The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group'

Pictured above is (the artists rendering) the '2 Sisters Food Group' facility in Riverside County, California, which is located next to Tesco's Fresh & Easy Neighborhood Market distribution center. Dynamic Builders, the contractor for the 2 Sisters' building, set up a cellular-cam during construction. You can view a slide-show and a time-lapse video show of the construction of the facility here. It's worth a look.

Analysis/Commentary

Yesterday (June 20, 2010) Fresh & Easy Buzz broke the story that a National Labor Relations Board (NLRB) Administrative Law Judge, Lana H. Parke, on June 10 ruled against Fresh & Easy Neighborhood Market's fresh meat and prepared foods ingredient supplier, United Kingdom-based 2 Sisters Food Group, in an unfair labor practices case brought against it by the United Foods & Commercial Workers (UFCW) union.

[Read our story here: June 20, 2010 - NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case.]

Fresh & Easy Buzz is the only publication to report on the judge's decision thus far, based on a search we just completed.

However, interestingly, today's Financial Times just happens to have a short story, "Tesco takes over Fresh & Easy suppliers," which features an interview with Tesco plc director and Fresh & Easy Neighborhood Market CEO Tim Mason, who hasn't spoken to the press in a rather long time, and who now is in the sites of The CtW Investment Group, which works with pension funds sponsored by the Change to Win coalition of U.S. labor unions, for the substantial pay package he recently received. See our June 4, 2010 story: Every Little (Bit) Helps: Tesco Fresh & Easy Neighborhood Market CEO Mason Paid $6.188 Million For 2009]

Last week, on June 17, CtW Investment Group sent this letter (and this press release to the media) to Tesco shareholders regarding what the group says is excessive remuneration for Mr. Mason. In the letter they urge Tesco shareholders to vote no on proxy Item #2, the Directors’ Remuneration Report, at Tesco’s upcoming July 2nd shareholder meeting in the UK.

In the story today (it's here), Tim Mason tells the Financial Times that Tesco is buying and taking over 2 Sisters Food Group and its other privately-owned in-house supplier, Wild Rocket Foods, which serves as Fresh & Easy Neighborhood Market's fresh produce procurement arm.

The story says: Tim Mason, the head of the Fresh & Easy business, told the Financial Times it was a sign of its commitment to the US business. While not large enough to require disclosure, he said the transaction involved “tens of millions of dollars” and “a real amount of money”.

If not large enough to require disclosure, Why did Mason disclose it at all. And why specifically disclose it today in the Financial Times, the day after our story on the NRLB decision against 2 Sisters Food group? There's no press release on the subject in the "newsroom" on the Fresh & Easy website, for example.

2 Sisters Food Group and Wild Rocket Foods are privately-owned companies. Tesco brought both firms to the U.S. to serve as its supply partners for Fresh & Easy. Both companies have facilities next door to Tesco's 850,000 square-foot Fresh & Easy Neighborhood Market distribution center in Riverside County, California. The impressive 2 Sisters Food Group facility is only a few years old and is about 53,000 square-feet. The facility was a substantial investment for the company.

In the story, Fresh & Easy CEO Mason also says: "The move (buying 2 Sisters Food Group and Wild Rocket Foods) would lead to 'synergies and economies by putting the management teams of the units together. . . we think will be very beneficial for the business." OK.

Mason is also attributed by the Financial Times' reporter as saying '2 Sisters Food Group and Wild Rocket Foods had not performed as well as their owners had hoped, as Fresh & Easy slowed its expansion plans.'

"Has Fresh & Easy gone more slowly than we initially planned and they initially planned? Well, yes. And that has obvious consequences," Fresh & Easy Neighborhood Market CEO Mason is quoted as saying in the story.

What isn't said in the Financial Times' story today of course is that both suppliers have been losing far more money as part of Tesco's U.S. venture that they had ever expected to. Both firms essentially wanted out of the deal - and it now appears they are.

Interestingly, the Financial Times story says nothing about the NLRB Administrative Law Judge's June 10 decision against 2 Sisters Food Group, which we reported yesterday.

The UFCW first filed an unfair labor practices complaint against 2 Sisters Food Group in 2008, as we reported here [August 27, 2008 we reported in this piece - UFCW Union Reports Tesco Fresh & Easy Neighborhood Market's Prepared Foods Supplier to Labor Board For What it Says is Unfair Firing of Six Employees] and in our story yesterday. Paying for nearly two years' of legal costs in fighting the charges, which resulted on June 10 in a victory for the UFCW union, has just added to 2 Sisters Food Group's expenses in California.

Unfortunately nothing Tim Mason says in the Financial Times story, in the couple sentences about sales, same-store-sales and the like, sheds any light on Fresh & Easy's performance. It's just a brief repetition of the generalized comments, void of any metrics, Tesco made when it reported its fiscal year 2009/10 sales and earnings in April.

We aren't surprised Tesco is buying its produce supplier Wild Rocket Foods. They signaled this in part when they transferred Tim Lee from UK corporate headquarters to Fresh & Easy USA, as its new director of fresh foods.

Tim Lee's specialty at Tesco's corporate headquarters in the UK, where he was a produce category procurement director, was fresh produce. There Lee and another Tesco produce category procurement director, Alex Dower, launched Tesco's global fresh produce sourcing buying and supply chain initiative in about mid-2009. The initiative focuses on direct procurement of fresh produce for Tesco stores in the UK and continental Europe. Lee's responsibilities included setting up satellite offices in growing and sourcing regions around the world and staffing the offices with technical specialists and produce buying teams.

Basically, what Tesco is doing with Wild Rocket Foods is buying it and folding it into its corporate procurement function, with a California Fresh & Easy twist, which Tim Lee was responsible for in the UK, and was sent to Fresh & Easy in part to do in some form.

Another signal Tesco was up to something with its produce procurement came when we learned - and reported here - June 9, 2010: Key 'Veteran' Fresh Produce Category Manager Chris Harris Leaves Fresh & Easy Neighborhood Market - that fresh produce category manager Chris Harris had left Fresh & Easy Neighborhood Market. Harris' departure now takes on a much brighter picture in light of Tesco's buying of Wild Rocket Foods, combined with the naming of Tim Lee as director of fresh foods a few months ago. (We commented in the piece linked above that Lee was making some changes to Fresh & Easy's produce procurement since coming on board. Check it out.)

In light of NLRB Administrative Law Judge Parke's June 10 ruling against 2 Sisters Food Group, we aren't surprised that Tesco is buying 2 Sisters' as well, although we didn't know it was until reading Mr. Mason's announcement today in the Financial Times, just a day after our story was published.

Buying 2 Sisters Food group and Wild Rocket Foods though is a complete 180 degree turn by Tesco. The key reason Tesco brought 2 Sisters Food Group and Wild Rocket Foods with it to America was so that it could outsource the labor intensive fresh meat and produce functions, thereby saving considerable labor costs.

As such, does it logically (and financially) follow that Tesco wants to buy the two companies, since doing so means adding hundreds (CEO Mason says 750 in the Financial Times story) of new employees to the Fresh & Easy Neighborhood Market payroll? Not on your life.

However, 2 Sisters is Tesco's primary fresh meat supplier in the UK. Additionally, Wild Rocket is owned by Tesco's leading fresh produce supplier in the UK, Langmead Farms. These relationships also help explain why Tesco would want to bailout the two companies by taking over their respective U.S. operations., even though the cost is in the "tens of millions," according to Tesco director and Fresh & Easy Neighborhood market CEO Mason.

We've been hearing from sources for some time that both 2 Sisters Food Group and Wild Rocket have been bleeding red ink, hoping for something to give, like an increase in sales volume at Fresh & Easy. It appears now both suppliers - what Tesco designed as it outsourcing hat trick fro Fresh & Easy - will bleed red ink no more in California, but rather take what they can get from Tesco and head back to the United Kingdom.

And since it's selling its U.S. operations to Tesco, 2 Sisters Food Group won't have to follow all those remedies the NRLB Administrative Law Judge laid out in her June 10 ruling. Tesco might have to though.

Related stories:

June 20, 2010: NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case

June 20, 2010: NLRB Judge Rules Against Fresh & Easy Neighborhood Market in Spring Valley CA Store Labor Law Violation Case

June 12, 2010: Will Phil Clarke Shake Things up at Fresh & Easy Neighborhood Market USA When He Becomes Tesco CEO in 2011?

June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

June 4, 2010: Every Little (Bit) Helps: Tesco Fresh & Easy Neighborhood Market CEO Mason Paid $6.188 Million For 2009

NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case

On August 27, 2008 we reported in this piece - UFCW Union Reports Tesco Fresh & Easy Neighborhood Market's Prepared Foods Supplier to Labor Board For What it Says is Unfair Firing of Six Employees - that the United Food & Commercial Workers (UFCW) union charged Tesco-owned Fresh & Easy Neighborhood Market's UK-headquartered fresh meat and fresh-prepared foods supplier 2 Sisters Food Group with unfair labor practices at its Riverside County, California plant, filing a complaint against it with the National Labor Relations Board (NLRB), for what the union said was the unfair firing of six employees for attending a union recruitment meeting, along with filing complaints against the workers' managers at the company.

UK-based Tesco brought 2 Sisters Food Group with it to the U.S. in 2007 to be its supplier of fresh meat and poultry and fresh-prepared foods. 2 Sisters is independently-owned and is not connected to Tesco corporately. However it serves as a quasi-in-house supplier to Fresh & Easy for the products in these two categories.

The UFCW began a campaign to unionize employees at the 2 Sisters Food Group plant in Riverside County in early 2008, just as it did with Fresh & Easy's store-level employees a couple months earlier

Nearly two years later (after the first of multiple complaints was filed as reported in our August story linked above), on June 10, 2010, a National Labor Relations Board (NLRB) Administrative Law Judge, Lana H. Parke, has reached a decision on the 2008 case, which was consolidated into a number of other complaints filed since then by the UFCW against 2 Sisters Food Group.

The consolidated complaint in the case, which was tried by Judge Parke on March 1-3 in Riverside County, California, where 2 Sisters Food Group is based near Fresh & Easy Neighborhood Market's distribution facility, and on March 1-3 and in Los Angeles, alleged that Fresh & Easy Neighborhood Market violated Sections 8(a)(3) and (1) of the National Labor Relations Act, according the the judge's ruling summary.

A key, but not sole, complaint in the case by the UFCW is that 2 Sisters Food Group interfered with a July 17, 2009 election by company employees, the positive results of which would have unionized the company. The union's chief goal in the case was to get the election, which the employees that favored unionization lost, set aside on the grounds the company's interference in it resulted in an unfair election.

Below are the three key UFCW complaints against 2 Sisters' in the case that Judge Parke ruled on, in favor of the UFCW and against 2 Sisters Food Group:

1. Did the Respondent (2 Sisters Food Group) violate Section 8(a)(1) of the Act by promulgating and maintaining overbroad rules, including solicitation and distribution rules and a rule waiving employees’ right to file charges with the Board, all of which has interfered with, restrained, and coerced employees in the exercise of their Section 7 rights?

2. Did the Respondent violate Sections 8(a)(3) and (1) of the Act by terminating employee Xonia Trespalacios on July 13, 2009? (this goes to the original complaint reported on in our August 2008 piece.)

3. Did the Respondent engage in conduct that affected the results of the representation election held July 17, 2009 so as to require the setting aside of the election?

In her June 10, 2010 ruling, Judge Parke ruled for the UFCW and against 2 Sisters Food Group on the union's key issue, that the election held on July 17, 2009 (number 3 above) be set aside and a new election held.

In her decision conclusion in favor of the UFCW, Judge Parke wrote: "In as much as I have recommended that Objections 4 and 37 be sustained, I recommend that the election held on July 17, 2009 in Case No. 21-RC-21137 be set aside and that the representation proceeding be remanded to the Regional Director of Region 21 for the purpose of conducting a second election."

The judge also ruled that 2 Sisters Food Group must post a "Notice of Second Election" in a place where all employees can see it on company premises. The heading of that notice reads:

"The election conducted on July 17, 2009 was set aside because the National Labor Relations Board found that certain conduct of the Employer interfered with the employees' exercise of a free and reasoned choice among employees in the following unit: All full-time and regular part-time production employees, maintenance employees, technical/quality assurance employees, sanitation employees, shipping and receiving employees and plant clerical employees employed by the Employer at its Riverside facility, excluding all other employees, temporary employees, office clerical employees, professional employees, guards and supervisors as defined in the Act. [You can view the notice here.]

In the firing of employee Xonia Trespalacios, Judge Parke's remedy is a strong one for the employee: "The Respondent (2 Sisters Food Group) having unlawfully terminated employee Xonia Trespalacios, it must offer her reinstatement and make her whole for any loss of earnings and other benefits. Backpay shall be computed on a quarterly basis from the dates of her discharge to the date of proper offer of reinstatement, less any net interim earnings, as prescribed in F. W. Woolworth Co., 90 NLRB 289 (1950), plus interest as computed in New Horizons for the Retarded, 283 NLRB 1173 (1987). The Respondent will be ordered to make appropriate emendations to Xonia Trespalacios’ personnel files. The Respondent will be ordered to post appropriate notices," the judge wrote.

Below are the recommended remedy's the Judge made in her ruling against 2 Sisters Food Group in the case:

Respondent, 2 Sisters Food Group, Inc., its officers, agents, successors, and assigns, shall

1. Cease and desist from:

(a) Promulgating and maintaining overbroad work rules and a mandatory arbitration rule that requires employees to waive their rights to file charges with the Board

(b) Terminating any employee for engaging in union activities and/or to discourage employees from engaging in union activities.

(c) In any like or related manner interfering with, restraining, or coercing employees in the exercise of the rights guaranteed them by Section 7 of the Act.

2. Take the following affirmative action necessary to effectuate the policies of the Act.

(a) Within 14 days from the date of this Order, offer employee Xonia Trespalacios full reinstatement to her former jobs or, if that job no longer exists, to substantially equivalent positions, without prejudice to her seniority or any other rights or privileges previously enjoyed

(b) Make employee Xonia Trespalacios whole for any loss of earnings and other benefits suffered as a result of the discrimination against her, in the manner set forth in the remedy section of the decision.

(c) Within 14 days from the date of this Order, remove from its files any reference to the unlawful termination of Xonia Trespalacios and within 3 days thereafter notify her in writing that this has been done and that the termination will not be used against her in any way.

(d) Preserve and, within 14 days of a request, or such additional time as the Regional Director may allow for good cause shown, provide at a reasonable place designated by the Board or its agents, all payroll records, social security payment records, time cards, personnel records and reports, and all other records, including an electronic copy of such records if stored in electronic form, necessary to analyze the amount of back pay due under the terms of this Order.

(e) Within 14 days after service by the Region, post at its facilities in Riverside, California copies of the attached notice marked “Appendix.”[23] Copies of the notice, on forms provided by the Regional Director for Region 21 after being signed by the Respondent's authorized representative, shall be posted by the Respondent immediately upon receipt and maintained for 60 consecutive days in conspicuous places including all places where notices to employees are customarily posted. Reasonable steps shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material. In the event that, during the pendency of these proceedings, the Respondent has gone out of business or closed the facility involved in these proceedings, the Respondent shall duplicate and mail, at its own expense, a copy of the notice to all current employees and former employees employed by Respondent at any time since July 13, 2009.

(f) Within 21 days after service by the Region, file with the Regional Director a sworn certification of a responsible official on a form provided by the Region attesting to the steps that Respondent has taken to comply.

[We suggest you read Judge Parke's full written ruling here. It offers numerous details of the case, as well as a summary of the issues in the case involving employees and their supervisors at the 2 Sisters Food Group facility in Riverside County, California.]

Judge Parke's June 10, 2010 ruling and order is pending. It must be approved by the NRLB.

2 Sisters Food Group has the right to appeal the Administrative Law Judge's ruling should it be approved by the NRLB, which most-likely it will per the agency's normal procedure following a judge's ruling.

The NLRB Administrative Law Judge's ruling is a clear victory in this instance for the union. The key finding from the UFCW's standpoint in terms of being able to unionize 2 Sisters Food Group's Riverside County facility is the provision that a new employee election must be held.

Related story - June 20, 2010: NLRB Judge Rules Against Fresh & Easy Neighborhood Market in Spring Valley CA Store Labor Law Violation Case.

UFCW Union Reports Tesco Fresh & Easy Neighborhood Market's Prepared Foods Supplier to Labor Board For What it Says is Unfair Firing of Six Employees

The United Food & Commercial Workers (UFCW) union has charged Tesco Fresh & Easy Neighborhood Market's fresh, prepared foods supplier 2 Sisters Food Group with unfair labor relations practices in the U.S., reporting the company to the U.S. Labor Relations Board for what the union says is the unfair firing of six of the firm's employees for attending a union recruitment meeting, along with filing complaints against their managers at the company.

Tesco essentially brought United Kingdom-based 2 Sisters Food Group with it from the UK to Southern California USA (where Fresh & Easy is headquartered) to be its supplier of ready-to-eat and ready-to-heat fresh, prepared foods in its current 74 (and rapidly growing) small-format combination fresh foods and basic grocery Fresh & Easy stores.

In a statement, Emily Stewart who is one of the leaders of the UFCW union's campaign to bring Tesco to the table and meet with and discuss the unionization of Fresh & Easy Neighborhood Market store-level workers, said: "We have uncovered evidence that workers are being harassed and intimidated by 2 Sisters management to deter union activity, in clear contravention of US labor laws."

The U.S. Department of Labor has a process in which company employees, unions and others can report firms such as 2 Sisters Food Group to its labor relations board for investigation. Companies reported have the right to offer their side of the story as well. In the last 8 years however under the administration of President George W. Bush, the U.S. Department of Labor and its Labor Relations Board has investigated far fewer reports like the one by the UFCW of 2 Sisters than it has under past Presidential administrations, like the Clinton Administration in the 1990's.

The 2 Sisters Food Group built a $60 million fresh, prepared foods facility near Tesco's 850,000 square foot distribution center in Riverside, California in order to supply the fast-growing chain with ready-to-eat and ready-to-heat prepared foods.

UK-based 2 Sisters Food Group was only founded just 15 years ago in 1993 but has rapidly grown into a company that has 13 plants in the UK, one in Holland and one in the U.S. According to its website, it currently employees over 5,500 people internationally and has annual sales of ~650 million-p (British Pounds).

At press time, 2 Sisters Food Group hasn't issued a statement regarding the UFCW's claims and its reporting of the company to the labor board for what it says are the unfair firings of the six company employees.

The reporting of Tesco Fresh & Easy's prepared foods supplier, which like Tesco's Fresh & Easy is a non-union company, appears to be the latest and newest element on the UFCW's multi-front campaign designed to get Tesco executives to meet with union leaders to discuss unionizing Fresh & Easy Neighborhood Market employees.

That campaign by the UFCW, both in the U.S. and in the United Kingdom, includes leafleting neighborhoods where Tesco has existing and is opening new Fresh & Easy grocery stores with anti-Fresh & Easy flyers, demonstrating and picketing in front of the stores, conducting a political lobbying and media campaign in the U.S. and the UK, and getting the support of Democratic Party nominee for U.S. President Barack Obama, who has written two letters to Tesco CEO Sir Terry Leahy asking him to have company representatives meet with UFCW leaders.

Thus far the UFCW campaign hasn't budged Tesco. Tesco CEO Leahy and Tim Mason, CEO of Tesco's Fresh & Easy Neighborhood Market USA, both say the company has no plans to meet with UFCW representatives and sees no reason to do so. Further, Tesco says the union is free to organize Fresh & Easy store-level employees in accordance with existing U.S. labor laws, stating that it is up to the workers as to if they want to join the union or not.

Tesco is not required by U.S. labor law to meet with the union's representatives. Doing so is voluntary.

UFCW Tesco campaign being discussed at Demo convention

Meanwhile, Fresh & Easy Buzz has learned the UFCW union's Tesco campaign has been the topic of discussion among various union and political types at the current Democratic Party National Convention in Denver, Colorado.

The UFCW and every other U.S. labor union is supporting U.S. Senator Barack Obama for President against presumptive Republican Party nominee Senator John McCain. Senator Obama officially received his party's nomination for President earlier today in Denver. He will give his acceptance speech tomorrow night in Denver to a crowd expected to number 70,000 -to- 75,000.

America's labor unions, including the UFCW, are mobilizing tens of thousands of union members to conduct a nationwide grass roots campaign between now and November to help get Senator Obama elected President. The unions also are among the leading financial donors to the Obama campaign.

Organized labor is banking on an Obama victory in November to open the door to be able to increase union membership, which is at an all time low in the U.S.

Senator Obama supports the Employee Free Choice Act, a piece of legislation currently before the U.S. Congress. Organized labor is the major sponsor of this measure and has built a coalition in Congress in support of the measure.

Republican Presidential candidate Senator John McCain doesn't support the Employee Free Choice Act, which would establish stronger penalties for violation of employee rights when workers seek to form a union and during first-contract negotiations, provide mediation and arbitration for first-contract disputes, and allow employees to form unions by signing cards authorizing union representation.

It's the last aspect of the legislation, allowing employees to merely sign cards authorizing union representation rather than using the current secret ballot system, that not only is the most controversial part of the proposed legislation but the one getting the most objection by corporate America.

You can read the entire text of the Employee Free Choice Act legislative bill here, along with reading some related information about its supporters and other issues surrounding the proposed legislation.

If passed, the legislation will make it much easier for unions and employees to choose union representation where they work. Rather than go through the current secret ballot voting process which requires numerous steps before an actual secret ballot vote can be taken, unions and workers would have a much easier time because the act would allow employees to fill out a simple card saying yes or no to being represented by a union. If a majority says yes, union representation can go forward essentially.

What we've learned is that a number of labor unions have informally discussed supporting the UFCW more aggressively in its campaign to bring Tesco to the table to discuss the unionization of Fresh & Easy while meeting in Denver at the Democratic National Convention.

By no means is it at or even near the top of organized labor's agenda. Getting Barack Obama elected President is the number one objective and focus. However, since so many representatives of U.S. organized labor are attending the Denver convention, they're using the opportunity to discuss numerous issues and strategies, which is how the Tesco Fresh & Easy discussions have come up, Fresh & Easy Buzz has learned.

What next?

The next step in terms of the UFCW union's reporting of Tesco Fresh & Easy's prepared foods supplier 2 Sisters Food Group to the labor board is to await the response by the board as to if they will investigate the union's allegations that the six employees were unfairly fired for attending a union organizing meeting and for reporting managers regarding labor issues. It is against U.S. labor law to fire an employee for attending a union organizing meeting.

The issue is likely to turn up the heat on Tesco regarding the union issue with its U.S. Fresh & Easy grocery chain. Tesco, which is based in the UK and is that nation's leading retailer along with being the third largest retailer in the world, has union representation in its UK stores as well as being affiliated with unions in nearly every other region it does business internationally except for the U.S.

Tesco's Fresh & Easy Neighborhood Market is far from the only major food and grocery retail chain in California, Nevada and Arizona, where its current 74 stores are located, that's non-union. Major non-union chains in these three states include Wal-Mart, which is the world's largest retailer and the number one seller of food and groceries in the U.S., Whole Foods Market, Inc., specialty grocery chain Trader Joe's, Target, which operates Super Target combination food and general merchandise stores, and three smaller but fast-growing natural foods chains: Sprouts Farmers Market, Sunflower Farmers Market and Henry's Marketplace.

Tesco though has been very cool regarding the UFCW campaign thus far. It's senior executives seldom if every comment on the union publicly in the U.S. or in the UK. Additionally, neither Tesco PLC or its Tesco Fresh & Easy USA division has launched a public relations campaign to counter the union, preferring to simply repeat its statement that it is up to the retailer's store-level employees to choose if they want or don't want to join the union.

Tesco has not issued a statement at press time regarding the UFCW action against 2 Sisters Food Group. We would be surprised if the retailer does issue a statement regarding the development since 2 Sisters Food Group is independent (ownership) of Tesco.

Resources:

Click here to read a selection of past stories and posts about the UFCW/Tesco Fresh & Easy issue in Fresh & Easy Buzz.

'Human Rights Watch' Calls Tesco and its Fresh & Easy Neighborhood Market 'Labor Rights Violator' in the USA

Pictured above is Tesco plc director and Fresh & Easy Neighborhood Market USA CEO Tim Mason. Mason came to America in 2006 to start up Fresh & Easy for Tesco as the CEO. The first stores openened in November 2007. Prior to coming the the U.S., he was director of marketing for Tesco, at its global corporate headquarters in the United Kingdom. In March, 2011, Mason will be given the title of Co-CEO of Tesco plc, although the company says he will remain in California as CEO of Fresh & Easy. See here.

News & Analysis

The New York City-based human rights watchdog group Human Rights Watch issued a blistering report today that singles out United Kingdom-based Tesco and its Fresh & Easy Neighborhood Market USA as one of a handful of European companies doing business in the U.S. that have been "carrying out aggressive campaigns to keep their employees in the United States from organizing and bargaining, violating international standards and, often, US labor laws."

The charge by Human Rights Watch comes amidst a now three year campaign by the United Food & Commercial Workers union (UFCW) to organize store-level employees at Tesco's Fresh & Easy, which has 159 stores in California (Southern and the Central Valley); Metropolitan Phoenix, Arizona; and in Nevada's Las Vegas Metro region.

"Many European companies that publicly embrace workers' rights under global labor standards nevertheless undermine workers' rights in their U.S. operations, a Human Rights Watch spokesperson says. Tesco [with Fresh & Easy] is one of those European companies."

The 130-page report, "A Strange Case: Violations of Workers' Freedom of Association in the United States by European Multinational Corporations," goes into some detail, quoting a few former Tesco Fresh & Easy employees.

For example, Shasta Furman, a former worker at a Tesco Fresh & Easy Neighborhood Market store in San Diego, says in the report: "It was constantly driven home to us in team-lead meetings that we should tell employees they have no need for the union, that the company will take care of them so they don't need a union. When the union started passing out flyers outside our store, my manager told us 'You don't want to be part of it. These are not the right people for you.'"

Another former Fresh & Easy San Diego store employee, team leader (assistant manager) Fred Baquet, told Human Rights Watch in an interview for the report: "We had lots of issues. The time sheets were confusing. They had us working through breaks and lunch. People lost a lot of money. I would bring up people's pay problems and management would tell me to tell them... 'If you don't like it, there's the door.' People came to me with complaints and I told them, 'My job's on the line, too.' The managers were always preaching 'no union' to us. Anything union was unmentionable because it could cost you your job."

Human Rights Watch says today's report is based on interviews with workers, employees' legal testimonies, findings of US arbitration panels, company documents, and written exchanges with company management. The report is part of the human rights group's efforts to further strengthen and promote labor laws in the U.S, which it argues are designed to allow employers to side-step human rights conventions and prevent unions from organizing workers.

Along with United Kingdom-based Tesco, which owns and operates El-Segundo, California-based Fresh & Easy Neighborhood Market, the following European companies doing business in the U.S. are named in the report: Deutsche Telekom and T-Mobile; Deutsche Post and DHL Express; mSaint-Gobain; Sodexo; Group 4 Securicor PLC; Kongsberg Automotive100; Gamma Holding and National Wire Fabric107; Siemens115.

"The behavior of these companies, including Tesco's Fresh & Easy, casts serious doubt on the value of voluntary commitments to human rights," says Arvind Ganesan, director of the Business and Human Rights Program at Human Rights Watch. "Companies need to be held accountable, to their own stated commitments and to strong legal standards."

Among the violations Human Rights Watch says it documents in the report are "practices of forcing workers into 'captive audience' meetings to hear anti-union harangues while prohibiting pro-union voices, threatening dire consequences if workers form unions, threatening to permanently replace workers who exercise the right to strike, spying on employee organizers, and even firing workers who support organizing efforts at companies."

Human Rights Watch says this about Tesco's Fresh & Easy Neighborhood Market USA: Fresh & Easy "has created an anti-union atmosphere, and employees who want to organize union activities live in fear for their jobs."

Here are links to two responses to Human Rights Watch from Tesco regarding the organization's claims and report: Response from Tescoto HRW 7-26-2010 and Response from Tesco to HRW10-22-09.

Tesco said today in a statement about the report, which singles out its Fresh & Easy chain as a human rights violator when it comes to labor relations: "Wherever we operate, all staff are free to join trade unions and we have positive relations with trade unions around the world...This report is a further example of misleading allegations being used to misrepresent our position."

In describing the methodology behind its report, Human Rights Watch says: "The Human Rights Watch report is based on thirty interviews with workers and employees' testimony in legal proceedings, findings and decisions of US labor law authorities, company documents, and written exchanges with company management.

Tesco's Fresh & Easy Neighborhood Market has lost two cases in National Labor Relations Board (NLRB) hearings before Administrative Law Court Judges this year, in which employees and the UFCW union charged the grocery chain with violations of the U.S. Labor Relations Act. Fresh & Easy Buzz reported on both of these cases. In fact, Human Rights Watch sites those two cases as the primary basis for its arguments in today's report. (See here.)

Read the two stories linked below:

>March 4, 2010: Administrative Law Judge Finds Tesco's Fresh & Easy Neighborhood Market Violated Labor Relations Act in Ex-Store Employee, UFCW Union Complaint

>June 20, 2010: NLRB Judge Rules Against Fresh & Easy Neighborhood Market in Spring Valley CA Store Labor Law Violation Case

A couple months ago, Tesco bought out its meat suppler for Fresh & Easy, 2 Sisters Food Group. The buyout came shortly after an Administrative Law Judge found 2 Sisters Food Group, which was an independent company that had no ownership affiliation with Tesco or Tesco's Fresh & Easy, in violation of U.S. labor laws in a case involving its firing of six employees over the issue of a union vote at the meat plant. Read our June report: June 20, 2010 NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case. Also see: June 21, 2010: The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group.'

Tesco brought 2 Sisters Food Group's (its major meat product supplier in the UK) along with it in 2006-2007, when it set up shop in Southern California for Fresh & Easy Neighborhood Market. A couple months ago Tesco bought out 2 Sisters Food Group, along with its produce supplier for Fresh & Easy, Wild Rocket, for what Tesco director and Fresh & Easy Neighborhood Market CEO Tim Mason will only say was "tens of millions" of dollars.

Fresh & Easy Buzz has been closely covering the UFCW union/Tesco Fresh & Easy labor issue for nearly three years. We written reported extensively on the topic, along with offering much analysis. [Click here, here and here for a selection of our stories on the topic/issue. Use the older link at the bottom of the linked page for additional stories and pages.]

In our analysis, it's too early to know the affect today's Human Rights Watch report will have on Tesco's Fresh & Easy Neighborhood Market. However, the human rights group is respected, and counts among its members numerous influential opinion leaders from various walks of like, including many who live in California, where Fresh & Easy is headquartered and has 98 of its current 159 stores. (Thirty four stores are in Metro Phoenix; 27 in Metro Las Vegas.)

We do see the report, and the Human Rights Watch support, as giving the UFCW's on-going efforts to organize Fresh & Easy employees a boost. The union will now be able to point to the human rights group as a respected independent source which agrees with what the union has been arguing about Tesco's Fresh & Easy since 2007, which is that it will do whatever it takes to remain non-union, a charge Tesco has denied is true.

But approval of labor unions by U.S. consumers is at a near all time low, according to Gallup, the leading U.S. polling firm.

A slim majority of 52% of Americans say they approve of labor unions, the second lowest approval rating in Gallup's 70-year history of polling on the topic, behind only last year's 48%, the polling firm found in a poll taken this month (August 5-8, 2010).

Gallup says it first asked Americans to evaluate labor unions in 1936, at which time 72% approved. The all-time high of 75% approval came in 1953 and 1957 surveys. Support for unions declined in the late 1960s and early 1970s, but mostly hovered around the 60% mark until last year, when it dropped below the majority level for the first time, according to the polling firm.

In the August, 2010 poll, 10% of Americans identify themselves as union members, and an additional 6% say another member of their household belongs to a union. Seventy-two percent of Americans who are union members or live in a union household approve of unions, compared with 48% of those in non-union households.

Union approval varies widely by political party affiliation - It's 71% among Democrats compared with 34% of Republicans and 49% among independents. All three party groups expressed their lowest approval of unions last year and, although views improved slightly, they remain less positive than before.

Gallup finds significantly more Americans saying they want labor unions to have less (40%) rather than more (29%) influence than they have today. Twenty-seven percent say their influence should stay about the same.

Prior to last year, Americans were about equally divided in saying they wanted labor unions to have more versus less influence, or showed a tendency toward wanting unions to have more influence.

Regardless of their preference, Americans by a nearly 2-to-1 margin predict union influence will decline in the future. The poll finds 46% of Americans saying unions will become weaker in the future compared with 25% who say stronger. This general pattern has held each time Gallup has asked the question since 1999.

Gallup adds a slight caveat to the poll results however: "Labor unions are less popular now in the United States than they have been for most of the last 70 years. One reason for this could be the economic downturn. With many Americans out of work and struggling to find work, organized labor groups' missions may not seem appropriate or even fair as they might have when jobs are more plentiful. There is some precedence for an economic-related downturn in union approval, as Gallup found a mild drop in union approval during the late 1970s and early 1980s when the U.S. economy was in poor shape."

Additionally, "The more negative appraisal of unions the last two years could be due to the belief from union opponents that unions are likely to benefit or are benefiting from the policies of the Obama administration, including recent legislation providing aid to states that will preserve thousands of education and public sector jobs," Gallup adds about the poll's results.

Fresh & Easy Buzz doesn't put its stock in one poll. However, numerous other polls reflect opinions similar to what Gallup found this month.

But it's important to not lump all unions into the same pile. For example, in California the UFCW union is very strong. The state's top grocery chains - Kroger (Ralphs/Food 4 Less), Safeway/Vons, Albertsons, Stater Bros., Save Mart, Raley's and numerous others, as well as many multi and even single-store independents - are unionized. These grocers represent the majority of groceries sold in California annually from a market share perspective.

The UFCW is a fairly popular union in California overall. This is evidenced in the level of support union-store employees tend to get from shoppers whenever they've gone out on strike over contract issues with the chains. Although we've seen the level of popularity wane a bit over the last decade.

But, on the other hand, the fastest-growing food and grocery retailers in California - and in most parts of the U.S. - are non-union. These include Walmart, which is now the number one grocery retailer in America, Costco (it has some union affiliation in Northern California), Target, Whole Foods Market, Trader Joe's, Sprouts Farmers Market, Henry's Farmers Market, Tesco's Fresh & Easy, and a couple others.

The UFCW hasn't been able to unionize any of the fast-growing chains mentioned above, even though in some instances - Walmart particularly - it been trying to do so for over a decade.

The less than enthusiastic opinion of labor unions does help Tesco in its battle with the UFCW, although it is a relative form of help. For example, with two Administrative Law Judges finding Tesco's Fresh & Easy in violation of U.S. labor law so far this year - and we're told more cases are going to be brought to the NLRB by current and former Fresh & Easy employees together with the UFCW - the grocer is giving its opposition a lot of ammunition.

Right now, the store to watch in terms of union organization and activity at Tesco's Fresh & Easy is its unit at 4211 Eagle Rock Boulevard, in the Glassell Park neighborhood in northeast Los Angeles.

As we recently reported in this story - July 24, 2010: Employees at the Glassell Park-Eagle Rock Fresh & Easy Neighborhood Market Store in Los Angeles Seeking Union Recognition From Tesco - A group of employees recently told Fresh & Easy Buzz they have or are close to having a majority of store workers in agreement that they want to join the United Foods & Commercial Workers (UFCW) union.

Some of the store's employees met with Fresh & Easy Neighborhood Market executives at corporate headquarters in El Segundo, California on March 26, and requested to be recognized as a union store, as we reported in the July piece linked above. Tesco has thus far denied the Glassell Park store workers' request, which isn't uncommon for a company to do.

You can read the full report issued today by Human Rights Watch, "A Strange Case: Violations of Workers' Freedom of Association in the United States by European Multinational Corporations," here.

An English Village, A British Fresh Chicken Brand and Tesco Fresh & Easy's New 'Buxted' Discount Fresh Meat Brand: What Do All Three Have in Common?

Tesco's Fresh & Easy is currently promoting "Buxted" Boneless-Skinless Chicken Breasts for $1.77 pound and Boneless New York Steaks for $3.99 pound in its advertising flier. Both promotional price-points are extremely competitive ones in the three states, California, Nevada and Arizona, where its 115 grocery and fresh foods are located.

When Fresh & Easy Buzz first learned Tesco's Fresh & Easy Neighborhood Market was preparing to introduce a new fresh meats store brand named "Buxted" the first two images that resonated in our mind were: 'sounds upscale or high-end, and sounds British.'

The name "Buxted" for a food product brand sounds to our ears and internal brand radar gauge to be upscale-high-end (even a bit stuffy) rather than discount or value-based, which is how Tesco's Fresh & Easy has positioned and priced "Buxted,", as the brand name for its new line of value-priced fresh meat products.

A Fresh & Easy Buzz reader offered a different take recently. She said when she first heard the name "Buxted" she immediately thought of the popular "Buxton" brand of leather wallets and handbags. (We did point out to her that Fresh & Easy is offering fresh beef, like the New York steaks it has on sale in its advertising flier this week, under the "Buxted" fresh meats brand -- and that since both leather wallets and beef steaks do come from the same animal -- there is somewhat of a connection between the two brand names and the respective products offered under the two brands.

We've since done a little research after our first impression of the "Buxted" brand name, asking consumers to name which of the two -- upscale brand or discount brand -- comes immediately to their minds when they hear the brand name "Buxted." So far we've asked 31 consumers; 23 have said "upscale," two said "who cares," four said "they had no idea," and two said "discount." We continue the exercise.

But "Buxted" it is for Tesco's Fresh & Easy when it comes to its value or discount-priced line of fresh meat products, which includes chicken as well as beef.

Since the other thought that came immediately to mind when we heard "Buxted" as the new fresh meat value brand name for Tesco's Fresh & Easy was that 'it sounds British, English,' we went investigating.

And indeed we were correct.

"Buxted" just happens to be the name of a civil Parish (think county if you are an American), as well as the name of a village, Buxted village, in the Parish, which is located in Uckfield, East Sussex, United Kingdom. It's right next door to Coopers Green, and just a stones' throw from Maresfield, as you can see on the map above.

Buxted Parish, of which the village of Buxted is a part, even has its own Web site, which you can view here.

Buxted, which has a storied, and some say important, history, today has about 3,300 residents, according to its Web site. The village and surrounding area is rural and bucolic, the stuff of English countryside drawings and paintings.

Below is how the town council describes Buxted Parish:

"Buxted Parish, which includes Five Ash Down and High Hurstwood is situated in the High Weald Area of Outstanding Natural Beauty between the North and South Downs. The Weald was originally an area of land between two lines of chalk hills called the North and South Downs. Weald is an old English word for "forest" and this area across Kent and Sussex included Ashdown, Tilgate and St. Leonard's forests which remain today. Uckfield and Crowborough are the nearest market towns."

The village of Buxted lies on the A272 roadway from Heathfield to Uckfield road. The name of the village derives from "Bloc Stede," meaning the "stand of beeches" (A beech wood), according to local historians and the village council.

Buxted is a small village (that's the village sign pictured above) with very few local retail shops or services. The main shopping center for residents is in Uckfield, which is just a few miles south.

Historically, Buxted got an occupational and economic boost in 1331 when the export of unwashed wool was prohibited by King Edward III. He encouraged weavers from Flanders to settle in England. They brought their weaving and dying techniques to England, and at Buxted , they produced silk materials.

but a bigger economic bang was to come to Buxted. The cannon making industry in the Weald (think county again) started in 1543 at a furnace on the stream at Hoggets Farm lying to the north between Buxted and Hadlow Down .

The reason for this is because Buxted Parish was a major producer of iron, which the cannons were made out of. Over the following years the area became rich from the iron industry, and the village of Buxted benefited from supplying the forges and furnaces in the area.

but all good things, like the iron industry and cannon-making, come to an end eventually. And such was the case in Buxted. When the iron industry collapsed in the early 1800's the village of Buxted reverted to its rural roots. [You can read a bit more about the history of Buxted here and here.]

But, you are probably asking ...What's the connection between Buxted Parish and the village of Buxted ... and meat -- particularly Tesco Fresh & Easy Neighborhood Market's new "Buxted" brand of discount-priced fresh meats?

Well, it's all about the chicken; "Buxted Chicken" to be precise.

At one time Buxted was super-famous for its chicken processing industry. The British wholesale Buxted Chicken Company had a large chicken processing factory in the village of Buxted, as well as one in nearby Five Ash Down.

Although the Buxted chicken factory closed down in the 1980s, and the site is now owned by the Woodland Trust, the factory in Five Ash Down remains, and the main industry and economic claim to fame in Buxted Parish and the village of Buxted is still the chicken business.

The well-known British "Buxted" brand chicken was the brainchild of Britain's Antony Fisher, who went on to found the Institute of Economic Affairs, a respected think tank and public policy center in the United Kingdom (UK).

'Buxted' brand at Tesco-UK and Tesco Fresh & Easy USA

"Buxted" brand chicken is owned and distributed in the UK by West Bromwich-based 2 Sisters Food Group, which is owned by Boparan Holdings Ltd.

2 Sisters Food Group supplies chicken under the "Buxted" brand, as well as for private label, to Tesco in the UK, which owns and operates El Segundo, California-based Fresh & Easy Neighborhood Market in the U.S. states of California, Nevada and Arizona (115 stores at present). 2 Sisters also supplies other major UK supermarket chains like Marks & Spencer and others with "Buxton" brand chicken.

"Buxted" is 2 Sisters' original fresh poultry brand. It later added a second brand, 'The Devonshire Red." The company also does a large volume in private label sales. It's markets other fresh meats and foods along with chicken. [The "Buxted" brand logo above is from the 2 Sisters' Web site.]

"Buxted" is not a discount fresh chicken brand for 2 Sisters in the UK. Rather, it's a "value-added" brand. The company sells private label chicken to Tesco and others that those retailers then use as their store discount or value brands.

Today, 2 Sisters Food Group, which was founded in 1993 and is privately-held, has 13 manufacturing sites in the UK, one in Holland and one in U.S.A. The company says it employees over 5,500 people globally, and that it has annual sales exceeding £650 million (pounds). That's about $830 million U.S. It works closely with Tesco in Thailand, for example.

This is the very same 2 Sisters Food Group that Tesco brought with it in 2007 to the U.S. to be the "in house" procurement and distribution arm for all of the fresh foods (including meats) sold in its combination grocery and fresh foods Fresh & Easy Neighborhood Market stores. 2 Sisters set up shop in Riverside County, in Southern California, where Tesco's Fresh & Easy distribution center is located. [Suggested reading, August, 2008: UFCW Union Reports Tesco Fresh & Easy Neighborhood Market's Prepared Foods Supplier to Labor Board For What it Says is Unfair Firing of Six Employees.]

So you see, Tesco's Fresh & Easy reached back home to the UK to come up with the brand name -- "Buxted" -- of its discount-priced fresh meat line. That's why it sounds British ... because it is.

And, Tesco's Fresh & Easy is using "Buxted" as its discount or value fresh meats (including chicken) brand in the U.S. But as we mentioned above, that's not the positioning of the brand in the UK.

Oops they did it again: 'Buxted,' Fresh & Easy, local marketing and merchandising

It appears to us that by naming its new, value brand of fresh meats after an existing British brand (and a village in England), Tesco's Fresh & Easy has learned nothing from what has been one of its failures to date, in our analysis, which is the turning of a blind eye to the local nature of food and grocery retailing in the U.S.

Why not a brand name for the new fresh meats value line that would resonate in the minds of consumers in California, Nevada and Arizona rather than one imported from the United Kingdom? Perhaps something like "Pacific Pride"? or "Western Value?" Just a thought.

Perhaps it won't matter that the brand, like nearly all of Fresh & Easy's merchandising and marketing, is of British design, which the grocery chain then attempts to stuff into American food retailing, since the focus of the "Buxted" brand is price

But then, if "brand" doesn't matter, why even create a new store brand for the fresh meat line? Just keep the fresh & easy store brand label on the meats (that's the brand on all the other fresh meats sold in the stores) and offer a selection of the items for discount prices on promotion, which is what the retailer is doing with "Buxted" anyway.

Obviously Tesco's Fresh & Easy thinks "brand" matters, even on a line that's focus is discount priced. Why else create a new one?

Therefore, why "Buxted"?

As we said, in our analysis, and in the majority of opinions we've thus far gleaned from the 31 consumers, with more to come, "Buxted" in the first place sounds more upscale or high-end than it does discount or value. (Of course each consumer will be the individual judge of that.)

But the fact the brand name is a British import, and has no brand relevance to America in general and to the Western U.S. specifically, boggles the mind just a slight bit. It reminds us of the very same ethnocentric behavior Tesco Fresh & Easy's senior executives have axhibited from day one.

Of course, we could be wrong. Perhaps brand "Buxted" will do well.

But in the world of brand naming and marketing it's a fact that it helps to create a brand name that has some relevance to the customers it's being targeted to. It's also a fact of food and grocery retailing in the U.S. that taking a local marketing and merchandising focus is a major key to success.

It appears in naming its fresh meats value line "Buxted," Tesco's Fresh & Easy believes both of these marketing and merchandising realities are either wrong or irrelevant.

Thus far this attitude and approach has proven less than successful for the grocer. You just can't force-feed a British food retailing model into U.S. food retailing culture and practice, and fail to take a regional and local approach to private-label product branding and food retailing in general, and expect to do well in America because the nature of food retailing in the U.S. is a regional, sub-regional, sub-sub-regional and local business.

But, the village of Buxted in the UK is a lovely place. That's for sure. Although it's having a tough go economically right now.

And we should add: We hope the "Buxted" brand of value-priced fresh meats is a huge success for Fresh & Easy, both because we want the stores to succeed -- the more competition the better for the entire industry, not to mention keeping the jobs (and adding more) of the great store-level employees who work for the grocery chain -- but also because the value-priced meat line, like the 98-cent produce packs recently introduced by Fresh & Easy, along with some other recent value-based developments, just happen to fit the "value proposition" model we started developing and describing in the Blog over a year ago (and have continued to do), that in our analysis is where Tesco needs to go -- and has been moving towards -- with Fresh & Easy Neighborhood Market. [Fresh & Easy Buzz Redux: Much of the Value Proposition-Based Analysis and Suggestions We've Been Offering Now Being Adopted By Tesco's Fresh & Easy.]

But, in terms of "Buxted," when we hear the name or see it on a package of meat, particularly steaks, we just can't get that thought of the "Buxton" leather wallets out of mind.

Fresh & Easy Neighborhood Market Terminates Pacific Pride Seafood Inc. as Supplier; Company's Owner Tells Source He's Going Out of Business

Breaking Buzz

Tesco's Fresh & Easy Neighborhood Market has ended its supply and procurement relationship with Los Angeles, California-based Pacific Pride Seafood Inc., which has been the 175-store (California, Nevada and Arizona) fresh food and grocery chain's supplier of fresh and frozen fish and seafood since the first Fresh & Easy stores were opened in November 2007, Fresh & Easy Buzz has learned.

Friday, June 18 was the official end of the fish and seafood supply partnership between Fresh & Easy and Pacific Pride Seafood, which has been in business in Southern California for over 20-years, according to our sources.

Rather than using Pacific Pride, which is located at 3264 Mines Avenue in Los Angeles, or another wholesaler as its seafood product supplier, Fresh & Easy Neighborhood Market is folding its fresh and frozen fish and seafood procurement into its in-house meat procurement operation, which was previously 2 Sisters Food Group, its quasi-in-house meat supplier from 2007-2010, which it bought out last year.

Since it was founded in 1987, Pacific Pride Seafood has primarily been a wholesaler of fresh and frozen fish and seafood to restaurants and smaller retail food stores in Southern California.

However, in 2006-2007 when Tesco's Fresh & Easy was starting out, one of its meat and seafood category buyers who had previously done business with Pacific Pride Seafood introduced the owner of the company to Fresh & Easy Neighborhood Market's head of fresh foods, meat and seafood procurement. Not long after that the grocery chain and Pacific Pride established the supply relationship, and the wholesaler has been Fresh & Easy Neighborhood Market's supplier from 2007 until now.

Over the last five years Tesco's Fresh & Easy has become Pacific Pride Seafoods' largest customer in terms of dollar sales and business.

On Friday, a regular reader of Fresh & Easy Buzz, who's spent many years in the industry in Southern California and has been friends with the owner of Pacific Pride Seafood as well as a customer for many years, told us the company's owner called to tell him Friday that as a result of the termination of his business with Fresh & Easy, he plans to let all his employees go and close the seafood wholesale company, which was founded in 1987.

We tried to contact Charles Love, the owner/sales manager, or any other employee at Pacific Pride Seafood on Friday to verify the closing. However, we weren't able to get in contact with any employees. Instead, despite a number of calls placed, we couldn't get through to a live employee but only the company voice mail and the greetings message.

The Southern California industry source who's close to the owner of Pacific Pride Seafood told us a second time on Friday though that in the fairly long telephone conversation he had with the company's owner, he told our source he has no choice but to close privately-held Pacific Pride because losing the Fresh & Easy account at this time is too great of a financial loss to make up for with other accounts, adding he put too many eggs in one basket, Tesco's Fresh & Easy Neighborhood Market, and now he's forced to close the nearly 25-year-old seafood wholesale company.

Related Stories

June 20, 2010 - NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case
June 21, 2010: The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group'

August 27, 2008 UFCW Union Reports Tesco Fresh & Easy Neighborhood Market's Prepared Foods Supplier to Labor Board For What it Says is Unfair Firing of Six Employees

March 9, 2009: An English Village, A British Fresh Chicken Brand and Tesco Fresh & Easy's New 'Buxted' Discount Fresh Meat Brand: What Do All Three Have in Common?

Tom & Jane Plus Others Discuss Unionization at Tesco's Fresh & Easy Neighborhood Market

On June 30, 2010 we published this piece - Tom & Jane Plus Two Discuss Unionization at Fresh & Easy Neighborhood Market - about a discussion on the Fresh & Easy Neighborhood Market Facebook site about whether or not the non-union food and grocery chain should be unionized.

Tom, (who's not an employee of Fresh & Easy) and Jane (who is an employee of Tesco's Fresh & Easy Neighborhood Market) are the two most active discussion members, hence we used their names in the story's title. Well, and... the names also made for a good sounding headline, despite the similarity to John and Kate plus...

