Live Better Index

Wal-Mart's consumer research shows that many of their consumers are out front in the company's move toward "greener" products. Wonder how a recession will change things, if at all. As a sustainability index goes, I would have to say it is based on a narrow product range and a 1.5% adoption rate for organic milk isn't all that great. Still, Wal-Mart is listening to consumers and not asleep at the wheel. From the PR Newswire:

BENTONVILLE, Ark., April 21 /PRNewswire-FirstCall/ -- On the eve of celebrating Earth Day, Wal-Mart issues new consumer research that shows shoppers are considering the environment before making a purchase. Today the retailer announced an adoption rate increase of 66 percent from last year in its sustainability Live Better Index, which has been tracking consumers' decisions to purchase five key eco-friendly products since April 2007. This growth in the sustainability index shows that concern for the environment has a growing presence in shopping baskets of the retailer's 200 million annual customers.

The sustainability Live Better Index follows the adoption rates -- sales compared to other products in the category -- of five eco-friendly products based on Wal-Mart sales data. The overall adoption rate of these products serves as a nationwide trend indicator of consumer demand for 'green' products. These products were selected because consumers can make a conscious decision to purchase them for their environmental and cost-saving benefits versus other products in the same category.

"When the sustainability Live Better Index was established, we wanted to help Americans understand that environmental choices were accessible and affordable for everyone," said Stephen Quinn, chief marketing officer at Wal- Mart. "The fact that product adoption has increased dramatically in one year shows that the decisions our customers make in the aisles coupled with Wal- Mart's commitment to providing more eco-friendly choices at the best value is helping consumers and the planet live better together."

Eco-Friendly Products on the Rise

The sustainability Live Better Index data for April 2008 show a 37 percent increase in adoption of organic milk and a 47 percent increase in adoption of compact fluorescent light bulbs since April 2007. In October 2007, Wal-Mart began a nationwide transition to sell only concentrated liquid laundry detergent as part of its commitment at the Clinton Global Initiative, contributing to the increased adoption rate of concentrated liquid laundry detergent. As a whole, adoption rates of the five sustainable Live Better products have increased significantly over the past year:

    1.  Compact fluorescent light (CFL) bulbs - Average adoption rate of
      19.7 percent (up from 13.39% in 2007)
        - Delaware leads the category with an adoption rate of 25.8 percent
  2.  Organic baby food and formula - Average adoption rate of 4.12 percent
      (down from 4.31% in 2007)
        - California continues to lead the category with an 8.58 percent
          adoption rate
  3.  Organic milk - Average adoption rate of 1.58 percent (up from 1.15% in
      2007)
        - Virginia has the highest adoption rate of organic milk at
          2.7 percent
  4.  Extended life paper products - Average adoption rate of 67.5 percent
      (up from 50.77% in 2007)
        - Minnesota has the highest adoption rate with 78.1 percent
  5.  Concentrated/reduced-packaging liquid laundry detergents - Average
      adoption rate of 76.3 percent  (up from 22.86% in 2007)
        - Oklahoma leads the category with an adoption rate of 96.3 percent

To reflect the growing consumer preference for eco-friendly products, Wal-Mart will now track additional product categories including sustainable coffee and eco-friendly cleaning products in the Live Better Index. These additions follow the introduction of the Sam's Choice coffee (Apr. 2008) and Clorox Green Works(TM) (Jan. 2008) lines to Wal-Mart stores.

Wal-Mart tapped into the growing influence of environmental concerns on consumer shopping behavior, as shown by the new sustainability Live Better Index findings, and launched its most comprehensive environmental sustainability campaign this April to celebrate Earth Month. The campaign highlights eco-friendly products available at budget-friendly prices, including all of the products tracked on the sustainability Live Better Index. New products introduced to consumers included t-shirts made from transitional cotton and recycled plastic soda bottles and Sam's Choice sustainable coffees.

American Consumers Continue to Drive Change: Live Better Index 2008 Findings

As the number of eco-friendly products at Wal-Mart grows, many states across the country are starting to take notice and are increasing their commitment to eco-friendly products:

    -- California is now the "greenest" Wal-Mart state in the country,
     surpassing last year's leader New Hampshire, with an average adoption
     rate of 38.8 percent.
  -- New Mexico had made the most progress since 2007 with a more than
     96 percent increase in their overall adoption rates.
  -- In just three months, eco-friendly cleaning products garnered a
     4.8 percent adoption rate across the United States.
  -- Washington leads the way for sustainable coffees with a 0.7 percent
     adoption rate.

More details on the Live Better Index can be found online at http://www.livebetterindex.com.

Pro green and carbon neutral

We may not understand what "carbon sequestration" is, but we know it is good. From the Dole Food Company:

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Dole Food Company, Inc. announced today that its operating division in Costa Rica, Standard Fruit Company de Costa Rica S.A., will purchase carbon offsets from the Costa Rican Government’s program in amounts equal to the carbon dioxide emissions generated by the inland transport of Dole produced bananas and pineapples.

This ground-breaking announcement marks the first time that a private company has committed to offset its emissions from the transport of its finished products within Costa Rica. The announcement is part of a broader agreement Dole signed last August with the Government of Costa Rica’s Ministry of the Environment and Energy and the National Strategy for Climate Change to produce a carbon neutral supply chain for bananas and pineapples. Costa Rica is seeking to become carbon neutral by 2021.

“Dole is determined to take the lead in environmentally friendly production and distribution methods,” said David A. DeLorenzo, President and Chief Executive Officer of Dole Food Company, Inc. “We are committed to helping the Government of Costa Rica achieve their sustainability ambitions.”

Dr. Roberto Dobles, Minister of the Environment and Energy of Costa Rica stated: “This agreement that Dole signed today is an important first step within a global vision. It is a first step toward a great contribution by Dole for the consolidation of the country strategy to be climate neutral for our bicentennial.”

Under the accord, the National Forestry Financing Fund (“Fonafifo”) will offer Dole carbon credits from government-certified forestry projects that will annually sequester an equivalent amount of carbon from the atmosphere as that emitted by fossil fuel use in road and rail transportation. In essence, the Dole products will be “carbon neutral” with regards to transportation from company-owned packing plants to the ports of export in Costa Rica.

The carbon credit approach is one of many strategies that Dole is employing to neutralize the carbon footprint resulting from the growing, harvesting, packaging and distribution of the company’s bananas and pineapples in Costa Rica. Reforestation programs are occurring and thousands of trees are being planted on Dole plantations in Costa Rica, including local farms and neighboring communities.

Danilo Roman, General Manager of Dole Standard Fruit de Costa Rica S.A., commented: “Among the many steps we have taken to reduce emissions at source is optimization of fertilizers to deliver nutrients more effectively. In this way, we can directly reduce the emission of nitrous-oxide, a potent green-house gas. We expect that this program will decrease emissions by over 12% or nearly 9,000 tons of CO2 equivalents per year.”

Renieri Nuñez, Pineapple Operations Manager, added: “The Company has always been a pioneer in environmental good practices. We are now looking at everything from ways to improve the efficiency of tractors, to employee training to operate machinery in a more fuel efficient manner, to lowering the carbon footprint of our agricultural operations. We hope to work together with our supply chain partners in furthering climate change mitigation practices.”

Dole Food Company, Inc., with 2007 revenues of $6.9 billion, is the world's largest producer and marketer of high-quality fresh fruit, fresh vegetables and fresh-cut flowers. Dole markets a growing line of packaged and frozen foods and is a produce industry leader in nutrition education and research.

One and done

Sen. Larry Craig, R-Ida., has said he won't support another extension of the current farm bill unless everything is agreed to and all that needed to be done was to write up the language. Craig, a big supporter of specialty crop provisions, nevertheless feels that farmers need certainty as planting season is already underway, one of his staffers told me today. The House-Senate conference is expected to meet again tomorrow, and we shall soon see by the tone of the news releases from Harkin and Peterson what we can expect.

Apples in storage little changed from year ago

USDA's cold storage report, released today, showed these numbers for apple holdings. New York is up a good little bit, but overall supplies are not much heavier than the same time last year.


Apples in Cold Storage: By State and United States, March 2008

(1,000 pounds)
-------------------------All Warehouses
--------------------March 31, 2007----------------------March 31, 2008

CA------------------11,424--------------------------------10,117
MI------------------143,579------------------------------- 83,984
N ENG-------------- 3,961--------------------------------- 6,310
NY-------------------141,120-------------------------------295,848
OH--------------------3,070--------------------------------640
OR--------------------18,965-------------------------------16,701
PA--------------------123,354------------------------------96,348
VA--------------------66,172 -------------------------------69,680
WA-------------------1,744,344-----------------------------1,778,880
WV-------------------30,272-------------------------------- 29,780
Other States----------- 27,762-------------------------------19,803
US---------------------2,314,023----------------------------2,408,091

Railroads are raising the roof

A link to a story in The Washington Post about the reinvigorated railroad industry. From the story:

This year alone, the railroads will spend nearly $10 billion to add track, build switchyards and terminals, and open tunnels to handle the coming flood of traffic. Freight rail tonnage will rise nearly 90 percent by 2035, according to the Transportation Department.

The zeitgeist has even dropped a "green" gift in the industry's lap. A train can haul a ton of freight 423 miles on one gallon of diesel fuel, about a 3-to-1 fuel efficiency advantage over 18-wheelers, and the railroad industry is increasingly touting itself as an eco-friendly alternative. Trucking firms also use the rail lines; UPS is the railroad industry's biggest customer.


TK: Anyway you slice it, rail figures to gain freight in the years ahead. Yet, the story is not so simple. The drama is that at the same time investment and track laying are booming, some lawmakers want to remove the industry's antitrust exemption. From the piece:

Meanwhile, the railroad industry's long-standing antitrust exemption has attracted the attention of lawmakers. They seek to eliminate the exemption and closely examine the rates railroads charge to haul freight, which the industry says would cripple its expansion at a critical time.

Owning Earth Day

This just slid across my inbox, a news release touting Fresh & Easy's Earth Day initiatives. From the release:

Fresh & Easy Neighborhood Market today announced a series of initiatives in celebration of Earth Day. On Tuesday, the company plans to give away reusable “bags for life” at all Fresh & Easy stores and unveil a dedicated green building Web page. The company also announced it recently joined a national greenhouse gas disclosure group, The Climate Registry, as a “founding reporter.”

Bag for Life. In celebration of Earth Day, Fresh & Easy will bag customers’ groceries in reusable “bags for life” for free on Tuesday. The “bag for life” is larger and more durable than a standard grocery bag and, if damaged, the company will replace the bag for free, forever. These bags are made with recycled material and are 100% recyclable. Fresh & Easy offers its customers two different types of reusable bags, including a $2.50 canvas bag and the plastic “bag for life,” which retails for $.20.

Green Building Web Page. On Tuesday, Fresh & Easy will also launch a Web page dedicated to the company’s green building initiatives. The site will highlight Fresh & Easy’s green building practices and incorporate a real time green energy meter from its 500,000 sq. ft. solar panel on its Riverside, CA distribution center. The installation was built by Solar Integrated, a Los Angeles company, and is one of the largest of its kind in the world. The solar panels power about 30% of the energy used at the entire facility. www.freshandeasy.com/greenbuilding

The Climate Registry. Fresh & Easy has joined The Climate Registry (TCR), an organization that builds and expands the greenhouse gas measurement and accounting work of the California Climate Action Registry, a California-based voluntary greenhouse gas reporting organization of which Fresh & Easy is already a member. TCR extends a common carbon footprint reporting standard across North America. For more information on TCR, please visit www.theclimateregistry.org.

“We all have a responsibility to put thought into our impact on the environment,” said CEO Tim Mason. “At Fresh & Easy, we take this responsibility seriously, and strive to be good stewards of the environment. Collectively, we all can make a big difference.”

Fresh & Easy is also partnering with Leadership in Energy and Environmental Design (LEED) to demonstrate its commitment to build energy efficient and sustainable buildings. www.usgbc.org\LEED

More information on Fresh & Easy Neighborhood Market can be found at www.freshandeasy.com.

Food rationing in America

Not exactly. But this story talks about limits to purchases of rice, flour, cooking oil and other food at some retail outlets in view of recent price run-ups. From The New York Sun:

The curbs and shortages are being tracked with concern by survivalists who view the phenomenon as a harbinger of more serious trouble to come.
"It's sporadic. It's not every store, but it's becoming more commonplace," the editor of SurvivalBlog.com, James Rawles, said. "The number of reports I've been getting from readers who have seen signs posted with limits has increased almost exponentially, I'd say in the last three to five weeks."

TK: More than a tinge of tabloid journalism, quoting a survivalist blog.. Restaurants who buy from club stores like Costco and Sam's Club may be aggravating spot shortages by overbuying, but when I was in DC some Thai officials I met mentioned the limits on rice purchases in that region as well.

Moral high ground or expedient choice

The Fresh Talk poll question this week provides you, the reader, a hypothetical scenario that in imperfect but in obvious ways mirrors the choices Chiquita faced in Colombia. Beginning in 1997 and continuing for seven years, Chiquita (or its subsidiary) paid right wing terrorist groups about $1.7 million for protection money. In previous years, four of the company's employees had been killed in two incidents. After eventually deciding to tell the Justice Department of its actions, the company plead guilty to a single felony count and paid a $25 million fine to the government for a violation of the International Emergency Economic Powers Act. A good treatment of the hard choices faced by Chiquita and the legal history of the episode can found in at this link for Corporate Counsel magazine. Thanks to Luis of the Fresh Produce Industry Discussion Group who found the piece some time back.

