Beverage Industry Memo: Coke For Passover: Beverage Giant Coca Cola Makes 'The Real Thing' For Jewish Holiday

In mid-to-late March -to- April each year in the U.S., Beverage giant Coca Cola goes back to the future so to speak and produces a limited amount of "The Real Thing," which is the company's original Coke soft drink beverage made with pure cane sugar or sucrose (sugar refined from sugar beets) instead of high-fructose corn syrup, which is the sweetener it's used in all of the carbonated sodas it produces and sells in the U.S. and most everywhere else in the world except Latin America (and particularly Mexico) since 1985.

Prior to April, 1985 when Coca Cola announced it would switch to using high-fructose corn syrup in its flagship Coke brand, along with its other brands of soft drinks, the beverage maker used sugar in all of its sodas sold throughout the world. Coke was the first soft drink-maker to switch to using high-fructose corn syrup, primarily because it's cheaper than sugar, and the other U.S.-based soda pop makers followed the leader.

Those real sugar Coke days also were when the beverage giant created its popular "The Real Thing" marketing and advertising campaign. "Coke; it's The Real Thing...Coke is." That very popular tag-line, which became part of the American lexicon, went away once Coke no longer was sweetened with sugar but rather with corn syrup instead.

Many U.S. consumers crave "The Real Thing." So much so in fact, that a huge market exists in the U.S. for Coca Cola produced in Mexico using sugar. The "Real Thing" is then shipped across the border into the U.S. for sale at stores which primarily cater to Hispanic consumers.

But the world's number one carbonated beverage maker and marketer does make an exception to its high-fructose corn syrup-only as the sweetener of choice policy in the U.S. once each year. From mid-to-late March to April each year in the U.S., Coca Cola produces limited runs of its Coke soft drinks using sugar instead of the corn syrup during the three weeks or so leading up to the Jewish Passover holiday. (PepsiCo also produces a limited run of its Pepsi brand carbonated brand soft drink sweetened with sugar for Passover.)

Among the foods Observant Jews aren't allowed to consume during the Passover holiday period include any food or drink made with chamez. High-Fructose corn syrup falls into this category since anything produced from refined corn it chamez as stated in the Torah. Observant Jews must follow all of the proscribed Passover dietary restrictions as laid out in the Torah. The punishment for eating chametz during Passover is karet ("spiritual excision.")

Since Coke doesn't want to lose sales from Observant Jews during Passover, it's been producing the soft drinks made from either sugar cane or sucrose (sugar refined from sugar beets) for years since it stopped using sugar completely in Coke produced in the U.S. and most elsewhere in the world in 1985.

"Real Coke" for Passover is generally only available during the religious holiday in large metropolitan areas with high populations of Jewish consumers such as Los Angeles, New York, Boston, Philadelphia, Baltimore-Washington D.C., Miami, Atlanta, San Francisco and Houston, Texas. Since Coca-Cola's system is to have local bottlers produce all of its soft drinks, the local bottlers in those regions are responsible for making and selling the Passover sugar-sweetened Coke.

Selling the Passover Coke isn't a problem however. The beverages fly off store shelves as soon as they're stocked--and it's not just Observant Jews who are buying the "Real" Coke to drink during the eight key days of Passover. Indeed, consumers of all stripes and religious backgrounds who prefer the taste of the sugar-sweetened Coke to today's high-fructose corn syrup version, stock up on the limited-run soda pop as soon as they see it in stores.

The Passover Coke is certified by local Rabbinical councils as "Kosher for Passover," which is the designation required in order to satisfy Jewish dietary laws during the religious holiday observance.

The special sugar-sweetened, Coke is usually bottled in 2-liter plastic bottles, which are distinguished by their yellow caps that sport the OU-P (Kosher for Passover) symbol or the words Kosher L' Pesach in Hebrew on the cap. Some Coke bottlers produce Passover Coke in cans as well as the 2-liter plastic bottles, but it's a rarity. [You can read more about the OU certification at their website here.]

We've often wondered why Coca-Cola hasn't introduced (or actually reintroduced) Coke made with pure cane or sugar-beet refined sugar since it's sugar-sweetened Mexico-bottled soft drinks are so popular with consumers of every ethnicity in the U.S.

A little background: In the mid-to-late 1980's, Hispanic foods distributors in the U.S. started exporting the Mexico-made Coke across the border (without Coke's express permission) to sell at Hispanic grocery stores and in Mexican restaurants in parts of the U.S. where there were large Mexican, Central and Latin American immigrant populations. Not only did the Mexican-bottled Coca Cola catch on fast with the immigrants, but non-Hispanic consumers in the U.S. discovered the sugar-sweetened version in the stores and Mexican restaurants and grabbed it up regularly.

Just a few years later, in the early 1990's, conventional supermarket chains with stores in high-population Hispanic communities, along with specialty foods distributors, started getting numerous requests to sell and distribute the Mexican-bottled Coca Cola.

