business news in context, analysis with attitude

MNB yesterday took note of a CNBC report that the Grocery Manufacturers Association (GMA) "has been ordered to pay $18 million for violating campaign-finance laws to conceal the identities of corporations that poured $11 million into defeating a 2013 food-labeling initiative in Washington."

MNB reader Tom Kroupa responded:

It's amazing that corporations have gone this far to put their profits above the health of our citizens. They have finally been punished. But is it enough? We have a human right to know what is in our food! Who could be against that?

To be clear, GMA isn't being fined for opposing food labeling legislation ... but for trying to hide the names of the corporations that were funding its lobbying efforts. But if nothing else, the fine is a major victory for transparency.

One thing that didn't really occur to me yesterday was whether GMA has the kind of reserves that will allow it to pay this fine. (Assuming it loses the appeal. I wouldn't be surprised if appeals result in the reduction in the fine.) One industry expert pointed out to me yesterday on the phone that in one month we've seen FMI lose its central revenue-producing business with the cancellation of its annual convention, and now GMA get hit with what could be a crushing fine. All of which suggests, this person said, that maybe something bigger and structural is happening here.

Got the following email from MNB reader Larry Ishii about the sale of Andronico's to Safeway, which I said was a shame:

I called on Andronico’s for ten years for Unified Grocers and I agree with your comments.

But there was another independent retailer that has befallen the same fate, G&G. During my years at Unified, G&G was a much more stable retailer yet the changes in the marketplace caught up to it as well.

Unless these retailers make changes that they must, more will succumb to the same fate or simply shut down. The independent retailer is the essence of what our great grocery industry was always about but time marches on…

It is a very sad pattern.

Responding to yesterday's story about Walmart's aggressive and progressive sustainability and environmental goals, one MNB user wrote:

Sustainability is a nice goal to have and has long been the target for the specialty market.

It is now gaining more traction within the regular retail community as show by major retailers directives for their own brands.  Now we see Walmart making a statement.

My only question, since this direction comes at a cost; how is Walmart going to continue their pricing structure and competitive “cost edge” when traditionally they have pushed production off shore to achieve that edge?

As Walmart’s retails climb closer to other retailers, their consumers' purchasing power diminishes.  That makes them very vulnerable to competition, since in my eyes, they have nothing else to offer.

This is a great announcement for Trader Joes, ALDI, the new Lidl, and the 4 “bigs” of retail.
Regarding the energy efficiency statement: I think solar company stocks just went up.

Regarding the fact that even as deflation causes supermarket prices to drop, restaurant prices are going up, MNB reader Tom DeLuca wrote:

Hate to admit it, but after reading the article, I have to finally side with my wife (of 20 years) and agree that perhaps we should ‘eat in’ vs. ‘dine out’ to save some money.

I certainly agree with your view, that supermarkets need to know that they can’t compete on just price.  In fact, they need to end their own in-fighting and how who gets credit for what.  Said differently, they need to figure ways to create “experiences” as you mention, but in ways that go beyond their compartmentalized thinking of “that’s my department [offering]”. Not just cheeky end caps with Taco Shells, Salsa and a Mexican Flag, rather, a ‘solutions’ center that offers all that and a way to recreate the restaurant “experience” at home. Not just meal components / ingredients, but some simple and inexpensive way to recreate the ambiance that going to “Uncle Vito’s” might offer.  Perhaps it’s that end cap of spaghetti, sauce, and maybe some candles (from the GM side of the store)?

From MNB reader Kevin C. Lavin:

I am a food broker in California. We recently had an Australian Company visit us. They were shocked at how low our restaurant prices are. They said comparable restaurants in Australia are triple.

And finally, one MNB reader had some thoughts about yesterday's Eye-Opener about business lessons to be learned from the Chicago Cubs:

Much like Ryan Murphy, I am a lifelong Cubs fan who used to cut school to attend games, was a 7 year vendor, made sure my family attended Cubs games at different ballparks as my career moved us around the country, often attended games by myself to “sort out life” and plan to be a WF usher in retirement. There is no better place in the world than Wrigley Field.

I 100% agree with Ryan but with one addition. It is hard to top the Cubs Brand. When the entire Chicago metropolitan area is 7M and 5M attend the parade, it goes beyond baseball and (not an exaggeration) extends worldwide.

The question then becomes how do companies…and people continue to build on their brand and generate loyalty while continuing to innovate, update and remain current and relevant while not hurting the tradition. The Ricketts certainly seemed to have figured it out.

KC's View: