Heinz Goes to the Garden Department

Heinz-UK, which owns the country’s largest-selling sauce brands (Heinz & HP, which it purchased in 2007), is targeting garden centers for its barbecue sauces and other non-food retailers for other products.

The move is intended to avoid the dominance of supermarkets and the relentless march of their private label products. Heinz has watched its market share in sauces (including tomato ketchup) drop from 79,9% last year to 74.7%, while private label has grown from 15.8% to nearly 19%. Sales of private label products have surged in recent months thanks to retailer promotions. Dave Woodward, president of Heinz’s UK and Ireland business, describes garden centers as “white space opportunities.” The sauces and ketchup are already being sold by Heinz’s foodservice division in garden center cafes, but the company is aiming for retailers like Mothercare, a specialist retailer selling children’s clothing & furniture, as an outlet for its baby foods.

Gas stations and c-stores such as Nisa-Today’s and Spar are also on the radar. Heinz has sold seasonal products in these outlets in the past, but never year-round before. Currently 70% of sales are in traditional supermarket chains like Tesco, Asda, Morrisons and Sainsbury. Unlike many brands, Heinz makes only frozen desserts in a private label format. The move to c-stores will not be a no-brainer, since private label already accounts for 1/3 of all U.K. food sales and is rising in the convenience store channel. Tesco is looking to rent out plots (called “allotments”) to consumers for growing vegetables and raising chickens at its own Dobbies Garden Centres.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

The Knives Come out at Benihana

If this article isn't proof of what's wrong in the restaurant industry, I'm not sure I know what is.

The piece talks about a food fight between the several factions who own the Benihana chain. On one side are the children of Benihana founder Rocki Aoki and Coliseum Capital Management, which owns around 10% of Benihana's stock. Apparently Benihana management is looking to issue between 12.5MM-25MM new shares of common stock following a merger with a subsidiary. Management claims they need to do this in order to raise capital, resist the economic downturn, and deal with some outstanding credit issues. The measure passed on February 23rd despite the opposition; there is no word yet whether the disgruntled parties will resort to legal redress.

The family says the stock issue will dilute their influence on the direction of their father's creation, and undermine the value of their shares. Naturally, the company that controls the chain (BFC Financial Corp., the second-largest stockholder) has no problems with the issue, and why should they? There's a nifty anti-dilution protection written into their agreement that will mean the influence of their share won't be hurt, and will by default increase. Even the company's SEC filing admits other investors will be "adversely affected."

That's what you call a "ginned game."

The widespread ownership of the restaurant industry by private equity groups and other financial entities can be a mixed bag for the business. On the one hand, PE guys tend to be more entrepreneurial than traditional foodservice people. They understand making money and taking risks. But they also know how to work the system, so right now, Benihana is focused on stock manipulation, not on improving its competitive position. Would I consider representing the brand?

Not until this issue gets settled.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

BK Ups Its Game

Client Burger King struggles against McDonald's even on a good day.

It seems no matter what the Miami-based food giant does, it pales in comparison to the Golden Arches. Much of that is just the economies of scale: McDonald's is so big, even when it belches, the winds of change blow hot. The media has tended to favor the Oakbrook, IL-based behemoth while openly denigrating the efforts and prospects of chains like BK, Wendy's/Arby's and others.

Recently the brand has taken two pages from Mickey D's playbook. As reported here in this blog, Burger King has ditched its loser coffee, BK JOE (considered "sludge" by those in the coffee trade), in favor of Seattle's Best (well, second-best, but better than BK JOE). Now, its its latest move is to go after McDonald's Angus Third Pounder premium burger with the new Steakhouse XT. Boasting 7 ounces of beef, the new burger is 30% larger than an Angus Third Pounder.

The Steakhouse XT will debut at the promotional price of $3.99 alongside a co-branded A.1. Steakhouse XT and a Smoky Cheddar Steakhouse XT at $4.49. Whoppers usually go for $3.19. The Steakhouse XT and A1 Steakhouse XT are joining the core menu, while the Smoky Cheddar is an LTO (limited time offering).

The new line of premium burgers offers a higher margin than Burger King's regular lineup, which has seen controversial price-cutting strategies that prompted a lawsuit from franchisees. The change is only possible because of a new line of batch broilers with multiple cooking tracks that allow it to make both Whoppers and premium Steakhouse XT burgers. The company also says it is testing other broiled products, including Fire-Grilled Ribs, stuffed burgers, breakfast items, snacks and even flame-grilled desserts.

Stay tuned for more in the burger wars.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

More Marketing Appetizers

• Michigan based grocery chain Meijer joins the “small is beautiful” movement in food retailing with a 102,000-square-foot test store in Niles, MI, about ½ the size of the average Meijer.

• In other store news, the no-frills discounter PriceRite is continuing its slow expansion in the Northeast adding a 42nd store. The chain doesn’t advertise, and requires shoppers to use their own grocery bags or purchase them.

• While both Nestlé and Unilever have long resisted extending their food brands through licensing, both have agreed to let Chicago cupcake retailer Phoebe’s sell individual-sized servings of both Haagen-Dazs and Ben & Jerry’s ice cream.

• Frozen yogurt has surpassed ice cream where sales are flat or declining, and probiotics are all the rage, so Red Mango’s decision to become the first retailer to offer iced teas fortified with GanedenBC30, a patented strain of probiotic is a man bites two dogs story. Claimed to “support the immune system and regulate the digestive track,” GanedenBC30 will also be added to Red Mango’s Original, Pomegranate by POM Wonderful, and Tangomonium frozen yogurt flavors.

• Sales of organic food in the Canadian market were C$2.1-C$2.6bn last year ($1.9-$2.4bn) with the four main categories fresh fruits & vegetables (41%), beverages (17%), and prepared foods (14%) with most of the remaining 28% packaged organic foods. The market is expanding 15-20% annually, though domestic production is rising only 4%.

• The UK trade journal Retail Bulletin has ranked Tesco’s website the top retail site.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Top Food Industry Leaders

President Obama was only 5th on Supermarket News’s “Top 50 Leaders of the Food Business.” The #1 spot went to Kroger’s David Dillon. While CPG houses were included, curiously no restaurants were. Myopia. Here are the top ten leaders:

1. David Dillon, chairman, and CEO, Kroger Co.
2. Mike Duke, president and CEO, Wal-Mart Stores
3. Steve Burd, chairman, president and CEO, Safeway
4. Craig Herkert, president and CEO, Supervalu
5. President Barack Obama, president, United States of America
6. Charles Youngstrom, president, Aldi U.S.
7. John Rishton, CEO, Ahold
8. Danny Wegman, CEO, Wegmans Food Markets
9. Jim Sinegal, president and CEO, Costco Wholesale Corp.
10. Pierre-Olivier Beckers, CEO, Delhaize Group

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Marketing Shorts

Quick! Name three date foods—

• According to a Cornell University survey of college students, anything that makes you look healthy, doesn’t stick in your teeth, and doesn’t give you bad breath is OK. Whether habits picked up on college dates will persist into adulthood remains to be seen, but researchers seem to think those habits will morph into the ones married people will have. Right. It turns out women are more likely to pick salad and vegetables “in an attempt to appear more feminine and attractive,” while men didn’t choose the so-called “masculine” foods like proteins, but instead chose foods their dates were eating. Imagine that behaviour continuing past the first few years of marriage? Overall, neat and easy-to-eat foods were preferred, while those thought of as smelly or causing bad breath were out.

• Research from the National Restaurant Association (NRA) reports 69% of quick-service restaurants would eat there more frequently if it offered discounts for frequent dining, 66% said they go more often if offered discounts for dining on less busy days of the week, and 53% said they would eat there more often if kids are for free. Repeat customers account for 75% of QSR sales.

• The latest restaurant trend is the “pop up” eatery that is usually a temporary add-on for an existing restaurant, such as offering pizza in the evenings at a bakery café serving more mundane fare during the day. The trend started with out-of-work chefs, but may stick as diners look for more adventurous fare and different eating options.

• Safeway has expanded its couponLink program to all stores, allowing customers to load online coupons directly to their Safeway Club Card. The program is managed by Shortcuts.com, CellFireand P&G eSaver. Shoppers can log onto www.Safeway.com where there’s a link to the couponLink page with the offerings from the three coupon providers. Once downloaded, the coupons can be organized by product category or product name, and automatically redeemed at checkout. Cell phone users can download coupons from both CellFire and Shortcuts.com, even while shopping in the store. Mike Minasi, Safeway president of marketing, says “Customers don’t even have to remember to bring coupons with them to the store.”

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Tasty Tidbits

• According to New American Dimensions, a Los Angeles-based firm that monitors ethnic trends in the U.S., there are more Chinese restaurants than McDonald’s, Wendy’s and Burger King restaurants combined.

• As a sign of the times, agribusiness giant Cargill has announced it will shut down its hydrogenated oil production line at a Wichita, KS plant. The demand for the product has diminished greatly since the movement to reduce or eliminate trans fats came about. The process adds hydrogen molecules to vegetable oil producing semi-solids like shortening used in baking and other food processing tasks.

• Target has opened 23 new stores, bucking the retailer depression. Only four are general merchandise stores, while 17 have expanded food options and 2 are full-grocery SuperTargets. Target is trying to push its private label brands Archer Farms, Choxie, Market Pantry and Up & Up.

• Changes in packaging focusing on smaller sizes for convenience stores and “small footprint” operations bode for growth in the US meat & poultry packaging market according to a study by The report by The Freedonia Group entitled Meat, Poultry and Seafood Packaging which predicts it will reach $9bn by 2013.

• Predictions about the death of the Good Humor Man is perhaps premature, but entrepreneurs attracted to mobile ice cream sales by the low start-up costs and nearly non-existent job training have found the market off by 25% in some areas. Ice cream was long considered a necessary luxury and otherwise recession-proof, but that’s no longer the case.

• While the scotch market continues to age-out and decline in size, premium single-malt distiller The Macallan is releasing a new line of four varieties aimed at the global travel (i.e., gift) market. Ranging from the “value priced” Macallan Select Oak (three oak casks, including former sherry barrels) is priced at $53/liter up to The Macallan 1824 Limited Release (only the oldest sherry casks made from oak produced by the Tevasa cooperage in Jerez, Spain) at a whopping $2,000/700ml. And who says conspicuous consumption is so yesterday?

• The bags go up, the bags go down: PepsiCo’s Frito-Lay and other snack makers are rolling back the de facto price increases of last year when packages were shrunk while prices stayed the same. Now the trend is in reverse, and F-L is releasing Doritos, Cheetos and Fritos in 20% larger bags but maintaining the same pricing.

• Suzie Wong would be amused: General Mills is rolling out a line of Chinese frozen entrees under the new Wanchai Ferry brand (Wanchai is the district in Hong Kong where the movie character Suzie Wong lived, and a branch of the Star Ferry connects it with the mainland). Claiming cooks can plate a complete Chinese dinner for two in 14 minutes, General Mills is offering five flavors at an MSRP of $7.49. A coupon for the product can be downloaded at http://www.WanchaiFerry.com.

• Restaurants know more consumers are eating at home, but if anyone has any doubts, Allrecipes.com double its site visits in the past year, and will launch a similar site in Germany.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

BK JOE Throws in the Towel

It was no surprise to us, but Burger King has thrown in the towel on its BK JOE line of coffee and will now be selling Starbucks' Seattle's Best.

It's a really smart move for both sides.

We tried licensing BK JOE years ago, but no one in the coffee world would touch the brand. Made from a coffee extract (called, appropriately enough, "sludge" in the business), BK JOE couldn't get the pulse of a coffee-holic racing. In the interim, McDonald's has grabbed up even more of the breakfast day part by selling a quality coffee (Green Mountain). Burger King's breakfast strategy was hostage to its lousy coffee, supplied by Sara Lee, who sold off its own retail brands years ago.

Starbucks is moving rapidly to expand its channels of distribution, pushing its retail licensed products and launching Via instant. Americans are behind the rest of the world when it comes to instant coffee. If you travel in Europe, for example, instant is an accepted way of getting your jolt of java in the morning. But the branding "experts" here are crapping all over Starbucks, insisting they're "diluting" the brand equity.

It seems only those on the sidelines understand brand equity, and those of us engaged in building businesses in new and exciting ways are "ruining" the brands. Just ask the restaurants who aren't licensing their brands to retail. Even as more and more of them go under.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Food Allergies Not as Bad as Thought

Despite concerns about food allergies, health professionals are concerned that foods are being targeted for ailments they did not cause, and frequently are blamed for crimes they did not commit.

One-quarter to one-third of Americans believe they or their children have a food allergy, though diagnosed rates are one fifth that total. Studies show 6%-8% of children under 3 are allergic to at least one food, but that once they grow up, that number falls to 3%-4%. Approximately 12MM people in the U.S. have such allergies, with the U.K. the leader in Europe.

The usual suspects— milk, eggs, peanuts, wheat, soy, fish, shellfish and tree nuts— make up 90% of food allergies. The most-common non-food allergies are from pollen, penicillin, and bee stings, but whether food or non-food, the reaction is the same because of the antibody IgE (Immunoglobulin E) which is supposed to fight foreign substances entering the body. IgE causes histamines to be released, which (along with other chemicals intended to protect us) can cause symptoms ranging from itchy eyes and mouth all the way to hives, wheezing, a swollen tongue, rashes, nausea and diarrhea. In the worst instances, anaphylaxis sets in, shutting off the airway and leading to a calamitous drop in blood pressure.

Even with physicians questioning the extent of real food allergies, the reactions blamed on them have been increasing. Informal estimates show peanut allergies have doubled in the last decade, and celiac disease (an allergy to wheat gluten) is now 4x more prevalent than 50 years ago. Fortunately, a blood test and an intestinal biopsy can settle the matter. One problem for diagnosing food allergies is the tests are inaccurate.

The best test is also the most-dangerous: called a “food challenge,” it has the patient ingest controlled amounts of the suspected offending food in greater and greater amounts. The fall-back method is blood testing, often leading to misdiagnosis: one recent study showed up to 90% of the suspected allergies in a group of 125 4 year-olds were negative when food challenges and not blood tests were used. An older 1987 study following 500 kids up to their 3rd birthday found only 8% had real allergies, despite 28% of parents thinking their kids did.

Some who think they have an allergy may simply be sensitive to certain foods. Lactose intolerance, caused by too little of the enzyme the body employs to digest milk proteins, affects 50MM Americans. Simply avoiding dairy or eating dairy products with the enzyme lactase solve the problem. Even wheat gluten is a challenge for most stomachs, so the occasional upset may trigger the belief one has celiac disease. Avoiding gluten, food dyes or MSG isn’t harmful; giving up whole food groups over a self-diagnosis spawned by feelings of discomfort can be, especially when it leads to parents blocking certain foods from their children. And even avoiding gluten is challenging, since it’s in processed meats, medications, and even used to dust frozen vegetables to prevent freezer burn.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

World News

• The baking sector in Colombia has shown less growth that analysts had expected. Recent sales show no change, though retail value growth was much higher (5%). This could be accounted for by the rising cost of ingredients resulting in higher unit prices. The price pressure is forcing manufacturers to seek greater efficiency and product diversification. The fastest growing category was packaged cakes (retail value increased 15% on volume growth of 3%). Productos Ramo’s Ramo brand is the most-popular, usually purchased by housewives and singles. Number two is Mexico’s Grupo Bimbo’s Bimbo brand. Health & wellness is a growing concern, especially in the bread category. White bread is still the #1 category accounting for 37% of packaged sales last year, but “healthier” products like whole grain are surging (34%), followed by multi-grain bread and light bread (10% each). The main concern among consumers with white bread is a mistaken impression other breads are lower in calories.

• The global halal food industry is currently worth around $632bn per year.

• Efforts to control waste and the impact on landfills are focusing on supermarkets and their packaging. In the UK, the consumer magazine Which? asked readers what they thought, and 94% said there is too much food packaging with 30% saying they had refused to purchase something because it had too much packaging. The study compared 27 everyday items bought from six major supermarkets: Asda, Marks & Spencer, Morrisons, Tesco, Sainsbury’s and Waitrose.

The average total yielded 636g of plastic or paper packaging with 14 of the items weighing the same as their container (392g average). Upscale retailer Marks and Spencer had the most packaging (415g). The company has tried to implement a “green packaging” blitz known as its “Eco Plan,” and explained its products often contain more than the competition. It also insisted the study does not take into account recyclability, a key issue now that some plastics are no longer accepted by municipalities and recycling firms, nor its efforts to use more recycled plastic in its packaging. A heavy ice cream carton singled out by the magazine is made from polypropylene which the company claims has a “greater potential to be easily recyclable.” Additionally, M&S says other “green” efforts will include cutting plastic bag usage from 464MM to 77MM within one year. Among the other retailers surveyed, Asda said it had removed 40K tons of packaging, and Sainsbury’s insisted most of its packing was now recyclable. Waitrose claims it has cut packaging by 1/3 since 2001. Tesco says it has 3,500 “packaging reduction projects” underway.

• Lianhua Supermarket, a subsidiary of China’s Bailian Group, is acquiring a 100% stake in Hualian Supermarket from the parent group. With this purchase, Hualian will become a subsidiary of Lianhua, increasing the latter’s total outlets to over 5,200.

• The Evil Empire just got larger: PepsiCo (parent of Frito-Lay) has acquired a 20 % share of Calbee Foods Company, Japan’s largest snack maker. PepsicCo will transfer ownership of its Frito-Lay Japan equity to Calbee in return for a seat on Calbee’s board. The plan is to produce jointly a wide range of food products in Japan, including (surprise!) potato chips, vegetable snacks, breakfast cereals and the ever-popular prawn crackers. The two companies currently generate combined annual revenues of $1.4bn. In a related development, PepsiCo and The Pepsi Bottling Group are investing $1bn in Russia during the next three years, raising its stake there to $4bn, aimed at expanding manufacturing and distribution capacity. A new beverage facility has opened in Domodedovo with a snacks manufacturing plant expected later this year in Azov. Investment in the Lebedyansky juice business will include warehousing and distribution upgrades. The new plant will be PepsiCo’s biggest, and will churn out Pepsi-Cola, Aqua Minerale water and ready-to-drink Lipton iced tea.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Marketing Appetizers

• One of the last family-owned supermarket chains, Ukrop’s, is on the block. The chain has sent out a prospectus to Ahold, Supervalu and Harris Teeter among others looking to sell the company.

• The market for beauty foods has grown to over $1bn in 2008. Described as “nutricosmetics” or “cosmeceuticals.” beauty foods are any food, beverage or supplements that promises benefits to appearances, such as anti-aging. In 2003, the market was worth $579MM.

• Canadian grocer Loblaw has launched the President’s Choice private label brand, and is offering both a money-back guarantee and is handing out fliers comparing prices to name brands. As long as price is the only factor, Private Label will never be more than a stand-in, which is borne out by a new survey from Digital Research showing shoppers are purchasing private-label brands in record quantise, but also stocking up on sale items, using coupons and cutting spending on what they term “non-essentials.” And in a challenge to those who say consumers are eating less-healthy fare, those surveyed said they were still purchasing fruits and vegetables.

• More and more CPG houses and food marketers are extending their outreach to the Hispanic shopper, and Unilever is the latest with ViveMejor. Aimed at the female Latina, the aim is to interleave coupons for Unilever products with advice from experts, along with the usual media and pr initiatives on Spanish-language programming.

• The ASDA supermarket chain in the UK is touting how it keeps aspartame out of its private label products, calling it one of the "hidden nasties" found in the competition’s products.

• The World Society for the Preservation of Animals has found from surveying supermarket chains that 23% more products than last year mention at least one of the following on their label: free range, cage free, grass fed, pasture raised, USDA organic, American humane certified, animal welfare approved or certified humane. The society also cautioned about the use of labels claiming “no antibiotics used” or “no hormones,” pointing out the US government conducts no testing to verify such claims, and that “naturally raised” is a voluntary definition with no requirement that animals have freedom of movement or access to fresh air and sunlight.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

RMS: Retailer Meal Solutions

A new study by Technomic could have been written by us.

It's nothing you haven't seen here or, if you're one of our clients or paid subscribers, have read months ago: consumers don't give a damn about market share, they're just hungry and want meal solutions, not hot air. The restaurant sector doesn't get it, for the most part. While a few brands like our client Burger King have seen the light, most are still thinking a few bucks off their regular menu will lure recession-strapped customers back out to eat.

Others are saying it (like Steve Johnson's "Grocerant" blog), but it has more weight when Technomic says it: supermarkets are developing what they call "retailer meal solutions" (RMS). Grocers have some keen advantages over restaurants, including a wide selection of fresh, frozen and shelf-stable meal options:

"Are you hungry now, or do you want to eat that later?"

Technomic goes on to outline some other options grocers have over restaurants, including:

• Expanded meal alternatives
• Portion-size flexibility
• Increased focus on innovative menu items
• In-store restaurants and other “third-place” features
• In-store RMS events, including chef demonstrations and samplings

Now, Wal-Mart just outsourced their in-store demonstrators, so don't think grocers are immune to dumb moves.

Technomic offered some trenchant advice to the retailer Grocerants:

1.) Get fresher: 87% of consumers say freshness is the key factor in purchasing a retailer meal solution or RMS. yet freshness is a problem with many grocers's food offerings.

2.) Get faster: Three quarters of those interviewed (74%) said convenience is critical in deciding whether to purchase a retailer meal solution.

3.) Offer more variety: Over 22% of those interviewed said they would purchase more RMSs if there were greater variety. C-store customers in particular would like more than greasy hot dogs and doughnuts.

4.) Understand your customer: Technomic found the same kind of ignorance among retailers as among restaurants about what kinds of RMS offerings consumers want and why they purchase them. For example, a majority said the food from grocers looked better than restaurant fare, while the quality of the ingredients used is perceived to be superior in restaurants.

Overall, Technomic found 75% of consumers purchase RMSs once a month vs. 33% who buy them weekly. The high-usage, low-frequency statistics signals a wide acceptance by the buying public, but that it has not yet replaced eating out.

Despite claims consumers want healthier fare, the hard evidence says they really want value and convenience. Packaging is a way to convey both, especially with individual portions, or meals that include an entree and a side in an easy-to-transport package.

Hey, have you seen the Burger King microwavable French fries to the right that cook and serve in the same, cool tear-off fry-pod carton?

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

More Chaos in the Restaurant Industry

We've been warning about restaurants going under (click here).

Bennigan's started it, then Uno and Taco Del Mar. Now it's McGrath's Fish House.

The 20-unit chain has eight restaurants in Oregon and 12 in Washington, Idaho, Arizona, Utah and Colorado. Not quite on the same level as Bennigan's and Uno, but still another domino falling. The Restaurant Management Group is supervising the reorganization of McGrath’s, which ascribes the financial crisis to the usual problems: too much debt load and under-performing units. The plans include closing some locations, though no details are currently available. Uno has already closed 16 units, reducing its total to 179 outlets.

Yet still the chains say "we're not looking to do any licensing at this time."

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Tasty Tidbits

• The non-grocery category of the retail sector continues to struggle as evidenced by Best Buy’s first quarter report for fiscal 2010: net earnings were $153MM, a decline of 15% compared with $179MM 1 year ago. In a sign of improvement and aggressive marketing, total revenue increased 12% to $10.1bn, compared with $9bn for the first quarter of fiscal 2009. Overall the domestic segment’s first-quarter revenues totaled $7.5bn, an increase of just under 1%. Part of the growth was from 115 stores added to the chain in the past year, with comparable-store sales declining 4.9%.

• Regular readers our subscription newsletter know already that IBC (Interstate Bakeries Corp.) recently emerged from bankruptcy. Makers of Wonder Bread, IBC is one of the few major bread companies around. But following their entry into Chapter 11, they closed four plants in the Southern California market, but are now poised to return with Wonder, Home Pride and Nature’s Pride brands.

• Mobile consumer marketing continues to catch on with Mass Connections developing “Consumer Alert” to update potential customers with real-time messages about new promotions. The service will rolled into the existing promotional & marketing campaigns the company develops for retailer clients.

• CIT Group, Inc. has fended off bankruptcy after being turned down for more U.S. Treasury bail-out funds after seeking help from the private sector. The company has been especially active in lending money to restaurants.

• NYC’s White Coffee has licensed the Kahlua brand for flavored coffees.

• "Getting lit up" might take on a different meaning in Arizona now that the governor has signed a bill authorizing those with concealed weapons permits to “pack heat” at bars & restaurants that serve alcohol. Owners who don’t want gunplay will have to post a sign outside their establishments saying “no guns allowed.” The bill was backed (are we surprised?) by the other NRA: the National Rifle Association.

• On a lighter note, Cake.com, a supplier of cake decorating products, has been credited by The Guinness Book of World Records with the top cupcake. Weighing 150 pounds, it can serve 1,500 of your closest friends. Frosted and presented at the Mall of America in Minnesota, it’s a foot tall and 2 feet wide, and was attended by 2,500 normal-sized cupcakes.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Health News

• The Atkins and other low-carb diets have taken a major hit from a recent research paper published in the July issue of the Journal of the American Dietetic Association: a study of nearly 4,500 otherwise healthy Canadians showed that you’re less likely to be obese if you eat foods low in carbohydrates. The lowest risk of being overweight or obese was among adults who obtained 47%-64% of their energy from carbohydrates. Overweight and obesity prevalence was 65% in the lowest quartile of carbohydrate intake. Those with the highest carbohydrate intake had lower intakes of total calories, protein and fats, but more fiber than those in the lowest carbohydrate intake category.

• The CDC (Centers for Disease Control) says that blacks have a 51% greater prevalence of obesity and Hispanics a 21% greater prevalence compared with whites. Geography is also a marker with blacks and whites in the South or Midwest having a greater chance of being obese, while Hispanics in the South, Midwest and West had higher rates.

• Research has indicated older women who are obese and have Type 2 diabetes could decrease their body mass index or add muscle mass by taking safflower oil or conjugated linoleic acid supplements.

• Scientists study cataracts in rat eye lenses think they may have found a dietary supplement to prevent or even treat the condition: carnosine.

• Manufacturers of baby foods, increasingly aware of food allergies to wheat products, have doubled the number of new products made with rice instead of wheat over the 130 introduced in 2007.

• A team of Glasgow University researchers identified a molecule which amplifies allergic reactions, along with a biological agent which may reduce the symptoms leading to a reduction in the number of fatal anaphylactic shock cases. Anaphylaxis, which can lead to cardiac arrest and death, is caused by foods such as peanuts, tree nuts, sesame, fish, shellfish, dairy products and eggs. Non-food causes include wasp or bee stings, rubber, penicillin and some drugs or shots.

GEEK ALERT! The following is technical for information junkies!

According to Dr. Alirio Melendez and Prof. Eddy Liew, the team leaders, the immune system hormone cytokine IL-33 plays a key role in the onset of anaphylaxis. Removing the IL-33 molecule will reduce the severity of the reaction. Anaphylactic shock induces a severe inflammatory reaction which often constricts breathing; the IL-33 molecule amplifies that inflammatory reaction. Patients with high levels of IL-33 tend to have more severe reactions. While children often outgrow allergies to milk, eggs, soy and wheat, those for peanuts, tree nuts, shellfish and fish often persist into adulthood. Interestingly, the UK population has the highest prevalence of these allergies in Europe and ranks among the highest in the world. The findings were published in the Proceedings of the National Association of Sciences of the USA (PNAS) journal.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Dean Foods Under Scrutiny

Many in the food industry have welcomed the greater activism by the Obama administration into areas like food safety.

But now there is growing pressure to look at some of the anti-competitive practices: Senator Bernie Sanders (Democrat from Vermont) has asked the U.S. Department of Justice to investigate mega dairy company Dean Foods for what he contends are monopolistic practices that harm dairy farmers.

According to the senator, Dean Foods buys approx. 70% of the fluid milk in New England, recording historic profits of $184MM while farmers are scraping by. Dean hasn’t limited its activities to the US, either. Dean recently purchased Alpro, the European soy-based beverage and food arm of Vandemoortele, for €325m. Europe’s farmers want the milk quota increased by 5% to go along with several measures already enacted by the EU government, including reintroducing export subsidies. The US, Australian, and New Zealand governments are angry at this move, saying it runs counter to the G20 agreement to avoid protectionism during the current financial crisis. Protectionism is widely believed to have significantly worsened the Great Depression of the 1930s.

As Dean’s profits have soared, milk prices are tumbling from $19.50 per 100 pounds one year ago to below $11 by June of 2009. Dean’s profits for the quarter shot up from $30MM in 2008 to $76.2MM during the same period. The company denies anything illegal, pointing out the USDA (Department of Agriculture) usually sets milk wholesale prices, and that "supply and demand" are keeping the price low.

The senator is also pressuring U.S. Agriculture Secretary Tom Vilsack to prop up the price paid to dairy farmers. More than the cost of milk is at stake, both in the US and Europe, where dairy farmers have demonstrated in Strasbourg at the EU Parliament demanding action against low prices and deregulation that has hurt farmers while aiding large middlemen.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Great Shopping Experiences

A study by the Jay H. Baker Retail Initiative at the Wharton School, the Verde Group and the Retail Council of Canada called Discovering WOW – A Study of Great Retail Shopping Experiences in North America (which can be purchased for $2,500) has discovered — brace yourself — that 50% of all shoppers have experienced truly great “WOW” shopping trip.

Yet even when the earth moves, it doesn’t always translate into customer loyalty. Of the 26 “great shopping experiences” assessed in the study, less than 50% resulted in improved customer retention. The “Wow” experience happens often (52% of shoppers), and recently (35% within the last 6 months), usually falling into five distinct categories:

• Engagement - being polite, genuinely caring and interested in helping, acknowledging and listening

• Executional Excellence - patiently explaining and advising, checking stock, helping find products, having product knowledge, providing unexpected product quality

• Brand Experience - exciting store design/atmosphere, consistently great product quality, making customers feel they’re special and that they always get a deal

• Expediting - being sensitive to customers’ time and long check-out lines, being proactive in helping speed up the process

• Problem Recovery - helping resolve and compensate for problems, upgrading quality and ensuring complete satisfaction

Not surprisingly, the study found customers who have had a “WOW” experience 75% more loyal to that store than those who didn’t get a tingle, but “Brand Experience” and “Engagement” turn out to be the only elements that significantly built loyalty with “Brand Experience” the most important (40% more so than any other factor). Interestingly, stores had little trouble delivering “Engagement” elements, and did well with the others—with the notable exception of “Brand Experience,” the most crucial for building customer retention (see Appendix Item #1).

NOTE: Subscribers to our weekly newsletter received a free report on Hispanic shopper patterns and trends. Why are you getting this news on a delayed basis when you could be receiving it sooner?

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Tasty Tidbits

• The Consumer Price Index for all food at-home compiled by the Bureau of Labor Statistics of the U.S. Department of Labor fell 0.1%, its fifth straight month of decline.

• Energy shots, 2 oz. drinks with concentrated doses of caffeine, B vitamins and amino acids, were all but unheard-of four years ago. Now sales are expected to reach $700MM this year, almost double last year’s $370MM. They cost 20x the per-ounce cost of a Coke, and are the rage among college students, drivers, construction workers and others who need to stay alert. A 7-Eleven College Park, MD, sold 400 shots during finals week this Spring.

• A new restaurant chain called University Char-Grill will debut in Rock Hill, SC, with plans to open 30 others over the next 5 years. The menu features burgers, grilled chicken sandwiches and 20 flavors of milkshakes, and it targeting the “fast casual” middle ground between fast-food and formal restaurants.

• Mmmm, ice cream: 27% of Americans claim chocolate is their favorite flavor; 22% say it’s vanilla and cookie dough/cookies and cream. Some 45% claim their favorite way to eat ice cream is in a cup while 29% prefer a cone.

• Confirming what readers of our weekly newsletter already have been told, sales in the carbonated drinks category have been flat to slightly negative over the past 5 years according to Mintel. Up to 34% of adults purchasing beverages switched to water over carbonated beverages. This switch has impacted the convenience-store channel the most, where sales were down 1.9% ($8.3bn) and volume was off 5.5% ($5.5bn).

• Despite problems with the organics movement, a survey of wealthy consumers who’ve taken a hit in the recession by Packaged Facts shows they are still more likely to buy natural, organic and ethical foods. While other demographic groups have slowed or stopped their purchases of “green” items, consumers earning more than $75K as individuals ($100K as households) are actually more likely to be them.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Carl's Jr. Continues Its Bad Boy Ways

Carl's, Jr. likes being bad.

A stream of sexy ads has outraged the proprietary police. But the fast food burger chain has clearly decided bad pub is better than no pub. Its current commericial has Kim Kardashian, whom the New York Times has dubbed one of television's most-vapid and pointless personalities, in a suggestive spot extoling how "salads can be hot."

The video above is safe for work, but unsafe for those who think skin and suggestive gestures aren't the way to sell food.

Then again, who remembers the eating scene in "Tom Jones"?

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.

Coupons Stay Strong

It's no surprise that coupon usage has continued to rise during the Great Recession.

According to Marx Promotion Intelligence (a division of TNS Media Intelligence), Free Standing Insert (FSI) coupon activity increased 8.0% during 2009 versus the previous year to more than 272bn Coupons Dropped (published) as part of 203bn FSI pages. This is the highest level in the past decade, surpassing 2007’s 257bn Coupons Dropped. Retailer promotion pages also increased 37.7% to over 9bn pages (a record). This was part of more than $385bn in consumer incentives delivered via FSI coupons, up 15.0% from 2008. The average FSI coupon face value reached a new record ($1.42, up 6.5%). Average coupon expiration (known as “Fuse”) decreased to 9.3 weeks (down 3.9%) as manufacturers reduce their financial risk by limiting the time coupons are viable.

This blog includes excerpts from a weekly round-up of food industry & food licensing news provided free to Broad Street Licensing Group's clients, and as a paid subscription service (6 months $695; 1 year $1,125).

Too busy to keep up with the news wires & publications about the food business? If you or your company would like to subscribe to our news service, call Danielle Foley at Broad Street Licensing Group (tel. 973-655-0598) and ask for your free sample or click on our website.