Welcome to The Lempert Report LIVE
Welcome to The Lempert Report LIVE
Welcome to the Lempert Report Live. On today’s broadcast Dollar Tree Dinners is a hit and Dollar General wants to grow, cost of food declines– but prices are still rising and what one retailer is doing about it, oh no– the Girl Scout cookie shortage and why its important, Women take a lead in food, how your local fast foodery is about to change and on the Bullseye– finally a recalibration for brands. Today at Denny’s and Dunkin its free coffee to celebrate daylight savings time. And if you happened to be at SxSW and at the Variety Power of Comedy Awards I’d like to hear about it. Inspire offered attendees Crispy tater tots from Sonic Drive-In topped with gyro meat from Arby’s, cheese, and tzatziki sauce, the Chick’n& Waffle ice cream from Baskin-Robbins that comes with a actual chicken honey garlic-sauced boneless chicken wing from Buffalo Wild Wings, soft pretzel twist bite from Sonic with a Dunkin’ glaze, A cocktail made with Jimmy John’s pickle juice-infused-Arby’s curly fry vodka, simple syrup, cucumbers, mint, and lemonade, with a Jimmy’s pickle garnish to name just a few of the tantalizing treats. I don’t think so! Tell us what you think of these concoctions in the chat and we will share your thoughts after the Bullseye. Let's get started. So, Sally, I am fascinated by a girl by this 30 year old, by the name of Rebecca Chobat. She comes from North Carolina. She has this TikTok channel, th at teaches people how to live off Dollar Tree groceries. She has a bunch of videos that range from, you know, some that are close to 750,000 views. She has 10.2 million likes, 750,000 followers. And what I f ind fascinating, she started her You Tube channel about seven or eight years ago. Originally it was about budgeting. Then what she did is she actually had gastric sleeve surgery. She lost 120 pounds and actually chronicled that on her YouTube channel, which led to her now doing these recipes. Not just about healthy food by any means, but foods that you can buy from Dollar Tree to save money and have tasty dishes. And I just think that what she's doing is really cool.
Sally:I agree, Phil, this is, you know, as we know, our younger generations are really great at creating content for social media, particularly TikTok and a lot of them are really supporting retailers and brands by teaching people, like in this case, how to shop at a Dollar Tree. For$35 a week, you can feed yourself three meals a day. It's incredible that she's found a way to do this. And what's even more interesting to me is that, you know, not only is this such a great service to people who are struggling with buying food right now with the prices, as well, but these dollar stores are getting a lot more customers these days. And as they continue to expand their stores and to expand their offerings into fresh foods, mo re frozen foods and canned vegetables and things, then there's go nna b e a lot more opportunity for Rachel to show us what we can do with all of these different items at a very low co st.
Phil:Absolutely. And, what I love about her TikTok videos is they're not fancy. But what she does is really focus on content versus the glitz. So it's great. And as you point out, bo th dollar stores, D ol lar Tree and Dol lar General are expanding. Dollar General, just last week, said they're gonna open up more than a thousand new stores. Their penetration of refrigerated and Frozen continues to increase, whic h I think is fabulous, great news for all of us. And good for them to see the trend and then react to it. Talking about trends, the cost of food has declined, but grocery bills are still up. To me, this is a food crime. What they're basically saying is that the cost increases give food makers an ability to hike prices above wha t th ose increases called for boosting profits and correcting what they saw as two lo w cos t pr ices in previous years. It's amazing some of these quotes. A friend of ours, Mark Lang, who's an associate professor of marketing at the University of Tampa, M ark has also done a lot of work for the Mushroom Council, was quoted in this, th ey are, to me, absolutely profit ta king, Co nAgra and Hershey reports hig her pr ofits in their most recent quarters. And, you know, actually what happened is Sean Connolly, who's the CEO of ConAgra said at a conference how ConAgra was able to raise prices without losing sales by volume. He said the prices were just too low in frozen pre- pandemic. What we've been able to illustrate for the retailer is the co nsumers welcome a$4 and$5 0 unit or package, because at that price of fr ozen meal is still a good value. They have Mari e Cal endars, they have Bird's Eye, th ey've got Healthy Choice. And, you know, at$4.50, it's probably about double what it was prior to that. And as we've talked about here before, you know, Coca-Cola's CEO quoted again, sa yi ng we've earned the right to price with the consumers. So what can we do here? These food companies are just making tons of profits. They're not reducing prices. What's, what's the next step for a consumer?
Sally:Yes, it is, it is frustrating to see that the cost of ingredients are down, agricultural commodities are down and still yet, consumers are not getting any relief. We have heard t hat transportation and labor costs are up, but still the message is very unclear. And what is coming to consumers is, well, you'll pay it, so we'll charge it. And I think that that is a very, s cary territory for brands and retailers to get into if they retain the loyalty of these customers they've had for so long.
Phil:Absolutely. And there's a couple retailers who are fighting it. I mean, most retailers right now are not just taking the price increases. They're saying that,"Hey, you've gotta prove that you really need it." But Winn-Dixie just announced, a n d t hey've had this program since 2016, called Down Do wn, bu t they've just released the latest of f erings of 15% savings on more than 150 food and packaged goods products in the store for the spring. They do this every quarter, Do wn Down is de si gned to help customers get more for their money on frequently purchased items. Also across the pond in France, the F rench government said last week that it has ma de a deal with major supermarkets to cap many food prices. What they're trying to do is cut prices for a wide range of foods, the ch oice of which f oods are up to the retailer, basically April to June, they want to tur n i nto what they're calling an anti inflation quarter. So do we think that more retailers are really gonna put pressure on these brands and just not take this, I kno w that Hy-vee and thei r n ew stor es, they now have little stickers with arrows that poi nt d own to show a price reduction. Price is becoming, you know, the number one issue for consumers when they go into the supermarket.
Sally:Yes. And, you know, it does sound like a really beneficial program that the French Prime Minister is putting in place the anti inflation initiative. He's telling us that t he selective products will also come with a logo, called the Anti Inflation Q uarter that features the colors of the French flag. I think that that, you know, sort of signaling to people is great that these retailers or products have gotten on b o ard t o help support their country and the price of food. So I think that that's something people will really embrace, at least the consumers.
Phil:Absolutely. And talking about, you know, prices and problems in our supply chain, there's a shortage of Girl Scout cookies. Just to give you some idea of what we're talking about here. You know, Girl Scout cookies are sold in a short season. In that season, it amounts to$800 million, th e equivalent of about 200 million packages. And Little Brownie Bakers, w hi ch is owned by Ferrero in Italy, has had a problem, be ca use of we at her conditions. They've had power outages, they've had probably disruptions for the past three years, in their production, they supply 75% of all the Girl Scou t cookies. The other 25% are supplied by ABC Bakers. And the bottom line is for certain products like the New Raspberry Rally, that' s a new flavor this year. People have bought them and they're being sold on eBay for$35 bucks. And what's important to note is that any money that the Girl Scouts make, stays in their local chapter. It doesn't go to a big organization somewhere, where they can rent office s pace and pay high CEO salaries. This is money that actually stays in that local community. And when people do stuff like this, the Girl Scouts, you know, they made a couple bucks on the cookies to begin with, but the person who's making the big bucks on eBay, none of that money goes to Girl Scouts. And I know that your sister's involved in in Girl Scouts. What does she have to say about this?
Sally:Yeah, so my sister has been involved as a troop leader with her daughters for many years now. And, you know, they sell a lot of cookies. They have a really big program where they do that. And you know, what she has told me is exactly what you're talking about here, Phil, is that this is a great organization that for so many decades has been supporting programs and healthy, strong, inspirational growth for young girls. And we want that money from those cookies that those girls are out there selling. We want that money to go to them and support these programs for them. So, it is something for people to keep in mind that, you know, I mean, do you really wanna pay$35 for a box o f raspberry rallies? It's not so much about the cookie, although I know some people love them and love the taste of them. It's really about supporting this program.
Phil:And, also, this points out, you know, a problem for the Girl Scouts having, Ferrero occupies 75% of their capacity, f or this program, you know, is dangerous. The past three years, they've not been able to keep up with it. They're putting up a new plant in Illinois that supposedly once it's built, solves these problems. And also because there's just two suppliers, the Girl Scout cookies that you get in Nashville may be a different recipe than the ones that I get here in Santa Monica. So I think that the Girl Scouts need to bring in, you know, somebody who knows distribution and fo od to really even this out. So everybody uses the same recipe, same formula, has the same variety of products, and they don't get into the si tuation again. You know, if you look at what Ferrero has been able to supply 84 million packages, b ut again, you know, 75%, the last time I looked of$200 million is$150 million. So they're just about half of what they need to, and this is Girl Scout cookie season. If they don't get'em now, they're not gonna get'em. So let's support the G irl Scouts, let's keep it local and, h ey girl Scouts, you know, it's time to really look at your supply chain and see how you can fix this so it doesn't happen again. This month is Women's History Month and there's been a lot of articles written about these women who are running food companies, and food influencers. And for me, I can think of tw o, a nd Sa lly, you might have a lot more, but Rachel Berliner from Amy's Frozen fo od, she started it in her kitchen. It's a huge brand. Well, well lo ved b rand. And also our friend Mar ion Ne stle fr o m N Y U. T o me, thes e are two powerhouse women in food. What are some others we should know about?
Sally:Yes, agreed on both of those. And we are seeing more women-owned businesses. In fact, there are 114% more female entrepreneurs now than there were 20 years ago. And what's wonderful about having them in food, i s, you know, a lot of these women are moms or have been moms, and they really seem to care about the planet and nutrition and food waste, and making sure that there is accessibility to food. So, you know, I've picked a couple here to talk about that I think really support these major issues that we face as a world right now. Starting with Julia Collins, who founded Moonshot Snacks in 2019. Now this is a black and wom en ow n ed pr oduct. It's plant-based. It's a climate friendly cracker, and it is sourced from regeneratively gro wn in gredients. Very, very important. We are hearing a lot about regenerative agriculture and how good that is for our planet. Also, I wanted to point out, Hema Reddy who is a former director of marketing for I B M. And she is the founder of the first plant-based hard boiled egg, Wunder Eggs. Now, this comes at a great time just because it's also because it's great for the planet, b ut also a lot of people are choosing more plant-based diets, even going vegan. And also the price of eggs been pretty high lately. So this may grab some attention. I don't know how much they cost, and then I also wanted to point out, fo under and C E O o f Hungry House, Kri sten Ba rnett. This is in New York. This is a place for food brands and concepts to focus on, to come and focus on sustainability, diversity, quality, and transparency. All of these values that we are talking about that we need more in the food industry. And I love these companies that provide a space for new entrepreneurs and food maker s to c ome in and learn how to get their products out there and learn how to do it the right way.
Phil:Absolutely. And it's a great time, a great month to celebrate women in food as well as all women, no matter what it is, but we just care about women in food. It's that simple. And, if I look at, f or example, Colleen Wegman, f rom Wegman's, a s Danny has passed th e b aton on to h er, she's doing a fabulous job at o ne of the best retailers in the nation, probably in the world. So, you know, we celebrate women in fo od, no question about it. There's something NOT to celebrate. Basically what we've seen during the pandemic is a lot of fast food restaurants, obviously their sales from drive-through have increased dramatically. Sales of the restaurant people dining in is down about 16% and, 39% of all sales, a t a fast food restaurant goes thr ough th e dr ive-through. So guess what they've decided to do? Let's get rid of in-store dining. And you know, why have to deal with the space? Because they can take that space put in more drive-through lanes rather than just having one drive-through lane. So people can pick up things faster. They don't have to clean it, they don't have the labor factor involved. It's a way to get, you know, b ottom line, is more money per burger that you sell. But I think it's gonna backfire on them. I think that there's still a lot of people who, you know, if 39% of your sales goes to t he i r dri ve-through, well guess what that means? 51%, no, 61%, go th rough people who are coming into the restaurant and sitting there. So, you know, we've gotta weigh that out. And I think that it's a knee-jerk reaction the same way we saw with 15 minu te delive ry and so on, that probably in two or three years, all these fast food restaurants are gonna have to go back to built-in seating.
Sally:Yes. And you know, for me, I think about small towns and I think about when I was a kid and we didn't have any fast food restaurants until I was in high school. We got a McDonald's, and it became, not only was it a place where an inexpensive place where people wanted to go and have sit d own and have some food, but it also became a place, a safe place for young people to go and hang o ut and have food together. It was a hangout and it really meant a lot to our town when it ca me, we got it. So I wonder if there are still some people out there that, you know, the food isn't that great enough for them to just want to drive through and get it, you know, there's another element missing that if we take out the dining rooms.