USDA ERS - Vegetable and Melons Outlook

Here is the link to the April 17 USDA ERS outlook report on vegetables and melons. Much detail in the 46 page pdf; from the report:

In 2007, per capita net domestic use (a proxy for consumption) of all vegetables, melons, potatoes, sweet potatoes, pulse crops, and mushrooms rose 2 percent to 444 pounds. Among crops experiencing increased use were processing tomatoes, fresh potatoes, fresh onions, and sweet potatoes. However, given the sluggish economy, little change is anticipated in net domestic use of vegetables and melons during 2008. Following a winter season where potato growers harvested 4 percent fewer acres, potato growers expect to harvest 5 percent fewer acres this spring. Although favorable weather has allowed yields to increase 1 percent from a year earlier, spring potato production is expected to decline 4 percent from a year ago. Fresh-market potato prices remain strong, running just below the highs of a year earlier and 20 percent above the average of previous 5 years. Area expected to be planted to summer storage onions is forecast to decline 6 percent in 2008 to 104,050 acres—the lowest storage area since 1992. Given average yields this fall (storage onion yields were record-high in 2007), production of storage onions is expected to be well below a year ago, bringing improved grower prices and revenue this fall.

All vegetables and melons: In 2007, per capita disappearance (also known as net domestic use, a proxy for consumption) of all vegetables, melons, potatoes, sweet potatoes, pulse crops, and mushrooms rose 2 percent to 444 pounds. Most of this increase was due to higher processing tomato, fresh potato, and fresh onion disappearance. Given the sluggish economy, little change is anticipated in net domestic use of vegetables and melons during 2008. Fresh vegetables: On a per person basis, net domestic use of fresh-market vegetables (excluding melons, potatoes, sweet potatoes, pulses, and mushrooms) rose 2 percent to 155 pounds. Fresh use rose for such crops as onions, sweet corn, celery, cabbage, carrots, pumpkins, and tomatoes, while dropping for squash, bell peppers, broccoli, and cucumbers. In 2008, fresh vegetable use is expected to decline slightly from that of a year earlier.
Melons: Estimated disappearance of all melons totaled a record high 8.5 billion pounds in 2007—the third consecutive annual gain. On a per capita basis, domestic disappearance of the top 3 melon crops increased 2 percent from a year earlier to 28.1 pounds, driven by gains in cantaloup and watermelon use.

How schools are coping with higher food costs

Rising costs for milk, grains and fruit have caused school districts to look for ways to economize in school lunches. Here is a good article from the www.pressdemo.com about some ways districts in California are coping. From the story:

Districts are finding ways to cut costs, such as using canned fruit instead of fresh and offering eclectic treats meant to spur a healthier palate less frequently. "Once a month I will menu jicama sticks, which are very expensive, very labor intensive, (but) the kids love it," Nobles said. "Oranges were a great price this year, so the kids had a lot of oranges."

TK: Produce vendors have to be involved with school districts they serve to help them maximize their dollars while still preserving their ability to source fresh.

Frozen resurgence?

Are frozen foods poised to make new inroads because of food inflation? Andrew Phipps of the UK makes a solid case for that outcome in this opinion piece called "Is this the true cost of food?" found at this link on www.talkingretail.com. From the piece:

It's no great secret the hard discounters in the UK are starting to see some traction across their estate; Aldi and Lidl are offering good quality at a good price and people are willing to go a little out of their way to buy into that cheaper way of living.
This time last year the focus of supermarkets was how to make as much money as possible out of the premium lines in store and this contributed to the increases we saw towards the end of 2007.It is likely that while premium ranges remain important, the growth this year may well come from the other end of the offering, the value lines.Meeting the needs of customers by enhancing the offer is going to reap dividends for retailers, particularly in some of the 'forgotten' categories like frozen.This year will see a big comeback for the frozen aisle as people remember the value of buying something, defrosting what you want and saving the rest – the ultimate in portion control.The role of shoppers is to look at what they are buying and using.The fact is that according to recent government figures food accounts for 20% of all domestic waste, food worth in excess of £8bn is thrown away, the vast majority of this still in edible condition. If an average household spends £100 a week on food, that is the equivalent to throwing away over a £1,000 a year. Why would anyone do that? The saving to be made in reducing food waste will offset the increased food costs we are seeing in the UK.The next year or so is going to be tough; prices will continue to rise at a faster rate than income levels.
To retain the shopper of today retailers need to understand how their needs will change in a different market climate with differing dynamics.
The adage 'the cost of a meal can be judged by the cleanliness of a plate' holds true; retailers need to sell what customers want and shoppers have to buy what they need.

Better, not bitter

That's the American spirit in the face of adversity, anyway. But check out the pink slip blog , written by Maureen Rogers, of Boston, Mass. She describes herself and her blog in this way:

Worcester girl by birth, Bostonian by choice, I'm a product marketing consultant (and, less grandly, a freelancer across the marketing continuum), specializing in B2B technology. I'm writing a book, Pink Slip (business lessons learned the hard way), and this blog is part of that process.(Not to mention great fun on its own.)

TK: The blog begin in 2006, but one thinks she would have more to write about lately, what with the economy slipping and businesses "right sizing" their staffs. I had to laugh when she notes in one of her posts that fast food restaurants have experimented using off site call centers to handle fast food orders. In another post, Rogers talks about business lessons learned from the case of Flagler vs. Wal-Mart, a few of which might be applicable in the world of fresh produce. From pinkslip.blogspot.com:

Yesterday, I blogged about Flagler Productions, the tiny little almost out of business company that got dumped as a vendor by Wal-Mart - and is getting their revenge by selling embarrassing (and possibly incriminating) videos of Wal-Mart company meetings.

It seems to me that there are a number of business lessons to be learned from this story, and here are a few that I came up with.

For Flagler:

• Don't rely on one company to provide 90%+ of your business. Sure, it probably felt pretty darned good to have a big old company like Wal-Mart as your prime source of revenue, but somewhere along the line, Flagler should have done a better job of leveraging their being "the little company that can work for the big guys" and gotten a few more customers for themselves. A little "what if" analysis - i.e., 'what if Wally dumped us' might have saved Flagler from having to get rid of their employees, move their digs, lose their line of credit - and have to resort to the not particularly savory practice of selling what might seem like kinda-sorta proprietary material.
  
• Get it in writing. Given that Flagler was relying so heavily on W-M, they should have gotten some consideration from Wal-Mart for devoting all that business to them, being ever-ready, or whatever. If they'd had a contract in place, they would have had more than 9 days notice (or whatever measly little notice they got) that the business would be drying up. An annual guarantee, a 3 - 6 month notice period - Flagler should have gotten some protection for themselves.
  
• Before you do something pissy, think it through. This selling of the Wal-Mart videos may well turn out to be a lucrative business for Flagler. They may, in fact, befriend clientele who count themselves among the legions of Wal-Mart haters. Maybe. But this just might backfire on them, giving companies pause before doing business with them. They may well be thinking, if this is how they treat a former customer - one that's big and powerful - how might they treat me? I'd sure be thinking that before I signed them up to video my company function. And it does sort of look like Flagler was trying to blackmail Wal-Mart. (Kinda/sorta.) So think it through. Then think it through again, and ask yourself whether, in the long run, what you're doing is worth it.

For Wal-Mart:

• If you're the big guy, it doesn't hurt you to be nice to the little guy. Surely someone at Wal-Mart must have known that withdrawing their business from Flagler was going to devastate them. Maybe they had good reasons - maybe this will all come out - but wouldn't you think that a company that's supposedly concerned with its reputation would be just a tad kinder and gentler. Of course, W-M didn't exactly get where they are by being nice to the little guy. Still, in this sort of situation, it doesn't seem that it would have hurt all that much.
  
• Get it in writing. It's truly hard to believe that, in this day and age, Wal-Mart was naive enough to trust things like joking skits about flaming gas cans - which can and will be used against them in a law suit involving one of their flaming gas cans - to outsiders, without getting it in writing that they owned the rights to any videos made about them. (Note that the skit about the flaming gas can pre-dated the incident in which a young boy was injured by one of them.)
  
• Before you do something stupid, think twice. In a somewhat blackmailish gesture, Flagler offered to sell the videos to Wal-Mart for several million dollars*. Wal-Mart decided they were only worth $500K. This may turn out to be a very costly, quite stupid decision on their part. I can understand if they didn't want to give in to something blackmailish, but that obviously wasn't the case: they offered something. Given that they were willing to "negotiate"', you'd think they might have just written off "several million" as chump change. (Maybe they weren't aware about the flaming gas can video. Surely that one "unfunniest home video" alone could end up costing them more than Flagler's asking price.)