Welcome to The Lempert Report LIVE
Welcome to The Lempert Report LIVE
Welcome to the Lempert Report LIVE. Our look at the July Consumer Price Index and Food Inflation projections, how some condiments will have to reformulate, how food businesses can enable sustainable diets, the backlash coming against food brands, a new twist on kitchen smells. And in our Bullseye, why Amazon bought a vacuum cleaning business. Let’s get started.
Sally:Phil. You were just participating in a story with Good Morning America. Do you wanna tell us about that?
Phil:Sure. Basically what we did is we took a couple, here in Los Angeles. We brought them to a Ralph's supermarket. We took their shopping list, their typical shopping list, and we had them shop three times. The first time, what happened is they shop the way they normally shop and it came out to be just under a$170. Then I spent some time with them and told them how to shop using store brands and some other hints that brought it down to about half. They saved about$65. Then I sent them back in the store to use their frequent shopper card and look at the circular and they saved another 20 bucks. So all in all, we cut their shopping list in half from a dollar standpoint. And we also timed them the first time they went shopping. It was 22 minutes, which is the average that somebody spends in the store. The next time, when I really asked them to read labels, look at net weight and so on, it increased their time about 11 minutes. So basically, in 11 minutes they made 60 bucks. And it was a great segment. It's on the GMA website and it's really a terrific reminder for all of us that we need to be more thoughtful. When we go shopping, the other hint that I gave them is what we talked about last week, that when you write down a shopping list, versus typing it, they had typed it on their computer, you become more thoughtful about it and, you know, they said,"oh wow." You know, never, never quite thought about that. So yes, especially in today's era with inflation, we really need to help people learn how to shop better. And as we talk about the consumer price index, if we look at the past 12 months at home, food went up 10.9%. Now year over year butter's up 26.4%, eggs up 38%. That's one of the hints that I gave them too, because they always bought brown eggs. And I said to them, what's the difference between brown eggs and white eggs? They had no clue. And then I told them that there is no difference. It's basically brown eggs come from hens with brown feathers and white eggs come from eggs with white feathers. But it can cost a dollar or a$1.50 more. Coffee's been up 20%, cereal and bakery up 15%, fruit and vegetables 9.8%, dairy 14.9%. So we really need to use all those hints that, that we can. And there was just a survey that I got this morning from Stata, where Americans plan to cut back in the face of inflation. 39% of us are saying, we're gonna cut back on bar, cafe and restaurant visits. And then another 35% of us say that we're gonna cut down on food or household goods. So you know, people, even though the economy is looking better, and even though with the inflation reduction act, people are feeling better, still why waste money?
Sally:Yes. I definitely need to take you shopping with me, Phil. That would be great. I'm so glad to hear that Good Morning America and you are helping people learn how to shop smarter, b ecause yeah, it is good to see those fuel and energy costs coming down, which we are seeing, but that f ood, those food prices are just not coming down yet. And so hopefully some of these efforts will help consumers and hopefully there will be some things in the inflation reduction act to help Americans as well.
Phil:Yeah. And the important thing, if we look at the inflation numbers, the good news is everything was down except for food. Food was up July to June about a half of a percent, which is lowest it's been, but it's gonna take a while to fix the supply chain. There's no question about it. Whether we look at climate change, labor cost, transportation, all of those things. So, you know, you mentioned the inflation reduction act. The good news is that it passed, providing extensive tax breaks for clean energy, authorizes Medicare to negotiate prices of certain prescription drugs. We've all talked about that. We're on track with this bill to reduce carbon emissions by about 30% by 2030, as compared to back in 2005, 370 billion in tax credits over 10 years for solar and wind producers, as well as for the purchase of electric vehicles. Lots of great stuff about this. In fact, the political economy research Institute at the university of Massachusetts at Amherst says that new legislation in this bill could create more than 9 million jobs, just in the era of the environment over the next 10 years. But also there's some things that were left out.
Sally:Yes, there are, and there are some really good things in this. And one of the things that I really appreciate about this bill, Phil, and I know you do too, because we talk a lot with farmers and we talk a lot to people in the agricultural industry. And as we are facing so many issues related to climate change right now with the drought in California, with the flooding in Kentucky, you know, farmers are facing a really hard time right now. So there's going to be 20 billion for a 10 year period in this bill that will be allocated to help farmers defray those costs for conservation. So that means, you know, if they wanna use cover crops in the winter to keep the soil healthy, or if they want to implement some ways to keep soil and fertilizer from eroding during storms if they want to help protect the bees and the insects that are beneficial, then this money is going to let them is going to give them that opportunity to cover those costs. So that is really excellent for farmers, but yes, there are some things that are being left out. And I think one of the main things that people might be criticizing about it is that, you know, during the pandemic, we learned so much about food hardships in this country, especially with our minorities and the inequities there. And something that had originally been included in the build back America act earlier that is part of this was that they were going to allocate a lot of money to provide free lunch and breakfast to kids in public schools all over America, which is very important. We all know that a lot of these kids that, you know, are living in poverty, this is the opportunity they have to eat a healthy nutritious meal, but that did not get included. It got left out this time. And I think there's some disappointment in that supporting what we have really learned about the food hardships in America and fighting hunger.
Phil:Absolutely. And, and hopefully, you know, what this bill has done is hopefully open up the door, both on climate and on, you know, food nutrition programs and so on. So that it's the beginning of it not, not the end of it.The other thing that I found really interesting going through the bill in more detail, which hasn't been talked about a lot is that it also gives$500 million to help gas stations retrofit their pumps to take fuel containing 15% ethanol, rather than just 10% ethanol. And, if you recall, oh, this goes back probably about two years ago on Farm Food Facts, we talked to the CEO of POET, which is one of the biggest ethanol, producers, I think, in the world. And he talked about if, if they could up it from 10 to 15%, ethanol in our gasoline, the impact, on the environment in a positive way would be huge. So lots of good things. It's still a story that's evolving that we have to understand a lot more, but kudos for, you know, for the Senate and the House passing the bill. And I think it's gonna help us all. Let's switch gears a little bit. There's a new report that came out of Mintel. And, what they're saying is that if in fact condiment brands want to succeed, they have to put more work into engage younger and more diverse audiences. What's that all about?
Sally:Yes, apparently our younger generations are not into condiments the way that we are. This study found out that younger consumers under 45 are less engaged in their older counterparts and that, you know, those over 45 tend to have six or more condiments in their fridge at any given time while those under 45 or more likely to have fewer than six product types. So this is really interesting to me. I am a huge fan of condiments. Sometimes I feel like I'm just eating a food so that it will deliver that condiment to me. But I think, you know, what we're seeing in flavor trends is we're seeing some of these condiments, these makers of condiments, branching out into more modern flavors, more interesting textures, things that maybe these younger generations will be more drawn to.
Phil:Yeah. I think, I mean, when I look at this report from Mintel, you know, they're talking about more restaurant centric flavors. The good news is that nearly a third of product launches that they found in 2021 carried cleaner formulation claims such as no artificial ingredients, organic, no and low positioning, significantly out-ranked supplemental claims, such as protein or fiber, not sure how much protein or fiber is in the average condiment, but I'm just wondering if a report like this gets a lot of these food companies to come up with wacko flavors that are gonna, you know, be gone in, you know, in six months because nobody's gonna buy them.
Sally:Well, I don't know. What do you think about Hines 57's new condiment flavors that they've come up with, you know, and these, some of these are crunch sauces. So they've got that texture in there. Mandarin orange miso crunch, garlic roasted crunch, chili pepper crunch. What do you think of those?
Phil:I'm not a big fan of Hines 57. Let me start there. I think it's interesting, you know, they also have infused honey.
Sally:Sorry. You're not from the south. That's why.
Phil:I'm not. Infused honeys, flavorful honey sauces in hot chili and black truffle. You know, that's nothing new. I think that their crunch sauces to your point is really an innovation is something new and exciting. Their honey's don't get me excited, but I'll try it. I'm gonna try the Hines 57 crunch. And, I don't know, maybe it'll make me wanna, you know, move to Georgia or something
Sally:Maybe.
Phil:So, Joanne Trewern, sustainable diets manager at the world wildlife foundation in the UK, did a study and she wrote about it in food weekly, and basically, worked with two different supermarket chains. She also says in her column that we make over 200 food decisions a day. A lot of them, you know, are subconscious if you would, but what she found is during veganuary, which is a big deal in the UK, they were able to increase dramatically. The foods that people ate that were plant-based, by just doing some very simple things, putting them at eye level in the shelf, putting better signage, putting it at the end of the aisle, having some price, promotions, loyalty card incentives. And the interesting thing to me, not only did sales go up 58% during veganuary, but also maintain that three months after, at 15% higher, it didn't affect the sales of meat. So what it really proves to me is you can have more plant-based foods in your diet. And that doesn't mean that the meat industry, you know, is gonna go outta business and, you know, people just have more of a balance to it. So I really applaud what she's doing. And what do you think about, you know, veganuary? For a while you were a vegan.
Sally:Yes. Three years. I was. And then I switched, back to flexitarian. But I love the veganuary concept and, you know, it would be great if we could practice something like that here in the United States, particularly in January as a time when people are focused on,"okay, I've gotta eat healthier. I need to change some of my habits." But what I really liked about this research on these two supermarkets was, you know, that they really found that engaging with the consumers and helping them learn how to prepare and use these new items that they weren't accustomed to buying really made a difference in them adding that to their basket.
Phil:Yeah. We need more studies like this that are more realistic and also show these kind of results. There's a new study that also came out of the UK from the poll agency, their consultants, they served over 2000 UK consumers. And what they found is 68% of consumers said they were uneasy or unsure about brands supporting climate change, black lives matter, LGBTQ, equality, diversity and inclusion and female body confidence. 8% of them said they would actively avoid brands that support these causes. So I guess the question is, are brands stepping over the line as a way to either get positive publicity align their values with consumers? But it just doesn't sound like it's working.
Sally:Yes. It seems like, you know, reading this statistic that when brands get involved with social causes, 58% believe it's insincere, which is woke-washing or greenwash. And that to me is the key part of this. You know, it's not that people aren't interested in supporting these causes. It's just that they don't believe maybe that their retailer or this brand is sincere in getting behind it, you know, it's interesting when target for pride month target, you know, really brought out a lot of pride products into their store, which was really fun and exciting and cool to see them supporting that. But I did hear, you know, quite a few people talking about how it was opportunistic on Target's part and maybe, you know, just let's make money off of people. So, you know, I think those consumers have to know that you really mean it.
Phil:Yeah. I have to put your money where your mouth is. And if you're gonna support something like that, you've really gotta make a commitment 365 days a year to support it, not just to be opportunistic about it. Talking about opportunistic, would you buy a Cinnamon Toast Crunch, Lucky Charms, Trix, Cocoa Puffs, or Honeynut Cheerio candle? What? Here's what bugs me about this. First of all, most of these cereals have no aroma. I mean, there's no aroma to lucky charms. It's just all artificial colors and flavors and things like that. I don't remember when I was a kid and I used to like Trix, that Trix had any aroma to it. Why is General Mills selling, and there's 23 different varieties of these candles, goes from a four ounce candle for five bucks, 11 ounce candles, 12 ounce candles, 13 and a half ounce candles. Target is selling this. They've got gift sets with Lucky Charms, Cocoa Puffs and Cinnamon Toast Crunch. You know, I mean, if in fact I wanted a candle that smelled like Lucky Charms, why would I want one that smells like lucky charms, Coco puffs and Cinnamon Toast Crunch and have all these aromas, you know, bombarding my house? I think this is the stupidest thing ever.
Sally:I think about those KFC logs that they had, you know, a few years ago, they came out with those around the holidays so that you could throw the logs in your fireplace and your house would smell like KFC, which I guess like. But what was so interesting to me is to hear that, you know, Target is reporting that the candles are their largest growing household item at the chain and online, they have available over 955 choices. So, you know, I guess cereal candles could be a thing. I think my kids would be into it.
Phil:Really?
Sally:Yes, I do. They wanna eat Lucky Charms so bad, you know, and I try to keep my kids off of unprocessed or highly processed food and bad cereals. Yeah. But once in a while, I let them have something that's, you know, junk food. And we recently this weekend, actually, we got two boxes of Lucky Charms because they said,"mom, it's been a while. We really want that for breakfast".
Phil:So, so your feeling is that if you get the candle right, just permeate the house with that aroma or smell or stench, that the kids won't want to eat it.
Sally:They won't ask for the cereal. Yeah.
Phil:Got it. Thanks, Sally. On today’s Bullseye, we go beneath the surface to look at Amazon’s purchase of iRobot. On August 5th Amazon& iRobot announced they entered into a merger agreement where Amazon will acquire the iRobot cleaners for approximately$1.7 billion. I’ve always been impressed by the Roomba– I have one– but it is limited to those rooms that don’t have a lot of furniture, table and chair legs and other obstacles. More often than not, mine“gets in trouble”– beeps and I have to rescue it from danger. Now to be fair, I bought mine several years ago and the Machine Learning and AI software I’m sure has improved to avoid these kinds of mishaps. So why did Amazon pay so much for this device, no matter how cool it is? Of course, it will connect to Alexa and be able to do things we haven’t even imagined yet. But in my opinion, Amazon bought the company and its intellectual properties for two basic reasons. The first is to get quickly into the robotic business(same as they did in buying Whole Foods to move fast into grocery) and most importantly– here’s where the fine print comes in– to be able to map out inside the homes of the more than 40 million homes worldwide that have bought home robots from iRobot. While the company is best known for its vacuum they do a lot more: they worked with NASA on the first Micro Rovers, sent robots to reveal the mysteries of the Great Pyramid of Giza, found harmful subsea oil in the Gulf of Mexico, deployed the first ground robots used by US forces in conflict and created the first self-navigating FDA approved remote presence robots to hospitals. Last year they also acquired the Aeric Cleantec air purification company. Amazon bought a lot more than just robotic vacuums to sell on its website– they bought the intelligence that could challenge Ocado and Kroger in micro-fulfillment centers around the globe as well as being the first one who can integrate your grocery purchases on line, that are then delivered by robots, and then put away in your pantry and fridge– and always in the right space. Yes, Amazon has taken Rosie the robot from George Jetson and added a lot more. Sally, do we have any comments?
Sally:We do Phil. We've got some comments from John Pandal. He says"I have an HEB branded butter tortilla scented candle. Just say no."
Phil:John, John, you're killing me here.
Sally:And, and to add to that, Mary Miller also said, you know, that the cereal candles were a hard no for her.
Phil:Hey, Mary.
Sally:We've also got John Pandal commenting about the socially conscious brands in stores. He says, go woke, go broke. And he also says 200 food decisions a day. You mean like, just say no, every time I walk, buy the refrigerator.<laugh>
Phil:Exactly.
Sally:And he is got one more for us under 45. People have a drawer full of Condiment packets from takeout delivery meals, no soy sauce or barbecue sauce in the fridge, but Chick-fil-A packets everywhere. I totally agree with him on this.
Phil:Well, Mary, John, thanks so much for joining in on the discussion, for the rest of you, throughout the entire week, get online, let us know what you're thinking about. Let me know if y ou agree with me about Amazon's purchase o f i Robot. This could be a game c hanger for the supermarket industry. So watch this space carefully. In the meantime, I hope you'll visit Supermarketguru. com. Look at our archives, look at other articles that we're posting. And until next Monday, we will wish you a great week and we'll see you back here.