CFA FOOD·4·THOUGHT
Friday, June 13, 2008
Stan Sorkin, Executive Director
195 Farmington Ave., Suite 200 · Farmington, CT 06032 · 860 677 8097 · Fax 860 677 8418 · www.ctfood.org
LEGISLATIVE UPDATE
The General Assembly met in Special Session on Wednesday, June 11th to deal with gas, real estate, and
ethics issues. As of Thursday, here is the summary of the legislation that would affect the grocery industry:
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Cash discounts for gas: To cut gasoline prices at least 10 cents per gallon. Passed
Gas tax increase: Postpone increase in state’s gross receipts tax for gas: Passed
Diesel fuel tax: Limit increase in state tax on fuel. Passed
Real estate tax: Extended real estate conveyance tax for 2 more years: Passed
CFA WEB SITE
Be sure to visit www.ctfood.org for June updates on the latest Nielson Trends, Executive Director’s message
and more.
GREEN CONSUMERS DO MORE SHOPPING IN WAREHOUSE CLUBS
LOHAS (Lifestyles of Health and Sustainability) consumers are more inclined than non-green consumers to
shop in warehouse clubs, according to new research from The Nielsen Company and the Natural Marketing
Institute (NMI). When the retail distribution of sales across all shoppers is analyzed, LOHAS consumers,
which the research defines as being environmentally motivated in their purchases, spend 10% more in
warehouse clubs, whereas environmentally unconcerned consumers do more shopping in lower-cost channels
such as supercenters and dollar stores. One in five U.S. consumers is now living LOHAS, according to NMI.
U.S. LOHAS products are a $209 billion business today, and are expected to exceed $400 million by 2010.
The research shows that LOHAS consumers are not only early adapters, but spend more than non-green
consumers in nearly every store department. The exception is the meat department-"perhaps as a reflection of
their vegetarian lifestyles," noted Todd Hale, senior VP, consumer and shopper insights for Nielsen. Not
surprisingly, LOHAS consumers are particularly heavy buyers of fresh produce, cereal, soup, oral hygiene
products and canned vegetables. But they're also big purchasers of butter and margarine, ready-to-serve
prepared foods and eggs, among other categories. The analysis shows that 81% of LOHAS households
purchase products labeled as organic, spending nearly four times as much as the 62% of environmentally
unconcerned consumers who buy organics. "Organics are on fire, with billions in sales, and LOHAS
consumers appear to be a major driver of this growth, noted NMI senior VP Patti Marshman-Goldblatt. LOHAS
consumers also snap up far more products that make health claims such as gluten-free, multi-grain and
probiotic. For example, they spend more than twice as much as the non-green on sprouted grain and products
free of genetically modified organisms. What are the most popular product categories among the nonLOHAS? The research defined types of shoppers and ranked their biggest categories by highest annual dollar
buying rate. Here are some highlights:
* "Naturalites" (purchases motivated primarily by health concerns): frozen baked goods, frozen breakfast
foods, children's cologne, ice, frozen meal starters and men's toiletries.
* "Drifters" (trend-oriented): automotive, bread and baked goods, cookies, deodorants and desserts, gelatins
and syrup.
* "Conventionals" (traditional, cautious buyers): snacks, candy, cheese, milk and condiments, gravies and
sauces.
* "Unconcerned" (eco issues not on their radar): baby food, books and magazines, canning/freezing supplies,
cosmetics and dough products.
The research came out of a new agreement that links NMI's LOHAS Consumer Trends Database with
Nielsen Consumer Panel Services (Media Post).
