Get ready as we pull back the curtain on the retail world, where a colossal merger hangs in the balance. We're breaking down the proposed union of Kroger and Albertsons, scrutinizing what it might mean for suppliers, consumers, and workers alike, and we're not shying away from the contentious payout for Albertson's executives. We'll also give a nod to FreshDirect's commendable drive to support New York's local brands and the uplifting impact it might have on local producers. Plus, we're shining a spotlight on the diverse local businesses that FreshDirect is featuring this August.
We're also shifting our focus to Harvard telling their graduate students to apply for SNAP benefits. We'll switch gears to discuss the unanticipated health benefits of watercress - the superfood you never knew you needed and ponder whether it will soon grace your fast food orders. We'll wrap things up with a critical look at the proposed Protecting Kids on Social Media Act, the need for stricter regulations on social media use by children, and remind you to check out new initiative Food Not Phones. Visit foodnotphones.com for more.
Welcome to the Lempert Report LIVE. On today's broadcast how Kroger and Albertson CEOs are selling their merger to America. Fresh Direct goes local. The side effects of Ozempic and Wegovy - does anyone really care? Harvard's latest problem. Ever wonder what the world's healthiest food is? Well, we're going to tell you, and it might surprise you. On Food Not Phones no one thinks that social media is good for kids. And on the bullseye, it's all about Subway's new positioning as it prepares again for sale. Don't forget to go to Food Not Phones. com and join us for National Food Not Phones Day on September 19th. Let's get started. So, Sally. Last week we saw the two CEOs of Albertson's and Kroger issue a video and it looks like they're trying to sell the public on this merger. Just to quote Rodney McMullen, CEO of Kroger. "The combination of Kroger and Albertson's is about creating more opportunities more opportunities for our customers to find the foods they love at lower prices. More opportunities for associates to grow their own their careers with us now and in the future. And the growth extends well outside of our doors. We see more opportunities for our farmers to see more of their crops and more places and more opportunities to bring communities across America to the food families that need to thrive. So what's really interesting is reading between the lines. This video campaign sends a signal to me that says they're probably a little bit more concerned than they were a couple months ago about this merger. It's currently under antitrust review. The FTC and the Department of Justice are more closely scrutinizing these mega deals. We know that they've said they have to invest originally, sorry, divest themselves of 300 stores. Now they're saying 650 stores. When we first reported on this, we said it's probably close to a thousand stores. They've been having conversations with Ahold about getting some stores and Amazon Whole Foods, which is one that we predicted out there. What do you think? Do we think that this ad campaign is really going to do something worthwhile, or are they just really nervous at this point?Sally:
Well, Phil, these are the two largest supermarket chains in the country, and so this is a mega deal, and obviously will take a while for the FTC to review this, but they seem to be pretty confident that they're going to push this deal through. The unions are pushing back against this, the teamsters are pushing back against this. I wonder, is this a slippery slope for the potential for suppliers to be squeezed? They talk about farmers, their farmers being supported, but what about all farmers and agriculture? And then we also think about the consumers and the employees at these stores. If there is not enough competition in the market, then what will that mean for food prices for consumers, and what will that mean for wages and employee benefits?Phil:
Yeah, and also I think that they're getting much more nervous, even though I think it was last week, or the week before, there was a judge that threw out a couple lawsuits. They were trying to prevent it, but what's come out which I think is really damaging for them and going to be in the headlines a lot is that with the deal, the executives of Albertsons would get about $146 million payout if this goes through. That's a lot of money and I'm just wondering if, in fact, the unions and those people who are against this are really going to play on the fact that the Albertsons execs are going to make $146 million if this goes through. And, to your point, what does that then do to prices and employees and everything else? So stay tuned. We're going to keep on following this, more to come. The whole industry is watching this because it will be game changing. One retailer who I think has done a fabulous job e-commerce retailer Fresh Direct, located in New York. They are announcing August as their local month. It's all about supporting local New York brands. I think that this is probably the first time that we've seen any e-commerce platform support local. We know that when people go into supermarkets and they see signs that say local, it increases sales. It's one of those magic words that are out there and I give kudos to Fresh Direct to doing this, not only supporting the backbone of their community, but frankly, it's a great buzzword to get consumers that might not be on Fresh Direct to go to Fresh Direct. What do you think?Sally:
