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Produce Business

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American Food & Ag Exporter

Cheese Connoisseur

Is Wal-Mart’s Scratch Bakery Idea Scaleable?

One interesting point regarding Wal-Mart’s announcement that they were intending to segment their stores is one of the examples they gave:

In Houston, one store is adopting a Hispanic identity, in part by offering more Hispanic grocery products, a fresh-from-scratch bakery and selling 300 to 500 breakfast tacos a day.

The results relative to other Houston Supercenters include sales per square foot that are 7.6 percent higher and a higher gross margin, which means more profits per item sold.

I am sure Wal-Mart is telling the truth, but I take the sales and margin numbers with a grain of salt when it comes to projecting the success of a roll out.

Wal-Mart is a big, powerful and talented organization, and when it is focused it can achieve a lot. That is the danger of doing a few prototypes. We know when everyone is paying attention, they can succeed but the challenge for Wal-Mart is not what is a good idea, but what is scaleable.

Foodservice items, such as the breakfast tacos, absolutely vary by region and ethnic group. In fact those breakfast tacos, if placed in the “Hispanic” store concept they put in the Cuban communities of South Florida won’t go very far because that is not what Cubans eat. You need Cubano sandwiches and Cuban coffee.

But putting an egg, cheese and some ham in a taco with some salsa isn’t much more difficult than putting egg, cheese and some ham on an English Muffin, bagel or a croissant, so one wonders what the manager of that store was doing to make his store a “Store of the Community” if he had to wait for this initiative to figure that one out.

The scratch bakery is interesting, because bakery is also a very ethnic product. A good Jewish bakery can drive traffic as can a good Italian one, and the sweet cakes of the Caribbean are a completely different product than are sold in either the Jewish or Italian variety.

But scratch bakery is as much an art as a science. One wonders if it is a scaleable solution to whatever Wal-Mart’s issues may be.

Minimum Wage Shake Down

When the Maryland legislature passed a measure, overriding the Governor’s veto, to require Wal-Mart to spend a certain set amount of money on health care, I attacked the measure in a column I wrote for PRODUCE BUSINESS.

Now Mayor Richard Daley of Chicago has vetoed a city ordinance that would increase the minimum wage for “big box” retailers. He must have felt pretty strongly as it was the first time he has ever used his veto:

“I understand and share a desire to ensure that everyone who works in the City of Chicago earns a decent wage. But I do not believe that this ordinance, well intentioned as it may be, would achieve that end. Rather, I believe it would drive jobs and businesses from our city, penalizing neighborhoods that need additional economic activity the most.”

The mayor is correct. Setting arbitrary minimum wages would simply encourage retailers to locate outside city limits and encourage city residents to shop outside of city limits.

But the truth is that the mayor’s response, though true, is also beside the point. The point is that it is not the place of government at any level to pluck out certain competitors — in this case stores of less than 90,000 square feet — and give them a competitive advantage over their larger rivals.

If the city council had passed a minimum wage for the whole city, I might give them a lecture on economics. But by selecting one competitor over another, they reveal themselves to be enormously arrogant. They also reveal themselves to thirst for political power. After all, if they can do this, doesn’t it mean that no man is secure in his business? With the whim of the city council, competitive advantage can be given to the smaller competitors.

What a perfect set up to shake down every business in the city. Ever hear of a protection racket?

The City Council is expected to try to overrule the Mayor’s veto.

Pundit Note: The City Council of Chicago at the end of a 2½ hour meeting failed, by three votes, to override Daley’s veto.

The Science Of Mandarins And Organic Milk

It is hard to know what to make of all the research being done related to food. The BBC reports that eating Mandarins may cut the risk of liver cancer. Though one study was just a survey, another studied only 30 people with viral hepatitis who had a daily drink containing carotenoids and mandarin juice.

In the UK, the Organic Milk Suppliers Cooperative is asking that the Food Standards Agency recognize a nutritional distinction between organic milk and conventional milk. The request is based on a study that purports to find that:

According to the research, a pint of organic milk contains on average 68.2% more total Omega 3 fatty acids than non-organic milk and has a ratio of Omega-6 to Omega-3 fatty acids, which is believed to be beneficial to human health.

The study may be challenged on several points. The collection of milk was not done at retail, as consumers would experience it and, more important, it is an average over a year and not a finding that any given bottle of organic milk has more beneficial fatty acids than any given bottle of conventional milk.

But the big point is, even if accurate and representative, the study doesn’t even pretend to prove that drinking a lifetime of organic milk means you will live longer or be healthier than if you drink conventional milk.

And if we don’t have that, well, why care about the chemical make-up of the milk?

US Beef Exports Broaden

Following the resumption of US beef exports to Japan which we reported on here, South Korea is now also opening its market to US beef.

In the meantime, the US Meat Export Federation is working hard to promote US beef in Japan where Costco is often the only place consumers can find US beef.

But in an event at Shinjuku Station, the busiest train station in the world, US beef did fine compared to both Japanese and Australian beef.

Japanese consumers try samples of U.S. beef at a consumer event in Tokyo. U.S. beef samples were gone first compared to Japanese and Australian beef.

Media surround as consumers line up to receive free samples of U.S. beef. Major Japanese TV networks Asahi and NHK reported U.S. beef was the most popular compared to Japanese and Australian beef.

Consumers, who received USMEF We Care items stressing the safety of U.S. beef, crowd to receive free samples of U.S. beef at an event held at a Tokyo train station, the busiest in the world.

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