Specialty foods distributors like A-1 International Foods in Los Angeles (now part of Tree of Life), Hagemeyer's Gourmet Specialties in Northern California (now owned by Unified Western Grocers), Gourmet Award Foods in Texas (also owned by Tree of Life) and others started distributing the sugar-sweetened Coke to supermarket chains and independents like Safeway Stores, Inc., Fiesta Mart, Ralph's and numerous others, who put the Mexican-bottled Coke in the Hispanic food and beverage sets in their stores in neighborhoods where there are high Latino shopper demographics.

Sales of the Mexican, sugar-sweetened Coke have soared since then, as more supermarkets, grocery stores and restaurants have stocked the soda pop. Today, it's a good bet that if a shopper of any ethnicity goes into a Hispanic grocery store, supermarket (chain or independent) or authentic Mexican restaurant, you can get a bottle of bottled in Mexico Coca-Cola, made using sugar rather than high-fructose corn syrup.

This gets us back to "wondering" why Coca-Cola hasn't reintroduced a "new" everyday version of the popular vintage (and current Passover and Latin American version) sugar-sweetened Coke in the U.S., which is its largest market globally. We think we know why. Our bet is the giant beverage marketer believes if it did so, the sugar-sweetened version of Coke would be so popular it would seriously hurt sales of corn syrup-sweetened Coke, even though the soda pop would have to retail for more because of the higher price of sugar compared to lower-cost high-fructose corn syrup.

Instead of let what would be a very popular version (sugar) of Coca Cola canabalize sales of its corn syrup-sweetened carbonated beverage by marketing a sugar-sweetened version--in addition to being subject to the price fluctuations of the sugar market--we suggest the beverage marketer prefers to just stay with what it has, despite the strong niche demand for the "Real Thing" among a healthy segment of American consumers.

High fructose corn syrup is generally plentiful--although that's changing a bit since a good portion of the food and sweetener-grade corn crop acreage in the U.S. is being planted for ethanol fuel-grade corn currently--and inexpensive relative to sugar. (If the ethanol trend continues, and corn-based products like sweeteners keep going up in price, maybe sugar will make a comeback as the carbonated beverage sweetener of choice? For example, commodity price of corn is up over 15% in the last year.)

However, when it comes to Passover, which begins on April 20 this year, the giant beverage maker and marketer stills go back to the future and produces a limited amount of its vintage Coke. And, since there aren't any religious tests given at the supermarket checkout stand, any consumer who desires can buy the sugar-sweet stuff.

Further, lets not forget, the Mexican-bottled Coke made with sugar is available in many parts of the U.S. where there are substantial Hispanic consumers. Since Hispanics are the fastest-growing ethnic group in the U.S.--and are a fast-growing population not just on the east and west coasts but in places like Iowa, Idaho, Illinois and elsewhere throughout the country as well--we suspect people in parts of the U.S. where the Mexican Coke isn't currently available will see it in many of their stores soon.

Meanwhile, during the upcoming Passover season, Coke is rolling out its Passover Coke. We suspect it won't stay on store shelves very long if this year is like the last few years in terms of the special yellow-capped carbonated beverage's brisk sales. Hag kasher vesame 'ah (happy and kosher Passover). It's "The Real Thing."

Retail Memo: The Small-Format Grocery Store Revolution Marches On: Hy-Vee, Inc. Testing A Small-Format Grocery Store in Lincoln, Nebraska

As our regular readers know, we've been writing extensively about and offering analysis on what we term the small-format grocery store revolution among major food and grocery retailers in the U.S. We also refer to it as 'The invasion of the Small-Marts.' [If you type in small format grocery stores, small-format food retailing, small-format revolution and Small-Marts(one at a time of course) in the search box at the top of the blog, or search through our archives.

The major grocery retail players in this growing small-format grocery retailing revolution in the U.S. are: Aldi USA, the U.S. division of German grocery chain Aldi, which currently operates almost 900 10,000 square foot -to- 15,000 square foot discount grocery stores in the Midwestern and Eastern U.S. (27 states); Save-A-Lot, the small-footprint, limited assortment discount grocery store division of SuperValu, Inc.; and specialty grocer Trader Joe's, which is owned by Aldi.

Additional major small-format retail players include: Wawa, which operates hundreds of hybrid small-format grocery-convenience stores in the Eastern U.S.; Giant Eagle Supermarkets, which operates a handful of Giant Eagle Express small-format grocery stores and is building more, and Tesco's Fresh & Easy Neighborhood Market, which has opened 59 small-footprint grocery markets in the last four months in Southern California, Arizona and Nevada and plans to build at least 150 more stores in the next two years.

Other key players in the small-format grocery store revolution include: Whole Foods Market, Inc., which is getting ready to open its first Whole Foods Express store in Boulder, Colorado; Wal Mart, Inc., which will open at least four of its new, small-footprint grocery stores called Marketside this summer in the Phoenix, Arizona Metropolitan region; Safeway Stores, Inc., which plans to open five new, small-format grocery markets in the San Jose region of the San Francisco Bay Area this summer, and a couple others.