Absolutely. I feel like this is a wonderful effort that Fresh Direct is making and wonderful for these local producers. I can honestly tell you, Phil, that even though I know there are a lot of local food producers here in Tennessee I can't name one from going into my Kroger or my Publix. There's really not a lot of featuring of those products, and to see them featured online in this way is wonderful because they're offering deals on different products and featuring individual products from these local producers and it's also an opportunity for their story to be told a little bit, which we know that consumers respond to local foods that have a story. They like knowing about where their food comes from, they like knowing that it goes to supporting a small business, that it supports their community. So this is a great effort to get the word out about these companies.Phil:
Absolutely, and just some of the companies that are being featured in August is Chloe's, which is frozen novelty, plant-based treats, Bread Alone organic bread, and what I love about this is you can now compost your BPI-certified, commercially compostable bread bag. That's their point of difference and hopefully the bread tastes great as well. Adirondac Creamery, what they did is they started as fundraising for refugee aid. However, it's extremely high quality ice cream made with New York state milk, very high butterfat content, making it extra rich and creamy. I want a pint now. Hepworth Farm, seventh generation farm in Milton, new York, that has over 400 varieties of organic vegetables tomatoes, peppers, eggplant, zucchini, cucumbers. Altabeli farm in Kinder Hook, New York. Bi-color Corn and one of the things that I miss being on the West Coast is corn. This time of year on the East Coast is just so great to throw on the grill. And Ithaca Hummus, where what I didn't know is most brands blend their hummus while the chickpeas are still hot. Ithaca cooks the chickpeas and blends the hummus cold to keep the ingredients fresh. So Fresh Direct good for you, great idea I've supported. Hope it continues, not just through August, but having fresh food featured on Fresh Direct all the time, I think would be a really cool idea. What we're seeing is more news about these weight loss drugs. Washington Post has a terrific story about the fact that people on weight loss drugs are forced to balance uncomfortable side effects with the benefits of reduced food cravings and the shedding of substantial pounds. Whether it's Wegovy or Ozempic or any of the others that are out there, this is probably the hottest topic in pharmaceuticals right now. Wegovy just last week issued a report, a study that found that people on Wegovi were able to reduce their risk of heart attack, stroke or heart disease by 20%. They surveyed over, or studied over, 17,000 people. That's significant. They don't talk about the fact whether it's because you're taking the drug or whether you're losing 20 or 30 pounds, and that's what's improving your health conditions, but clearly what we're seeing are people gravitating towards these drugs.Sally:
Yes, we are. They have become very popular, and that is not surprising considering that we have 42% of our population that is experiencing obesity right now, and so people become very interested in anything that will help them drop those pounds. It is a slippery slope here. There are a lot of things that we'll have to see how they play out, but these side effects that are happening. If these side effects keep happening, what other medications have to be prescribed to people to offset those side effects? That could be one concern. Another concern is are we creating another form of disordered eating If we are just taking medicine and putting up with nausea and these side effects? And is that disordered eating? Or are people learning better dietary habits as they go on this medication and lose the weight? So the jury is out on all of these things, but I think there is cause for concern.Phil:
Absolutely, and the truth is exactly what you said. Are we able to change people's behavior? Is this just something that could start them on it? They start to see losing weight and then they start to eat better, so they have a life change. I mean, these drugs are really made that you've got to be on them for the rest of your life, so right now they're injectable. Most of them are once a week, some are daily. There are some pills that are now being tried to be approved by the FDA to do the same thing. But also the cost of it For those people who are diabetic. Your health insurance covers, I think, the majority of it, but if you're not diabetic and you're just taking it for weight loss, it's between $1,000 and $1,300 per month. So I'm just wondering how many people that are out there that can afford to spend $12,000 to $16,000 a year on these drugs and we know Elon Musk is a big fan of it. He can certainly afford it, but I'm not sure how many people can. And the other concern in this article is that there's a weight loss surgeon in Ventura, california, by the name of Terry Simpson. He said that he's concerned that those customers or people who are getting their drugs from online providers are not getting the adequate advice on what to eat when taking the drugs. Also, the law firm you might've seen their commercials, I see them all the time, Morgan and Morgan, which are these lawyers who sue anybody for anything, I guess says it's been retained by more than 500 clients in 45 states with similar stories about gastrointestinal issues, nausea and the like, to be able to sue Ozempic and Wegovy and others about this. So it's certainly a storm that's brewing and, as you said, it could be a very slippery slope. So hopefully this is just the first generation of this kind of medication and they could solve all these issues so people can actually lose weight in a healthy way without all these side effects. Harvard University did something, in my opinion, that's really strange. Now the thing to know is that Harvard is the richest school in the world, has a $53 billion endowment. I know what endowments are used for, but let's put that on the side. They sent a flyer to graduate students encouraging them to participate in the SNAP program. They have a SNAP benefit signup event in April. Their slogan is fuel your body and stock your pantry. Did you know that grad students may qualify for assistance paying for food and groceries. I just think, and I could be totally wrong, and I know that there's some Harvard graduate students that are there on scholarships, so let's put them on the side, but I know a lot of Harvard students are paying their way, which is probably upwards of 75 or 100 grand a year for tuition. Do you think it's right for Harvard to be telling their grad students to go on SNAP benefits to save money on food?Sally:
Well, there are a lot of things to consider here. Another point is that 30% of Harvard's grad students are international, so they are not even eligible for the SNAP program. So that's almost a third of those students that can't even apply. Now there is a very big problem in our country right now with college students and food insecurity. Not necessarily Harvard we're talking about. We're talking about all colleges and what's happening, and there is a big effort on some of these campuses by an organization called Swipe Out Hunger, where they are trying to set up programs at these campuses to help students sign up for food, for food stamps, because they're having a hard time making it and also the the profile of the college student that we traditionally think of, which is, you know, an 18 year old that graduates from high school and then goes off to college and lives in the dorm and, you know, joins a fraternity or a sorority and has this wonderful experience at college. That has really changed quite a bit. And, you know, Feeding America is telling us that. You know, now we've got 30% of college students that are experiencing food insecurity and 71% are non-traditional students. They are people who are working full time, they are caretakers for dependents, their parents, and a lot of these are not even starting until they're 21. So the the profile of the college student has really changed, but at Harvard I don't know if that profile has really changed.Phil:
I totally agree with you and for those people, and just to give you some idea, I don't have the Harvard tuition but I think it's somewhere around $100,000 a year. Over the past 30 years, tuition and fees for private, nonprofit four-year colleges rose 80%, An average of $39,400 a year. That's according to the College Board. Public four-year college in-state tuition and fees double to an average of $10,940. There's a 64% increase on tuition and fees over the past 20 years on average. So I agree with you. I think that those students probably undergraduate, non-Harvard. Yes, go for it. That's what these social programs are all about. Eat healthy, because if you eat healthy your mind is gonna work better. But Harvard graduate students currently get paid $40,000 a year from the university and then what they're saying is they need $60,000 a year. They've gone on strike twice in the past couple of years to get that fee up. I think we wanna put Harvard as an exception to that rule, or at least I do. Do you know what the world's healthiest food is, Sally?Sally:
Tell me. Well, you know you know what it is.Phil:
But it was a shocking surprise to me, it's actually watercress. So when I think of the world's healthiest food, I think about nutrient dense, I think about all those things I don't necessarily think about watercress. But when I read about watercress actually it's much healthier than I ever thought. I've gotta start eating watercress. They have. They've shown effects that athletes that eat watercress two hours before they compete. It lessens their chance of cell damage. Watercress is loads of iron, calcium, potassium, magnesium, vitamin K loaded with vitamin C as well. I always thought of watercress just a step above, like head lettuce, you know. I never really thought a lot about it, did you?Sally:
I haven't to be honest with you, Phil, but it kind of reminds me of the kale craze 10- 15 years ago, when we all got very excited about the nutritional benefits of kale, which are very real, although apparently watercress is perfect because it scored a 100 out of 100, according to the CDC, so it's even better than kale. But it makes me wonder, you know, are we gonna start seeing watercress chips? And you know other restaurants, and even like fast food restaurants or fast casuals, you know trying to incorporate watercress in different ways. It's very easy to use. You can put it on a sandwich, just like you would regular lettuce. You can use it in a salad, you can put it in a soup, you can make pesto from it. So there are a lot of ways that you can use watercress, but it's not the green that you think of immediately when you're shopping in the supermarket.Phil:
And one big difference and I'm glad you brought up the kale phenomenon. But one big difference is watercress tastes a lot better than kale. I mean certainly baby kale leaves are palatable, but you know, full grown kale not so much.Sally:
In one of the few issues that both Democrats and Republicans can agree on are on the sponsors of the Protecting Kids on Social Media Act. More than half of teens say that social media use is ubiquitous. Depression in teens has doubled over the last decade and almost one in three teenage girls considered suicide in 2021. Senators Tom Cotton, Republican, Brian Schatz, Democrat, Chris Murphy, Democrat, and Katie Boyd, Republican, have all come together for this bill. Sally, what are these bipartisan senators proposing?Sally:
Well, on April 26th, they introduced the Protecting Kids on Social Media Act, and what they want to do is they want to require these programs, these platforms that for social media that kids are getting on. They want to require and certify of age somehow, they want to know that they are old enough and that they have consent from their parents. But another thing that is even more important, I believe, phil, Phil is that they want to crack down on these addictive algorithms that are personalized to children using social media and they are targeted at them to keep them online for longer and longer, and the reason being we all know the reason being is that if they can show that these kids are staying on their platforms longer, then they can sell more advertising and make more money, and this is not ethical and this should be very high concern for our country and our children and what is happening to them.Phil:
Yeah, and the Senators put an op-ed in the Washington Post and in it is some really interesting things. Teenagers report spending nearly nine hours a day in front of their screens. Four out of five kids report spending more time than they intend online. 60% report trying and failing to quit social media because of those algorithms that you're talking about that have made them very addictive. And also what had to be really concerned about this op-ed they found that federal law enforcement says that there's over 500,000 predators online every day. These predators pose as minors. They contact these kids using chat rooms and instant messaging features on social media. I think that these four senators coming together on the Protecting Kids on Social Media Act is really good, really positive, and it's something that I think we all need to support.Sally:
Absolutely, and I have an almost 13-year-old boy and this is a big concern for me, because when we think about social media, we think about Facebook, we think about Instagram, but that's not the only type of social media platform. The gaming world is a social media platform, and that is very, very popular in our youth today, and they are interacting with a wide variety of people out there. That is where a lot of predators have been reported stalking children on these gaming platforms. So this is needed legislation, and I think that these companies should be required to take more responsibility.Phil:
Absolutely, and we're doing our little part with Food Not Phones. So, just as a reminder, join us in our newest initiative, Food Not Phones, where we all commit to putting down our phones during meal times. Join us, along with industry leaders, the FMI Foundation's Family Meals Movement, Acosta Group, Hy-Vee and the Association of Retailing Consumer Professionals. Check it out at FoodNotPhones. com. Make sure that you join the pledge. September 19th is going to be a big day where we have hopefully everybody in America, as they're eating breakfast, lunch and dinner hashtagging #FoodN ot Phones, putting down their phones for that half hour, 45 minutes or an hour and really relating to each other so that we can make a little step in fighting the whole social media phenomenon and bring back some humanity to it. On Lost in the Supermarket, R andi Kronthal-Sacco of the NYU Stern Center for Sustainable Business joined me to discuss the nuances of sustainable messaging and how brands and retailers can take advantage of the amplifier effect and increase their sustainable product sales. For the complete episode, just log on to SupermarketGuru. com. In the meantime, here's just a little glimpse of what she had to say and why it's so important. Consumers resonate with the most and actually move them to purchase those products.Randi:
Yeah. So we found three things that I wanted to talk about. One was that when you couple a sustainable claim with a category claim and when I say category claim, if you're in food, you have to have a good tasting product. If you just talk about the sustainability benefits without talking about the fact that it tastes good for food or washes your clothes, well, you're not going to drive purchase. So when you couple a category claim with a sustained, the right sustainable claim, we found in this study that it has a significant amplifier effect. So, for example, if you only say a category claim, you garner about 44% of 100 of your prospective audience. When you add an environmental claim the right environmental claim, which we'll talk about it goes from 44% to close to 70%. So you it really acted as an amplifier the right sustainability claim. Number two has to do with what's personal. So it has to do with what's in it for me. There's a marketing 101 with them. What's in it for me? And that really, those claims how does it benefit the consumer was the claims that resonated the most and I'll go into those in a second. What's interesting is, for years, sustainable marketers thought if we just tell consumers that buying this product will solve climate change or reduce greenhouse gases, that they will go and droves to the supermarkets to purchase the products. And this data says no. You have to tell them that the product operates in the category that it's operating in and that the benefit is personal. And those right personal benefits resonated across audiences. So, whether you leaned left or right politically, whether you were old or young, whether you were rich or poor, those right benefits that were human was where the great unifiers. On today's Bullseye.Phil:
As we all know, the sandwich chain Subway, with over 37,000 restaurants globally, is up for sale. Get out of that checkbook and there's a lot going on to make the sale more attractive, and for good reason. The sale, or auction, has been going on since the beginning of the year and while there have been discussions, the chain is valued between $7 and $10 billion, according to Franchise Times, and global sales is $17.5 billion a year and no takers. The problem is that the average franchise brings in just about $400,000 a year. That leaves the owner with only about $40,000 to $50,000 a year profit. In comparison, jersey Mike's unit sales are 1.2 million a year. Jimmy John's is just over $900,000 a year. So single store operators have a tough time making ends meet, which is why the chain is pushing existing franchises to build more stores or take over other locations to create many chains under the brand's umbrella. Since January, multi-unit groups have consolidated or required 230 restaurants. Just a kick in the bucket Rottinghaus has 290 subways, GS Dallas 145, and Marwaha Group 137. Changes are here. More TV ads with sports celebrities and naming its Subway Series of sandwiches. Putting new slicing machines in full view of customers and slicing their deli meats fresh in store, even though they're not doing it per sandwich. They just slice it and then they put it back in that steam table tray or not steam table, but cold table store remodels are happening and now their consumer PR campaign has kicked in, which is a weird one that I'm not convinced makes the chain more saleable, but hopefully we'll certainly get them some headlines. August 1st started their consumer campaign, the Name Change Challenge, which lasted only four days, a mistake in my marketing playbook, which offered people the opportunity get this to legally change their first name to Subway. So, for example, Subway Lempert, terrible name. In return, one winner will enjoy free Subway sandwiches for life and the chain will pay the winner's legal fees up to $750 for the name change. Just to put it in the right perspective, depending on what state you're in, you could change your first name anywhere from $100 to $450. The rules do specify that the sandwiches for life is actually gift cards worth $50,000. So let's say you're 20 years old and you're gonna live to 80, that equates to spending $16 a week at Subway for life, the equivalent of two or three sandwiches, depending if you order foot longs or half sandwiches every week. Then there's the tax implications. That cuts it the $50,000 to maybe just one or two sandwiches, depending on your tax bracket. Obviously, there's a conduct clause in the rules. Remember Jared? Well, the winner has not been named yet and the company says it will announce the winner before the end of August. It talks a little bit about the rules, but it looks to me that they're looking for the most creative name. The rules do not stipulate that the winner can't change their name back. Hmm, another issue. This is yet another one of those consumer PR campaigns that, in my book, is ho- hum and will increase the sales that they need to push their sale upwards. Subway. Go back to the drawing board. Thanks for watching.Sally:
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 2.30 pm Eastern for more.