the top retailers if wines in general in the world. The British-based mega-retailer also is considered in the industry to be one of the best at merchandising and selling wines.

Jago did offer some positive words to the Aussie winemakers though. He told the group he sees "considerable opportunities" for Australian wine exports in terms of gaining market share and profitability. He suggested that as an industry in general, and as a retailer (Tesco) in particular "we're running to hot on promotions right now." As such, "You shorten the life of your brands by over-spiking them," he told the winemakers. His solution: "Let's reduce promotional participation" in general. In other words, he let them know Tesco plans to cut back on its promotional activity in the wine category.

Jago urged the winemakers and marketers to embrace change, telling them "If you don't change, others will change faster." That's likely good advice for any industry. However, we can't help wondering if the Aussie's will invite Jago back next year?

Tesco's Fresh & Easy offers its own version of two-buck-chuck: British retailer Tesco's new Fresh & Easy Neighborhood Markets venture in the U.S., which is sort of an IGA neighborhood grocery store meets Trader Joe's. is taking a wine merchandising page from the Trader and offering its own version of a two dollar bottle of wine.

Fresh & Easy's version is called Big Kahuna, an Australian Shiraz imported for the retailer by Cornerstone, a new U.S. subsidiary of Copestick Murray, a wine company based in Wiltshire, England. Copestick Murray is a major wine supplier to Tesco, and the British-based retailer brought the company along with it to the U.S. to import many of the wines it sells in its Fresh & Easy grocery markets. Thus far 13 Fresh & Easy stores have opened in Southern California and Nevada and more are on the way.

Fresh & Easy also is selling another private label wine which is getting rave reviews, especially for its price-to-quality value. The wine is a Recoleta, an Argentine wine. It's a blend of Malbec, Argentina's primary red wine, and Bonarda. The wine sells for $3.99 bottle. We're told by a couple wine lovers in Southern California that they bought all the bottles in one of the Fresh & Easy stores after buying a bottle a couple days earlier and loving it--and it's price. They call the wine "premium four-buck chuck."