Since we ran the piece, the union/non-union discussion on the Facebook site has gotten more interesting - and richer - with additional folks joining in, including other Fresh & Easy employees. Tom and Jane have added additional comments as well.

You can view - and read the additional comments - the ongoing discussion on unionization at Tesco's Fresh & Easy Neighborhood Market here.

Feel free to offer you own comments on the topic and issue on this post or on our June 30, 2010 post linked above - and below.

Related Stories & some background on the issue:

>June 30, 2010: Tom & Jane Plus Two Discuss Unionization at Fresh & Easy Neighborhood Market

>Read a history of our coverage of the UFCW union-Fresh & Easy Neighborhood Market topic and issue here. Click the "older posts" link at the bottom of the first linked page to see additional pages.

>Most recently we reported and published a series of stories about Tesco, Tesco's Fresh & Easy Neighborhood Market, the UFCW union, and labor-related issues and legal cases involving two of the chain's stores and one of its two suppliers - 2 Sisters Food Group - which Tesco recently bought and has taken over. See the stories below:

June 20, 2010: NLRB Judge Rules Against Fresh & Easy Neighborhood Market in Spring Valley CA Store Labor Law Violation Case

March 4, 2010 - Aministrative Law Judge Finds Tesco's Fresh & Easy Violated Labor Relations Act in Ex-Store Employee, UFCW Union Complaint]

June 20, 2010: NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case

June 21, 2010: The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group'

>Additionally, Fresh & Easy Buzz recently reported on Tesco plc director and Fresh & Easy Neighborhood Market CEO Tim Mason's 2009 comphensation package. See the stories below:

June 4, 2010: Every Little (Bit) Helps: Tesco Fresh & Easy Neighborhood Market CEO Mason Paid $6.188 Million For 2009

June 23, 2010: Tesco Fresh & Easy Neighborhood Market CEO Tim Mason Gets Big Stock Award Featuring a Singular Twist

June 8, 2010: Tesco CEO Terry Leahy Retiring; Philip Clarke New CEO; Tim Mason Named Deputy CEO But Will Remain Fresh & Easy Neighborhood Market Chief in U.S.

April 23, 2009: Tesco PLC Director and Fresh & Easy USA CEO Tim Mason Sells Over 631,381 Tesco Shares Yesterday For $3.2 Million Payday

Termination of Supply Arrangement With Fresh & Easy Neighborhood Market Results in Closing of Los Angeles-Based Pacific Pride Seafood Inc.

Pacific Pride Seafood Inc., which until last week was the supplier of fresh and frozen seafood to Tesco's El Segundo, California-based Fresh & Easy Neighborhood Market, has let all 25 of its employees go and closed its doors at 3264 Mines Avenue in Los Angeles.

As we reported in Fresh & Easy Buzz yesterday [See - June 19, 2011: Fresh & Easy Neighborhood Market Terminates Pacific Pride Seafood Inc. as Supplier; Company's Owner Tells Source He's Going Out of Business] Tesco's Fresh & Easy terminated its supply arrangement with Pacific Pride Seafood in order to fold its fish and seafood procurement into its in-house meat (and now seafood) operation, which it bought from its then quasi-in-house former meat supplier 2 Sisters Food Group last year.

Pacific Pride Seafood is owned by Charles Love, who's also the sales manager for the privately-held seafood wholesale company which until Friday, June 19 when it closed its doors had been in operation in Los Angeles, serving retail and food-service customers throughout Southern California since 1987.

Tesco's Fresh & Easy represented the majority of Love's sales at Pacific Pride Seafood Inc.

Losing the account supplying the 175 Fresh & Easy stores in California, Nevada and Arizona was too severe of a financial blow to Pacific Pride Seafood. Therefore, he was forced to close the nearly 25-year-old business.

Related Stories

June 19, 2011: Fresh & Easy Neighborhood Market Terminates Pacific Pride Seafood Inc. as Supplier; Company's Owner Tells Source He's Going Out of Business

June 20, 2010 - NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case

June 21, 2010: The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group'

August 27, 2008 UFCW Union Reports Tesco Fresh & Easy Neighborhood Market's Prepared Foods Supplier to Labor Board For What it Says is Unfair Firing of Six Employees

March 9, 2009: An English Village, A British Fresh Chicken Brand and Tesco Fresh & Easy's New 'Buxted' Discount Fresh Meat Brand: What Do All Three Have in Common?

Fresh & Easy Neighborhood Market Extending 'eatwell' Healthy Foods' Private Brand Into Dry Grocery Category

Private Brand Showcase

Tesco's Fresh & Easy Neighborhood Market has extended its 'eatwell' healthy foods private brand from the fresh-prepared foods category into the dry grocery category.

The first dry grocery category item in the Fresh & Easy stores is 'eatwell' Turkey Chili with Beans, in 15oz cans. The product is similar to the Health Valley and Shelton's brands of canned Turkey Chili with Beans, both of which have been on the market for decades. The item retails for $1.99.

As we reported in these two stories earlier this year - April 1, 2010: Tesco's Fresh & Easy to Launch New 'EatWell' Brand Lower-Sodium, Fewer-Calorie Prepared Foods Line and April 2, 2010: Fresh & Easy's New 'EatWell' Healthier Fresh, Prepared Foods Brand to Hit Stores on April 7 - Fresh & Easy Neighborhood Market launched its 17 item line of 'eatwell' refrigerated ready meals, side dishes, sandwiches, salads, soups, chili and sushi on April 7 of this year. In July, the fresh foods and grocery chain added some new fresh foods items to the 'eatwell' line.

Thus far the canned Turkey Chili with Beans is the only 'eatwell' brand item in the dry grocery category (Tesco' Fresh & Easy calls it the ambient category, using the British grocery industry term) we've spotted in the Fresh & Easy Neighborhood Market stores. However, our sources tell us additional dry grocery category items under the 'eatwell' brand are in the pipeline.

One of the original refrigerated, fresh-prepared foods items introduced in April under the 'eatwell' brand is a Turkey Chili with Beans. Sound familiar?

The refrigerated, ready-to-heat and eat Turkey Chili with Beans, which comes in a round plastic container, contains turkey, onions, carrots, tomato, kidney beans and bell peppers, along with various herbs and spices. It retails for $1.99, just like the new canned version.

The two chili versions - the refrigerated and canned - have essentially the same ingredients, as one might expect, with just a few minor changes based on one version being fresh and the other canned.

It will be interesting to see what Fresh & Easy does with its 'eatwell' brand in the dry grocery category.

Currently the fresh food and grocery chain uses the fresh&easy brand for all of its private or store brand dry grocery and perishable items (including organic and healthy foods items), with the exception of using 'Mothers Joy' for a line of price-focused breakfast cereals.

The brands 'fresh&easy' and 'eatwell' are used for fresh-prepared foods.

Fresh & Easy also has used the 'Buxted' brand to a limited degree on a few value-priced fresh poultry and meat items. However, the grocer appears to be phasing out private brand 'Buxted,' which isn't a surprise since the brand is owned by its former meat supplier, 2 Sisters Food Group, which Tesco's Fresh & Easy bought out earlier this year. [See - June 20, 2010: NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case and June 21, 2010: The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group']

In a strategy session piece in 2009 - May 18, 2009: Strategy Session: Tesco's Fresh & Easy Needs to Move From its One Store Brand Fits All Strategy to A 'Three Brand' Store Brand Strategy - we suggested Tesco needed to move into a three brand strategy for its private brand efforts. Key in our suggestion is that Fresh & Easy Neighborhood Market have a store brand other than 'fresh&easy' for its natural/organic products category and healthy foods category (or a separate brand for each).

In April Fresh & Easy introduced 'eatwell,' following our strategic blueprint in part. Now the grocer has started extending its 'eatwell' healthy foods brand into the dry grocery category, starting with the canned Turkey Chili with Beans.

Since we haven't seen any additional 'eatwell' dry grocery items other than the Turkey Chili with Beans so far, it appears Tesco's Fresh & Easy is taking the brand extension slow, and perhaps even testing the response to the item. After all, it's unusual for a grocer otherwise not to introduce numerous items under a private brand at the same time.

However, since it already has numerous refrigerated items in the 'eatwell' brand, we suspect Fresh & Easy Neighborhood market is testing the 'eatwell' brand waters in dry grocery before rolling out additional items. Stay tuned.