To this fast-growing list, we can now add West Des Moines, Iowa-based Hy-Vee, Inc. to the list of major grocery retailers entering the small-format food retailing world in the U.S.

Employee-owned Hy-Vee, which operates 223 supermarkets in seven Midwest states and had 2007 gross sales of $5.6 billion, is planning to test a small-format grocery store in the city of Lincoln, Nebraska, which is among other things home to the University of Nebraska. The small-footprint grocery market will go into a neighborhood where the retailer already has an existing supermarket but is closing this week.

Hy-Vee's small-format grocery store will average about 20,000 -to- 25,000 square feet. The store will offer a more limited selection of grocery and fresh food items than the chain's larger supermarkets do but will still merchandise all of the basic categories contained in its larger stores: dry grocery, fresh produce, fresh meat, dairy, perishables and the like, according to Richard Jurgens, Hy-Vee's CEO. In other words, the store will contain all the regular categories --including some specialty and natural foods, but just have a more limited assortment, which is the case with all of the major players--to one degree or another--in the small-format grocery retailing game.

The grocery chain, who's motto is "Where there's a helpful smile in every aisle," says its been studying different format options for some time, looking for concepts that would allow it to serve different neighborhoods which have different needs. The neighborhood where the first small-format grocery market will be located is called University place. It's near the University of Nebraska and contains a mix of students, faculty and University employees, along with residents who live in the neighborhood but work elsewhere in the city.

Hy-Vee, founded in 1930, is still finishing the design of the small-format grocery store, according to Jurgens. He says the retailer will provide further information soon. After the design in finalized and signed off on in the next month to six weeks, the grocery chain plans to submit the plans to the city of Lincoln, and once they are approved it will set the construction and grand opening schedule, Jurgens says.

CEO Jurgens says the retailer sees value in creating smaller-format grocery stores with limited assortments as part of its food retailing format arsenal. "It was important for us to come up with a format that would be intriguing, practical and successful. We think we've found one," he says.

The existing supermarket in the University Place neighborhood in Lincoln is set to close this Sunday. However, a new, much larger Hy-Vee supermarket will open just 2 miles away in about two weeks, Jurgens tells us. However, the grocer is still anxious to get the new, small-format market completed and approved so the grocer can serve the neighborhood more directly by having in store right in the heart of it.

Expect the Lincoln, Nebraska University neighborhood small-footprint market to offer a decent selection of specialty, natural and organic groceries (in addition to the limited assortment of supermarket basics), along with fresh, prepared foods, to fit the neighborhood's demographics, which includes a high percentage of college educated residents.

We haven't been able to find out the name--if it exists yet--of Hy-Vee's new small-format grocery market concept. However, we plan on keeping our ears out for it.

At 20,000 -to- 25,000 square feet, the Hy-Vee small-format concept is a bit larger than most of the others mentioned in the beginning of this piece. Aldi, Save-A-Lot, Trader Joe's. Wawa, Giant Eagle and Tesco's Fresh & Easy small-format stores all average about 10,000 -to- 15,000 square feet. However, Wal-Mart's Marketside, Safeway new small-footprint markets, and Whole Foods Express are all respectively about 15,000 -to-25,000 square feet, as we've reported before.

Ironically--or perhaps by design-- 20,000 -to- 25,000 square feet is about the average size of the neighborhood independent grocery store in America today. (Many range from 25,000 -to-about 35,000 square feet as well.) And, there are thousands of thriving small-format multi-store and single-store independents across the USA operating these smaller neighborhood grocery stores in the communities in which they live and work. It's these independents, really, who are the catalysts of the small-format grocery retailing revolution among major retail players currently happening in the U.S.

Retail Memo: Analysis & Commentary: U.S. Upscale Grocers Need to Adapt to the Down Economy by Adding Value and in Some Cases Lowering Prices

The current economic news in the U.S. isn't good. The negative indicators abound. For example, The sub-prime credit crisis not only has a record number of homeowners getting their houses foreclosed on, but its also having a more profound macroeconomic result, which was witnessed the other day when Bear Sterns, the country's fifth-largest investment bank, nearly had an old-fashion bank run on its funds.

In order to prevent that from happening, banker J.P. Morgan and the U.S. Federal Reserve Bank loaned the company ten's of billions of dollars in a scheme not used in the U.S. since the great depression. J.P. Morgan then stepped in a couple days later, and with the Feds backing acquired Bear Sterns for $2 per-share, a mere fraction of what the investment bank's share price was just a week before.

Further negative economic indicators include record oil, gasoline and energy prices, food price inflation, rising unemployment and a host of other serious economic ills. About 50% of the professional economists in the U.S. recently polled by the Wall Street Journal said they believe the U.S. was already in a recession. Economic forecasters in states like Michigan and California are saying the respective states have probably been in recession since the end of last year.

We don't have to wait until a committee calls an official recession however to know the U.S. economy is in a severe patch. Like billionaire investor and chairman of Berkshire Hathaway said in this piece we wrote a few days ago, "The U.S. economy is essentially in a recession."

For example, food and grocery product inflation jumped by 4% between 2006-2007, the highest increase since 1990, according to the U.S. Department of Agriculture's Economic Research Service. And, of course, we don't have to tell you how much better the U.S. economy was doing in 2006 and early 2007, compared to its current performance. All indications suggest food and grocery inflation will rise at least 4% this year, and likely higher, according to the Economic Research Service's forecasts. As a point of contrast, in the mid -to- late 1990's food and grocery inflation averaged about 1%.

Retail prices on key food and grocery items has increased in the last year by far more than that overall 4% however. Eggs are up 15-20% over 2007 prices. Milk is up about 12%, compared to last year. Additionally, the commodity prices of wheat and corn, which are used in everything from bread and tortillas, to cereals, packaged and prepared foods, and in the case of corn as a major food additive and sweetener.

These soaring commodity prices have pushed the price of items like whole wheat bread up by 15-20% in the last year--and food products containing wheat and corn continues to increase since there's currently no light at the end of the price-increase tunnel in terms of when the commodity prices might stabilize.

For example, Supermarket chain buyers are telling us they've been receiving more frequent price change notices from vendors (in categories and on items across the board) than they can remember receiving in the last 15 -to- 20 years. Food manufacturers and marketers also are telling us not only are they getting significant price increases in the commodities they purchase but that the frequency of those increasing is record setting.

In low food and grocery inflation times (like the 1% 1990's) grocery retailers try to not pass on, or to pass on only a portion of, the price increases they get from their suppliers. However, in times of high food inflation like now, the retailers like to pass on the entire price increases, as the food inflation provides cover, so to speak, for doing so. It's also a must to do so in such bad economic times.

We believe, and are beginning to see evidence, that the current economic downturn in the U.S. economy could have serious negative effects on some upscale food and grocery retailers. In particular, we think the more middle-range upscale grocers like Safeway (Lifestyle format), Kroger (its upscale format), SuperValu (its more upscale banners) and a few others are likely to experience some significant sales downturns beginning in the second quarter of this year.

Our analysis also is that smaller, regional upscale food and grocery retailers (the single and multi-store independent and the smaller, privately-held regional chains) are at serious danger do to the current economic conditions in the U.S. One of the primary dangers to these grocers financial markets' credit crunch.

These independents and regional chains generally don't have a corporate cash-flow to tie them over like the upscale banners of larger supermarket chains do. (for example, gourmet grocer Bristol Farms is owned by SuperValu.) As a result, if sales drop significantly and the grocers need temporary operation funds, the difficulty of obtaining a credit line, or the interest rate cost of doing so, could put them in serious financial and operation straights.

The good news for these independent and regional upscale grocers is that they've been there before, and have survived previous recessions. Those retailers that have survived severe economic downturns in the U.S. have done so because they are in touch with their customers and communities. They also haven't been afraid to innovate and change--including lowering prices temporarily if needed--until better economic times arrive. It's all about increasing value during the down times.

Those upscale retailers at the very top-end and those with a solid niche, will fair much better, we believe. For example, our analysis is that Whole Foods Market should only feel partial effects from the recessionary economy, as it's niche is strong enough we believe to avoid serious sales losses. However, we predict the supernatural grocer will have to get more aggressive on its pricing in order to keep its same-store sales from eroding throughout the rest of this year.

There currently are signs that shoppers are beginning to trade down and search out bargains as their wallets and purses (and available credit) grow emptier because of soaring gasoline costs, the credit crunch, escalating food costs and other negative economic factors. Even worse, their confidence in the economy is very low.

Discount warehouse food store chains like Costco Wholesale, BJ's Wholesale Club and Wal-Mart's Sam's Club, have all recently posted strong same-store sales gains in the last couple months. Further, Wal-Mart just reported solid sales overall and at its Supercenters, which sell food and grocery products at a discount. In fact, Wall Street investment houses last week gave strong buy recommendations for Wal-Mart stock, primarily on the strength of its increased food and grocery sales.

Costco, BJ's, and to a lessor extinct Sam's Club, sell extensive selections of specialty, gourmet and natural-organic foods at prices generally lower than upscale supermarkets. With shoppers visiting these club format stores more frequently because of the bad economic times, many likely will make many of their upscale-oriented purchases while in the club stores, which is going to hurt the upscale grocers sales and margins, especially because these are higher-margin categories.

Dollar Stores like Dollar Tree, Family Dollar, Dollar General and others also are thriving in the current economy, as consumers--including upper middle-class shoppers--search out bargains. These stores carry fairly large grocery product selections, most for a dollar each as advertised

Another sign consumers are searching out lower priced food and grocery stores is the fact that salvage grocers, those grocery retailers who buy overstock, discontinued and slightly blemished products, are reporting increased sales, and saying they're doing dramatically more business than they've done in the last 10 years or so. The salvage grocers also are saying they're seeing lots of new faces (shoppers) in their stores.

Upscale food and grocery retailers that sell basic grocery items as well as more upscale offerings like prepared foods, specialty and gourmet foods, natural and organic products, and other higher-end goods, will need to get more competitive on their everyday pricing strategies in order to stave off the combination of a poor economy and cash and credit-strapped consumers.

People have to eat, and not all consumers are in a position to buy in bulk at stores like Costco, Sam's Club or BJ's Wholesale Club. They either don't need the quantities the stores sell, can't afford to spend a considerable sum of money on any one shopping trip, or just don't like shopping the huge, big box stores. Many of these consumers also would prefer to shop at a more upscale supermarket than visit a combination of stores--a salvage grocery for their hot buys, a warehouse club for loading up, and the upscale supermarket for the specialty, organic and prepared foods items.

However, that's what many consumers are starting to do. It's the economy, stupid, as that old political saying goes. We think upscale retailers can retain many of these shoppers by tightening up operations, buying better, lowering margins a bit for the rest of the year, and offering far better in-store and newspaper promotions than most currently do. The key is to not become a tertiary retail venue for shoppers, who only come shop the upscale store after they've been to a warehouse club and discount store like Wal-Mart.

Many upscale supermarkets have been spoiled by the good economy, allowing the stores to serve primarily as primary grocery shopping venues, and to a lessor degree as secondary stores. The current state of the U.S. economy is changing that. However, upscale grocers can weather this economic storm, even is they see a significant shift in some shoppers from primary to secondary, if they focus on providing value in both basic grocery items and in more upscale offerings like specialty, natural and organic, and prepared foods.

Our analysis suggest there will be some shakeout in the upscale grocery retailing sector. Some upscale grocers will put off building new stores they already have on the planning docket. Others will even close some stores. A few--those who fail to adapt and provide better value during the economic downturn or recession--might even fail completely.

Failing completely, and even closing stores, doesn't have to be an option though. The key is to add value. Buy better, promote more, take a little margin hit, and get ready for a better day--and better economy, which will come, perhaps as early as mid 2009.

Confectionery Category Memo: Fashion Designer Giorgio Armani Creates and Sells a line of Decadent, Premium Artisanal Chocolate Eggs for Easter

What does high-end fashion designer GiorgioArmani have in common with Easter. Hint: It has nothing to do with designer Easter Bonnets but everything to do with designer, chocolate Easter eggs.

The Armani fashion house has decided to cash-in on the soaring, high-end, gourmet and artisanal chocolate segment of the confectionery category by creating and introducing what Georgio Armani calls his Spring 2008 chocolate collection.

The collection features Armani Dolce Easter Eggs, which are three varieties of decadent chocolate eggs in dark, milk and white chocolate. The premium, artisanal chocolate Easter eggs even have the fashion house's distinctive Armani "A" logo embossed on each egg.

Each of the designer chocolate eggs is wrapped in a package befitting what one would expect from one of the world's most high-end fashion houses. The Armani Dolce Easter Egg comes packaged in sugar-blue colored mattelic paper with a sky blue ribbon. These designer chocolate eggs aren't for children's Easter egg hunts though. Rather, they're for a special someone; especially a special someone who loves Armani.

In addition to the individual Dolce Easter eggs, Armani also has a second item in his Spring 2008 premium chocolate collection. That item is a hand-carved chocolate Easter Dove made from a full kilo of super-premium chocolate.

Armani is keeping distribution of the decadent chocolate Easter Eggs and the Easter Dove exclusive. High-end, upscale retailers can't order them to sell in their stores even if they want to. Rather, Armani is only selling the chocolate Easter delicacies at its various Armani retail stores. The chocolate eggs and Easter Dove are currently being offered for sale in the stores and are available until May 9, according to an Armani spokesperson.

The chocolate segment is the hottest and fastest-growing of the many within the overall confectionery and candy category. And within the chocolate segment, gourmet, artisanal, organic and Fair Trade premium chocolate products are leading the segment. There's a consumer flight to premium quality, and even the top-selling organic and Fair Trade chocolate brands are premium as well as having the other attributes.

Chocolate makers and marketers have been responding to this consumer flight to premium quality chocolate--and pushing it along as well--by introducing a record number of products in the last two years. In fact, chocolate candy--lead by premium quality--was the leading category globally in all food new-product launches between October and December, 2007, according to the market research firm Productscan. That's a 28.7% increase over the previous year.

Additionally, the premium chocolate candy segment had consumer sales growth of over 20% in 2007, compared to the previous year. Premium dark chocolate, milk chocolate, organic and Fair Trade chocolates lead this sales growth. Sales growth for 2008 is expected to be even higher.

With such rapid sales growth in the premium chocolate category, it's no surprise fashion designer Armani decided to create and put his famous logo on a line of decadent chocolate Easter Eggs, as well as the hand-crafted Easter Dove.

The process of an artisan crafting a fine premium chocolate product is similar to the process a fashion designer uses to create a woman's dress, shoes or a man's suit. It's mostly a creative art but science is involved as well. Looking at it that way, artisanal chocolates are actually a rather logical line extension for a creative artist like Armani. It's also a good extension of the brand we believe because there's a logical mental connection in consumers' minds between high-quality clothing--and designers--and high quality confections.

After all, the best artisanal and gourmet chocolate makers and marketers use branding strategies similar to the best fashion designers. These include using the confection makers personal name often, just like fashion designers do, using high-quality packaging, and getting well-known celebrities to try, enjoy and endorse their respective products.

We aren't sure if Armani makes and sells designer Easter bonnets. However, if he does, an Easter gift of an Armani Easter bonnet and set of Armani premium chocolate Dolce Easter Eggs could be a big winner as an Easter gift this year.

Wine & Spirits Memo: A 'Trump Vodka' In The Buff Promotion Puts "The Donald' in the Rough

Lesson number five in the art of business warfare courtesy of real estate, reality show, golf course, modeling agency, swimsuit pageant and premium vodka mogul Donald Trump: 'If all else fails, blame the naked girl.'

It seems 'The Donald,' who not too long ago added premium vodka brand marketer to his numerous business enterprises, threw a very big Superbowl party, with his Trump brand super-premium Vodka as the adult beverage of choice for the partygoers.

Not everyone attending Trump's premium vodka-infused Super Bowl party was an adult though. In fact, the one person it later turned out wasn't of age, stood out at the party as much or more so than the mogul's Vodka, which like all of his ventures has his last name attached to it.

And stand out in a big way she did. According to TMZ, which has verified the story with Trump's PR people and the vodka brands' marketer and distributor, a 17 year old girl was at the party walking around completely naked, except for Trump Vodka logos painted all over her body. She was serving samples of the premium vodka to Trump's guests, wearing just her birthday suit. Trump Vodka logos were body-painted on her in what we hear were "strategic" locations. Donald Trump was at the party and does not dispute he saw the nudegirl there.

Trump, through his representatives, tells TMZ he knew nothing about the nude girl's coming to his Super Bowl party, although he saw her there, sans her clothes. He says she is probably just "a publicity whore."

Trump's spokesperson told TMZ the naked party girl, Chanell Elain Hallet, crashed the party and just happened to have her body painted with Trump Vodka stickers. 'Given the circumstances, we can only guess that she crashed the event to seek publicity for herself," the Trump spokesman told TMZ. There was no mention however from the spokesperson as to how and why the nude party crasher was allowed to walk around and serve guests free samples of the vodka.

Here is the explanation form Trump's representative and Drinks Americas, the marketer and distributor of Trump Vodka. Trump has a licensing arrangement with the company. (Trump also licenses his name for a line of premium steaks and a line of men's suits.)

"Drinks Americas contracted with modeling agency, Professional Event Marketing of Scottsdale, Arizona, to hire three promotional models, all over the age of 21, to be opaquely painted with logos for this event. the three woman we contacted through the agency were to promote the brand throughout the evening. All three were in attendance. We do not know why Miss Hallett was there, but she was not there having been hired or working for us. Given the circumstances, we can only guess she crashed the event to get publicity for herself. We are appalled and always work hard to adhere to our social and civic responsibilities as a premium alcoholic beverage marketing company."

We only have one question for "The Donald' about the whole incident: Why didn't you just look the Trump Vodka logo-covered naked girl right in her eyes and say: "You're Fired?"

Local Foods Memo: Tesco's 1,000 Mile 'Local' Scottish Chickens

Why did the chicken cross the road? To get into the truck for its 1,000-mile round trip of course.

Retail giant Tesco, the world's number three retailer and the UK's largest supermarket chain, is coming under fire from environmentalists and shoppers today in the United Kingdom (UK) for labeling chickens sold in it's stores as "local" despite the fact the birds' actually have taken a 1,000-mile round trip to be slaughtered, packaged and then transported to the grocer's stores in Scotland.

The thrust of the matter regarding the "local" labeled but well-traveled birds is that the grocery retailer is currently selling chickens in its Scotland stores that have been raised at a chicken farm in North-East Scotland, then sent 499 miles to Essex to be processed, before then being shipped back to the Scotland stores to be sold. Perhaps Tesco should change the label to "locally raised for now. Or, use another local packaging plant.

But, that seems to be the crux of the problem. According to the UK industry trade publication Meat Trades Journal, the chickens killed at the Grampian Country Foods slaughterhouse in Perthshire, Scotland (local so far) are being shipped (at least until today perhaps) to Witham in South-East Essex (499 miles away) for packaging because the regular packaging plant in Banff, Abberdeenshire (which is close to Perthshire) shut down last year. So much for outsourcing locally and then not finding another local packaging plant right away.

UK environmental groups such as Sustain, the alliance for better food and farming, are accusing Tesco of a lack of full-disclosure by still labeling the birds as "local." The "green" groups' also are saying the chickens' 1,000-mile round trip--from near the Scotland stores to 499 miles away and back again--is creating unneeded extra food miles and adding to the country's already growing carbon emissions. Sounds logical to us.

Another UK environmental group, Friends of the Earth, also issued a statement today about the non-local, "local chickens." Vicki Hird (rhymes with bird), a Friends of the Earth spokesperson, said: "Consumers thinking they are buying 'greener,' local and Scottish are actually buying pretty travel-sick chicken." In all fairness (at least to the birds) chickens travel much farther than 1,000 to get to the grocery store and are still tasty. But we do get Ms. Hird's point.

Tesco, the world's third-largest retailer, defended its travel itinerary plan for the birds in a statement saying basically it didn't have any option because the local packaging plant closed and they needed to get the chickens packaged for sale at the stores. A Tesco spokesperson didn't comment on how many chickens are being sent on the 1,000-mile round trip journey However, the retailer said it hopes to have the situation solved very soon

The local Grampian Country Foods' packaging plant closed last year (about six months ago), according to Max Tooley, Tesco's technical meat manager for poultry. Tooley added that although the situation has been going on for about six months (then why still label the birds as local we wonder?) it should "hopefully be solved in about two weeks," with the pending approval of a new packaging plant at a new site nearby where the chickens are slaughtered. We're glad it will be solved in two weeks. But that could be a long two weeks if Tesco doesn't take the local label off the chickens' packaging or the shelf.

Tesco shoppers weren't very happy today upon hearing the news that the "local" birds aren't really all that local because of their travels. Consumers buy "local" foods not just because they are raised locally, but also because they are processed and packaged locally as well. In other words, one of the keys to "locally grown" is that the products don't have to travel excessive food miles to get to the stores where shoppers buy them. Local equals a lower carbon footprint.

The locavore (local foods) movement defines a locally-produced food product as one that generally comes from no more than 100 miles from where it is sold at retail and purchased at the grocery store, or elsewhere, by a consumer. This local definition includes the food product being grown, processed, packaged and distributed within that 100-mile distance. Obviously, in the case of the 1,000 mile chickens, they don't quality under that definition.

Meanwhile, the revelation about the well-traveled "local" chickens is a serious hit for Tesco. It's CEO, Sir Terry Leahy, has been arguably the most outspoken of all UK retailers on the need for the supermarket industry to reduce its carbon footprint. In fact, under a plan of Leahy's, Tesco plans to eventually label all of the food and grocery products it sells in its stores with a "carbon footprint" label.

The label, similar to nutritional labels on packaged foods, will inform the consumer where the product was produced, processed and warehoused, and how many food miles it traveled to get to the Tesco store.

Tesco in the UK also has been a major proponent among UK food retailers of buying and selling locally-grown foods in its stores, including beef, pork, poultry and other food and grocery products. Local foods is a major issue among UK consumers, not only as part of the nation's popular and fast-growing green movement, but also as a way of preserving it's shrinking farming industry.

To the latter point, the Tesco chickens are raised locally. However, to the former point, the 1,000- mile journey--to the packaging plant and back again--violates the "green" aspects of the "buy local" movement.

It seems even without their wings, these particular Scottish Tesco chickens are still well-traveled birds.

Leadership & Management Memo: America 2.0: The Creative Imperative

Editor's Note: Andrew Razeghi is an adjunct associate professor at the Kellog School of Management at Northwestern University and the author of the book "The Riddle: Where Ideas Come From and How to Have Better Ones" (Jossey-Bass/Wiley, February, 2008). Mr. Razeghi also is an advisor to corporations and organizations on creativity, innovation and leadership. His clients have ranged from Pepsico and World Kitchen, to General Electric, Motorola and Darden Restaurants, among others. Fast Company magazine recently selected "The Riddle" as one of its "Smart Books for 2008."

In his essay below, Rezeghi says America needs an overhaul in leadership--from Washington D.C, and the country's statehouses, to it's corporate boardrooms and elsewhere. More importantly though, Rezeghi argues this new leadership--America 2.0--needs to be fueled by a creative imperative. It's this creative spark that's needed to create a new leadership style and new leaders.

This creative imperative requires a jump from America 1.0 thinking to America 2.0 thinking, while drawing on the original creative leaders, like the founding fathers, to go "back to the future" in a sense, the author suggests. In order to achieve America 2.0, the U.S. needs more modern day dabblers or dilettantes like Benjamin Franklin, the polymath who not only invented bifocal eye glasses and the lightning rod, but created America's first fire department and public lending library, while still managing another couple dozen innovations on the side. He even found time to get himself put on the $100 bill, after all.

In his essay below, Andrew Razeghi offers a smart and timely argument for what it just might take to make the transition from the end of America 1.0 to the creative and successful new era--America 2.0. You can learn more about Andrew Razeghti here. We thank the author for his essay.

America 2.0: The Creative Imperative

By Andrew Razeghi

Outsource high-wage jobs to lower-wage nation. Check.

Extend homes loans to people who can't afford them. Check.

Wage conventional war on unconventional enemies. Check.

How did we do? Let's see: 7.7 million people unemployed, 2.2 million foreclosure filings issued by banks and lenders (a 75 percent increase over 2006), and 3,974 U.S. servicemen and servicewomen reported dead in Iraq (up from 139 since President Bush declared "Mission Accomplished" on May 1, 2003).

The dollar's weak. Bankruptcies are strong. And Rambo is back in theaters.

Sure we need hope to deal with all of this, but mostly we need creativity. We need a new Eureka moment like the one we had on July 4 - 232 years ago.

As the economic spotlight fades and flickers on the U.S. economy and the balance of power finds its new fulcrum point between the Middle East and China, now is America's chance to reinvent itself. Now, while no one is looking, is our chance not only to elect new leaders, but to create new leaders - leaders who are enlightened, broadminded, and able to offer unconventional solutions to unconventional problems. The challenge however is this: Somewhere between the late 18th century and today, all of the great dilettantes died and those who espoused their beliefs have been deemed dabblers - not serious professionals with serious opinions. If history is any guide, however, it will not be the experts, but rather the dabblers who help reinvent America.

Consider the success of America 1.0 and one of its master architects, Benjamin Franklin. Franklin's resume reads like a Denny's restaurant menu: activist, author, diplomat, inventor, philosopher, printer, publisher and scientist. Today, we'd likely accuse Franklin of being indecisive in his career choices. "Ben, when are you going to settle down?" we would likely ask. However, consider Franklin's achievements. He invented bifocal glasses, the lightening rod, swim fins, the glass harmonica, and the Franklin stove. He published Poor Richard's Almanac, promoted colonial unity, founded the first American fire department, and created the first lending library. If that were not enough, he brokered the French alliance that helped make the American Revolution possible and then went on to serve as the postmaster general under the Continental Congress. He died an abolitionist. Oh, and somewhere along the way he became fluent in five languages. And we wonder how Benjamin Franklin was so very good at thinking outside the box.

Franklin lived broadly. The only reason that history holds out Benjamin Franklin as an outlier - a lone genius in a sea of mediocrity - along with Sir Isaac Newton, Thomas Jefferson, and most of the enlightened leaders of the Enlightenment is that today we believe you must find your interest and dedicate your entire life's work to it. Don't dabble. Become an expert.

We like our leaders to be experienced, educated, and - when possible - tall. Focus: that's what we value. And focus is what we get.

We can outsource (jobs), pass the buck (subprime paper), and fight wars with intense concentration. After all, it's what we were trained to do. Focus. Execute. Do whatever it takes to get the job done. Whatever you do, just don't dabble.

If you want to be a serious politician or business leader, why waste your time as a radio broadcaster or a Hollywood actor (Ronald Reagan)? Why split rails or get lost among the pages of Aesop's Fables (Abraham Lincoln)? Why become a lawyer when you could be fighting for peace (Mohandas Ghandi, who, by the way, was nominated five times, but was never a recipient of the Nobel Peace Prize. Martin Scorsese: you're in good company.)

History's greatest leaders were also history's greatest dabblers. They were great problem-solvers not only because of how they thought (big) but how they lived (broadly). In order to nurture a brave new world of creative problem-solvers, we need to train leaders who can think "sideways" (across conventional boundaries and between the lines). We need creative leaders not experts. The only effective way for America to remain relevant in the 21st century is to reinvent itself through creativity and innovation. The mandate for America 2.0 is a creative imperative.

Where to start?

First, we need to go back to school - not the institution, rather the mentality. The origins of the word "school" meant "serious activity without the pressure of necessity". In ancient Greece, this manifested itself in schools as places where students had the opportunity to read, to contemplate, and to bask in knowledge from a variety of disciplines. Today, schools have become vocational training grounds - graduating specialists instead of generalists, technicians in lieu of leaders, and managers instead of creators. We desperately need a return to broad-based education - programs that educate the whole child, not just help to promote his or her natural strengths.

Second, we need to give people more time and space to think. That involves unshackling our corporate leaders from the death knell of quarterly earnings calls, increasing our funding of basic science, and encouraging a spirit of entrepreneurship that made America 1.0 the killer application of 19th and 20th century governance.

And finally, we need to encourage innovation that creates more than cool gadgets like iPhones and flat-panel televisions (although, Apple, please don't stop, we love you), but innovation that also improves how we govern, how we teach, and how we lead. In search of the next Eureka moment for America, we need to bring back the dilettante.