Monday, May 30, 2011

82-Year-Old Grocer Andronico's Needs A Sugar Daddy of Sorts: 'The Insider' Suggest Tesco and its Fresh & Easy Neighborhood Market Might Fit the Bill

The Insider - Heard on the Street

Last week the San Francisco Chronicle and a couple papers in nearby Berkeley published brief stories in which they reported eight-store, family-owned grocery chain Andronico’s Community Markets is having financial problems.

The reports were based on e-mails sent to the papers from suppliers/vendors the grocer owes money to on a past-due basis.

It's true the grocer is past-due to the vendors. But Andronico's financial struggles aren't a new development, as reading the reports might suggest. Instead, the grocer's financial difficulties began in earnest in late 2005-2006, becoming very serious in 2009, and remaining so today, due primarily to too much debt, increased competition and later the economic recession.

The 82-year-old upscale-oriented eight-store independent, headed by CEO Bill Andronico and founded in 1929 by his grandfather, Frank Andronico, moved on April 26, 2011 from its longtime headquarters located at 1109 Washington Avenue in Albany near Berkeley to a suite of offices above and next to its store (pictured above) on Irving Street in San Francisco’s Inner Sunset District.

The lease on the Albany digs, where Andronico's has been for about 25-years, was up May 1. The grocer didn't renew it, instead deciding wisely to save some cash by utilizing what is a fairly decent amount of office space at the San Francisco location, which is its best overall performing store out of the eight supermarkets it operates - four in Berkeley, and one unit each in San Francisco, Palo Alto, Los Altos and San Anselmo.

Palo Alto and Los Altos are in the South Bay Area, not far from San Jose. San Anselmo is in Marin County.

In the past Andronico's rented out some of the office space above and attached to the supermarket in San Francisco's Inner Sunset District.

The store is the only supermarket in the densely-populated neighborhood, which among other things is home to the University of California at San Francisco, a medical professions' campus which has a medical school, school of pharmacy, graduate school of health sciences, a major research hospital and additional research institutes.

Since I've known about Andronico's serious financial problems since 2009 - and its overall financial struggles since 2006 - I thought I would offer some details, analysis and commentary on the topic and issue for Fresh & Easy Buzz readers, many of whom are very familiar with Andronico's Community Markets, which until last summer was known simply as Andronico's Market, and before that as Andronico's Park & Shop.

The signs on the Andronico's stores still say Andronico's Market, even though the name of the chain and stores were changed to Andronico's Community Markets last summer. I'm told by a person in a position to know at Andronico's there are no current plans to put up new signs because of the expense of doing so.

First off, last week Bill Andronico responded to the San Francisco Chronicle with an e-mail, which was published May 26.

According to the May 6 item in the paper, Bill Andronico wrote in the e-mail that the grocer is looking to "recapitalize" and to "bring in lending/investor partners to replace the existing lender group and, additionally, provide growth capital." (You can read the rest of his e-mail as published in the Chronicle here.)

There's really nothing new about Andronico's trying to bring in new investors and raise capital. It brought in new money a decade ago, which is how from the late 1990's to the early 2000's  it built a new store and fresh foods facility in Emeryville (East Bay), two very upscale and expensive-to-construct stores in the East Bay Area cities of Danville and Walnut Creek, and how it financed the remodeling of the San Francisco store in 2008, along with doing a few other things.

Additionally, the grocer has been seriously trying to raise money from existing and new investors for at least six years that I'm aware of. It continues to try.

The first major sign Andronico's was having serious financial difficulties beyond those that surfaced in 2005-2006 was when in 2009 it let a number of category managers and buyers go at its then headquarters in Albany. The grocer had established a well-staffed professional category management system in the late 1990's, after having just a couple grocery buyers, a produce buyer, meat buyer and small prepared foods headquarters' staff prior to that.

Shortly after the cutbacks, Bill Andronico brought in former Whole Foods Market executive Justin Jackson as a consultant. Before joining Andronico's, Jackson was the vice president of purchasing for Whole Foods Market's Pacific Northwest Region

As part of his job, Jackson, who is executive vice president of Andronico's, recruited a new senior management team, largely comprised of ex-Whole Foods Market guys from the Pacific Northwest and Northern California divisions.

That team includes: John Clougher, Andronico's president and COO; Steve Epidendio, vice president operations; and Anthony Gilmore, who's titles are chief strategist and chief administrative officer. Bill Andronico remains CEO.

Clougher is the former president of Whole Foods' Pacific Northwest Region. Epidendio was the vice president of retail operations for Whole Foods Markets' Northern California division. He was previously a store manager for Andronico's for about nine years, from the late 1980's to early 1990's, later joining Whole Foods Market in Northern California.

Anthony Gilmore was recruited by Jackson and Clougher to Andronio's. Just prior he was vice president of corporate lifestyle, new concept development and corporate perishables at Pleasanton, California-based Safeway Stores, Inc., from 2007 until leaving in 2010, where among other things he worked on the development of its "The Market" small-format stores, which Safeway has stopped opening. There are two "The Market" stores - one in Long Beach, California, the other in San Jose. [See - October 15, 2010: Safeway Shelving 'The Market' Small Store Format; Won't Be Part of its Strategy Going Forward.]

Gilmore, who has 34-years experience in the food and grocery retailing business, most of it at Safeway and Whole Foods Market - and most of those years in Northern California - was president of Whole Foods' Northern California Region from 2004-2007. During his tenure in the position he was responsible for leading the development of numerous new Whole Foods locations in Northern California, many of which opened this year and last.

He went to work for Whole Foods in 1996 as the manager of its store in Palo Alto, California, where one of Andronico's eight stores is located. 

Gilmore later managed a store in Boulder, Colorado and was later promoted to regional vice president of the natural and organic-focused grocer’s Southwest Region, taking over as president of the division a short time after.

From 2002-2004 he was president of Whole Foods' Midwest division, getting promoted to president of the much larger Northern California Region in 2004.

Before joining Whole Foods Market in 1996, Gilmore spent 19-years working for Safeway Stores' in Northern California at the store-level, including as a store manager.

One of the casualties of the shake up at the grocery chain was the departure of Gary Wallner, who for 21-years was the face of Andronico's to the vendor-broker-supplier community. Wallner joined Andronico's in 1989 as a buyer-merchandiser, progressed to director of buying and merchandising, and then became vice president, which was the title he held when he left in May 2010.

In addition to Wallner, a couple other senior executives were let go in the reorganization.

One of the first things the new management team at Andronico's did last summer was to change the name of the chain, from Andronico's Market, to Andronico's Community Markets.

The change reflects the grocer's attempt to reposition the stores from their historic higher-end, upscale/specialty focus to a more community or neighborhood-oriented grocer. The stores still focus on specialty, natural, organic and fresh and fresh-prepared foods, along with offering basic groceries as they always have, but the group has been trying to tone down the upscale aspect in order to try to reach a broader customer base.

The recession that first hit in 2008 added to Andronico's financial problems, along with its debt load and the increased competition, because some its core-customers were forced to trade-down to grocery stores that offered lower prices. Although the Bay Area economy has improved somewhat since, as is often the case when  consumers start shopping around elsewhere, they continue doing it even when things get better economically, at best splitting their business among two or three food retailers.

The family-owned grocer has a history of name changes. For example, until the late 1980's-early 1990's the stores were called Andronico's Park & Shop Markets, then becoming Andronico's Market, the company name and store names until last summer.

Going Forward

First and foremost, Andronico's is looking for new investors - and money - plain and simple.

Additionally, the grocer has an experienced and seasoned senior management team.

Bill Andronico knows the Bay Area food and grocery retailing market extremely well, as does Gilmore and Epidendio, most particularly out of the others, although I question if Andronico's can afford as much high-priced talent as it has brought on in the senior management ranks.

For example, Bay Area competitor Mollie Stone's Markets (nine stores), which is privately-owned and very similar in format to Andronico's historic format positioning, has a much leaner management structure and team and is doing well despite the continued economic recession and competition from major chains and other independent grocers in the Bay Area. Mollie Stone's opened its ninth store in San Francisco's Castro District in March of this year, for example.

Andronico's has what in my analysis and opinion are three strong stores out of the eight it operates in the Bay Area. Those stores are its Inner Sunset supermarket in San Francisco and two stores in Berkeley - Shattuck Avenue and Telegraph Avenue - out of the four units in the Easy Bay Area city.

The other five stores are decent-to-marginal.

The two other Berkeley units, on University and Solano Avenues respectively, haven't been great performers for many years.

And Andronico's has and faces increased competition in Berkeley, where for decades it was the leading grocer with its four stores.

For example, Trader Joe's opened its first store in Berkeley this year. The TJ's store on University Avenue, not far from the Andronico's Communty Market unit on the same street, which leads to the world renown University of California at Berkeley campus, has taken a significant bite out of sales at the Andronico's store.

Additionally, local independent Berkeley Bowl opened a new store in the city last year. That and its existing store - the grocer is super-popular and focuses on fresh foods (particularly produce) as well as natural, organic and specialty products - have also hurt Andronico's considerably, as has the Whole Foods store (near the Telegraph Avenue Andronico's), which has come on stronger over the last few years, compared to its past performance.

Even though it's still a strong store, the Inner Sunset District Andronico's unit got some new competition earlier this year when Whole Foods Market opened a store a five minute drive away, at Haight and Stanyon streets in San Francisco's Haight-Ashbury District.

The Whole Foods' store went into a vacant building that for decades was home to a Cala Foods market, which was closed a number of years ago by Kroger Co., its owner. Ironically, the Haight and Stanyon Whole Foods store was one of the many locations acquired by Gilmore during his tenure as president of Whole Foods Market's Northern California division.

During the years the former Cala Foods building and now Whole Foods store was vacant, the Andronico's unit in the Inner Sunset gained added business and sales because the store was the nearest full-service supermarket for many people in the Haight-Ashbury neighborhood.

The Palo Alto, Los Altos and San Anselmo Andronico's stores are what I call decent-to-marginal performers, and are subject to becoming worse-performing with increased competition, which is coming everywhere in the Bay Area, with Trader Joe's, Sprouts Farmers Market, Whole Foods Market, Sunflower Farmers Market, Target and Tesco's Fresh & Easy Neighborhood Market all opening numerous new stores, along with continuing new store growth from Safeway and others, in the region.

Walmart also plans to start opening some of its new smaller-format Walmart Market and Walmart Express stores in the Bay Area, beginning later this year or in early 2012.

So what's Andronico's to do?

Option one is to bring in new investors with cash - this the grocer's preferred option because it desires to stay independent, according to my good sources - and not sell the 82-year-old chain bearing the family name, although investors do own a piece of it now.

When founder Frank Andronico stepped down, Bill Andronico's father took over. And when his Dad retired, Andronico, who's a graduate of the University of Southern California's Food and Grocery Industry Management Program and has worked in the family business for about three decades, became CEO. That's a serious and important legacy to uphold and maintain.

In its 82-years Andronico's has also been a innovator, no only in the Bay Area but nationally.

For example, it was one of the first grocers in the U.S. to offer fresh-prepared foods made in-store by chefs.

Andronico's was also one of, if not the first, grocers to install multi-shelved refrigerated produce cases in its stores. In fact, when it first did so many decades ago, such produce cases didn't exist, so the grocer had them custom made.

The family-owned chain also is a pioneer in specialty, gourmet, natural and organic food and grocery product merchandising and promotion. For example, long before Whole Foods Market opened its first store in the Bay Area in the 1980's, Andronico's was already firmly established as a leader in the then just-starting-to-emerge categories in the United States.

Andronico's was among the first wave of supermarkets in the U.S. that provided significant space on its shelves to natural and organic product brands like Lundberg (rice), Celestial Seasonings (tea), Newman's Own and many others, as well as to specialty and gourmet foods from abroad and at home.

Andronico's was also the first grocer I'm aware of that completely replaced the standard metal grocery shelving in its stores with wire Metro shelving, something that not long after it did so became popular among grocers in the Bay Area and throughout the U.S., thanks in part to Bay Area-based grocery store designer John Sutti, who built his considerable reputation in large part on the innovative store design work he did in partnership with the family in their stores.

A story: When Whole Foods Market co-CEO Walter Robb went to work for the then fledgling grocery chain in the early 1990's, his first task was to spearhead the renovation of a vacant building on Miller Avenue in Mill Valley, California that he previously had the lease on and had planned to turn into his own grocery store. But failing to raise the cash, Robb instead did a deal with Whole Foods' founder (and the other co-CEO) John Mackey, which was that in return for a little money and a job as the store's planner and then manager he would sell the lease to Whole Foods so the location could become the grocer's first store in Mill Valley.

It was a good decision for Whole Foods, Robb and Mackey. The 14,000 square-foot store has among the highest sales-per-square-foot of any Whole Foods unit - averaging about $550,000 a week in sales. Robb later became president of Whole Foods' Northern California Region. The Northern California Region has become a top-performer for Whole Foods. Mackey and Robb, who later became co-president of Whole Foods, went on to have a great working relationship, so much so that Mackey and the grocer's board named Robb co-CEO last year.

Robb (and Whole Foods) hired John Sutti and his firm to do the design work for the Miller Avenue store, which is one of two Whole Foods Market stores in the small town of Mill Valley (about 10,000 residents), in large part because Robb was impressed with the work Sutti did for Andronico's, who Robb called on for a couple years prior to that as a sales consultant for a number of Bay Area natural and organic products' companies. He also got had gotten to know Bill Andronico and the Andronico's stores fairly well prior to that as the manager of a natural foods store in Marin County.

Jean Greenfield, who for a number of years in the 1990's worked as Whole Foods' Northern California regional buyer out of a tiny converted closet, accessible by climbing a latter, atop a small loft in the backroom of the Miller Avenue store, later went to work for Sutti's retail store design firm. Whole Foods later established its Northern California headquarters in Emeryville, where it is today.

Bottom Lines(s)

Andronio's has been working hard on option one, bringing in new investors, for nearly one year now, since the new senior management team took over. So far - no new investors or cash.

This brings us to what I call option two, which would be an outright acquisition or major investment - controlling or significant minority interest - in Andronico's.

I see two grocery chains this might make sense for - Tesco's Fresh & Easy Neighborhood Market and Bristol Farms - both of which are headquartered in Southern California and have stores in Northern California's Bay Area.

Bristol Farms and Endeavour

In October 2010 members of Bristol Farms' senior management team, including CEO Kevin Davis, along with investment firm Endeavour Capital bought the upscale 14-store chain from its then owner, Supervalue, Inc. Bristol Farms has one store in Northern California, in San Francisco, and is scouting the region, with a focus on the Bay Area, for potential future stores. [See - October 29, 2011: CEO Kevin Davis, Execs and Investment Firm Buy Upscale Southern California Bristol Farms Chain From Supervalu, Inc.]

Andronico's and Bristol Farms are very similar chains, even though the new team is trying to position Andronico's Community Markets more into the community or neighborhood market space - which to date in my analysis and opinion hasn't and isn't working.

Therefore, I see some definite synergies (and mutual opportunities) between the two grocers in terms of Bristol Farms/Endeavour Capital taking a look at Andronico's, as either an investment opportunity or acquisition.

Both grocers are also supplied by wholesaler Unified Grocers, which doesn't want to lose the Andronico's business.

Will Bristol Farms take a look? I would if at the helm. Would Andronico's be interested? One would think so.

One problem though: Andronico's is union. Bristol Farms is not. That means a deal of any kind is going to involve the United Food & Commercial Workers (UFCW) union on some level, which is something Bristol Farms would like to avoid.

Tesco and Fresh & Easy

The other opportunity I find most interesting is Tesco and its Fresh & Easy chain.

Andronico's offers the following to Tesco and its Fresh & Easy Neighborhood Market chain, which has opened 11 stores in Northern Californa (nine units in the Bay Area) so far this year, and opens its first store in San Francisco June 22, followed by its second unit in the city on August 24.

>Talent: Bill Andronico and Anthony Gilmore (and maybe one additional member of the senior management team), both know as much about the Northern California market region as most grocers operating in it do. That would be a big plus for Tesco and Fresh & Easy, which as a dearth of senior executives with experience in Northern California or elsewhere in the U.S.

>Fresh Foods: Andronico's has a, history of having among the finest fresh produce, meat and fresh-prepared foods programs not only in Northern California but in the U.S. Tesco's Fresh & Easy could benefit greatly from this expertise and experience.

>Store Locations: Tesco could utilize all eight of Andronico's stores.

What I would do as Tesco:

>Get rid of the Andronico's Community Markets name and go back to Andronico's Market, keeping the San Francisco, Shattuck Avenue-Berkeley and Telegraph Avenue-Berkeley stores under the Andronico's Market banner and format. Use it as the basis of a possible upscale chain down the road. Invest some money in the two Berkeley stores, although it need not be much as they are in pretty good shape.

>Change the University Avenue and Solano Avenue stores in Berkeley to Fresh & Easy Nieghborhood Market stores. Both locatons are about the same size as Fresh & Easy markets - 10,000-12,000 square-feet - and geographically fit the format best of the four.

>Also convert the San Anselmo, Palo Alto and Los Altos locations to Fresh & Easy stores.

Tesco's Fresh & Easy has no stores in Berkeley, which is one of the better cities in the Bay Area for the format.

Tesco's Fresh & Easy also doesn't yet have any stores in Marin County (San Anselmo), Palo Alto or Los Altos, all desirable locations.

Andronico's fresh-prepared foods program and the high quality of the products it produces could be helpful to United Kingdom-based Tesco overall, in the UK where it's a major player but far from the best - Marks & Spencer, Waitrose and Sainsbury's are better in my view - in ready-to-eat and ready-to-heat prepared foods' merchandising and globally in some of its other operations.

Lastly, Andronico's specialty-oriented expertise and historic upscale format might also be a benefit to Tesco in the UK if it ever decides to create an upscale format and position it against the nation's leading upscale-specialty-natural-organic grocery chain,Waitrose, and Whole Foods Market, which is opening additional stores there.

Union redux: Like Bristol Farms, Tesco's Fresh & Easy is a non-union food and grocery retailing chain. And, as readers of Fresh & Easy Buzz are well aware because we cover the issue more extensively and more in-depth than any other publication does, the United Food & Commercial Workers Union (UFCW) has been trying to unionize Fresh & Easy Neighborhood Market since early 2008. Therefore, the fact Andronico's is a union grocer could pose a serious barrier to Tesco making any sort of  investment in Andronico's - even buying it - should the UK-based global retailing giant-come-to-America consider my scenario.

The jury is still out on whether the Fresh & Easy format will succeed. Right now in my analysis the majority of the jury is voting no. But Philip Clarke and company might still be able still change that verdict, although the clock is ticking very fast.

Were I an advisor to Tesco CEO Philip Clarke and his deputy CEO Tim Mason (and I'm not and don't seek such a position), who's also CEO of El Segundo, California-based Fresh & Easy Neighborhood Market, I would tell then to call Bill Andronico post-haste and set up a meeting with him, Anthony Gilmore and the CFO, to start. The investment in time is well worth the potential outcome.

And, of course, Andronico's could benefit - starting with surviving - from an investment or more from Tesco. As such, were I advising Bill Andronico (and I don't), I would tell him not to wait to hear from Tesco CEO Clarke or his deputy Tim Mason. Instead, I'd suggest he reach out and ask for a meeting. Perhaps he already has - Philip Clarke was in San Francisco late last week, leaving the airport on Saturday to return to London?

if Andronico's had hired that social media director it's been advertising for on its website for nearly a year - I first saw the ad on the website in August 2011 and noticed Andronico's removed it about one week ago - it could communicate with Tesco on Facebook and Twitter, two important social media sites Andronico's has zero-presence on. See its Facebook site, for example, assuming it's actually the grocers.

If I were being paid the big bucks to turn a grocery chain like Andronico's around, one of the first things I would do is create a significant presence on Facebook, Twitter (Andronico's has neither that I can find) and a couple other social media sites. You can hire a talented college intern to help for near-nothing, for example.

The sites are free but potentially powerful. They also allow a grocer to address customers and potential customers directly and instantly - no need to send e-mails to third parties like local newspapers, which is so 20th Century.

Bill Andronico should call Mollie Stone's co-owner Dave Bennett, who understands the potential power of social media, and chat a bit. Then he should ask his numerous senior executives what they're waiting for on the social media front? After all, 82-year-old Andronico's needs and deserves solutions rooted in the 21rst Century, not the 20th.

A Sugar Daddy of sorts isn't needed for social media and many other low-to-no-cost operations, merchandising, marketing and promotional programs that are needed but I'm not seeing being implemented at Andronico's, which makes me wonder - are things that close to the end financially? Or is it time for another new senior management team? Or both?

It would be a shame to lose the 82-year-old chain completely. So time and much better effort from the senior management team seems to me to be of the essence.

Saturday, May 28, 2011

At The 'Brand Factory': Safeway Stores' Launches Newest Private Brand - 'Safeway Kitchens'

Some of Safeway Stores' new 'Safeway Kitchens' bread. Top two shelves, 100% Whole Wheat. Third shelf from top, Oats & Nuts. Bottom: two varieties of white bread. [Credit all photos to Fresh & Easy Buzz.]

Private Brand Showcase

The late Californian Walt Disney liked to call his entertainment and theme park empire the "Dream Factory," as a way of putting an emphasis on the larger imaginative and creative processes of what the Disney Company did, rather than merely describing the products it produced, marketed and sold. 

We'd like to suggest a similar, although less lofty, moniker for Pleasanton, California-based supermarket chain Safeway Stores, Inc.

That moniker, the "Private Brand Factory," is based on the fact Safeway keeps churning out new private brands in a way similar to how Disney continues to create dreams, even without Walt.

Exhibit A: Safeway's latest just-out new brand is "Safeway Kitchens," the second new private brand the grocery chain has introduced this year.

So far the brand is being used on a line of fresh bread, rolls, hot dog and hamburger buns, english muffins, bagels and specialty breads, all of which have just recently been introduced in the grocer/brand-maker's stores.

We've identified about 59 SKUs so far in the "Safeway Kitchens" brand. The SKUs are listed at the end of the story.

The "Safeway Kitchens" brand and bread-bakery items appear to be positioned as mid-range in terms of the price-value equation.

The brand and items are neither upscale bread and bakery SKUs nor are they discount products with rock-bottom retail price-points, based on our observation and analysis.

Instead, "Safeway Kitchens" looks to be positioned directly against mainstream bread-bakery category brands like Oroweat and Natures Pride, as Safeway's private brand alternative.

For example, the 22-24 ounce 100% Whole Wheat and Oats & Nut loaves pictured above and below (along with all the other similar 22-24 ounce varieties) currently retail for $3.29 everyday in Safeway's stores in the particular region of California where the photographs were taken this week. That's slightly below the identical SKUs of the two brands mentioned above. Safeway is currently offering the "Safeway Kitchens" bread varieties at an introductory price of $2.99 each.

Earlier this year Safeway introduced a line of breads and related category items under its "Open Nature" natural foods brand.

The 22-24 ounce bread varieties - Whole Wheat, Multi-Grain and Oats & Nuts, for example - are virtually identical (see the photo above and the one below) to the "Safeway Kitchens" breads, except the "Open Nature" breads don't contain high-fructose corn syrup and artificial additives, colorings and preservatives like the "Safeway Kitchens" breads do.

The everyday price-points we've seen on the "Open Nature" breads are slightly higher than those on the Safeway Kitchens" breads, although this week both brands are being offered in-store for the same promotional price.

A Safeway Stores source told us this week that the grocer - and prolific private brand producer - will eventually selectively extend the "Safeway Kitchens" brand into other categories beyond  bread and bakery but those are the focus at present.

Since the grocery chain already uses "Safeway" as its category-wide (except dairy) value and price-focused brand, such a niche-oriented branding strategy for "Safeway Kitchens" would make sense to us, along with the fact the "kitchens" name in the brand tends to suggest categories like bread and bakery - and perhaps deli and a couple other "foodie-oriented" or comfort categories the name resonates with - rather than being used in an across the board manner.

For example, we doubt if you'll see mouse traps in the store's general merchandise sections under the "Safeway Kitchens" brand, even though the kitchen is probably the primary room in the house where most of us use mouse traps. But doing so would be taking functional branding to its illogical extreme, particularly if the brand name also finds its way to a line of cheese.

Ice cream might be a good category to use the "Safeway Kitchens" brand name on though, as would selected fresh and shelf-stable specialty and gourmet foods items. Spices might be nice as well. Perhaps also comfort-type foods like shelf-stable macaroni and cheese, to name a few.

But for now Safeway Stores' newest private brand, "Safeway Kitchens," is being used on breads, rolls, buns and other bakery category specialty items which are merchandised in the mainline bread sections in the stores and not in the in-store bakeries.

So far this year, Safeway has launched two new brands - "Safeway Kitchens and "Open Nature" - at its private brand factory in Pleasanton, adding to its already extensive product brand portfolio, which includes two brands, "O Organics" and "Eating Right," which the grocery chain is marketing to other supermarket chains and wholesale grocers in the U.S., Canada, Europe and Asia.

French-based Carrefour, which is the second largest food and grocery retailer in the world after number one Walmart, is selling "O Organics" in some of its stores in Asia, for example.

And a number of regional supermarket chains in the U.S., like Albertsons LLC's Southwest division, Big Y Foods, Brookshire Brothers and others, are currently offering numerous SKUs of either "O Organics" or "Eating Right" (healthy foods brand), or both, in their stores.

Safeway Stores has been busy this year developing and launching its new "Safeway Kitchens" private brand and rolling out what we estimate are several hundred new SKUs in the dry grocery, frozen, perishables, fresh meat, and produce categories under its "Open Nature" brand. But the grocer/brand-maker continues to create new private brands at its brand factory in Pleasanton.

Safeway's strategic plan is to develop a core competency at and become a major and serious player in brand development and consumer packaged goods marketing, and we aren't talking just about private brands sold in its stores, although the 1,700-plus supermarkets serve as the obvious major source of sales for all its branded products.

Safeway has already achieved a major milestone in this regard: It's "O Organics" brand is now the number one organic foods brand by annual sales (about $1.2 billion) in the United States. That includes both manufacturers' and retailer brands.

"Safeway Kitchens" is Safeway Stores' newest consumer packaged goods brand - but it's far from its last one.

"Safeway Kitchens" SKUs

  • Safeway Kitchens English Muffins, 100% Whole Wheat 6/14 oz
  • Safeway Kitchens Bread, Very Low Sodium Multi-Grain 16 oz
  • Safeway Kitchens Bread, Texas Toast Enriched 22 oz
  • Safeway Kitchens Bread, French Toast 22 oz
  • Safeway Kitchens Bread, 100% Whole Wheat 22 oz
  • Safeway Kitchens Bread, Enriched White Sandwich 22 oz
  • Safeway Kitchens Bread, Enriched White 22 oz
  • Safeway Kitchens Bread, Wheat 22 oz
  • Safeway Kitchens Bread, Enriched Butter Top White 22 oz
  • Safeway Kitchens Bread, Butter Top Wheat 22 oz
  • Safeway Kitchens Bread, Crushed Wheat 22 oz
  • Safeway Kitchens English Muffins, Extra Crisp, 12 oz
  • Safeway Kitchens Hamburger Buns, Giant Wheat 8/18.5 oz
  • Safeway Kitchens Hamburger Buns, Enriched Giant 8/18.5 oz
  • Safeway Kitchens Hamburger Buns, Giant Sesame 8/18.5 oz
  • Safeway Kitchens Hamburger Buns, Potato 8/15 oz
  • Safeway Kitchens Hot Dog Buns, Potato 8/15 oz
  • Safeway Kitchens Hot Dog Buns, Enriched 8/11 oz
  • Safeway Kitchens Hamburger Buns, Enriched 8/11 oz
  • Safeway Kitchens Hamburger Buns, Enriched Giant 8/20 oz
  • Safeway Kitchens Hamburger Buns, Enriched 8/12 oz
  • Safeway Kitchens Hot Dog Buns, Enriched 8/12 oz
  • Safeway Kitchens Bagels, Plain Sliced 6/18 oz
  • Safeway Kitchens Bagels, Cinnamon Raisin Sliced 6/18 oz
  • Safeway Kitchens Bread, 12 Grain 24 oz
  • Safeway Kitchens Bread, 15 Grains Plus Omega 3 24 oz
  • Safeway Kitchens Bread, Healthy Grains 24 oz
  • Safeway Kitchens Hamburger Buns, Crushed Wheat 8/13 oz
  • Safeway Kitchens Hot Dog Buns, Crushed Wheat 8/12 oz
  • Safeway Kitchens Hamburger Buns, Enriched Sesame 8/20 oz
  • Safeway Kitchens Bread, Sourdough Sliced Square Loaf 24 oz
  • Safeway Kitchens Bread, Sourdough Sliced Long Loaf 24 oz
  • Safeway Kitchens Hot Dog Buns, Wheat 6/14 oz
  • Safeway Kitchens Bread, Cinnamon Raisin 16 oz
  • Safeway Kitchens Rolls, Brown & Serve Sourdough 8/13 oz
  • Safeway Kitchens Bread, Sandwich White 24 oz
  • Safeway Kitchens Bread, Sandwich Wheat 24 oz
  • Safeway Kitchens Hamburger Buns, Egg 8/12 oz
  • Safeway Kitchens Hot Dog Buns, Egg 8/12 oz
  • Safeway Kitchens English Muffins, Extra Crisp 10/20 oz
  • Safeway Kitchens English Muffins, Cinnamon Raisin 6/12 oz
  • Safeway Kitchens Hamburger Buns,Wheat, Premium 8/21 oz
  • Safeway Kitchens Bread, 100% Whole Wheat, Country 24 oz
  • Safeway Kitchens Bread, 8 Grain 24 oz
  • Safeway Kitchens English Muffins, Sourdough 6/12 oz
  • Safeway Kitchens Bread, Oats & Nuts 24 oz
  • Safeway Kitchens Bagels, Cinnamon Raisin 6/20 oz
  • Safeway Kitchens Bagels, Sliced Plain 6/20 oz
  • Safeway Kitchens Bread, Country Buttermilk 24 oz
  • Safeway Kitchens Bread, 100% Whole Wheat 16 oz
  • Safeway Kitchens Bread, Country Potato 24 oz
  • Safeway Kitchens Bread, Country Buttermilk Wheat 24 oz
  • Safeway Kitchens Bread, Sourdough 24 oz
  • Safeway Kitchens English Muffins, Honey Wheat Berry 6/12 oz
  • Safeway Kitchens Hamburger Buns, Potato 8/15 oz
  • Safeway Kitchens Hot Dog Buns, Potato 8/15 oz
  • Safeway Kitchens Hamburger Buns, Enriched Sesame 8/12 oz
  • Safeway Kitchens Bread, Enriched Split Top White 24 oz
  • Safeway Kitchens Bread, Split Top Wheat 24 oz
Related Stories

January 5, 2011: Safeway Adds 'Open Nature' to its Natural-Organic-Healthy Foods' Private Brand Portfolio

February 7, 2011: Getting There First...Plus, Are Tesco's Fresh & Easy and Safeway Traveling Down A Similar Private Brand Aisle?

July 21, 2010: 'Sipsational' & 'Quenchtastic': Safeway Introduces New 21-Flavor Line of Soft Drinks Under 'refreshe' Private Brand

April 8, 2011: The Branded 'Signature Cafe' in Safeway Stores' Soon to Open 'Social Safeway' in Washington D.C. Should Turn A Few Heads

February 25, 2011: Safeway CEO Steve Burd Says Fresh, Prepared Foods Sales at $100 Million Annually

Additionally, Click on this link - - to read past stories in our 'Private Brand Showcase' feature.

Thursday, May 26, 2011

Kroger's Ralphs-Food 4 Less Chain Launches Fundraising Drive for USO and Members of the U.S. Military

Southern California Market Region Report
Memorial Day 2011

Kroger's Los Angeles-based Ralphs/Food 4 Less chain is launching a checkstand-based fundraising drive for the USO (United Service Organizations) in its 254 Ralphs' banner supermarkets in California and Nevada and its 147 Food 4 Less and Foods Co discount warehouse stores in California, Nevada, Illinois and Indiana.

The USO has for 70-years provided aid, comfort, cheer and entertainment to active duty members of the U.S. military and their families throughout the United States and abroad.

Kroger's Los Angeles-based Ralphs/Food 4 Less chain is launching a checkstand-based fundraising drive in its 254 Ralphs' supermarkets in California and Nevada and 147 Food 4 Less and Foods Co price-impact warehouse stores in California, Nevada, Illinois and Indiana, for the  (United Service Organizations), which for 70-years has provided active duty members of the U.S. military and their families with aid, comfort, cheer and entertainment throughout the United States and abroad.

The fundraising program, called "Honoring Our Heroes," is being launched in the 401 stores this week and will run until August 13, 2001, according to Mike Donnelly, president of Ralphs, and Bryan Kaltenbach, president of Kroger's Food 4 Less/Food Co chain.

Customers of the stores can donate money to the USO simply by donating their spare change (currency excepted as well) in collection canisters that have been set up at the checkstands in all the stores.

All the money donated between now and August 13 will be given directly to the USO to help it support the numerous programs and entertainment events it provides to members of the U.S. armed services.

Kicking off the program today, Ralphs' Donnelly said: "We salute our troops and thank them for the sacrifices they make to protect us. Ralphs is delighted to be able to help our troops through our support of local USO chapters."

Kaltenbach, president of sister chain Food 4 Less/Foods Co, echoed Donnelly's sentiments: "We are very proud to show our support of the U.S. military by raising funds for the USO," he said. "The USO's mission is important in letting active duty military personnel know the citizens of the United States appreciate their efforts."

The Ralphs/Food 4 Less in-store fundraising program is part of a major commitment Kroger Co. made earlier this year at the Daytona 500 auto race to expand what has been an ongoing relationship it has with the USO.

At the race on February 20, Kroger Co. presented the USO with a check for $400,000, which was donated by customers and employes from fundraising programs held in 2010 at about 1,300 Kroger-operated stores across the U.S., including its Ralphs, Food 4 Less, Dillon's and Baker's banner chain's.

Kroger announced at the event a pledge to expand its efforts this year to raise even more money for the USO through in-store fundraisers like the checkstand donation program, various online-based promotions and a text-to-give campaign it conducted during the race on February 20, in which the grocer sent text messages to its data base of shoppers encouraging them to text "USO" to 27722 during the race as a way of donating $10 to USO programs.

Kroger has over 350 associates who are active duty or reservist members of the U.S. military, according to the company.

At the Daytona 500 the food and grocery retailer, the USO and JTG Daugherty Racing painted a special Kroger emblem on the red, white and blue #47 Kroger-USO car, which was driven by NASCAR champion Bobby Labonte. The emblem featured the names of the more than 350 Kroger associates who are active duty or reservist members of the U.S. military. Kroger was the exclusive retail partner for the Daytona 500 race.

Earlier his month, on May 3, consumer packaged goods giant Proctor & Gamble (P&G) teamed up with Kroger in an ongoing nationwide and chain-wide promotion to raise even more money for the USO as part of the retailer's "Honoring Our Heroes" campaign and its year-long commitment to the service organization.

As part of the partnership Kroger and P&G created a digital opportunity for people to virtually “shake the hand of a hero," which is considered the proper gesture to use with U.S. troops in uniform to thank them for their service to our country.

The first 50,000 people to utilize the web application to shake a hero’s hand on will receive a special offer on one of the following P&G brands: Tide, Downy, Gillette, Pantene, Old Spice and Prilosec, according to P&G.

Through the partnership with P&G, Kroger will make a $250,000 donation to the USO, which is in in addition to the money raised during the May-August checkstand fundraising program, which is also being conducted at some of Kroger's other chains in the U.S.

Kroger and P&G also launched their joint-program in early May by offering a week-long promotion at all the retailer's chains and stores in which shoppers received a $5 instant rebate when they purchased any 10 P&G brand items out of many offered in what was named the "Mega Event" sales promotion.

You can visit the Kroger-Proctor & Gamble "Honoring Our Heroes" website here. It includes a variety of features, including ways all of us can honor those serving in the U.S. military. And with Memorial Day just a few days away, now is the perfect time to what you can to show your support.

The USO, which was founded 70-years ago, has a simple but not always easy to fulfill mission, which is to lift the spirits of America's troops and their families wherever they are deployed.

The non-profit service organization meets its mission by offering active duty members of the military and their families an extensive range of programs at more than 160 locations in 27 U.S. states and in 14 countries.

It also puts on hundreds of entertainment events each year as part of its spirit-lifting mission. The entertainers the USO brings to the troops throughout the world, including in Iraq and Afghanistan, include famous comedians and singers - and much more.

The upcoming Memorial Day weekend is a big time of year for the USO, although so are the other 360-plus days of the year.

You can learn how the USO is honoring active duty troops and veterans this Memorial Day Weekend at its website here, along with learning about ways you can help the organization in its mission to lift the spirits of members of the U.S. military and their families 365-days of the year.

Related Story - May 25, 2011: 'Side by Side': Wine at Fresh & Easy Neighborhood Market Aids America's Wounded Warriors.

Wednesday, May 25, 2011

'Side by Side': Wine at Fresh & Easy Neighborhood Market Aids America's Wounded Warriors

Fresh & Easy Neighborhood Market is offering something extra as part of the introduction of its new "Side by Side" brand Cabernet Sauvignon and Chardonnay wines this week.

For each bottle of wine sold, the grocer is donating $1 to Azalea Charities' "Aid For Wounded Warriors" program, which helps U.S. soldiers who've been wounded or injured in Afghanistan and Iraq.

The wine is being introduced in Tesco's 175 Fresh & Easy stores in California, Arizona and Nevada this week and is priced at $5.99 bottle, $1 of which goes to the fund to aid the wounded warriors.

The non-profit group assists soldiers who've been wounded or injured in Afghanistan and Iraq in variety of ways.

For example, the all-volunteer organization purchases specific items weekly for the wounded warriors, at the request of U.S. Military and Veterans Administration Medical Centers and Fisher House rehabilitation  facilities throughout the country. Many of the items bought are things not provided to the men and women as part of their military and veterans' medical care.

The Azalea Charities' project, which is based in Northern Virginia near the nation's capital, also provides financial support to the CrisisLink Program, which is a telephone hot line for the wounded warriors and their families.

You can learn more about Azalea Charities' "Aid for Wounded Warriors" program here. There's also a link at the page that can be used to make an online donation.

We're approaching Memorial Day weekend, which includes cookouts and picnics but is really about honoring those who've made the ultimate sacrifice for their county.

We honor their families as well on Memorial Day, along with all those still living who've served.

And among those who've served and are still living, as a people and country we owe more to them than we're currently giving, particularly those wounded warriors who seldom if ever complain - in fact many want to get back to Afghanistan or Iraq and rejoin the brothers and sisters they left there - and define the term the "American Spirit."

We invite those of you reading this to join us in making a donation this week to whatever organization helping wounded warriors or veterans you choose.

For example, along with Azalea Charities' wounded warrior assistance program, there's the "Wounded Warrior Project," which offers a myriad of programs and services to aid wounded warriors and their families, as you can learn about at the group's website here.

Most of us can afford to donate $10, $20 or more to programs helping those who've served and were wounded or injured doing so.

There's no better time to help than now, a few days before Memorial Day.

If you don't think you can afford a small donation, look at it this way - just spend $10 or so less at the grocery store (sorry grocers) while stocking up for your backyard cookouts and Memorial Day picnics this weekend. Then donate that $10 or so to one of the two wounded warrior assistance programs mentioned in this story, or to any other organization assisting active duty soldiers or veterans.

Take our word for it, in the grand scheme of things doing so will make you feel even better than having that extra beer or two, second hamburger or hot dog and extra serving of dessert this weekend will.

And with the money you saved buying (and eating) a little bit less at the grocery store for your weekend party, you'll have enough to donate whatever amount you can afford to help those Americans who should be on our minds and in our thoughts not only on Memorial Day but throughout the year.

Monday, May 23, 2011

Fresh & Easy Neighborhood Market Confirms Our Reports First Two San Francisco Stores to Open June 22 and August 24, 2011

The Fresh & Easy store at 32nd Street and Clement Avenue in San Francisco's Outer Richmond District. The photo was taken two weeks ago. The exterior is completed. The interior is about 30% completed as of today. Click here to see additional photos. [Photo copyright Fresh & Easy Buzz.]

Tesco's Fresh & Easy in Northern California - 2011

On May 10, 2011 we reported exclusively that Tesco's Fresh & Easy Neighborhood Market would open its first store in San Francisco, at 32nd Street and Clement Avenue in the Outer Richmond District, on June 22.

Read our story here - May 10, 2011: Breaking Buzz: Fresh & Easy Neighborhood Market Plans to Open First San Francisco Store at 32nd and Clement June 22.

Four days later, on May 14, 2011, we reported exclusively the 175-store small-format fresh food and grocery chain would open its second Fresh & Easy unit in the City by the Bay, at 3rd Street and Carrol Avenue in the Bayview District, on August 24, 2011

Read our story here - May 14, 2011: Breaking Buzz: Fresh & Easy Neighborhood Market Plans August 24 Opening For Third & Carroll Store in San Francisco's Bayview District.

Today Tesco's Fresh & Easy confirmed our reporting when it announced in a press release (see here), which is being reprinted by numerous publications, it will open the 32nd Avenue and Clement Street store June 22, and the 3rd Street and Carroll store in the 5800 Third Street residential-commercial mixed-use development in the Bayview District August 24, 2011.

Interesting press release mates

In today's press release confirming our reporting, Tim Mason, CEO of Fresh & Easy Neighborhood Market and group deputy CEO of United Kingdom-based Tesco, said about the grocer's opening of its first two stores in San Francisco: "We could not be more thrilled with the strong performance of our first 11 stores in Northern California and we're excited to get our doors open in San Francisco. Judging by the fantastic reception we've seen from customers throughout the Bay Area, we are certain these stores will also be a hit."

Eric Mar, who represents the Richmond District (where the first Fresh & Easy store at 32nd Street and Clement Avenue opens June 22) on the San Francisco Board of Supervisors, is also quoted in today's press release distributed by Fresh & Easy Neighborhood Market, saying: "I look forward to the Fresh & Easy store opening and welcoming a new business that is partnering with the community and giving back to schools and community organizations in the Richmond District."

Interestingly, Supervisor Mar is a major supporter of AB 183, the bill authored by Assemblywomen Fiona Ma (Democrat-San Francisco) - who lives in and represents the Richmond District in the California State Assembly - that if passed by the full assembly and California State Senate and signed into law by Governor Jerry Brown, would likely force Tesco's Fresh & Easy to change its all self-service checkout system in its California stores (currently 126 units), adding what most likely will at a minimum have to be one self-service checkout stand in each store.

AB 183 prohibits the sale of alcoholic beverages at self-service checkout stands, instead requiring a store clerk to be present to wait on customers who purchase alcoholic beverage items in a grocery or other format retail store that offers them for sale.

We call the legislation the "Son of Tesco Fresh & Easy Law" because the bill is virtually identical to two other bills authored by Assemblyman Hector De La Torre (Democrat-Southgate/Southern California) in 2008 - AB 523 - and 2010 - AB 1060.

We first nicknamed the legislation, that if it becomes law will ban the sale of alcoholic beverages at self-service checkout stands, the "Tesco Fresh & Easy Law" in this July 14, 2008 story: Breaking News & Analysis: CA Assemblyman Introduces 'Tesco Fresh & Easy Law' to Ban Stores With Self-Checkout-Only From Selling Alcoholic Beverages; using the nickname again in a number of stories in 2010 when Assemblyman De La Torre introduced AB 1060, after AB 523 failed to pass both houses of the California State Legislature in 2008.

AB 1060 passed both the full assembly and senate last year but was vetoed by then Governor Arnold Schwarzenegger, who's been the subject of much media attention since last week over his revelation that he fathered a child with a former domestic employee of the Schwarzenegger-Shriver household.

We coined the "Son of Tesco Fresh & Easy Law" moniker this year when AB 183, which is virtually identical to the previous two bills, was introduced by Assemblywomen Ma, who's also Speaker Pro Tempore of the California State Assembly, its number two leadership position, this year. [For example, read this story - May 4, 2011: 'Son of Tesco Fresh & Easy Law': Strong Chance California Legislation to Prohibit Alcohol Sales at Self-Service Checkouts Could Pass This Year.]

[You can read our coverage from July 2008 to the present of the California legislation that would ban the sale of alcoholic beverages at self-service checkout stands here.]

Ma's AB 183 was passed by a big majority in the Democrat-controlled California State Assembly's Appropriations Committee on May 11 and is headed for a vote by the full assembly. [Read our May 11, 2011 story about the bill's passage in the committee here: May 11, 2011: ‘Son of Tesco Fresh & Easy Law' - California Assembly Appropriations Committee Passes Self-Checkout Ban Bill AB 183 By 12-4 Margin.]

On April 8 of this year, Richmond District-San Francisco Supervisor Mar participated in a major rally along with Assemblywoman Ma and other key supporters of AB 183 on the steps of San Francisco's City Hall, calling for the passage of the bill that if passed and signed into law would ban the sale of alcohol at self-service checkout stands.

Among the bill's supporters at the rally led by Ma and Mar included representatives from: Mothers Against Drunk Driving (MADD), alcoholic beverage industry watchdog group the Marin Institute, San Francisco's Police and Fire Departments, the San Francisco District Attorney's office, San Francisco's Metro Methodist Ministries and a group of high school students from various city schools who are in favor of the proposed self-service checkout booze sales ban.

Assemblywoman Ma is termed out of office in the California State Assembly at the end of this year. She's running for the California State Senate.

Talk in political circles in San Francisco and Sacramento is that Supervisor Eric Mar could run for Ma's Assembly seat since she's leaving office at the end of the year. Ma's district includes additional parts of western San Francisco and portions of nearby San Mateo County along with the Richmond District.

The 3rd Street and Carroll Avenue Fresh & Easy store in San Francisco's Bayview District. The photo was taken about 10 days ago. The exterior has been completed since late last year. Work started on the store's interior recently. Click here to view additional photos of the store. [Photo Copyright Fresh & Easy Buzz.]

Tesco's Fresh & Easy in San Francisco

In addition to the stores at 32nd Street and Clement Avenue and 3rd Street and Carroll Avenue in San Francisco that Fresh & Easy Neighborhood Market has confirmed it will open June 22 and August 24, 2011, the Tesco-owned fresh food and grocery chain has a third location in the city, at Silver Avenue and Goettingen, which is in the Portola District.

The Portola District location is, like the 3rd Street and Carroll Avenue unit, one of the first batch of 18 stores Tesco's Fresh & Easy announced in January 2008 it planned to open in Northern California's San Francisco Bay Area.

In February 2008 Fresh & Easy Neighborhood Market announced another 19 planned locations in Northern California, in the Sacramento-Vacaville region.

No construction work has been started to date on the vacant building at Silver and Goettingen, which previously housed a Cala Foods/Bell Market grocery store. Tesco has been paying the monthly rent/lease on the building since at least early 2008.

Thus far Tesco has opened 11 Fresh & Easy stores in Northern California - nine in the San Francisco Bay Area, one in Vacaville, which is about midway between the Bay Area and Sacramento, and onei n Modesto, which is in the Northern Central Valley. We've identified in our research and reporting over 50 Fresh & Easy locations in Northern California. You can see those locations here.

Fresh & Easy Neighborhood Market has also made an offer to lease a vacant building at 1245 South Van Ness Avenue in San Francisco's Mission District which until the end of last year was home to a Delano's IGA Market grocery store. Read our January 26, 201 story here: January 26, 2011: Fresh & Easy Neighborhood Market is On A Mission - In San Francisco's Mission District.

Not long after Tesco's Fresh & Easy approached the owner of the building, fast-growing locally-headquartered grocery chain Grocery Outlet, which is based in nearby Berkeley, also made an offer to lease the vacant Mission District building, so it could open one of its salvage/discount grocery stores at the location.

The most recent information we have is that the San Francisco Economic Development Department is working with the landlord in terms of making a decision as to which grocer will be given the lease for the building.

Fresh & Easy Neighborhood Market is also looking for additional locations in San Francisco.

For example, the grocer is potentially interested in locating a store in a vacant 13,000 square-foot building at Noe and Market Street in San Francisco's Castro District that Trader Joe's had planned to put a store in but decided against doing because of various parking conditions the City of San Francisco required of the ionic grocery chain as a condition of locating a store in the building and neighborhood. The building has been vacant for over three years and last was home to a Tower Records store. Sacramento-based Tower Records went bankrupt a few years ago.

The city did the same thing with Whole Foods Market for a store it proposed last year on Market Street in the Castro District. Whole Foods' agreed to the conditions however, which among other things will require parking attendants to be made available by the grocer during certain store opening hours. Whole Foods Market plans to began construction on the store, which is the ground floor anchor of a new high-rise development, in late 2011 or early 2012, with an eye towards opening the store next year

In March of this year San Francisco Supervisor Scott Wiener, who was involved in initially luring Trader Joe's to the location at Noe and Market Street in the Castro District, which he represents on the board, started reaching out to other grocers, including Tesco's Fresh & Easy and the earlier mentioned Grocery Outlet, asking them to consider locating a store in the vacant building. To date, neither Fresh & Easy or any other grocers have signed a lease for the location, according to the Supervisor.

Fresh & Easy Neighborhood Market is also looking for additional store locations in San Francisco, which is a topic we'll be reporting on and writing about in an upcoming story.

Meanwhile, Tesco's Fresh & Easy Neighborhood Market has today publicly confirmed our May 10 and May 14 stories that the opening dates of its first two stores in San Francisco - which not only is a city where people leave their hearts but is also a town who's residents spend a higher percentage of their income on food and groceries than people who live in nearly any other city in the United States.

Related Stories

[Readers: Click on the following green links - , , , , , ,  and  - for our extensive coverage, reporting, analysis and more on the two San Francisco stores and of Fresh & Easy Neighborhood Market in Northern California, including the San Francisco Bay Area.]

Odds Southern California Grocery Store Workers Will Strike Highest Since Contract Talks Began

Southern California Market Region

The odds unionized grocery store workers in Southern California, (and the Central Coast and southern Central Valley) strike one or more of the region's "big three" unionized supermarket chains - Kroger's Ralphs, Safeway's Vons, and Albertsons, which is owned by Supervalu, Inc. - are much more likely today than they were just a week ago, based on our reporting and in our analysis.

Why? Last week representatives for the three grocery chains noted above presented negotiators from the United Foods & Commercial Workers' (UFCW) locals in Southern California with a proposal that details the health care plan changes - read significant cuts - the grocers want as part of the new three year contract that's being negotiated involving the chains and the about 60,000 unionized grocery store workers in the region.

Last month the union presented the chains with their health care plan proposal. The proposal from the grocers was their counter-offer, which is what the union says it's been waiting for since April.

And the presidents of the UFCW locals in Southern California pronounced the proposal, which would shift a considerable amount of health care costs to the store workers, dead on arrival.

For example, Ricardo Icaza, the president of UFCW local 770 which represent about 36,000 of the 60,000 unionized retail clerks in a region that stretches from Santa Maria on the Central Coast to Bakersfield in the southern Central Valley and includes Los Angeles County out to the Lancaster/Palmdale area in the desert, said in a note to union members on Thursday, May 19: "Ralphs, Vons, and Albertsons presented your union with a proposal that would effectively destroy your health coverage." No ambiguity in that statement.

On Friday, Michael Straeter, president of UFCW local 1442 which represents unionized retail clerks from Malibu to Long Beach in Southern California, had a similar message for the members of his local, saying: " [The] health care proposal from the company [Ralphs, Vons and Albertsons] shifts 80% of new costs to you," meaning the union members. "Stay strong as negotiations continue," he added in the message to the rank-and-file.

Straeter, who says the proposed health care plan changes will shift $450 million over three years from the supermarket chains to workers, also told his members to prepare to start picketing as early as this coming weekend.

The negotiations between UFCW representatives and the three supermarket chains will continue this week. The negotiators for both parties will once again be joined by a federal mediator, who's assisting with the talks at the request of the UFCW union.

But the union locals are thinking beyond what is an obvious impasse, in our analysis - the grocers say their proposal regarding the heath care plan changes is "reasonable" but the UFCW locals say it's a non-starter, which equals an impasse for all intents and purposes, even though the negotiations will continue. The federal mediator will obviously be busy mediating this week.

Union stewards and picket captains have been told by the union leaders to attend a meeting on Thursday, May 26, in which the possibility of forming picket lines at one or all three chains will be discussed. A UFCW representative told us Friday that the picket signs are already being made.

The UFCW members authorized the union on April 21 to call a strike if and when it decides to do so. (See the related stories linked at the end of this piece.)

What we're being told by more than one source a present - and this information is always subject to change - is that if a strike is called anytime soon, the current plan is to stage a walkout on Supervalu's Albertson's chain, which is the number three grocer among the "big three" in terms of annual sales and market share in Southern California. Kroger's Ralphs' is number one. Safeway Stores-owned Vons is number two.

We're also being told from other sources, on the chain side of the equation in this instance, that Ralphs' is likely to lock its employees out of the stores (meaning no work and no pay) should the UFCW and its members strike Albertsons. If Ralphs does this, Safeway's Vons is likely to follow suit, although most of our sources are far less sure about Safeway's thinking on the matter than they are about Ralphs'.

Kroger Co.'s Ralphs' division is still in court with the UFCW union over various actions involving the 2003 Southern California grocery workers strike and lockout by the chain, in fact.

The stakes are very high for the UFCW locals for a number of reasons if they do call a strike .

First, if they strike one or more of the three chains, they will be handing a whole bunch of new business to the many non-union grocers in Southern California, including Walmart, Target, Costco, Trader Joe's, Whole Foods Market, Sprouts Farmers Market/Henry's, Bristol Farms, Tesco's Fresh & Easy Neighborhood Market and others, that they're trying to unionize. Most of the non-union chains are already gearing up for a strike and thinking about the extra business it could bring their stores.

Ralphs, Vons and Albertsons are already under heavy pressure from the non-union players in Southern California that since the last contract was signed in 2007 have continued to grow - not to mention there being new entries to the market since 2007, like Fresh & Easy Neighborhood Market, which now has 101 stores in Southern California and seven in the Bakersfield region (out of its 175 total in California, Nevada and Arizona) - and take sales and market share from the "big three."

All of the fastest growing chains in the region are non-union. The "big three" unionized chains have added few stores in Southern California in comparison to all of the non-union grocers mentioned above.

At the other side of the negotiating table, Kroger's Ralphs, Safeway's Vons and Supervalu' Albertsons appear at present to be very firm on the cost reductions they say they need in the health care plans. They're saying very little publicly but are offering the message that health care costs are at the top of the list of their fastest-rising expenses.

 Look for the end of the week starting today to be a crucial point in time in the labor negotiations. If no material progress is made between the two parties this week - and there isn't going to be unless the chain's take back much of what they're asking for in the health benefits proposal, which the odds of happening are less than 5% in our analysis - then a complete impasse will be reached, meaning the union will feel the need to seriously consider a strike against one of more of the three chain's at week's end.

We suspect picketing and leafleting will come first, before a strike is called, if it is. We also don't expect a strike to be called this week or next week. But the following week,if there's no material improvement in the negotiations, the hoof beats for a strike on at least one chain are going to be very loud, in our analysis.

And perhaps the "big three" unionized chains would welcome a strike if avoiding one means giving in significantly on the takeaways they're asking for in their proposal. (They will take less than what they desire and are asking for now in the long run though. But it could be a very long run.)

Our take is that the grocers are very serious about achieving some significant savings in their costs for the union employees' health care plan. It's also our take that the union is very serious about accepting more than a small percentage of increased costs to workers for their health care plans. Stalemate

But the potential labor pool in Southern California is vast at present, since unemployment in most of the region remains in double digits. We suspect people would be lined up by the hundreds at Ralphs supermarkets in Southern California if, for example, the UFCW strikes Albertsons, and Kroger's Ralphs locks out it employees.

For example, grocers opening new stores in Southern California over the last three years generally get four or five times as many people applying for jobs at the store then they have positions available.

Additionally, organized labor and unions also are at an all time low in terms of the percentage of Americans that  favor them. A strike by the UFCW of one or more of the "big three" unionized supermarket chains could have the undesired consequence for the UFCW of the majority of consumers coming out in support of the grocers rather than the store employees, particularly because in times of high unemployment both the unemployed, the under-employed and insecure employed have far less sympathy for and are less likely to support labor strikes.

In contrast, if the union thinks the offer by the grocers is outrageous, taking more time to build that case among the grocery shopping public in Southern California could lead to greater support for the store workers than if a strike is called within the next few weeks, for example. It's all about gaging and influencing public opinion.

Another factor worth noting is that the ever-increasing price of food at the grocery store and cost of gasoline at the pump is giving the average consumer a considerable amount of grief and causing added worries on top of those created by a still high unemployment situation, ongoing housing crisis and anemic economy. Those aren't the factors that generally provide a warm reception to strikes, particularly when they are at grocery stores, a place all consumers in Southern California and elsewhere frequent regularly.

Related Stories

April 25, 2011: Talks Between Southern California's 'Big Three' Grocery Chains and UFCW Union Resume Tomorrow

April 21, 2011: Southern California Grocery Store Workers Vote to Authorize Strike Against 'Big Three' Chains

Friday, May 20, 2011

Eat My Brand: Fresh & Easy Neighborhood Market's New Sandwich Cookies Offer A Brand Message With Every Bite

Private Brand Showcase

Tesco's Fresh & Easy Neighborhood Market is introducing a new private brand line of cookies - chocolate and vanilla sandwich cremes - in its 175 stores in California, Nevada and Arizona, that's about as "me too" as it gets in the world of cookie category retailer brand product creation.

But the grocer has added a signature branding twist to the Oreo-style cookie variety offered by nearly every cookie maker-marketer on the planet and retailer in the business that has its own cookie brand.

That twist: Fresh & Easy Neighborhood Market has baked its clock logo into the middle of outer portion of the sandwich cookies, giving the common cookie variety an edible brand signature. Think of it as the cookie version of a tattoo. (If you double-click on the photo at top you can see the clock logo on the cookie clearly.)

We like the "cookie tattoo" of the clock logo and suggest it's a smart point of differentiation and a nice branding signature for a product that otherwise offers little opportunity for differentiation because of its basic nature and ubiquity in the marketplace.

The new fresh&easy brand cookies, which contain no artificial colors, flavors or preservatives, come in two varieties - Chocolate Cookie Cremes with a Vanilla (creme) Center and Vanilla Cookie Cremes with a Vanilla (creme) Center, as you can see in the photograph at top, which is of the front panel of the package as it sits on the shelf.

The packaging for the new cookie varieties was created for Tesco's Fresh & Easy by London-based design firm P&W, which has worked closely with the El Segundo, California-based fresh food and grocery chain on private  brand product creation and design since before the first fresh&easy brand products hit the stores in 2007. The firm also does design work for Tesco in the United Kingdom.

The branding inspiration behind putting the Fresh & Easy clock logo on the cookies came from the design firm as well, we're told.

Fresh & Easy Neighborhood Market has included its clock logo (above), which it calls a clapple, on other private brand products.

And last year it even launched a line of clapple-shaped candy. We wrote about the candy in these two stories in 2010 - June 24, 2010 - New Fresh & Easy Clock Logo-Shaped Candies Are A Pretty Sweet Idea; and July 17, 2010: New Fresh & Easy Neighborhood Market Clock-Shaped Private Brand Candy Line Hits the Shelves at Fresh & Easy.

The new fresh&easy brand sandwich cookies with the vanilla creme centers are already in many of the Fresh  Easy stores, and are supposed to be in all 175 units by the end of next week, according to our sources.

Will a "Double Stuf" variety and other line extensions be coming soon from Tesco's Fresh & Easy? Clappel included of course. Stay tuned to Fresh & Easy Buzz to find out

Recent Stories from our 'Private Brand Showcase' feature

May 16, 2011: Wing Man-to-Wing Man: Mollie Stones Market's 'Mike & Dave' Create and Set to Launch 'Personal Brand' Wing Sauce

May 12, 2011: Fresh & Easy Neighborhood Market Launches New Meat, Poultry, Veggie 'Grill-Pack' Items; 'Bigmista' Going 'On the Road Again'

April 22, 2011: A Little About Those 'green things' At Fresh & Easy Neighborhood Market on Earth Day 2011

April 20, 2011: Raley's Supermarkets Introducing New 'Raley's Tonight' Fresh Heat-and-Eat Gourmet Entrees

March 22, 2011: That's Amore: Fresh & Easy Neighborhood Market Introduces New 'Gourmet' Frozen Pizzas For $3.99 Each

March 15, 2011: There's Nothing Pie-in-the-Sky About Trader Joe's 'Elegantly Simple' Pie Recipe Contest

February 8, 2011: Private Brand Showcase Déjà Vu: Fresh & Easy Neighborhood Market Announces its New 'Gourmet' Brand

February 7, 2011: Getting There First...Plus, Are Tesco's Fresh & Easy and Safeway Traveling Down A Similar Private Brand Aisle?

January 6, 2011: Fresh & Easy Neighborhood Market Hopes 'eatwell' Makes For A Healthy 2011

January 5, 2011: Safeway Adds 'Open Nature' to its Natural-Organic-Healthy Foods' Private Brand Portfolio

Additionally, Click here to see more stories in our 'Private Brand Showcase' feature