business news in context, analysis with attitude

We wrote last week, based on our reading of some of the news reports coming out of Australia, that it seemed like the prevailing mood there would have favored Coles being sold to Tesco rather than Wal-Mart, mostly because of resistance to an American company having such a presence Down Under.

Several people thought that we may have been misreading the tea leaves.

One MNB user wrote:

Where do you get the sense that the Aussies have a resistance to an American company? The Australians have a natural animosity to England due to history, is what I understand from friends down under.

And another MNB user chimed in:

I think the biggest pushback to a US bid would come from…employees -- not the public. As a nation, we have changed our tastes over the past 25 years, and are now more closely aligned to the US than our UK heritage. In the 1970's the majority of OS- produced TV & movies were UK based. They are now swamped by the US industry. Our foods are more closely aligned to the US too -- following the latest trends & flavours from the US.

Australia also mirrors the US market on the market shares of housebrand vs proprietary, and yet Coles has a determined focus on increasing that share to UK levels – levels that just may not be feasible in the Australian marketplace, considering that since their introduction in the 70's the shares have sat around 15%.

So there are a few reasons why Woolworths would prefer a UK competitor vs a US one -- being the same reasons why the Australian public would prefer a US competitor to a UK one.

Remembering, too, that a portion of the current Woolworths management team was groomed by US retailer Safeway, when they owned the stores operated by Woolworths in the state of Victoria, until the mid-80's. Many of those system ideals & beliefs are now in play in the (Project) "Refresh"-ed Woolworths.

One thing is certain though -- whoever does end up as the new owner certainly has a battle on their hands. Woolworths has 5 years advantage on the Coles supply chain, 3 years on perpetual inventory, and untold years on store disciplines.

Obviously there has been a plethora of food safety stories in recent days and weeks, which led MNB user Dan Brady to write:

Industry had better begin to self regulate, and QUICKLY, or the Fed will surly step in and take action. Food safety, without regard to cost, must come from inside our industry or we will be faced with unrealistic expectations. We as an industry have a responsibility to verify and analyze all ingredient sources and then we MUST initiate the stringent recording of all production or processing activities. This will lead to an effective back and forward trace process that will help mitigate risk associated with contamination. We owe these action steps to our consumers and customers!

For those interested in the food safety issue, CIES runs a wonderful food safety conference each year, giving attendees a global perspective on the issues and a real forum in which to express concerns and learn about the issues. Next year’s conference is in Amsterdam, and we heartily recommend that you check it out…

On the subject of Martha Stewart signing a deal to supply Costco with a line of foods bearing her name and likeness, MNB user Nancy West wrote

Martha also expanded herself through the Michael's Craft store as of this week with her line of paper goods and scrapbooking items. This scares me since there are other brand names like Anna Griffin that have more substance… I guess the trick here is that if one has the capital and nothing to lose, they can reinvent themselves into anything they want.

Hopefully a lot of people (actually the demographics of women in the 35-55 age group) won't fall victim to seeing that they are making her richer when purchasing her craft items or furniture line. If one really thinks about it, all she is doing is taking something that was always there and just updating with her signature tastes, if you can call pastel green, ivory & beige a signature brand.

KC's View: