Changes in "Targeted Marketing"

Everyone knows consumers are big on coupons and saving money in the current economy, but A.C. Nielsen has studied it all and reports that targeted, mostly digital programs are doing the best.

The 200 digital ad campaigns they studied averaged a 32% sales increase translating to $1.1MM in incremental retail sales. That worked out to be a whopping 157% return on investment (ROI), including a 14% upswing in the buying rate. “Dollar stores” once thought of as the place brands went to die are leading the marketing changes: Dollar General focuses on three areas on their website— pets, easy meals and store brands. According to Nielsen, the dollar store is now like Motel 6 (which hasn’t rented rooms for $6 in a generation): less than ¼ of the items sold at so-called “dollar stores” go for a buck or less. Not surprisingly, high- and middle-income shoppers are flocking there looking for bargains, and brands that once scorned the outlet or refused to allow their products to be carried there are courting these stripped-down outlets.

Walgreen has a monthly online newsletter called “Wellness” that mixes information like drug interactions, seasonal health issues and a caregiver support forum with promotions. But the next wave of digital marketing is coming from experts: Amazon.com and AOL. But grocery stores are no slouches in the digital revolution as experts predict the end of paper coupons within 5 years, with cost reductions rendered at checkout. Food Lion’s “Bloom” program uses kiosks with handheld scanners that let customers scan prices and bag as they show, bringing their final total to the checkout aisle. The kiosks aren’t just for ringing up items, they allow customers to check prices, retrieve a stored shopping list, print out recipes and even generate their own bar coded stickers from produce and other items requiring weighing.

Ahold’s Stop & Shop has the same scanner set-up but allows shoppers to place deli orders at the kiosks for pick-up after they’ve finished. Ukrop’s Super Markets uses kiosks to entice loyalty card customers to insert their card and print up to eight coupons based on their preferences and previous shopping habits. Scanners won’t be enough, though, now that the iPhone’s 25K applications are moving into areas like shopping and online banking/bill paying. With 800MM downloads and counting, Apple is rewriting how marketers reach customers.

The plethora of data coming out is also changing the way marketers look at things. For example, Nielsen’s study showed an endcap for carbonated sodas generated 32K exposures, while one for household cleaners drew a pale 5K. Displays are also not created equal: one in-store flyer lifted sales by 18%, while a slat/wall display kicked things up 17%, a case stacker display 16%, a shelf coupon dispenser 14%, and the average endcap 13%. The lowest results came from power wing displays (12%), freestanding displays (8%) and shelftalkers (4%). The wide fluctuation in results would indicate a shakeout is coming for in-store marketing techniques as what’s effective and what’s not emerge more clearly. Will Twitter and other social media offering recipes and blog recommendations replace simple “cents off” coupons as friends and family drive marketing? Skeptics question whether shoppers will want to give up the tactile sensation of coupons, or the human interaction of staffing.

Indeed, Whole Foods has ditched the loyalty card path and drenches its departments in staff when most other businesses are looking for lower labor costs.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Steal This Food!

One person in 16 prefers the “five fingered discount” to paying for something, adding up to $35MM/day in retail theft.

At a time when crime is down across the U.S., shoplifting in on the rise (along with larceny and burglary). What concerns law enforcement officials and businesses is the organized nature of more and more shoplifting. The range of things being stolen in the current recession is growing, too: pizzas, baby formula, even plants torn out of the landscaping of restaurants. Stolen baby formula alone accounts for upwards of $1MM in losses.

“Shrinkage” has always been a problem for retailers, despite $12bn spent annually on theft-prevention (source: the Retail Industry Leaders Association or RILA). While credit card scams and financial fraud are the big-ticket items for organized crime, thieves are perfectly happy to sell off stolen items at flea markets and Internet auction sites like eBay. Retail criminals are dangerous, too, and have even tried to kill federal prosecutors in Texas. Law enforcement officials in Polk Co. Florida recently broke up a ring of 21 individuals who were being paid $300/day to steal upwards of $17.5MM in infant formula.

The extent of the problem varies by region, with economically troubled areas showing bigger jumps. For example, shoplifting rose 27% in the Great Lakes region, 24% in Palo Alto, CA and 30% in Tennessee. Congress and state legislatures are looking at legislation that would combat the shoplifting epidemic by increasing law enforcement funding and raising the crime to a Class 4 felony from its current status as a misdemeanor.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Target: Expect More, Get Less

Despite its media reputation as a marketing innovator and gross-profit margins in years past of 30% (vs. Wal-Mart’s 24%), Target has found itself under siege both from the marketplace and an activist investor.

William Ackman’s Pershing Square Capital Management is trying to stir up a hornet’s nest among stockholders after sales at stores open at least 1 year fell 2.9%. Ackman wants Target to be more like its Bentonville rival and stress food sales during these lean retailing times, so he put forward a dissident slate of nominees for the company’s May 28th board meeting. Target got into food retailing in 1995 when it opened 245 SuperTargets offering a full array of groceries in response to its Arkansas adversary. But these large (175,000-square-foot) retail footprints are expensive to operate, and the company has had difficulties finding profitable locations. And with its dominance in non-food products like bedding and fashion, the company held off adding more groceries to its retailing mix. Until now.

Most non-food chains like Sports Authority and Best Buy are staring at cutbacks or even possible Chapter 11. Most grocery chains are hiring workers on a regular basis and reporting profits. In addition, Target has seen its once-unique fashion-forward, trendy template copied by J.C. Penney Co. and Kohl’s Corp. Even dowdy Wal-Mart is taking away market share in bedding with its combination of value and improved style. Wal-Mart’s non-food sales are off, too, but unlike Target, it derives 59% of its revenue from food (which includes groceries, pharmacy products and HBA), while Target gets only 37% of revenue from grocery.

The company is trying to play down any potential shareholder insurrection, even as Ackman taunts them with web conference calls (Pershing Square is Target’s 6th-largest stockholder). Target CEO Gregg Steinhafel is clearly moving to quell the insurgency y announcing the company will open 100 new or remodeled grocery units this year, with the potential to take the plan to all of its 1,300 outlets if the move proves successful. But he sniffs at any comparisons with Wal-Mart, calling his rival “a grocer that happens to also sell general merchandise.”

Don't you just love arrogance?

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Broad Street Brokers Deal for Italian Wines

Montclair, NJ, October 27, 2009: BROAD STREET LICENSING GROUP has brokered an exclusive licensing agreement between Votto Vines Importing and The Order Sons of Italy in America (OSIA) for a retail line of imported Italian wines bearing OSIA’s LEONE D’ORO® trademark. The Order of the Sons of Italy in America is the largest and oldest national organization for people of Italian heritage in the United States.

The LEONE D’ORO-branded line of red, white and sparkling varietals will be imported from vineyards in the Italian regions of Piedmonte, Fruili and Le Marche. Each wine will retail from $12-20 per bottle.

“OSIA is one of the most-respected organizations in the country, and we look forward to working with them to bring the Leone D’Oro varietals to all who appreciate Italian wines,” said Peter Votto, VP Global Logistics for Votto.

“We are genuinely exhilarated by OSIA’s partnering with Votto Vines— a dynamic and visionary company whose principals know as much about wines as they do about Italy, the importance of family and the U.S. market,” stated Philip Piccigallo, National Executive Director for OSIA.

”Broad Street Licensing Group helps its clients extend their reach to consumers via new platforms and channels of distribution,” says Carole Francesca, president of Broad Street. Our goal is to extend OSIA’s brands into retail, leveraging consumer’s ongoing love affair with Italy and its magnificent foods and wines with the most respected Italian-American association in the U.S. Votto Vines is an excellent company that will bring these exciting wines to the American consumer across a variety of channels of distribution.”

The wines are part of the program Broad Street has developed for leveraging the Leone D’Oro and Figli d’Italia trademarks into a variety of food products in specialty grocery markets, and is designed to help consumers gain access to high-quality items from Italy allowing them to buy with confidence.

About Broad Street Licensing Group

Broad Street Licensing Group (BSLG) is a full-service agency specializing in developing, implementing and managing licensing programs, both for well-known consumer brand names and select non-profits, with a special focus and expertise in food and restaurant brands. They develop long-term licensing partnerships for their clients focusing on brand extensions designed to reach across platforms and channels of distribution. Their roster of experience includes Burger King, Bruegger’s Restaurants, The Culinary Institute of America, BIC USA, Rich’s Foods, Unilever, Fabergé, Cutty Sark, Good Humor-Breyers, Snuggle, ReaLemon, and Popsicle.

Tasty Tidbits

• Ocean Spray is planning to auction off its cranberry concentrates eBay-style. Its Ingredient Technology Group wants to avoid the speculation that has plagued the commodity markets.

• To wit, the G8 group of government ministers is looking at ways to curb speculation in the commodities market. Prices for oil, wheat and other vital products have shot up over the past year not because of demand, but due to hedge funds, retirement trusts, universities and other large capital-controlling entities taking speculative positions in commodities. The result has been a nightmare for the food industry in particular.

• The acquisition of George Weston Bakeries in the U.S. by Mexican baking giant Grupo Bimbo S.A.B (reported in Broad Street Licensing Group's subscription newsletter service when it happened) led to a tripling of the company’s reported sales this past quarter ($960MM vs. $360MM last year).

• Citing economics, Acme Markets is cancelling its home delivery service in favor of in-store pickup at 40 locations in Pennsylvania, New Jersey and Delaware.

• In the “drink and feel good about it” category, Modern Spirits claims producing each bottle of Tru vodka absorbs 760x more carbon than it emits. The secret? The company plants a tree for every bottle sold.

• Also on the alcoholic beverage front, Prime Star Group is bucking the recession and launching six new wines from Northern California’s coast.

• And finally, grocery retailer Giant Eagle is expanding into Columbus, OH with its Market District store concept that is upscale in focus, with gourmet sections, cooking demos, live music, themed events and a farmers’ market.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Health News

• The current epidemic of obesity has inspired what some might characterize as a witch hunt mentality with blame going to a wide and growing list of “villains,” including the fast food industry, high-fructose corn syrup, TV and school lunches. Now researchers from the Mount Sinai School of Medicine think they may have found a clue: endocrine disruptors such as phthalates used in food packaging. Kids in New York City’s East Harlem are 3x more likely than other children in the U.S. to be overweight, and perhaps not coincidentally high levels of these chemicals have turned up in urine samples. The researchers think the mechanism for promoting obesity may result from disruptions in hormones controlling growth and development. A study of 400 girls found the heaviest had the highest concentration of phthalates metabolites in samples of urine. A second study of East Harlem residents 6-8 years old showed higher levels of phthalates than the national average. Phthalates are primarily used as plasticizers in polyvinyl chloride (PVC) and polyvinyliden chloride (PVDC) polymers to increase flexibility in a variety of food packaging products, including films. The US Food and Drug Administration (FDA) is conducting research into phthalates and has said “there are no studies in humans that are adequate to serve as the basis for regulatory decision-making.” Not exactly a ringing endorsement of the chemical’s safety.

• Alfalfa sprouts are the latest produce item to be infected with salmonella with 7 outbreaks across 35 states. Will it ever end?

• Other chemicals on the scientific community’s radar screens are perfluorinated chemicals (PFCs), found in grease-resistant microwave popcorn bags and pizza boxes which has been linked to infertility, and especially, bisphenol A (BPA). BPA is component of polycarbonate plastic and epoxy resins used in the manufacture of reusable beverage containers (e.g., infant formula bottles) as well as the linings to soda cans. Green Century Capital Management, an investment group that targets environmentally-friendly companies for its financial services clients, has issued a report on 20 large publicly-traded manufacturers denouncing their inaction in removing BPA or in implementing meaningful reductions. Most baby bottle manufacturers have vowed to phase out BPA usage, but only for bottles sold in the U.S. Of the fourteen companies queried by Green Century that responded, only four had implemented alternative formulations with less BPA, and only one had found a substitute. Hain Celestial, Heinz, and Nestle all received top scores. The other companies contacted included Campbell Soup, Coca-Cola, ConAgra, Chiquita, Dean Foods, Del Monte, General Mills, Hershey, Hormel, J.M. Smucker, Kellogg, Kraft, McCormick, PepsiCo, Sara Lee, Sysco, and Unilever. Chemical industry lobbyists concede that “small” amounts of BPA leach into foods and beverages from polycarbonate bottles and can liners, but so far the National Institute of Health (NIH) has not shown more than “some concern” about the chemical and that only for its possible deleterious effects in baby bottles.

• Acrylamide, a chemical that has been bedeviling potato chip and French fries makers, got a bit of a pass with the release of a study of 120K Dutch men and women that uncovered no increase in lung cancer rates in men and a decrease among women. Acrylamide forms during high-temperature cooking processes, and has been linked in some studies to certain cancers. The substance is also present in coffee and baked goods, including bread and cookies. Animal studies have shown acrylamide to be a carcinogen; human studies have shown some non-conclusive links to and renal, ovarian and endometrial cancers. But a lawsuit by the California Attorney General has led to a consent agreement from Yum! Brands, owners of KFC, to list the carcinogenic danger from French fries in restaurants. Several snack food companies and restaurant chains were defendents in the suit, and are dealing with the fallout from it.

• French writer, Marcel Proust may have just been hungry: a new study by researchers from the University of California, Irvine published in the Proceedings of the National Academy of Sciences says when we eat foods rich in fat, our brains memorialize the experience and generate cravings later on. Damn. Apparently the small intestines transform oleic acids from fats into the compound oleoylethanolamide (OEA), which then sends our signals of satiety to the amygdala, the portion of the brain that controls our memory of emotional events. Scientists think this process helped our ancient ancestors remember their favorite outdoor restaurants on the vast plains of Africa, or whether a Mastodon-burger made them feel better than a salad. Since we no longer hunt and gather on those vast plains, the overabundance of fatty foods results in cravings that bring on obesity. And here you thought that dream you had of a big dish of chocolate ice cream was a moment of weakness and not a deep-seated memory.

• A study of almost 40K Swedish men aged 45-79 followed from 1998-2004 showed the eating fatty fish containing omega-3 fatty acids slashed their risk of heart failure. Heart failure occurs when the organ cannot pump enough blood, and is the leading cause of hospitalization in men over 65. Symptoms include fatigue and weakness, difficulty walking, rapid or irregular heartbeat, and persistent cough or wheezing. Omega-3 fatty acids include DHA (docosahexaenoic acid) and EPA (eicosapentaenoic acid), and have been linked to a wide-range of health benefits ranging from lowered risk for cardiovascular disease (CVD) and some cancers, all the way to improved joint movement and even better moods.

• As electronic prescription companies jockey for dominance in this fast-growing retailing segment, Allscripts ranked #1 for the second straight year. Their 203% increase in the number of end-users is somewhat deceiving, since the category hardly existed a few years ago. But with a provision in the American Recovery and Reinvestment Act that will pay physicians $44K-$64K over the next 5 years to deploy and demonstrate “meaningful use” of a certified Electronic Health Record system, the category is attracting big players like CVS and Wal-Mart (Physicians who fail to implement the process after 2014 will be penalized). Benefits from electronic prescriptions are thought to be eliminating the storied illegible doctor handwriting, as well as alerting health care professionals about dangerous drug interactions, incorrect dosages or patient-specific problems such as previous bad reactions. Advocates insist the process will make the health care system more responsive to patient needs and lower costs, though skeptics add that a huge Federal feeding trough is being implemented, and the response by the large retailers would seem to confirm that assessment.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

World News

• France’s Carrefour will introduce 400 low-cost items, mostly foodstuffs, for the first time ever in the chain’s history.

• Anheuser-Busch InBev is selling Oriental Brewery, South Korea’s #2 brewer, to private equity firm Kohlberg Kravis Roberts & Co. for $1.9bn acing out KKR’s rivals Affinity Equity Partners and MBK Partners. Insiders reported MBK’s bid was higher, but InBev preferred KKR’s plan and financing. The kicker apparently was an agreement to pay $100MM over the selling price if OB’s EBITDA (earnings before interest, taxes, depreciation and amortization) outperformed estimates two years after the deal closes. InBev is sloughing off what it calls “non-core” businesses to pay down debt, sold Japan’s Asahi Breweries, Ltd. a 20% share in China’s Tsingtao Brewery, and is reported shopping around the American iconic brand Rolling Rock. The #1 beer brand in Korea is Hite.

• There is some concern that honey bees are the “canary in the coal mine,” with populations crashing around the world over the past few years. Aside for general ecological fears is the real threat to the agricultural sector and food production, since honey bees are required to pollinate most crops and fruit trees. The U.K. has seen bee stocks drop 10-15% in the past two years, so it’s not surprising the country’s Soil Association, a charity dedicated to promoting organic farming, has denounced the refusal by Hilary Benn, the Secretary of State for Environment, Food & Rural Affairs (Defra) to ban Neonicotinoids, a group of pesticides which were pulled from the market in France, Germany, Italy and Slovenia. For more information on the Soil Association, click here.

• McDonald’s now says it will scale back expansion plans for China from 175 new locations to 150, due mostly to the closing of many factories in southeast China. The fast food giant recently opened its 1,000th store in the Middle Kingdom, but China (along with Germany) are the only markets showing negative results worldwide. Previously the company had listed the Chinese market as its fast-growing sector, outpacing growth in the U.S.

• Dutch-based Royal Wessanen nv has decided to sell its North American holdings which include American Beverage Corporation, the food distribution company Tree of Life North America, along with PANOS Brands (organic and natural products) and Liberty Richter (an importer and distributer for brands like Knorr soups and Appolinaris bottled spring water). The company plans to concentrate on organic and specialty markets in the EU.

• The customer loyalty trend is spreading to the world’s largest customer pool: China Merchants Bank is launching a credit card in partnership with Guangzhou-based retailer Tianhecheng and will offer the MasterCard brand.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Just How Green IS My Valley?

Debate about “local sourcing” and “sustainability” generally favors reducing the carbon footprint of food distribution by relying on locally-grown and raised foods, rather than the current supply chain that brings foods from around the world to your local grocery store.

For example, the Leopold Center for Sustainable Agriculture at Iowa State University estimates food travels on average 1,500 miles from producer to consumer within the U.S. However, this argument has been denounced by Third World countries as another form of Western arrogance, since the globalization of the food supply chain has brought prosperity to poorer regions who account for an increasing portion of the West’s food consumption as Chilean peppers find their way to produce aisles in the depth of Winter, and apples stored in gigantic warehouses are available year-round.

A new argument claims that shifting consumption away from red meats and dairy— even for as little as one day/week— might have a greater salutary impact on greenhouse gas emissions (GHG) than cutting down the time foods are en-route. Christopher Weber and Scott Matthews, analysts for the Carnegie Mellon Institute, argue it is virtually impossible to reduce transportation costs equivalent to the change on the environment by reducing the consumption of meat and dairy. “Replacing red meat and dairy with chicken, fish, or eggs for one day per week would save the equivalent of driving 760 miles per year. Replacing red meat and dairy with vegetables one day a week would be like driving 1,160 miles less.” Analysts admit their estimates are mostly theoretical in nature. Further meat producers argue that organic farming would be impossible without the manure produced by feed and dairy animals.

Below is a visit to a farmers market in Marin County, CA.



Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Grocery Retailing Trends

While the food business continues to be a bright spot in the economy, not all grocers are doing equally well.

SuperValu, the #5 American grocery retailer, reported stiff losses of $2.9bn on net sales of $44.6bn for its fiscal year ending February 28th. Year-to-date net cash flow from operating activities was $1.5bn, compared with $1.7bn previously. SuperValu purchased most of the Albertson’s chain in 2006 for $17bn, and subsequently undertook an extensive remodeling and modernization program on over 200 stores. The Albertson’s deal vaulted the Eden Prairie, MN-based firm to the third-largest grocery chain in number of stores with 2,510 supermarkets and 792 c-stores. In addition to the Albertson’s brand, SuperValu already owned the Acme, Bristol Farms, Jewel-Osco, Shaw’s Supermarkets and Star Markets chains. That makes Supervalu the second-biggest grocer behind Kroger.

In contrast, the Penn Traffic Co., owner and operator of the P&C, Quality and BiLo supermarket chains in the Northeast, reported revenues of $872.3MM, up modestly from $896MM in the previous fiscal year. The firm accounted for the improved numbers through a reduction in the number of its stores, and blamed the soft improvement on lower volume and traffic.

One bright spot in retailing is the growth of online selling. Frozen food marketer Schwan’s has stumbled at brick & mortar retailing (saved largely by their frozen pizza lines), but it’s online business is booming. Sales to online visits (called “conversions”) from its website reached 50.5% in March according to Nielsen Online Mega View. The next-closest conversion rate was 27% by floral marketer FTD.com. Consumers spent an average of $75 online for food during the month, with the highest category spend at $252 (event & movie tickets). The other categories included Computer Hardware ($188.76), Automotive ($121.39), Consumer Electronics ($120.86), Child/Baby Care ($78.34), Sporting Goods & Outdoor Activities ($75.36), Home & Garden ($75.13), Office Supplies ($75.08) and Computer Software ($65.69). The sites tracked had a least 500K unique visitors.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Economic Downturn Curbs New Product Introductions

According to research giant Mintel, new product launches in the food & beverage category are off 51% from last year.

New product launches in the first quarter are generally lower than other times of the year, but this first quarter looks quite sober. Among those categories singled out for reporting were:

1.) non-alcoholic beverages (down 56%)
2.) chocolate (-55%)
3.) confections & chewing gum (-64%) and
4.) dairy items (off 60%)

The media feeding frenzy about the recession has even sparked some clever gimmicks, including Information Resources, Inc.’s “Downturn Generation” nametag that supposedly applies to the New Shopper in the New Economy. Their report “Dissecting the Downturn Generation: Recognizing and Leveraging Permanence in Today’s Transformational Economy,” makes the absurd claim that changes in shopping habits are now “permanent” and “irreversible.” Eager to justify their research budgets, they claim to have identified three “new” categories of shopper:

Optimists, who believe “things will get better during the next 12 months” and are cutting spending selectively and as a last resort

Maintainers, who believe “the economy won’t get worse, but it won’t get better either,” and

Pessimists, who are just this side of digging a shelter and stocking it with guns and canned food.

One stat emerging from the study is how economic storms can have lasting impact on shoppers, at least in terms of their mental state: gas prices are 50% below their height in 2008, yet 73% of surveyed shoppers feel gas prices had an impact on their financial picture during the last 6 months. Not surprisingly, 75% thought the same thing about food prices, despite a leveling off or decline in many foodstuffs since last Summer.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

A Little Levity

Chicago sports bar The Fifty/50 is offering a $100 gift certificate “no questions asked” for the person or persons who can return a framed vintage Playboy cover, one of many that decorate its bathroom walls. The May 1970 cover features Phyllis Babila on the cover (see above).

As an added incentive, restaurant regular Crystal McCahill will autograph a copy of her 2009 “Playmate of The Month” issue (see below).



Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Anti-Oxidant as a Branding Tool

No rarefied geek term, "antioxidant" has been shown to resonate with consumers.

Between 55-60% report they will stick with a brand or product that has antioxidant qualities-- whether they fully understand the value of the compound or not. The term has become a catch-all taking in a large range of phytochemicals, phenolic compounds and flavonoids, as well as the more well-known vitamins C and E, and beta-carotene compound. Concrete results (what researchers call a "hard end point" resulting in extending life or curing a disease) have been shadowy at best. And something manufacturers aren't keen to fix. With consumers eager to have "antioxidant" qualities in their food and beverages, companies are happy to give it to them, without probing too deeply or testing their claims.

But if experience in the UK is any guide, pushing claims too far can be detrimental to sales. The smoothie Innocent was denounced by the Advertising Standards Authority (ASA) for making unsubstantiated claims. Among the various compounds labelled "anti-oxidant," studies show consumers consider vitamin C to be the single most important vitamin for health among all age groups, while vitamin E is more important as the age of those studied increases. Pairing antioxidants with other functional food attributes (e.g., fiber) increased a product’s appeal. "Added vitamins and minerals" were considered important by 87% of younger purchasers (63% of those in the older brackets).

Researchers are looking for ways to compare various antioxidants so there would be some meaning to its being on the label, which might strengthen the marketing claims of legitimate products. But just as likely is that marketing will stay ahead of the research curve. Witness ORAC (oxygen radical absorbance capacity) testing– it is one of the most common chemical assays to establish antioxidant activity, and companies are already looking for ways to promote their products with ORAC-based claims, despite researchers saying a higher ORAC number is meaningless. Reports that nutraceutical beverage sales are on a steep rise will only embolden marketers bent on capturing some of that growth.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Cheeseburger in Paradise

This article in Chain Leader magazine about the 34-unit Cheeseburger in Paradise chain of casual dining restaurants brings up just how widespread licensing is.

The company licenses its name from Jimmy Buffet's Margaritaville Holdings, and comes from a hit song Buffet made famous decades ago. The notion of branding a restaurant chain with a pop song lyric might seem strange, but it's no weirder than some of the concepts that have made their way into the foodservice world. We had a client that owned a rather pedestrian shellfish brand tell us they wanted to see it licensed to a restaurant.

Yeah, right.

The article doesn't just show how pervasive licensing is, but how it can't succeed without making sense. The chain was originally owned by the heavily-leveraged OSI, owners of the Outback Steakhouse chain (among others). OSI was getting hammered by Wall Street when it was a publicly-traded company, so the chain's management team borrowed truckloads of money and went private, thinking "we won't have to answer to those annoying money guys every quarter and can do what's right for long-term growth."

Unfortunately, their timing couldn't have been worse. The casual dining segment of the restaurant biz was already in trouble when the economy went South, and consumers have consistently voted with their feet since then, opting either for cheaper meals out (trading down to Fast Food) or by staying home. OSI dumped Cheeseburger for $2MM recently, spinning it off to a group of investors.

Fortunately for Cheeseburger in Paradise (the restaurant), some sanity has prevailed, and the licensor (Jimmy Buffet's people) have lowered the royalty rate. One of the trickiest propositions in licensing is negotiating a fair royalty rate, both for the licensor and the licensee. If the rate is too low, the licensee gets rich off your brand. If it's too high, the products end up being priced out of the market and the deal is a flop.

The lesson from all this is two-fold: you never know where licensing is going to turn up, and make sure sanity prevails when negotiating a licensing deal.
Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

This article about Burger King licensee The Inventure Group says how the company has seen significant growth from its lines of snack chips, including that from Burger King.

In 2007, the company signed a deal with Burger King to produce a line of snack foods under the fast-food chain's moniker.
They include a crispy puffed snack shaped and flavored like onion rings (a popular Burger King offering) and another shaped and flavored like French toast.
The company reported that sales of the Burger King licensed products were up 45 percent in the second quarter of 2009.
"We're thrilled with the Burger King snack rollout," said Steven Sklar, Inventure's senior vice president of marketing.
The licensing agreements allow Inventure to use the name recognition of the licensee to launch new products.
"It's much less expensive to launch a new product under a known brand that to build a new brand on your own," Sklar said.
While Inventure gets a relatively inexpensive way to bring out new products, the licensee gains publicity from its name hanging in vending machines and convenience stores.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Business Week Names Top 100 World Brands

Broad Street Licensing Group client Burger King was #93 in the annual Business Week poll of the world's top 100 brands based on their relative valuation.

Place
1. Coca-Cola
2. IBM
3. Microsoft
4. GE
5. Nokia
6. McDonald's
7. Google
8. Toyota
9. Intel
10. Disney
11. Hewlett-Packard
12. Mercedes-Benz
13. Gillette
14. Cisco
15. BMW
16. Louis Vuitton
17. Marlboro
18. Honda
19. Samsung
20. Apple
21. H&M
22. American Express
23. Pepsi
24. Oracle
25. Nescafe
26. Nike
27. SAP
28. Ikea
29. Sony
30. Budweiser
31. UPS
32. HSBC
33. Canon
34. Kellogg's
35. Dell
36. Citi
37. J.P. Morgan
38. Goldman Sachs
39. Nintendo
40. Thomson Reuters
41. Gucci
42. Philips
43. Amazon
44. L'Oreal
45. Accenture
46. eBay
47. Siemens
48. Heinz
49. Ford
50. Zara
51. Wrigley
52. Colgate
53. AXA
54. MTV
55. Volkswagen
56. Xerox
57. Morgan Stanley
58. Nestle
59. Chanel
60. Danone
61. KFC
62. Adidas
63. Blackberry
64. Yahoo!
65. Audi
66. Caterpillar
67. Avon
68. Rolex
69. Hyundai
70. Hermes
71. Kleenex
72. UBS
73. Harley-Davidson
74. Porsche
75. Panasonic
76. Tiffany & Co.
77. Cartier
78. Gap
79. Pizza Hut
80. Johnson & Johnson
81. Allianz
82. Moet & Chandon
83. BP
84. Smirnoff
85. Duracell
86. Nivea
87. Prada
88. Ferrari
89. Armani
90. Starbucks
91. Lancome
92. Shell
93. Burger King
94. Visa
95. Adobe
96. Lexus
97. Puma
98. Burberry
99. PoloRalphLauren
100. Campbell's

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Private Label Hysteria

The Private Label people are sure the world will never end.

It's the same thing that we heard during the last run-up in gas prices: Americans would switch to more fuel-efficient cars and would slow down. The next time you're driving on the highway, check the speed of the cars rushing past.

Check your own speed.

The truth is that Americans LIKE the profligate lifestyle we've come to know from decades of plenty. Whether its overeating or overspending. So when I head claims that a "paradigm shift" in retail habits will mean the continued expansion of Private Label goods, I smile.

Cooler heads think a bit different. This study sees a flattening-out of PL purchasing. For one reason, brands produce intense consumer loyalty. For another, simple greed will play a part. It's true stores COULD use the savings from sustainable practices and using local commodities to keep their house brands much cheaper than national ones. After all, the large CPG houses have to ship their products all over creation, while the regional grocer can use a local co-packer. But we all know that isn't going to happen. The cost savings will end up in the P/L under a big, fat PLUS.

And don't think the brands are taking this lying down, either.
Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Green Food Trends

• While most surveys indicate that organic purchases are becoming a victim of the recession, a new JD Power canvass (press release attached) shows that the introduction of organic products via store brands helped elevate private label from just "cheap imitations" of brand names to unique offerings. Singled out for special mention are Whole Foods and Safeway's O-Organics line.

• Whole Foods isn't resting on those laurels, nor the distinction of being the first US retailer to have all its stores certified organic: it is partnering with Bosch Appliances to give away their high-end Evolution refrigerators stocked with organic and natural products.

• The organic movement has pressed for more than simply removing additives, hormones and pesticides from the food chain, arguing that agriculture and farming must sustainable. The Smithsonian Museum recently hosted a symposium on sustaining the world's seafood stocks. Demand for fish has reduced some stocks to perilously low levels, and fish farms have drawn the ire of environmentalists and some scientists for pollution, incubating water-borne diseases and parasites, and introducing hormones and synthetic colors to seafood. Participants in the round table argued that if fish stocks aren't sustainable, then the advantages of eating fish will be wiped out by the environmental impact.

• The sustainability question has reached McDonald's which has been pressured to shift its potato supplies away from the heavy use of pesticides. The company is feeling the pressure, and has promised to consider a shift.

• In a nod to the commercial and public relations advantages of "buy local," foodservice giant ARAMARK has indicated it will “shop locally” for suppliers, introduce biodegradable service ware, encourage composting, and facilitate the recycling of bottles, cans, cardboard and frying oil through the its Green Thread program.

• PepsiCo is introducing a new environmentally-friendly vending machine they claim will reduce greenhouse gas emissions by 12%. The machines will use CO2 for a refrigerant instead of hydrofluorocarbons, but the company says gases from the insulation foam and refrigerant make up only 5% of the machine’s carbon footprint with fully 95% coming from the energy required to power it. The company is also testing machines using isobutane and propane as refrigerants.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Wendy's Follows Burger King Into Games

Following BSLG client Burger King's licensing its brand to downloadable cell phone games, game manufacturer Ubisoft is partnering with Wendy’s to promote its Petz video game in the U.S. and Canada through a Petz-themed Kids Meal that includes five exclusive Petz premium items, including the Petz Catz PC game, Petz Dogz PC game, a Catz toy balancer ball, a Dogz plush toy, or a Petz-themed card game.

Petz is the #1 pet-themed game on the Nintendo DS system allowing players to create and care for cute, furry pets chosen from different breeds of dogs, cats, horses, and other animals. o games including Petz-related activity games such as word scrambles, puzzles, and games. A discount coupon to purchase Ubisoft’s Petz Dogz Pack for Nintendo DS or Petz Sports for the Wii home video game system from Nintendo is also featured on the Kids Meal bag. The promotion will be supported via wendys.com and in-store signage at Wendy's restaurants.

Ubisoft and Wendy's will also promote the campaign via a microsite that includes three new exclusive, co-branded mini Petz-themed games. The campaign was developed by 206, Ubisoft's promotions agency and Determined Productions Inc., Wendy's youth marketing promotions agency.

It should be pointed out this is a promotion and not a license.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

More Health Notes

• The ad claims by General Mills apparently are true: eating two 1.5 cups of Cheerios daily can help lower LDL (so-called “bad”) cholesterol by 10% in one month (as part of a reduced-calorie, low fat diet). The American Heart Association estimates 98.6MM Americans have total blood cholesterol levels of 200 mg per deciliter (mg/dL) or higher, the threshold for risk of heart attack or stroke. The bad news is the FDA wants to regulate Cheerios like any other drug if it's going to make those kinds of claims.

• FoodEssentials.com is a searchable database allowing consumers to compare foods from different manufacturers according to which ingredients or nutrients they wish to avoid or find, a potentially life-saving aid to persons with dangerous food allergies.

• In news of interest to older men, researchers at Eli Lilly and Co. claim their studies of erectile dysfunction (ED) drugs Viagra and Cialis did show adverse effects on visual acuity, color discrimination or intraocular pressure, or create other eye problems after daily treatment for six months. The results might not apply to patients with co-existing systemic or ocular disease, the study authors said.

• We have been reporting regularly to our clients on the rise of e-prescriptions and how retailers are rushing to corral those dollars. Now comes news that the state of Tennessee plans to implement over $14MM in grants and incentives to promote the use of electronic prescriptions. Advocates say the e-scripts reduce drug interaction problems, since the databases highlight potentially dangerous mixes to the physician and the pharmacist, as well as helping avoid them when different doctors prescribe incompatible drugs without knowing about each other’s actions. Critics say the centralization of the health care industry will eventually lead to higher prices and less choice to consumers. Despite criticism, retailers continue to market themselves, with Walgreen announcing it will give away $60MM in mobile health screenings in partnership with the seniors group AARP. The screenings will reach up to 2.5MM Americans.

• Wegmans Food Markets is promoting healthy eating to children with its Eat a Rainbow demonstrations. The in-store promotion will include educational handouts and food stations featuring fruits and veggies.

• While it’s hardly news that companies are trying to cut health care costs, Safeway is enlisting its employees in the process by encouraging them to be accountable for their own health. That includes keeping their weight down, watching cholesterol and blood pressure levels and other preventative steps the company claims is saving millions of dollars. So far, nearly 75% of employees have signed on to the program in return for discounts to their health care out-of-pocket.

• Among all the other bad things diabetes can do to the human body, the lowered blood sugar apparently increases the risks of dementia.

• A lack of vitamins A & C could increase the risk of asthma according to UK researchers.

• The use of energy drinks is highly controversial on several levels, including allegations their high citric acid content and sugars are bad for teeth, but now experts say their salutary effects aren’t what most consumers think they are. The rush of performance enhancement users report comes from the way the drinks boost motivation by activating reward and pleasure centers in the brain, not rejuvenating or repairing muscles. This boost is unique to these drinks and can’t be mimicked by other artificially sweetened beverages according to the latest research.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Tasty Tidbits

• Walgreen, under financial pressure after its merger with Rite-Aid, had good news in March as electronic prescriptions were up 211% over the same period last year. The increase is part of a 40MM electronic prescription blizzard the company anticipates this year. Retailers see the switch to electronic scripts as a crucial component of future growth.

• Among the recipients of the National Restaurant Association’s Kitchen Innovation Awards is Hobart’s Bluetooth-enabled “Combi Oven with Barcode Scanner” that automatically controls the cooking program with a wireless recipe exchange capability.

• Campbell Soup Co. has fueled speculation about the growth of artisan breads with its purchase of East Brunswick, NJ-based Ecce Panis. While artisan breads are a niche in the baking industry, this move could signal a shift to mainstream distribution. Other companies currently pushing artisanal breads include Nestle.

• Soluble fiber can now be added to beef and other meats. Marketed under the name LuraLean, the product is made from glucomannan which comes from the roots of the konjac plant. The fiber has already been successfully marketed for weight loss beverages and supplements due to its ability to absorb water and form a gel in the gut, increasing the sensation of being full. The company also claims the product will lengthen shelf life of meats because of its water-absorbing quality.

• With untold millions of bees dying off around the US for as-yet unknown causes, one potential culprit has been identified: mites. Mite-resistant bees will be introduced this Spring into the White House garden to pollinate its tress and shrubs.

• Despite the salmonella scare, peanut butter sales increased 5.6% in March over this time last year according to the National Peanut Board (yes, Virginia, there IS a National Peanut Board).

• According to a list of top 50 brewing companies by The Brewers Association, the top three craft breweries were Boston Beer Co., Sierra Nevada Brewing Co. and New Belgium Brewing Co., while the top three overall were Anheuser-Busch InBev, MillerCoors Brewing Co. and Pabst Brewing Co.

• Naked Juice is collaborating with the Rainforest Alliance, an international nonprofit organization that aims to ensure sustainable livelihoods for people while protecting wildlife and the environment. The Rainforest Alliance Certified seal will be placed on Naked Juice products containing bananas, which are found in 80% of the company's products.

• Dave & Buster’s, Inc. reported revenues decreased 7.2% to $134.9 million in the 4th quarter of 2008, compared to $145.4 million the same time in 2007. The decline was due to a 10.2% decrease in comparable store sales, a decline partially offset by additional sales at non-comparable stores, including three opened in fiscal 2008. Food and Beverage revenues decreased 9.2% while revenues from Amusements and Other decreased 4.7%.

• Dunkin’ Donuts will focus growth on larger airport hotels, resorts and vacation destinations in the East, Midwest and Southwest U.S. New footprints will include kiosks and self-serve hot coffee stations in addition to full retail stores. The brand’s first hotel restaurant opened recently in Concord, NC.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

More on Salt & Health

• The campaign against salt in processed foods and restaurants has intensified with the CDC (Centers for Disease Control) now joining the campaign to reduce salt. The CDC has released figures show the average American consumes 3,400 mg of sodium per day, 15x the amount needed (U.S. Dietary Guidelines recommend 2,300 mg tops), of which 80% comes from processed foods and restaurants. What’s more, it claims a 50% reduction in sodium in processed foods could save 150K lives and $10bn in health costs each year. Studies show sodium levels have doubled since 1970s as Americans consume more convenience foods in and out of the home. Manufacturers, under pressure to reduce fats and sugars, have upped salt to maintain flavor. Salt is also a valuable preservative in shelf-stable foods. One of the biggest challenges for individuals trying to limit salt is their complaint about bland food.

But health professionals have discovered links to osteoporosis, kidney failure and stomach cancer (excess sodium’s link to higher blood pressure has been recognized for decades). With heart attacks and strokes felling upwards of 850K people each year, high blood pressure is second only to smoking as a preventable cause of illness and death according to New York City Health Commissioner Thomas Frieden. Fifty million Americans have hypertension (blood pressure at or above 140/90 mm/Hg), while another 20MM are prehypertensive (blood pressure from 120/80 to 139/ 89 mm/Hg). Virtually all Americans will develop hypertension as they age, so salt reduction should ideally begin as soon as possible. Nearly 90% of Americans eventually develop high blood pressure as they age. The Grocery Manufacturers Association (GMA) is fighting government requirements to reduce salt, saying education is needed to alert consumers to the need for reducing their sodium intake. The American Heart Association, the American Medical Association (AMA) and the World Health Organization (WHO) all urge lower salt consumption.

• Unilever has announced plans to reduce sodium and salt from 22,000 of its products worldwide by 2010. The company claims to have removed over 9.1MM kilos of salt already. The reduction so far has been through recipe reformulations, though the company’s research arm is looking at innovative ways to replace the preservative qualities of salt by other means.

• Cutting salt isn’t as easy as it sounds-- raw chicken from the supermarket, for example, is often bathed in salt water to make it plumper (and hold water, thereby weighing more). Labels offer confusing information, with sodium totals sometimes tied to individual servings and not the entire package. Labeling regulations allow a surprising latitude in descriptors, too: products can trumpet themselves as “sodium free” even with up to 5 mg per serving, while “very low sodium” can be up to 35 mg and “low” up to 140. The claim of “reduced sodium” is meaningless, other than saying the current formulation has reduced its sodium content by 25% from whatever its earlier numbers were. “No added salt” does not mean “salt free.” Some typical processed foods and their sodium content includes Au Bon Pain blueberry muffin (500 mg), Marie Callender’s Frozen Fried Chicken (1,590 mg), ShopRite Cottage Cheese, ½ cup (450 mg), Kellogg’s Raisin Bran, 1 cup (350 mg), Kraft Easy Mac Macaroni & Cheese, 1 cup (700 mg), and Oscar Mayer Baked Ham, 3 slices (780 mg). Experts encourage parents to cook with less salt, as kids who are accustomed to less salt will likely not develop a “salt tooth” just as those who don’t have access to candy in childhood are less likely to have a “sweet tooth.”

• Sodium as a hot-button issue has been prominent in the U.K. for over 5 years with food manufacturers and restaurant chains cutting salt by up to 30% so far. Average daily consumption there is down from 9.5 g to 8.6 g.

• One reason for that bloated feeling after eating out is what’s called a “sodium load.” Flushing the extra sodium from the body usually takes several days.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Private Label Maneuvers

• Supermarket star Wegmans pushed its private label brand this past Summer with a promotion called “Stock Up for Summer.” The goal was to induce shoppers to buy fresh and frozen items like berries in larger club store-sized packaging, Atlantic Salmon (in club-size frozen assortments), “dry rub grilled pork chop with spinach & papaya salad” from the prepared-meals department, along with Tastes of Wegmans-brand chips, soft drinks and even paper goods.

• Target has given its PL products a face-lift under the new name “Up &Up” with an arrow logo replacing the ubiquitous bulls-eye one, something the company already did with its Archer Farms and Choxie house brands. Kathee Tesija, EVP for Merchandising, says 40 product categories have been transformed. Target’s house brands have shown 25% growth over the past five years, with off-price the selling point (usually 30% less than national brands according to Tesija). The retailer claims it doesn’t want to lose its core chic-ness with consumers by becoming a discounter, but is none the less experimenting with matching prices in three test markets. First-quarter earnings were $522MM, off from last year’s $602MM, though better than forecast. Sales rose a modest 0.4% to $14.4bn from $14.3bn. Same-store tallies declined 3.7% despite what company execs styled as “strongly positive” grocery numbers.

• German-owned Aldi is moving into Florida to compete against Publix by stocking up to 95% house brands, far above the national average (9.7%) as reported by the Food Marketing Institute (FMI). The Southeast market will be more competitive now that Jacksonville, FL-based Winn-Dixie has emerged from bankruptcy with new packaging for its house brands which sell at different price points. Thrifty Maid is the rock bottom private label brand alongside mid-tier Winn-Dixie and premium gourmet Winn & Lovett brands (the company’s original name). Even as private label threatens to consume many national brands, some of those brands continue to conspire with the threat. Publix paper towels, for example, are produced by giant Georgia-Pacific (makers of Brawny among other national brands), while its long-grain rice is packaged by Mahatma.

• Food Lion gave consumers coupons worth between $1-$10 for purchasing their house brands during is “Private Brand Super Sale.” The value for the coupons comes from the number of products purchased with a Food Lion loyalty card ($1 for buying four items up to $10 for 10). Fresh meats, produce and random weight deli and bakery items are excluded.

• Publix is going one further and giving away three of its private label cereals: Buyers of Kellogg’s Special K Red Berries cereal, Special K cereal bars and Quaker raisin, date and walnut cereal can take him the Publix equivalents (Publix-brand raisin, date & walnut cereal, strawberry bars, and crunchy rice & wheat cereal) for free in an effort to get consumers to switch over.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)