Recent Private Brand Showcase Features in Fresh & Easy Buzz:

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

July 17, 2010: New Fresh & Easy Neighborhood Market Clock-Shaped Private Brand Candy Line Hits the Shelves at Fresh & Easy

July 12, 2010: Tesco Launches Private Brand 'Lasagne Sandwich' in the UK Today...With No Apologies to The Earl of Sandwich

June 24, 2010: New Fresh & Easy Clock Logo-Shaped Candies Are A Pretty Sweet Idea

May 11, 2010: Tesco Might Want to Get 'fresh & naked' at 'fresh & easy'

April 2, 2010: Fresh & Easy's New 'EatWell' Healthier Fresh, Prepared Foods Brand to Hit Stores on April 7

April 11, 2010: When it Comes to Fresh, Prepared Foods, New York City's Duane Reade is Simply 'deLish' for Walgreens

February 22, 2010: Food, Drug Retailers With Stores in California, Nevada & Arizona Honored for Private Label-Store Brands' Excellence

May 18, 2009 piece - Strategy Session: Tesco's Fresh & Easy Needs to Move From its One Store Brand Fits All Strategy to A 'Three Brand' Store Brand Strategy

March 9, 2009: An English Village, A British Fresh Chicken Brand and Tesco Fresh & Easy's New 'Buxted' Discount Fresh Meat Brand: What Do All Three Have in Common?

Tesco Fresh & Easy Neighborhood Market CEO Tim Mason Gets Big Stock Award Featuring a Singular Twist

News & Analysis

Tesco plc director and Fresh & Easy Neighborhood Market USA CEO Tim Mason (pictured above) has been granted rights to 292,085 ordinary shares of United Kingdom-based Tesco plc stock under Tesco's executive incentive plan, for which no payment by the reciepient is required. It's essentially a stock grant.

The shares were awarded to Fresh & Easy CEO Mason yesterday as part of Tesco's 2009/10 fiscal year annual defered bonus for the company's top executives, who are also members of its board of directors.

The number of shares awarded to Mr. Mason was calculated using an average Tesco plc market price of 388.05 pence, according to Tesco plc's investor relations department.

In addition to Tim Mason's stock share grant of 292, 085 shares, Tesco plc CEO Terry Leahy received a bonus award of 459,644 shares.

The following other Tesco executives-directors received the stock awards yesterday:

>Commercial and Marketing Director Richard W Brasher, 196,696 shares
>International and IT Director, Incoming CEO, Philip A Clarke, 196,696 shares
>Chief of Retailing Services and Group Strategy Director Andrew T Higginson, 196,696 shares
>Retail and Logistics Director David T Potts, 196,696 shares
>Group Finance Director Laurie McIlwee, 147,522 shares
>Corporate and Legal Affairs Director Lucy Neville-Rolfe, 147,522 shares

In an interesting development, all of the directors except for Fresh & Easy Neighborhood Market CEO Tim Mason, received their share awards in the form of nil cost options (share options that can be exercised without payment of a subscription price; essentially a regular stock option). In contrast, Mason's 292,085 shares is in the form of an unfunded promise to deliver shares, which means, among other things, he can't exercise the options at any time, like the others can if they choose to.

For Tim Mason this basically means that unlike the other directors, who's shares will be increased to reflect the dividends that would have accrued on vested shares had they been reinvested in shares in the period between the stock grant and its exercise (the nil cost option), and can be exercised if desired, his award is what's called grant and vesting (an unfunded promise to deliver shares), which means the award will vest but Mason won't be able to exercise any of the 292,085 shares before May 22, 2013.

We suspect, among other considerations, the special handling of Tesco plc director and Fresh & Easy Neighborhood Market CEO Tim Mason's stock award might have something to do, but not exclusively by any means, with Tesco's being under attack by the CtW Investment Group, which invests money from labor union pension funds in various corporations, including Tesco plc. The group is arguing that Mason received excessive compensation for fiscal year 2009/10. [Read our June 4, 2010 story on his compensation package here: June 4, 2010 - Every Little (Bit) Helps: Tesco Fresh & Easy Neighborhood Market CEO Mason Paid $6.188 Million For 2009]

On June 17, 2010, CtW investment Group and the Change to Win coalition of labor unions, many of which have pension fund monies invested in Tesco, sent this letter to Tesco plc shareholders regarding Tim Mason's pay package. In the letter they urge Tesco shareholders to vote no on proxy Item #2, the Directors' Remuneration Report, at Tesco’s upcoming July 2 annual shareholder meeting in London, UK.

The group also distributed this press release about the letter and campaign to media outlets far and wide on June 17. The release has generated considerable press on the issue, focusing on Mason's 2009/10 pay package and the group's attempt to get Tesco plc shareholders to vote against it at the July 2, 2010 shareholders meeting.

Perhaps Tesco believes that granting Tim Mason's stock award on the unfunded promise basis, which means he can't exercise any of the shares until May 22, 2013, will help blunt some of this criticism, leading to a majority vote of Tesco shareholders in favor of the Directors' Remuneration Report at the July 2 shareholder meeting. Or perhaps, among other considerations, it's just good politics, considering Fresh & Easy's $253 million loss for fiscal year 2009/10? If shareholders were to vote the report down it would mean Tesco couldn't go forward with the pay packages, including the stock awards listed above, for the corporation's directors.

The objective reality is the probability of Ctw Investment Group and the labor union group getting a majority investor vote against the Directors Remuneration report is highly unlikely for a number of reasons, chief among those reasons being that the majority of Tesco investors with voting rights are the big, institutional investors. For example, U.S. billionaire Warren Buffett, who owns 3% (about $1.3 -to- $1.4 billion in value) of Tesco plc through his Berkshire Hathaway holding company and investment firm, won't likely vote against the report.

These big investors will likely vote for the package for two key reasons. First, Tesco plc had record profits in its 2009/10 fiscal year. Therefore the investors aren't going to let Tim Mason's pay package get in the way of affirming the report. Second, these institutional investors don't want to veto the report because doing so would lead to a drop in Tesco's stock share price, meaning their investments would drop in value.

Adding to this, voting against the report would likely lead to uncertainty in the market vis-a-vis Tesco plc, potentially leading to further reductions in the retailer's share price. This is the last thing these big, institutional investors want to happen.

The investor-types at CtW Investment Group are aware of this probability, as are the heads of the labor unions. Or they should be. Ctw has authored resolutions at previous Tesco annual meetings that were rejected by these same big, institutional investors, who've got the votes.

However, the unions see a secondary benefit to the "vote against the report" campaign, which is to increase the pressure on Tesco via investors and the public (via the media) in its efforts to organize and unionize Fresh & Easy Neighborhood Market's store-level employees, which the United Food & Commercial Workers (UFCW) union has been trying to do since the first Tesco-owned Fresh & Easy grocery stores opened in late 2007.

Tesco's annual shareholder meeting is just 10 days away. Therefore we'll see the results of this issue come to a head very soon, at least in terms of the shareholder vote - but certainly not in terms of the ongoing campaign to unionize Fresh & Easy workers.

Fresh & Easy Buzz Linkage: Related Stories:

June 4, 2010 - Every Little (Bit) Helps: Tesco Fresh & Easy Neighborhood Market CEO Mason Paid $6.188 Million For 2009

June 21, 2010: The Missing Link in Tesco's Purchase of Fresh & Easy Neighborhood Market Meat Supplier '2 Sisters Food Group'

June 20, 2010: NLRB Judge Rules Against Key Fresh & Easy Neighborhood Market Supplier '2 Sisters Food Group' in Labor Relations Violations Case

June 20, 2010: NLRB Judge Rules Against Fresh & Easy Neighborhood Market in Spring Valley CA Store Labor Law Violation Case

March 4, 2010 - Aministrative Law Judge Finds Tesco's Fresh & Easy Violated Labor Relations Act in Ex-Store Employee, UFCW Union Complaint

August 5, 2008: UNI Global Union Launches Tesco-Specific Alliance; Calls For Tesco Executives to Meet With UFCW Union Officials Over Fresh & Easy Neighborhood Market

June 26, 2008: Tesco 2008 AGM: Barack Obama Sends Second Letter to Tesco CEO Requesting the Company Meet With U.S. UFCW Union Leaders About Fresh & Easy

June 26, 2008: Tesco 2008 AGM: Charges of Tesco's Exploiting Workers at Indian Factory Heat Up On the Eve of Corporate Annual General Meeting

June 22, 2008: Vocal Cast of Critics and Advocacy Groups to Attend Tesco's Annual General Meeting On Friday, June 27

June 4, 2008: News and Analysis: UFCW Union Takes its Tesco Union Organizing Campaign Across the Pond to the United Kingdom Beginning Today

February 11, 2008: Supermarket Union President Asks Britain's Prince Andrew to Arrange A 'Sit-Down' With Tesco Fresh & Easy Neighborhood Market Senior Executives

Some additional links here.

[Photo credit: Fresh & Easy Neighborhood Market]