business news in context, analysis with attitude

In a remarkable turn of events that promise to change the face of food retailing for decades to come, major strategic initiatives were announced yesterday by some of the industry’s biggest players:

  • Wal-Mart said yesterday that it is acquiring drug chain Walgreens and c-store chain Wawa, saying that adding these two formats to its already impressive and ubiquitous lineup of stores will only make the company more formidable. CEO Lee Scott said that these acquisitions make sense from a number of perspectives, not least of which is the fact that new signs will be cheaper. “Besides, since we worship winning, why wouldn’t we want Wawa and Walgreen?” Scott asked, noting that the purchase was the first one he thought of because in school he always scored high in alliteration.

    Terms of the acquisitions were not disclosed. “We’ve decided that we’re only going to tell people want we want them to know,” Scott said. “And we don’t want them to know anything about our finances.”

  • Starbucks announced that it has acquired Krispy Kreme, and will immediately begin selling its own coffee products from the doughnut retailer’s stand-alone stores. For the moment, however, only a limited supply of Krispy Kremes will be available in Starbucks units. Starbucks CEO Jim Donald said his first priority is to reverse the commoditization of the company’s doughnuts, and will be looking for ways to void all contracts with supermarkets, c-stores, drug stores, garages, floral shops and toll booths that have been selling Krispy Kremes. “This is a big job, sort of like Coors deciding that it wants to return to the days when its beer was only sold west of the Rockies,” he said, holding up a fish as a visual aid. “But it is the only way to restore the luster to the already tarnished brand.”

    Donald also said he will immediately end high-cost consultancy arrangements with executives brought into Krispy Kreme to save the company. “Heck, we get rid of those contracts and the company is almost profitable again,” he said.

  • Albertsons CEO Larry Johnston announced yesterday that he will be leaving the food retailer to set up an investment banking company with his former boss, retired GE CEO Jack Welch.

    “No matter how much I study, no matter how much time I spend in the stores and with the so-called experts,” Johnston said, “I can’t figure this damned business out. It’s nuts. It makes no sense whatsoever, defies logic at almost every turn, and makes oil futures look like an inexpensive and conservative investment. I’m outta here. Let somebody else fix the company.”

    Winn-Dixie CEO Peter Lynch immediately offered to merge with Albertsons, but no response to the offer was made as of this posting.

  • Safeway announced that effective immediately, it was hiring celebrity chef and restaurateur Emeril Lagasse to be the company’s new CEO. In a statement released by the board, the company said that “after years of trying to run this company from a financial perspective and losing ground almost every year to the likes of Wal-Mart, we have finally decided that the time is overdue to place a greater emphasis on the food we make and the food we sell. While we recognize that this probably means our stock price will take a hit in the public markets, we are convinced that putting our future in the hands of a food-oriented populist is our last best hope for differentiating the company.”

    Departing Safeway CEO Steve Burd reportedly will move over to the front office of the San Francisco Giants, where he will join former Safeway CEO Peter Magowan. Burd’s first tasks at the baseball team: cut 30 percent from the team’s payroll and from the team’s health care costs.

    “No problem,” Burd said, assessing his new responsibilities. “The players union is just going to have to realize that there’s a new sheriff in town, and they’re going to have to deal with me. If they’re not willing to cut salaries, we’ll just have to recruit new players. I know some guys from the Safeway softball team who love a shot at hitting balls into McCovey Cove.” Burd also said that cutting health care costs wouldn’t be a problem, especially because the team “will save a lot of money on syringes, steroids and paying for all of Bonds’s lackeys who won’t be around this year.”

KC's View:
If at this point you have forwarded this story to your boss or some of your clients, you may want to send them a quick follow-up note reminding them of what the date is.

April 1, 2005.