business news in context, analysis with attitude

We got a number of emails responding to yesterday’s story about how activist group and self-described “organic watchdog” The Cornucopia Institute announced that it is filing a lawsuit against the US Department of Agriculture (USDA) in federal court, “accusing the agency of ignoring the organic regulations, and the intent of Congress, by their failure to enforce the law.”

Our comment: “Fine. Let it go to court. Let the burden of proof fall to the Cornucopia Institute, and if it can make its case, then USDA will have to ramp up its enforcement. If not, the Institute will have to shut up.

“All we know is this. As consumers, we only care that organic standards are being adhered to. We don’t give a damn whether the farm s small or large, family or corporate owned.”

MNB user Rosemary Fifield responded:

Sorry to hear that you don't care if a farm is large or small, corporate or family owned. Fortunately a lot of people do. Around here, small family farming is what keeps money circulating in the local economy, preserves the beautiful landscapes that your fellow Connecticut-based tourists love to come up here to see, and promotes animal welfare as well as stewardship of the land. Yes, organic milk can be produced in a feedlot, if that's what the USDA decides. But your own report stated that 44 percent of shoppers who buy organic cite better health and treatment of the animal as one of their reasons for choosing organic. Some consumers do care.

But another MNB user wrote:

I have discredited the Cornucopia institute and usually don't give them too much credit in their efforts. I had to put my personal feeling about Cornucopia aside and really read what was being said.

If they can back up their accusations with factual proof, then I say "Kudos" to them. As a retailer, I see the lack of enforcement of Organic rules in the produce industry everyday. If we really want the Organics we sell to be considered as the better and healthier food choice, then we (the industry) need to have the level of enforcement that the Cornucopia institute is demanding. I think many would agree. This only enforces the efforts that so many growers are practicing and really helps to define this growing category.

Unfortunately, when companies within our industry start their own level of 'consumer deception' and mislead consumers (on all levels) as to what they sell as 'Organic', it only hurts the future growth of this industry. It clouds the minds of the consumer and makes otherwise intelligent decisions seem random and uninformed.

We need the enforcement by the USDA of NOP rules just as we already have enforcement of other USDA guidelines.


MNB user Al Kober wrote:

I strongly supported a different approach to the Natural/Organic issue. Natural is a category and Organic is a category, but these two keep getting lumped together. The reason is as much as organic is growing, if measured alone, without lumping in the natural numbers, it would not be visible on a pie chart. So to make the movement of organic seem to be larger than it is, they put both together.

The other problem is the natural category is fragmented. Not only are the differences not currently defined, they too need to be separated into several categories. Natural, as currently defined by USDA and the new description of "Naturally raised" or something like that to separate the "Never, Never, Never Natural", from the "No Added Ingredients Natural" Of these three, the Never, Never, Never Natural is probably the fastest growing segment and the others just ride along on their coat tails.

MNB user Jeff Foster is skeptical:

Actually, this is more about getting noticed as a force in the organic world as much as anything else. A lawsuit against the USDA will of course bring them a lot of attention and a lot of activists will come out to champion the Organic Institute with membership and donations. A fundraising ploy?

We reported the other day that Gelson’s has signed a contract with the United Food and Commercial Workers (UFCW), simultaneously alleviating any possibility of a strike that could affect its stores and ratcheting up the pressure on Safeway, Kroger and Supervalu’s Albertsons to come to a labor agreement before the exiting contract expires on March 5.

Our views: “First of all – and our thinking has evolved on this one – we believe firmly that any agreement that does not integrate Safeway CEO Steve Burd’s thinking on health care would be a foolish deal…because it will not grapple with the most serious problem facing both these companies and their employees.

“Secondly, we would be shocked if there is a labor problem in Southern California…because with Tesco coming to town, it would not be wise for any of the food retailers there to be dealing with pickets and discord.”

One MNB user disagreed:

Dear Mr. Coupe,

I respect your views, but I must disagree with your notion that any labor deal that does not incorporate Mr. Burd's views is a "foolish deal".

I have no doubt Mr. Burd's ideas are well worth considering, but they are a radical departure from the traditional health and welfare structure that labor and management have built over the last 50 years in this industry. And one of the chief architects of that over those years, by the way, was Safeway. To attempt to undo that history and that format in one contract, after a contract that was a major shock to the system just three years ago, is, in my opinion, asking too much.

Time needs to be spent working with union leaders to bring them to different viewpoints. I know many such who are willing to discuss these matters. But the confined and compressed environment of negotiations is, again in my judgment, not usually the best time to accomplish such major departures. Rather, ongoing dialogue during the term of any agreement should be the order of the day.

Labor and management need to cultivate a robust relationship that manifests itself every day each year, not for just a few months every few years. The labor leaders my company deals with in northern Californian seem willing to have such a relationship and work creatively to come to new solutions. But this must be a collaborative process, and one that will necessarily involve compromise.

While Mr. Burd may believe he has seen the promised land, his conversion is not one all have had. And like many converts I fear he may preach and not listen to what others have to say. This will be no way to arrive at new labor-management relations.

Mr. Burd has obviously thought about this matter a lot - or people working for him have - but this does not mean he solely possesses truth. The days of one company dictating what all others did are, I think, over,

I apologize for running on so long. Thanks for keeping my juices flowing.

First of all, no apology necessary. These kinds of emails keep us all honest.

Second of all, don’t use “Mr. Coupe.” That is our 80-year-old father. We’re “Kevin.” Or “Content Guy.”