Phil:Absolutely. And, and you're bringing up a great point. I remember my second job in life when I was 16, I guess, is working at a McDonald's, in Belleville, New Jersey. And that's what it was. It was a hangout, probably it was a hangout because all of our friends used to come and we used to give them free cheeseburgers, but I guess I should not admit to that. Thanks Sally. The past week I had a great opportunity to talk to someone who's a labor organizer, someone who works for Starbucks, and Tyler told me what's really going on behind the scenes at this labor movement at Starbucks. For the full episode, just go to supermarketguru.com, click on the lost in the supermarket link, and you can hear the entire interview. But in the meantime, take a look at what he has to say. So let's talk about, you know, where we are today. And Tyler, I know that there w as, a n individual, wh o, who was fired from Starbucks. He wa s a union organizer. Like you, h as a video up that on TikTok has ove r 17 million views. are are people just, you know, getting involved in the union to get famous
Tyler:Yeah. I think that, first of all, no, absolutely not. because, you know, over 200 workers have gotten fired, and I imagine over 200 workers have not become Ti kTok f amous, as much as I'm sure they would love that. I think however, that we've utilized, th es e social media platforms like TikTok, like Twitter, like Instagram, to co nvey our message and our experiences to a broader audience, we understand that Starbucks, real ly puts a lot of investment and fai th into its PR and, an d h ow th e public perceives them. And so we understand that, you know, the average customer may may no t be coming into our store knowing all about the union or what Starbucks has been doing, but if we can raise awareness to that, then we can add more supporters to our cause as it were. so I think that, you know, getting that information out, via so ci al media platforms like TikTok is incredibly important. And in many ways it does go viral because I think that our struggle as you know, millennials or Gen Zers, is rela ta ble to a lot of people. And when they, when the veil is lifted off of, you know, the, the good PR image that Starbucks has, a lot of pe ople wanna, you k now, broadcast that and support it. So no, I don't think we're trying to become TikTok famous, cuz I, my vi r al video hasn't happened yet, but maybe this will do it
Phil:On today’s Bullseye– it’s about time. As food brands are being squeezed with higher labor, raw ingredients, and transportation costs they are finally shedding the shelves with slow moving products. This will finally change the narrative in the supermarket and frankly send a lot of brand managers who have relied on lame brand extensions packing. Yes, it started with the pandemic as the CEO of Progresso soup announced he was cutting their SKUs in roughly half to ensure that their production capacity could meet the needs of shoppers. He also found that there were over 25 varieties of chicken and noodles in their portfolio. Progresso was not alone as many food companies had to focus on their best sellers and leave the laggards behind. You might think that meant more efficiencies and would prevent what we are now experiencing at the checkout with higher prices. But there is a lot more to it than just efficiencies. Less employees and higher wages coupled with higher transportation costs and higher raw material costs and then came the floods, and droughts, and hurricanes and all the other effects of climate change. For a food company– a perfect storm if you will. Executives at Nestle and Unilever have been quoted as saying they have seen billions in savings after ditching the laggards in their product portfolios. Nestle said cutting products saved$1.06 billion, while Unilever said the practice saved$2 billion. Unilever is reducing the varieties of ice cream it sells. The company is using artificial intelligence in its'Polaris' program to help manage its assortment and cut its ice cream products by about 20%. Unilever trimmed about 5,000 types of products in the personal care category. At Kraft Heinz they have initiated a“decomplexity program”(who comes up with these phrases?) they announced at the Consumer Analyst Group Conference. One of the brands that bit the dust was Heinz Real Mayonnaise, which is a shame as it had no artificial flavors, colors or preservatives and for me had a more delicate flavor. And tasted good. It just didn’t have the marketing push to make it a viable alternative to Hellman’s/Best Foods as they focused on selling it in foodservice as pillow packs and the consumer thought that they were getting a second-rate product. For our UK viewers, you are lucky you can still get it across the pond. It was best said by Martin Renaud, a top marketing executive at Mondelez, who told Reuters the chocolate manufacturer has"too many flavors.""We sometimes have the tendency to launch a lot of things because they are exciting, but we need to be very rigorous," finally someone who understands we don’t need 20+ varieties of Oreos. Kellogg Co discontinued its line of Special K protein shakes and Nestle axed Lean Cuisine paninis, frozen Sweet Earth Benevolent Bacon, and Sweet Earth Vegan Hot Dogs; any one ever thought those were good ideas? I am glad to see that our CPG brands are finally cleaning up their offerings and focusing on those products that most shoppers want. It’s the smaller brands, for example that you’ll find at the Fancy Food Show that can fill in the gaps for the varieties that are being discontinued. Our major brands simply cannot afford to sell small quantities of products– but these smaller companies are designed to do just that. The outcome shouldn’t be shrinkflation or increased prices to the consumer so that these monolithic brands can make huge profits for their executive suite or shareholders– it should be to pass on the reduced costs to the US consumer who still has sticker shock at the checkout. The Lempert Report is all about inspiring ideas, making our industry think and challenging each other. Let’s think about“being the shopper” and how we can bring our supermarkets and restaurants closer to meet their needs. I hope you’ll come back to join us on next week’s installment of The Lempert report LIVE when we focus on the biggest and best insights– and the things that really matter. Be sure to visit SupermarketGuru.com for the latest marketing analysis, issues and trends and don’t forget to join us back here next Monday at 2:30pm Eastern for more.