NUTRITION PLAYS KEY ROLE AT SUPERMARKETS
More grocery store operators are incorporating nutrition experts and health programs into their business
models as consumers become more heath-conscious and look to their supermarkets for advice. In the last
year, Stater Bros., San Bernardino, Calif., and Giant Food Stores, Carlisle, Pa., have both added in-store and
corporate nutritionists to their employee lineup. And Boulder, Colo.-based Sunflower Farmers Market has
ramped up its nutrition programs. Bill Greer, spokesman for the Food Marketing Institute, said he considers
health and wellness a growing trend in the grocery industry. "Many supermarkets are repositioning themselves
as a provider of health and wellness in response to consumers' growing concerns about their diets," he
explained. Pharmacies and in-store health programs have become bigger players in food retail stores in
recent years, Greer said. More than half of all supermarket pharmacies offer in-store programs to turn
shoppers into pharmacy customers and approximately six in 10 companies offer health-focused recipes,
health seminars and disease management in at least one of their stores with a pharmacy.
For Stater Bros., which operates 164 stores in northern California, it's about what customers want. "There's no
question that our customers want to live more health-conscious lives," said Jack Brown, CEO of Stater Bros.
The grocery store operator has a pharmacy in 26 of its grocery stores and hired registered dietitian Melissa
Hooper last summer. Brown said the dietitian ties in nicely with its pharmacies through communication and
education. Stater Bros. introduced its Healthy Sections program last September, which is aimed at helping
shoppers make healthier food choices. The program is highlighted once a month in the Stater Bros. circular,
with a focused health and wellness message tying into brand products, Brown said. Other featured
components of the program include nutrition seminars, store tours, an informative newsletter, and in-store
messages as well as outreach into the community and media appearances. Sunflower Farmers Markets,
which operates 14 natural food stores in the Southwest, uses health-focused classes to educate its customers
about nutrition issues. "Our business is a transitional natural food store in that a lot of our customers are entry
level natural food folks who may not be as hip to what the issues are and may be more interested in learning
about it," said Mike Gilliland, part owner and CEO of the natural food chain. Topics of interest, Gilliland said,
include anti-aging remedies, anti-oxidants and foods with health benefits such as acai and red berries. Weight
loss is also a big topic, he said, as are the benefits of organics, cosmetics and body care. The in-store classes
are held monthly and topics are chosen by the popularity of the issue as well as the availability of the
speakers. Gilliland said he was in the process of hiring a nutritionist to help with in-store programs and classes
(Gourmet News).
NIELSEN REVEALS CONSUMER GOODS CATEGORIES AMONG THOSE MOST IMMUNE,
MOST VULNERABLE TO RECESSION
As the economic downturn forces consumer packaged goods (CPG) manufacturers and retailers to reevaluate their consumer marketing strategies, The Nielsen Company yesterday revealed that categories
including seafood, dry pasta, and candy are among those most immune to a recession. The analysis was
presented at Nielsen's Consumer 360 Conference, the CPG industry's premier educational and networking
event, attended by more than 1,000 industry professionals. The conference was held in Phoenix. According to
Nielsen's analysis of macroeconomic variables, historical trends, and consumer behavior, products such as
seafood, dry pasta, and candy are most immune to a recession. Beer and pasta sauces also show some level
of immunity to recessionary times. Those products among the most vulnerable or recession-prone include
carbonated beverages, eggs, cups/plates, food prep/storage items, and tobacco. To come up with this
analysis, Nielsen compared actual category behavior during prior recessions with expected behavior. Other
factors that drive category performance are considered in custom analytics projects and deliverables.
''Consumers are feeling the squeeze as they are caught between rising costs and lower spending power,'' said
Eugene Roytburg, managing director, Nielsen. ''As a result, many consumers are reprioritizing or altogether
changing their spending habits. For CPG manufacturers and retailers, this requires a change in the way you
market to consumers, and knowing which of your products are most affected by a recession will help you
maintain focus on the right categories and brands in order to succeed.'' Nielsen also noted that it has
developed a new Predictive Macroeconomic Impact System (PMIS) to assist CPG manufacturers and retailers
in understanding how certain categories perform during recessionary times. PMIS analyzes the
macroeconomic variables that tend to change during recessionary times, including the U.S. median housing
price, S&P commodity Trends Indicator, Consumer Confidence Index, Consumer Price Index, and stock
performance. Nielsen then identifies those variables having the greatest impact on consumer attitudes and
behaviors -- unemployment, inflation, consumer confidence, gas prices, housing prices, and disposable
personal income -- defining the extent to which these factors influence consumer motivation and decisionmaking (Progressive Grocer).
COMMUNICATION AT WORK
Six traits of companies that communicate effectively
Eight years ago the human resources consulting firm Watson Wyatt Worldwide began studying the
relationship between effective communication and financial performance in companies around the world. More
than 750 companies have participated in the studies, which have yielded data that consistently show that
companies with more effective communication programs outperform their peers with less effective programs.
With this year's report, Watson Wyatt identified six characteristics of companies with "highly effective"
communication programs. John Finney, research champion for the firm's global communication practice,
discusses them in the current issue of Communication World magazine. Adopting these practices would be a
smart move by any organization interested in improving their performance.
Focus on the customer
There aren't many topics more worthy of discussion inside companies than how to meet customers' needs. In
Watson Wyatt's study, 75 percent of highly effective companies say they have a formal process for making
sure employees know how their actions affect customers. Compare that with just 5 percent of companies with
less effective communications. Employees should receive ongoing, substantial information about how to
satisfy customers – and the more relevant to their specific jobs, the better.
Engage employees in running the business
Highly effective companies are 10 times as likely as less effective companies to give employees a chance to
give input into decisions that affect them. Everyone has heard of the ubiquitous employee-suggestion
programs that many companies run, but engagement goes even farther. It's about tapping into the wealth of
knowledge and experience that most employees are eager to share. Also, highly effective companies are
nearly three times as likely as their less effective peers to make policy changes as a result of employeeopinion surveys.
Improve managerial communication
Research consistently shows that managers are the most important communication channel inside
companies. Highly effective organizations know this and prepare managers for their roles as communicators.
They provide skills training, package information so it is easy to deliver, give managers a heads-up on
announcements so they can prepare to communicate, and reward managers for communicating effectively.
Manage change effectively
Highly effective companies are nearly twice as likely as less effective peers to use communication initiatives to
support changes like restructuring, layoffs, mergers and acquisitions. Also, they are 14 times as likely to help
managers understand and deal with change so that they, in turn, can help employees navigate it.
Measure communication effectiveness
Highly effective companies are three times more likely to have metrics in place for communication programs.
In my own consulting experience, I see an increasing number of companies interested in measuring
communication effectiveness, partly to justify funding. Whatever the reason, communication measurement
makes good business sense. Communication is too important a business function to be left to hunches and
guesswork.
Establish a compelling employer brand
Finney says an employer brand is "the communication of all elements in the employment deal and links that
deal with business goals." Fifty-five percent of highly effective companies say they have a clear employer
brand, compared with 18 percent of less effective companies. A brand is important because it helps keep
employees' eye on the ball; it communicates what the organization is all about and how things are done there.
Watson Wyatt's study indicates that companies with highly effective communication programs provide a 47
percent higher total return to shareholders. They're four times more likely to have high levels of employee
engagement and 80 percent more likely to have lower turnover than their less effective peers. With eight years
evidence, the issue is no longer whether or not communication is worth the investment. The issue now is how
companies can best use communication to help achieve business goals (Richmond.com).
CONSUMERS SHUN CONVENIENCE, SCURRY BACK TO BASICS
Talk about a topsy-turvy world: A new study shows that consumers are reversing decades-long trends,
shunning convenience and healthier foods in search of bargains. For example, the IRI study, called "IRI Times
& Trends Special Report: Competing in a Transforming Economy," finds that 53% of consumers report that
they are cooking from scratch more now than they were six months ago. About 59% say they are buying fewer
single-serving products, and 55% say they are buying fewer prepared meals, "marking a turning point in the
convenience trend," says the report. And 52% say they are buying fewer organic products. As a result, stores
are seeing a resurgence in sales of frozen foods, perishables, and those so-called "center store" items that
have languished. And while no one will be surprised that private-label products are still showing strong gains,
with 50% of consumers saying they have stepped up their spending on such products in the last six months, it
may pain marketers to see that a sizeable minority--42%--specifically say they have given up their favorite
brands. Certainly, the main driver to some of these changes is the economy: Roughly half of all consumers
with incomes under $55,000 per year say they have trouble affording the groceries they need, as do nearly a
quarter of those earning between $55,000 and $99,000. But prices are driving consumers to channel-hop in
ways that are hard to predict. Escalating prices "have bred exceptionally high price sensitivity, driving declining
demand across multiple categories, growth in private label, trial of lower-priced brands and accelerated
channel migration," the study finds. While the total number of shopping trips has fallen 3% in the last year,
shifts among types of stores are dramatic. Gas price shock, for example, has caused sales at gas-station
convenience stores to drop sharply, falling 6% in the first quarter of the year. The number of trips to grocery
and drug stores has also slipped, and even trips to warehouse clubs--long a retail growth category--have
slowed. The big winners are SuperCenters, which have seen trips increase 5.7% in the last six months (Media
Post).
FOOD RECALLS SPOILING CONSUMERS' APPETITES FOR A RANGE OF FOODS, DELOITTE
SURVEY FINDS
Food safety fears have moved to the front of the checkout line as well over half of Americans (57 percent) say
they have actually stopped eating a particular food, temporarily or permanently, as a result of a recent recall.
Additionally, close to three-fourths of Americans (73 percent) say they believe the number of food-related
recalls has increased in the past year. An even higher percentage (76 percent) of consumers is more
concerned about the foods they eat than they were five years ago. Concerns are especially high around
recalls of meat products. Specifically, consumers say they are most concerned by beef recalls (78 percent)
followed by chicken recalls (67 percent), recalls of fresh fruit and vegetables (53 percent), and recalls of dairy
products (53 percent). "These findings underscore how urgent it is for food manufacturers to do all they can to
address the problem of food recalls head-on," said Pat Conroy, Deloitte LLP's vice chairman and US
consumer products practice leader. "Over half of consumers say they may drop your product if they believe
you are not doing what it takes to protect them and their families." Additionally, Americans express great
reservations about foods produced outside the United States, with more than half (56 percent) saying they
think imported foods are "not at all" or only "somewhat" safe. In contrast, 80 percent of Americans say they
believe domestically produced foods are safe. Fully one third (33 percent) say they think fresh fish is "not at
all" or "somewhat" safe. Indeed, the survey found that 89 percent would like to see food stores sell more fruits
and vegetables that come from local farms. "In today’s environment, consumers are seeking fresher
ingredients, giving locally grown food providers an important advantage they haven't really had in the past,"
said Conroy (PR Newswire).
FOOD ALLERGIES TRIGGER MULTIBILLION-DOLLAR SPECIALTY MARKET
An estimated 12 million people in the United States have food allergies, and another 2 million have celiac
disease, a disorder in which the body's immune system attacks itself when exposed to gluten, a protein found
in wheat, barley and rye. Those figures are expected to rise. The number of children with peanut allergies
alone has doubled in the past decade. Food-induced anaphylaxis, a potentially fatal allergic reaction, causes
about 30,000 emergency room visits and 150 to 200 deaths annually, according to the Centers for Disease
Control and Prevention in Atlanta. Medical experts don't know why the number of people with food allergies is
increasing. Theories include reduced contact with germs, exposure to certain environmental pollutants and, in
the case of peanut allergies, the way peanuts are processed and when they are introduced into people's diet.
None of the theories is backed by much research. "We don't know if some of them are true or there's some
truth to all of them," said Marshall Plaut, chief of the allergic mechanisms section at the National Institute of
Allergy and Infectious Diseases. Until scientists learn more, the prescription for people with life-threatening
food allergies or celiac is to avoid the foods that make them sick, a task that is getting easier. Whereas a
decade ago, the "free from" food market consisted of small manufacturers whose products were sold mainly in
health-food stores, today it encompasses an ever-growing list of start-up companies, mainstream retailers
such as Safeway and Giant Food, and some food industry giants such as General Mills. The ripple effect goes
beyond the grocery aisle. In April, Deep Dive Media of Los Angeles, which runs health information Web sites,
paid an undisclosed sum to buy PeanutAllergy.com, a site started by an affected parent. In March, Sciele
Pharma paid $29 million to buy Twinject, an epinephrine auto-injector that competes with Dey L.P.'s Epipen.
Epinephrine is used to treat anaphylaxis. Food manufacturers have had to pay more attention to the needs of
people with food allergies since the federal government in 2006 began requiring ingredient labels to disclose
whether products contain milk, eggs, peanuts, tree nuts -- such as almonds and cashews -- fish, shellfish, soy
and wheat. Gluten is not on that list, but many manufacturers disclose it. Some companies, such as Stonyfield
Farm, use gluten-free in their marketing. In April, General Mills said it had reformulated Rice Chex to be
gluten-free. "Rice Chex . . . was truly our effort to meet the needs of these consumers," said Kevin Farnum,
director of sanitation, quality and regulatory operations for General Mills. "We know there is a great demand
among consumers to have free-from labeling." Other major food manufacturers such as Kellogg's and
Campbell Soup also sell products safe for people with food allergies and celiac, but they have been more
cautious about embracing the free-from claim. Unlike with organic products, there are no government
standards for what "free-from" means. The steps General Mills took to insure that Rice Chex was gluten-free
also illustrate how hard it can be for a large manufacturer to do so. In addition to tweaking the recipe, the
company had to review its production process, from the time the rice is harvested to when the cereal is
packaged, to be certain that gluten would not get into the product.
New, smaller companies are more nimble. They don't have existing factories to convert. They can build
facilities that are peanut- and tree-nut-free from day one. Many entrepreneurs, such as Eileen Moriarty Silva,
are doing just that. Two years ago, she started soy-nut butter maker Simple Food in Amesbury, Mass., after
selling her first soy-nut butter company in 2000. "I wanted to get back into the business," she said. "I knew
there was just plenty of opportunity, and a lot of customers just needed more food out there." The National
Association for the Specialty Food Trade, a New York trade group, estimates that 300 of its 2,800 members
offer more than 7,000 no-allergenic products, compared with five years ago, when about 50 members did,
spokesman Ron Tanner said. Increasingly, their customers don't necessarily have food allergies or celiac.
They just think they do. "As much as 28 percent of U.S. citizens believe they are intolerant to some foods,"
said Mintel spokeswoman Joanna Peot. "This trend towards self-diagnosis has widened the 'free from' market
from those who have to avoid certain foods to those who make a lifestyle choice for whatever reason." Internet
start-ups are also seeking to satisfy that demand. Heather and Brian Selwa started online store Peanut Free
Planet two years ago in Cicero, Ind. Competitors Patrick Felkner and Steve Rubinstein launched
Allerneeds.com, another peanut-free retailer, in Anaheim, Calif., four months ago. "We were trying to jump on
it before it really starts hitting [the mainstream]," Felkner said. "There's a market opportunity, there's no doubt
about it." Brick-and-mortar stores are clearing space on their shelves, too. "We've seen a dramatic increase in
the number of customers looking for these type of products really in the last few years," said Safeway
spokesman Greg TenEyck. "We've greatly increased the number and types of products we are offering. All
this is good news for food allergy and celiac sufferers, said Anne Munoz-Furlong, co-founder of the Food
Allergy and Anaphylaxis Network in Fairfax. "They want to be able to go to the grocery store and buy food like
everyone else," she said (Washington Post).
OSHA ANNOUNCES 2008 TARGETED INSPECTIONS
The Occupational Safety and Health Administration (OSHA) has selected 3,800 high-hazard worksites for
unannounced inspections over the coming year under its 2008 Site Specific Targeting (SST) Plan. The
program uses data from an annual survey of the illness and injury rates of about 80,000 employers with 40
or more employees to target worksites. Worksites that reported 11 or more injuries or illnesses resulting in
“days away from work, restricted work activity, or job transfer" for every 100 full-time employees (known as
the DART rate) will be placed on the program’s primary list for inspections. The list will also include sites
based on a “Days Away from Work Injury and Illness” (DAWFI) rate of nine or more cases that involve days
away from work per 100 full-time employees. A secondary list for possible inspection will include employers
reporting DART rates of between seven and 11 or DAWFII rates of between five and nine. The national
DART rate for private industry was 2.3, while the national DAWFII rate was 1.3. OSHA will also randomly
inspect about 175 workplaces (with 100 or more employees) that reported low injury and illness rates in
order to review their actual degree of compliance with OSHA requirements. These workplaces will be
selected from industries with DART and DAFWII rates above the national average. Finally, the agency will
include on the primary list some establishments that did not respond to the annual data survey (CBIA).
UPDATE ON THE SALMONELLA OUTBREAK
June 11, 2008: FDA has issued a warning to consumers nationwide that an outbreak of Salmonella serotype
Saintpaul, an uncommon type of Salmonella, has been linked to consumption of raw red plum, red Roma,
round red tomatoes, and products containing these raw tomatoes. At this time, FDA recommends consuming
raw red plum, raw red Roma, or raw red round tomatoes only if grown and harvested from the following areas
that HAVE NOT BEEN ASSOCIATED WITH THE OUTBREAK:
Alabama
Arkansas
California
Colorado
Delaware
Florida (counties of: Jackson, Gadsden, Leon,
Jefferson, Madison, Suwannee, Hamilton,
Hillsborough, Polk, Manatee, Hardee, DeSoto,
Sarasota, Highlands, Pasco, Sumter, Citrus,
Hernando, Charlotte)*
Georgia
Hawaii
Louisiana
Maine
Maryland
Massachusetts
Minnesota
Mississippi
New Jersey
New York
Nebraska
North Carolina
Ohio
Pennsylvania
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
West Virginia
Wisconsin
Belgium
Canada
Dominican Republic
Guatemala
Israel
Netherlands
Puerto Rico
* Shipments of tomatoes harvested in these counties are acceptable with a certificate issued by the Florida
Department of Agriculture and Consumer Services.
Consumers who are unsure of where the tomatoes are from that they have in their home are encouraged to
contact the store or place of purchase for that information. If consumers are unable to determine the source of
the tomatoes, they should not be eaten. Consumers should also be aware that raw tomatoes are often used
in the preparation of fresh salsa, guacamole, and pico de gallo, are part of fillings for tortillas, and are used in
other dishes. Types of tomatoes not linked to any illnesses are cherry tomatoes, grape tomatoes, and
tomatoes with the vine still attached. FDA recommends that retailers, restaurateurs, and food service
operators offer only fresh and fresh cut red Roma, red plum, and round red tomatoes and food products made
from these tomatoes for sale or service from the sources listed above. FDA further recommends that retailers,
restaurateurs, and food service operators continue to offer cherry tomatoes, grape tomatoes, and tomatoes
sold with the vine still attached, from any source (FDA.gov).
CFA UPCOMING:
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Specialty Food Seminar – Thursday, June 19 • 9:00-1:00 • Comfort Inn, Meriden, CT
Specialty Food Trade Show – Wednesday, July 16 • 10:00-3:00 • Comfort Inn, Meriden, CT
Summer Fun Picnic – Thursday, July 31 (tentative) • 4:30-8:30 p.m. • High Meadow, Granby, CT
UConn Football Tailgating Party – Date TBA • Rentschler Field, East Hartford, CT
Person of the Year Banquet – Saturday, October 11 • Hilton New York, New York City