Finally, let us be clearer about this. We’re not suggesting that Steve Burd has come down from the mountain with the absolute best health care solution inscribed on a pair of stone tablets. (Though that is a great image, and if we were in the magazine business we’d be thinking about that for a cover illustration.)

But we do believe that any new contract needs to 1) provide incentives for employees to demonstrate greater personal responsibility, 2) offer support systems that allow retailers to help their employees in these areas, as opposed to just dictating terms, and 3) create a mechanism that lowers health care costs’ impact on the bottom line. People who abuse the system, or cause costs to go up for other people, need to be penalized. In the auto insurance business, good drivers create the base and people who get into accidents pay higher rates. But somehow, in the health insurance business, the opposite is true – it is the people who are accidents waiting to happen that establish the base line, and then nothing is done to reward people who have better health habits. It’s nuts.

And we’re not sure that there is a lot of time left to collaborate on solutions before the whole system collapses under its own weight.

But, of course, not everyone agrees. MNB user Shawn Ravitz wrote:

You are out of your mind if you think that a labor deal will get done with Burd's plan. The key to Burd's plan is individual responsibility. That is in direct conflict w/ the UFCW's mission of "protecting" their constituents from themselves.

If there is any part of Burd's plan in the deal... it will be all fluff.

Not everybody was as enthusiastic about P&G CEO A. G. Lafley’s leadership style as we were.

One MNB user wrote:

Great leadership style, (but) he's chronically late.

This sets a great example of his dedication.

I wonder how he deals with others that are chronically late?

Good question. We’d guess that it depends on the reason.

And another MNB user questioned Lafley’s own characterization of what makes him a good leader – especially his relatively “low ego.”

Sure sounds like "a low-ego guy" to me! I guess everything is relative...

In all fairness, Lafley was answering questions. And we think that one of the marks of a good leader is self-knowledge – knowing what your strengths and weaknesses are. His self-evaluation didn’t put us off at all.

We expressed a certain skepticism the other day about a customer satisfaction study that purported to be a good predictor of future economic strength.

We wrote, in part: “People are worried about the war…about the conduct and future of government…global warming…terrorism…food safety…health care issues…their own jobs…and about corporate behavior and executive compensation issues. And that’s just a partial list.

“Don’t mean to sound like Chicken Little, but there are too many ways in which things can go wrong, and too many ways in which consumer confidence can be immediately and profoundly shaken, for us to be convinced that the ACSI numbers are much more than illusory when it comes to their predictive nature. We hope not. But we are unconvinced.”

One MNB user responded:

Your last paragraph summed it up nicely....just ask Jet Blue. If you compare their customer satisfaction ratings pre 2-14 and post, you get a very different picture. How they respond to this crisis, and how well it resonates with their customers, will be one for all of us to watch. Tylenol made a famous comeback, can Jet Blue? What a difference a day makes.

But not everyone agreed with us on this:

Donald Rumsfeld said one time that there “known knowns, know unknowns and unknown unknowns”. The U.S. media is always fretting about something that is unknown and acting like it is known. This serves to drive down consumer confidence as if the world were all known knowns. It isn’t and the speed of communications today can create a great deal to fret about.

Frankly, I’m tired of all this whining about jobs. Stuff happens and people lose jobs but we are CREATING jobs in this country so there are plenty to go around. And creation of jobs is a known known.

Surprise - the people in the upper Midwest are a little concerned – Chrysler is going to= be on the block and GM and Ford are not doing all that great. They should be concerned. They should be looking for new jobs and should have a long time ago. As for an investment bubble, check the Price Earnings ratios. They are quite within the normal range of trading. Someone just wanted to get some publicity with a stupid comment and the media let him.

Maybe it is because we are part of the media, but right now we’d take the media’s credibility over Donald Rumsfeld’s any day.

And to say that FM and Ford “are not doing all that great” seems like a mild understatement.

We got the following email about yesterday’s rave review of Alpha Dogs: How Your Small Business Can Become a Leader of the Pack:

I haven't read this book yet, but it's on my list.

I find it interesting that despite these kind of books, despite the fact that you can look around the US and see the success stories and the "not-so-success" stories that many retailers still miss the point. I talked to a couple executives this week from a large Canadian retailer regarding competing with Wal-Mart. It's interesting to me that one agrees that you should stay close to the core of "what got you there"-enhance perishable, enhance customer service, price correct, ... "give customers the theater and entertainment" that will continue to build brand loyalty-and don't wait for WM to open up next to you to do it. The other one... this one thinks the secret is in recruiting from the enemy. What can a former WM employee tell you that walking into a supercenter or reading the trade journals can't? Beyond the glare of the yellow face smile -Does he know how to provide the customer an experience that is rewarding enough to keep 'em coming back...?

You know, there were others that took that approach and also thought consolidate, centralize, get bigger, buy more, better- let's look at the success of those who thought that answer was correct: Albertson's, Ahold, Safeway, A&P, Penn Traffic, Winn Dixie...; some thought (and still do) regional players were a thing of the past. Anyone visit a Wegman's, Buehler's, Roundy's, Haggen's, Price Chopper or Raley's lately? Sales are up and climbing, store count is expanding and customers are smiling. These guys aren't giving up anytime soon.

The book, $24.95. Trip to visit one of these retailers, $1,000.

Bringing the message back to your own house: priceless.

Good line. Wish we’d thought of it.
KC's View: