Monday, February 25, 2013

Real is Chobani

Abercrombie to close up to 50 US stores

Abercrombie to close up to 50 US stores

By Anjli Raval and Barney Jopson in New York

Abercrombie & Fitch said it would close 40 to 50 stores in the US this year as the youth fashion retailer’s shares tumbled following weak sales in the crucial Christmas quarter.

Like-for-like sales fell 1 per cent at Abercrombie & Fitch’s US stores in the three months to February 2, extending previous declines in an intensely competitive sector where its rivals include American Eagle, Aéropostale and Forever 21.

The Ohio-based retailer, known for its thumping in-store music and scantily clad male door staff, said direct sales to US consumers, which include its ecommerce unit, rose 5 per cent, although they remain a small part of its business.

In an attempt to offset slower US growth, Abercrombie, which operates namesake stores as well as surf-themed Hollister and Abercrombie Kids, has made a big push overseas and online.

But its international segment performed even more poorly than the domestic stores, with like-for-like sales down 14 per cent.

“The earnings report was just one big giant pool of negativity,” said Brian Sozzi, chief equities analyst at NBG Productions. “Sales did not meet expectations, particularly in its international segment, and the company offered cautious comments on its first-quarter outlook. This is just something the market did not want to hear.”

“Also the company is looking to take prices up. The reason why Abercrombie had done better in recent months was because they had become more competitive on prices, so this is a big concern,” he added.

Despite lower than expected sales, Abercrombie’s net profits of $157m were well ahead of $46m a year ago, beating expectations thanks to lower cotton costs and less drastic clearance discounts than it had offered in the previous year.

But its latest quarterly profits were overshadowed by Abercrombie’s earnings guidance for the current financial year. It said it expected earnings per share to increase by 15 to 19 per cent, less than Wall Street forecasts for a 21 per cent rise. The group’s shares slid 7.2 per cent to $45.54 by early afternoon in New York.

“Our profitability is not where it needs to be,” said Mike Jeffries, chief executive, on an earnings call with analysts, highlighting “a challenging US retail environment over the holiday period.”

The announcement that Abercrombie would close 40 to 50 of its 900-plus US stores – primarily by allowing leases to expire – comes as analysts say that US retailers have more stores than they need in a weak economy where ecommerce continues to grow.

“It is unknown how the customer will respond to the economic situation,” said Oliver Chen, analyst at Citi Investment Research. “The impact of the payroll tax, elevated gas prices and continued macroeconomic uncertainty all led to weaker guidance.”

Sales in its direct-to-consumer business rose 52 per cent while total group sales increased 11 per cent to $1.5bn.

Its gross margin widened to 63.4 per cent from 59.5 per cent.

The company raised its quarterly dividend from 17.5 to 20 cents a share.

Dear Dreamers JC Penney

J.C. Penney and the Future of Retail

J.C. Penney and the Future of Retail

JCPenney in Frisco, TX (Photo credit: Wikipedia)

When J.C. Penney’s CEO Ron Johnson arrived at the company, he embarked on a journey to fundamentally change how the retailer operates. Upon his arrival, the aura of his success as Apple’s head of retail was believed to inject much needed life in what appeared to be a dying company. After the hoorahs quieted, the reality of the task before Mr. Johnson set in. And, for the 15 months that he has been at the helm, it seems the firm has struggled. When instant gratification did not occur, analysts and the media were quick attack.

What is Mr. Johnson’s plan for the company? Actually, it’s nothing new. He’s simply extending a concept that has been in retailing for years. So, what’s that?

If one walks into most any big-name retailer – Macy’s, Nordstrom, etc. – you will typically find the beauty products on the entry level. Whether it is Chanel or Lancome or some other brand, each product maker is “showcased” at its own counter. It turns out that the retailer sub-lets the space to the product maker and the counter is actually staffed by an employee of the product maker, not the retailer. In essence, each of these beauty product counters is a store within a store.

As was mentioned above, the concept of a store within a store has been around for years. The difference for J.C. Penney is that Mr. Johnson is extending the concept to the entire range of products from clothing to bath to housewares. In doing so, one might argue that the retailer has become no more than an operator of real estate . . . simply sub-letting to others. In one sense, this is probably true. Alternatively, there might be a value-add in the way this is accomplished.

Staging the physical layout to enhance the customer experience is no different than staging a home for sale. Staging can be quite sophisticated and can even go beyond sight. Consider Disneyland. Of course, the park is visually rich. And, the obvious added sense is sound. But, the less obvious sense that Disney employs is smell. The scents that one experiences at Disneyland are not coincidental. As one walks down Main Street, one will encounter a scent. Using large blowers, Disney pumps scent into the area. In the morning, when excitement is high, one specific scent is used. In mid-day, when energy is peaking, a different scent is use. As the day comes to an end and everyone is settling down for the Main Street Electric Parade, yet another scent is used. Disney uses scent to create or enhance a mood. One must admit that this is pretty sophisticated.

Bringing it back to retail, consider walking into an Apple retail store. Now, consider walking into some other retailer – use your own example – with a less thoughtful physical layout. It seems that this is where Mr. Johnson believes he will make a difference. His success with Apple’s retail store is in part due to their staging’s effect on the customer’s experience. And, most certainly, he believes that he can extend this concept to J.C. Penney.

Beyond the aspect of staging, there are potential operational benefits of the store in a store model. With the majority of staffing of stores coming from the product makers themselves, J.C. Penney might have lower overhead expenses. With each product maker operating its own “store”, the product makers would have greater control over sales, which might increase sales. Given a sales override, higher sales by the product makers would lead to higher income to J.C. Penney.

Of course, the proof is in the pudding. For several quarters under Mr. Johnson, the company has experienced losses. Its dividend was suspended. Naturally, questions arise. However, should Mr. Johnson’s strategy prove correct and be the future of retail, J.C. Penney should be well ahead of its competitors. We believe that as Rome was not built in a day, J.C. Penney will rise to greatness over time. As such, our firm established a position in JCP for our clients in Summer of 2012.

Update:

There have been many comments about J.C. Penney. Some readers might not be familiar with certain issues. As such, we provide the following.

Prior to being head of retail for Apple, Ron Johnson was the head of merchandising at Target. Prior to that, he was in retailing at Mervyn’s. It would be an unfair criticism of Mr. Johnson to assert that he does not have any background in retailing or that his retailing experience is limited to Apple. One of our firm’s clients worked under Mr. Johnson at Target and has stated that Mr. Johnson is the “real deal”.

The store-in-a-store concept is in fact being rolled out. The operative phrase is “being rolled out.” There are many store locations where it has not yet been introduced. Customers who frequent — or used to frequent — those store locations will still see the former store layouts and would understandably think nothing is changing.

Some JCP customers have asked why anything had to change. ”I liked the old store.” The fact is that fewer and fewer people liked the old store. There was simply not enough people who liked the old store to sustain it. And, the reality is that if nothing changed, it would have likely shut down in due time just like Montgomery Ward. Sentimentality is great, but that sentimentality needs to be shared by enough people to keep the dream alive. For those who liked the styles and fashion that were available at JCP, those styles and fashions will no doubt be available through other stores. Let those stores become your new favorites and let the old JCP be a fond memory.

Saturday, February 23, 2013

Today, Americans are spending $900 more annually on gas than they did in 2009.

Doing the Right Thing or Making a Profit - Which Comes First?

by Eric McNulty | 11:00 AM February 18, 2013

If a company "does the right thing" when it comes to environmentalism, social justice, or some other public issue, does the motivation matter?
There has been much talk about creating social or shared value in recent years. Harvard Business School professors Michael Porter and Rosabeth Moss Kanter are among those who have asserted that companies should care about their impact on employees, communities, and the planet as they pursue profit. Other voices such as Eric Lowitt, author of The Future of Value, have outlined how companies can create value by pursuing sustainability.
The deeper question for leaders is which is the cart and which the horse? Does one pursue social responsibility because it is profitable, or does one endeavor to be profitable with a business model that explicitly incorporates some version of social responsibility? Does it matter?
In my own work, I have come across many businesses that embarked on their journey toward social responsibility because it was a way to save money or increase revenues. I have advised people to fit the sustainability to the culture of the organization: in a growth-oriented firm, highlight the market-expanding opportunities; in a cost-conscious company, talk about saving money. This is a basic tenet of persuasiveness.
The question of motive was posed by Mitch Tyson, a serial high-tech CEO I met at a meeting of the Boston Area Sustainability Group. Tyson was provocative. He said that there was a time when he did not care about why. His particular passion was clean energy, and he was happy so long as it got greater traction. Over time, however, he changed his mind. He came to realize that why is an essential part of the equation for long-term success and impact.
Profit or cost-savings as the primary motive has an obvious weakness: as soon as it becomes more profitable or less costly to do something that is not socially responsible, one would expect the company to pursue that path. A central tenet of those who advocate for shareholder capitalism is that profit should be the only goal of a business: a firm's only obligation is to generate returns for its shareholders. Under this logic, the only reason to pursue a social goal is the belief that there will be a positive financial return associated with that activity.
That evening, Tyson put this question in the context of providing health insurance to employees — a topic much in the news. Tyson said that he could have decided to provide health insurance for his employees because insured workers tend to be healthier, and healthy workers perform better and are absent less often. Instead, he did it because he felt it was simply the right thing to do.
Tyson said that he thought about what he would say to his own family if asked about why his company insured its workers. If it was for purely selfish reasons, that would send one message. If it was because it was the right thing to do, that would send a very different message.
He thought about the ripple effect of that message on his family and the families of his employees. He understood that for clean energy to someday become the norm, enough people would have to be willing to look at various alternatives, weigh both value and values, and opt for the one that was the right thing to do.
I see this debate as part of the most critical job of leaders: to establish clarity about purpose, values, and the business model. Purpose is about articulating what it is you are trying to build. Values define how you will pursue that purpose. The business model spells out how the organization will remain financially viable, delivering sufficient short-term returns to investors while establishing a platform for long-term success. Broadly speaking, for-profit leaders tend to put the greatest emphasis on the numbers; nonprofit leaders at defining purpose, or mission. Clarity about all three — purpose, values, and the business model — is essential for every organization if its leaders and followers alike are to know what is the right thing to do.

It's Cool Again to be 'Made in America'

Domestic Goods Are All the Rage -- But Are They Good for the Bottom Line?

Published: February 17, 2013

Not since the 1970s has "Made in America" been such a hot way to market your product.
On one end is Walmart's promise to buy an additional $50 billion in U.S.-made merchandise over the next decade; on the other are designers touting investments in New York's shrinking garment district as a way to justify higher prices.
At the Financial Times' New York Conference last month, Brunswick Group executive Susan Gilchrist said that Made in America is "not just about the PR opportunities. Purely from an economic view, China is losing its cost advantage."
In 2001, the average hourly wage in China was 58¢, according to data from the Boston Consulting Group. By 2015, it will be $6. Combine that with the high productivity of American manufacturers and low energy costs, and the cost gap will close for most categories of goods to just 7% by 2015.
It's making more business sense to manufacture in the U.S. But does it make marketing sense as the focus of a brand's message?
In a September survey of more than 1,000 Americans by the Boston Consulting Group, more than 80% said they preferred U.S.-made goods, and that they would pay more for said goods. The same questions were asked of 1,000 Chinese consumers: 47% prefer Made in America.
Yet actions and sentiment are two different things: It often comes down to quality vs. a deal. When American-made goods deliver both, it works. "Consumers are starting to make a different tradeoff," says Harold Sirkin, senior partner and managing director at BCG and author of the study. "Retailers are able to sell goods at a slight premium, but not too much."
The push has support from celebrities such as Martha Stewart and Jay-Z. And American manufacturing is the raison d'etre of year-old ad agency Made Movement.
"Made in America will succeed for the same reason organic has succeeded," said Dave Schiff, a founder of the shop. "Just like people didn't want to eat food that was poisoning them, they want to live in a better economic climate."
Made in America is nothing new for some brands. New Balance, American Apparel, Red Wing and Pendleton have been producing in the U.S. for years.
Others are making a push to sell more U.S.-made products. Apple recently announced it would bring some Mac production back to the U.S. And apparel brands like Club Monaco have launched lines and products marketed specifically as "Made in the USA."
Walmart, meanwhile, sells more than $400 billion of goods each year, so some analysts say its commitment is meaningless when it comes to the bottom line. But Walmart spokesperson Randy Hargrove said that two-thirds of its products are "made here, sourced here, or grown here." Most of that, of course, is food -- Walmart is the nation's largest grocer. This new batch of funds will help create jobs in areas where Walmart typically spends overseas, such as apparel, sporting equipment and furniture.

Thursday, February 21, 2013

Google Glass 2

Google's electronic eyewear gets 'OK Glass' voice commands

Hoping to carve out a new type of personal computing, Google shows off how to use its computerized eyewear to search, navigate, chat, and take photos.

by Stephen Shankland

February 20, 2013 4:27 AM PST

This Google Glass video, taken without the need to hold a camera, is part of a video-chat hangout.

(Credit: Screenshot by Stephen Shankland/CNET)

"OK Glass."
Those are the two words that Google showed today will initiate a variety of commands for its Glass computerized eyewear.
In the Google Glass "How it Feels" video, people speak the words "OK Glass" and then pick from a list of featured voice commands to send a message, record a video, take a photo, launch a video-chat hangout, conduct a search, check the weather, or get driving directions.
The demo is a concrete illustration of how Google is evolving its technology from a mere search engine to a constant personal companion that augments your mind.
When Microsoft introduced Windows 95, its Start menu became the gateway for just about anything you could do with the operating system. Google -- expecting to advance computing beyond the era of PCs and even smartphones -- no doubt hopes that "OK Glass" will become as familiar.
The Glass eyewear perches a screen just above a person's ordinary field of view; the device itself is equipped with a processor, camera, head-tracking orientation sensors, and other electronics drawn from the smartphone industry. Google began selling Glass developer prototypes called Explorer last year for $1,500 that are due to ship this year.
Google's site shows off Glass' GoPro-like videocamera abilities, with first-person views of table tennis, swordplay, trapeze acrobatics, jumping rope, sculpture carving, hot-air ballooning, and more. The company is trying to demonstrate it as a sort of real-time video Facebook you can use to share life with others as you experience what's going on around you.
Google's video and "what-it-does" explanation is very much from a first-person perspective, showing what it's like to wear the device. It makes for a very personal experience, reproducing what a person would see and adding an unobtrusive transparent Glass interface in the upper right.
But that's not the whole story of Glass, of course. Wearing the devices might be very personal for the user, but wearing Glass makes you look a bit cyborg. Surely many folks talking to a Glass-wearing person will be put off by the knowledge that there's a microphone and camera pointed right at them. Think of how differently people behave when the camera comes out for a photo op.
In time, people will adjust, as they have to people talking on phones as they walk down the street -- especially if Glass becomes mainstream. Google expects Glass will be ready for consumers in 2014.
Google also announced a promotion in which people who share interesting ideas about what to do with the device get the chance to become a "Glass Explorer," who can then pre-order a $1,500 prototype. The application deadline is February 27.

Google's Project Glass electronic eyewear is "strong and light," Google said.

(Credit: Google)

Google Glass

Monday, February 18, 2013

P&G, General Mills Tap Into Startups

Alliances With Crowdfunding Site CircleUp Allow Big Firms a New Look at Trends

By LORA KOLODNY

Venture capitalists typically pay little attention to consumer-packaged goods startups. But industry giants General Mills Inc. and Procter & Gamble Co. are using their partnerships with a "crowdfunding" site to get to know more about them.
The two companies recently teamed up with CircleUp Network Inc., a San Francisco company that connects consumer-goods startups to individual investors on the Web.

Ben Sklar for The Wall Street Journal

Scott Jensen, left, and Keith Wahrer, co-founders of Rhythm Superfoods, have raised money on CircleUp.

CircleUp is providing trend reports to General Mills and P&G about startups in 18 categories, including pet foods, beverages, snack foods and infant products. The information provided includes which category had the most startups seeking capital each quarter and which types of companies garnered the most interest from accredited investors using CircleUp.com.
For its part, Cincinnati-based P&G said it offers the founders of startups listed on CircleUp mentoring as well as help setting up licensing deals or joint ventures. A P&G spokeswoman also confirmed that P&G may occasionally acquire a startup's business or technology. The company, whose partnership began last month, wouldn't say whether it paid CircleUp for access to data, or for connections to investors and startups.
A spokeswoman for General Mills declined to comment on its partnership with CircleUp. That alliance began in August.
Founded in 2011, the nine-employee CircleUp only accepts 2% of startups applying to raise funds on its site. Since 2012, it has helped nine startups raise $8.5 million in funding, with most deals just shy of $1 million. But it expects to expand quickly in the next two years, as more consumer-goods companies turn to crowdfunding to raise capital.
Rory Eakin, CircleUp's co-founder and chief operating officer, says his company pursued partnerships with industry giants because they're "strategics" whose executives can give a newer company a helping hand, or become an acquirer. "Getting access to companies like P&G and General Mills is not easy," he says. "Our brands were very excited about the opportunity to talk with them."
Mr. Eakin says the firm is on a mission to bring much-needed capital and assistance to worthy companies overlooked by traditional venture funds. The company's partnerships should ensure success, not hurt these smaller players, he says.
Some entrepreneurs, however, are wary about disclosing business specifics—customer lists, how much they spend to do business or the amount of money they have in the bank—online to raise funds. A key concern is whether rivals or potential rivals might be able to make strategic use of such details.
Scott Jensen, chief executive and co-founder of kale chip maker, Rhythm Superfoods LLC, says that he "had concerns about sharing our information" on CircleUp.com. "Anyone on the platform who was in the same business could see what we were doing...and who our customers were."
Mr. Jensen says that he had to "get over it and look at the upside of how much time the company could save raising this money online." In October, the Austin, Texas-based company raised $750,000 in a convertible debt-financing round on CircleUp.com.
He says Rhythm Superfoods needed money to ramp up manufacturing of its "nutritionally dense snack foods" to meet demand from grocery partners including Whole Foods Market Inc., Wegmans Food Markets Inc. and several others.
With the funding, Mr. Jensen wants Rhythm Superfoods to retool its manufacturing, double the number of full-time employees at the company to 12 from 6, and surpass the $10 million revenue mark this year. Last year, his company raised $2.3 million in a Series A round led by angel investors in Texas.
"Disclosure is a concern," says Nick Wells, an intellectual-property attorney who advises entrepreneurs using crowdfunding sites, such as CircleUp. "Startups will want to generate excitement but not with specifics that allow someone to recreate what they are planning to work on," he says.
CircleUp CEO and co-founder Ryan Caldbeck says the site prevents "snooping" by accredited investors, partners or anyone else who may try to use it with strict terms of service, and ongoing reviews of all investors on the site. "As part of the terms of use...there are confidentiality clauses. And users have to review deals as an investor," he says.
Investors permitted on the site can see a basic business plan from a company, but if they want to dig more into a company's financials, they have to get verified by CircleUp and the entrepreneur raising money before proceeding, Mr. Caldbeck says.
Rhonda Kallman, a co-founder of Boston Beer Co. Inc., maker of Sam Adams beers, says CircleUp's partnerships with big conglomerates could be "a good thing for a business that's looking to get acquired, eventually" but "discomforting" for others who want to "maintain creative control."
"Why tell the world your positioning, or where you see a gap in the market," says Ms. Kallman, who so far hasn't used crowdfunding to raise capital for her new business, Boston Harbor Distillery LLC.
In 2012, consumer-products companies took in $579.43 million in total from venture capital firms, just 1.95% of all venture investments into U.S. companies, as measured by Dow Jones VentureSource.

Amazon launches a virtual currency

Amazon launches a virtual currency

By Barney Jopson in New York and Tim Bradshaw in San Francisco

Amazon has underscored its desire to rival Apple’s App Store by launching a virtual currency through which it will in effect subsidise developers joining its own service.

The online retailer said it would give customers “tens of millions of dollars” worth of Amazon Coins to spend on developers’ applications and games. Developers will receive 70 per cent of the currency spent and Amazon will convert the digital money into dollars.

The initiative – which was announced on Tuesday and will launch in May – is the latest example of Amazon’s willingness to sacrifice profits to win market share, as it bets that by attracting a broader range of developers it will entice more customers.

Amazon Coins will be given only to US customers at the launch and can only be spent on apps and games that are available on its Kindle Fire tablet.

Amazon did not say which customers would be eligible or how much they would receive.

“It’s another thing that is going to squeeze those margins,” said Colin Gillis, technology analyst at BGC Partners. “It’s a big opportunity they are chasing after. They are in the race. The issue is: will there be long-term gold?”

Apple, Google and Amazon are battling to draw consumers into their own systems of commerce, advertising and devices. Amazon’s app platform, which is closely tied to its Kindle Fire tablet, still lags behind Apple’s App Store and Google Play.

Benedict Evans of Enders Analysis said the digital currency was “part of a steady drumbeat of moves by Amazon to build up an alternative mobile device ecosystem . . . to bypass Google”.

He said Amazon’s moves to build or buy mapping and voice-control services were part of that effort. “If Amazon were wanting to do phones, a lot of those components would be more important,” he said.

Amazon says it has more than 200m active customers, while Apple says its iTunes service – which includes the App Store – has more than 400m.

Paul Ryder, vice-president of apps and games for Amazon, said in a statement: “Now we have another new way to help developers reach even more of our millions of customers.”

Amazon’s push into virtual currencies comes after Facebook last year decided to phase out its own digital money, Credits, in favour of conventional money, as it sought to simplify transactions.

Anthony DiClemente, an analyst at Barclays, said that Amazon, through its digital currency, was seeking to attract both non-Amazon customers as well as existing shoppers who were buying only physical – not digital – goods.

“Amazon is certainly looking at different ways to boost revenue [by making] things easier, with less friction to the consumer. That is always the paramount concern,” he said.

Amazon has sold 10m-15m Kindle Fires since launching the device in 2011, Mr Evans estimated. Apple sold 23m iPads in the last quarter of 2012.

Maker's Mark to restore alcohol content of whiskey

FILE- This file still frame image made from video provided by Maker's Mark Distillery Inc., shows a bottle of Maker's Mark in an advertisement. After a backlash from customers, the producer of Maker's Mark bourbon is reversing a decision to cut the amount of alcohol in bottles of its famous whiskey. (AP Photo/Marker's Mark Distillery Inc., File)

BRETT BARROUQUERE , The Associated Press

Posted: Sunday, February 17, 2013, 5:58 PM

LOUISVILLE, Ky. - After backlash from customers, the producer of Maker's Mark bourbon is reversing a decision to cut the amount of alcohol in bottles of its famous whiskey.

Rob Samuels, Maker's Mark's chief operating officer, said Sunday that it is restoring the alcohol volume of its product to its historic level of 45 percent, or 90 proof. Last week, it said it was lowering the amount to 42 percent, or 84 proof, because of a supply shortage.

"We've been tremendously humbled over the last week or so," Samuels, grandson of the brand's founder, said of customers' reactions.

The brand known for its square bottles sealed in red wax has struggled to keep up with demand. Distribution has been squeezed, and the brand had to curtail shipments to some overseas markets.

In a tweet Sunday, the company said to its followers: "You spoke. We listened."

Fans of the whiskey applauded the move and questioned why the company moved to change in the first place.

"Some things you just got to leave alone," Todd Matthews, 42, of Livingston, Tenn., said.

Company officials said much customer feedback came from Twitter and Facebook. On those sites, comments on Sunday's change of course ranged from angry to celebratory to self-congratulatory. The statement on Maker's Mark's Facebook page drew more than 14,000 "likes" and 2,200 comments within two hours of Sunday's announcement.

The change in recipe started with a shortage of the bourbon amid an ongoing expansion of the company's operations that cost tens of millions of dollars.

Maker's Mark Chairman Emeritus Bill Samuels, the founder's son, said the company focused almost exclusively on not altering the taste of the bourbon while stretching the available product and didn't consider the emotional attachment that customers have to the brand and its composition.

Bill Samuels said the company tinkered with how much water to add and keep the taste the same for about three months before making the announcement about the change Monday. It marked the first time the bourbon brand, more than a half-century old, had altered its proof or alcohol volume.

"Our focus was on the supply problem. That led to us focusing on a solution," Bill Samuels said. "We got it totally wrong."

Both Bill and Rob Samuels said customer reaction was immediate. Company officials heard from "thousands and thousands of consumers" that a bourbon shortage was preferable to a change in how the spirits were made, Bill Samuels said.

"They would rather put up with the occasional supply shortage than put up with any change in their hand-made bourbon," Rob Samuels said.

The change in alcohol volume called for the recipe and process to stay the same, except for a "touch more water" to be added when the whiskey comes out of the barrel for bottling, Rob Samuels said.

When production restarts Monday, those plans are off the table, Bill Samuels said.

"We really made this decision after an enormous amount of thought, and we focused on the wrong things," Bill Samuels said.

Maker's Mark is owned by spirits company Beam Inc., based in Deerfield, Ill. Its other brands include Jim Beam bourbon.

Maker's is made at a distillery near the small town of Loretto, 45 miles south of Louisville.

Its bourbon ages in barrels for at least six summers and no longer than seven years before bottling.

The supply shortage at Maker's comes amid growing demand for Kentucky bourbons in general.

Combined Kentucky bourbon and Tennessee whiskey sales from producers or suppliers to wholesalers rose 5.2 percent to 16.9 million cases last year, according to the Distilled Spirits Council, a national trade association that released figures last week. Revenue shot up 7.3 percent to $2.2 billion, it said. Premium brands, generally made in smaller batches with heftier prices, led sales and revenue gains.

Kentucky produces 95 percent of the world's bourbon supply, according to the Kentucky Distillers' Association. There are 4.9 million bourbon barrels aging in Kentucky, which outnumbers the state's population.

Diane Mastrull: Hoodie pillowcase captivates entrepreneur, investor

http://www.philly.com/philly/video/BC2167941596001.html

CHARLES FOX / Staff Photographer

Rebecca Rescate found success before with her toilet-training kit for cats, and now she is helping Chris Hindley with his invention that may help buyers sleep through noise and other distractions.

Diane Mastrull, Inquirer Staff Writer

Posted: Monday, February 18, 2013, 6:19 AM

How does one outdo a toilet-training kit for cats?

With a pillowcase designed to be worn - yes, worn - on the head, with a hole to accommodate earphone wires and a pocket for an iPod or a remote control, Rebecca Rescate believes.

The Yardley mother of three has $15,000 in personal finances banking on it, and has just secured an additional $90,000 from Robert Herjavec, an investor on ABC-TV's popular Shark Tank. The technology titan missed out on Rescate's funky feline venture when she appeared on the show in 2011 - sales of the CitiKitty Cat Toilet Training Kit have reached $5 million - and "I'm not going to do it again," he said when she returned for a Feb. 8 episode pitching the new product - the HoodiePillow.

This time, she didn't face the cameras alone. She was joined by a Burlington County father of triplets, who came up with the idea for the wearable pillowcase in a sleep-deprived act of desperation shortly after his daughters were born three years ago.

"I'm a light sleeper, so I needed just to close myself off," explained Chris Hindley, 30, of Florence Township. "I started sleeping with a pillow or a T-shirt over my head, just to block out the world a little bit.

For affirmation, he took to Google "and realized there were a lot of people that liked to sleep that way."

Hindley, a marketing/design professional, and his wife, Dana, a copy writer, put their entrepreneurial inclinations to work and came up with HoodiePillow, essentially a pillowcase with a hood attached that's made of premium sweatshirt material.

Or, as Hindley described it in a recent interview: "A nighttime version of your favorite piece of clothing."

Costing $5 to make and selling for about $20 at www.hoodiepillow.com, it is designed to fit a standard pillow. The hood is oversized to provide enough coverage for the eyes - in case you don't have a sleep mask - and can be loosened or tightened around the head with what Hindley says are patented drawstrings.

About the same time that the Hindleys created the HoodiePillow, Chris landed a job as marketing director for Rescate's father's company in Fairless Hills, A.L. Patterson Inc., a distributor of precast-concrete products. Rescate was using the warehouse facility as headquarters and central shipping for what was, by then, her going-gangbusters CitiKitty training kit.

That, too, had been an invention inspired from a bit of desperation. Rescate had married in 2004 and, in so doing, inherited not only a husband but also his cat, Samantha. They were living in tight quarters in a one-bedroom on Manhattan's Upper West Side, where Rescate was unwilling to put up with litter-box odors.

She got to work teaching Samantha to do her business where humans do. Rescate developed a five-progressive-step ring filled with litter - and organic catnip to help lure kitties to the bowl - that fits under the toilet lid. Samantha was potty-trained in weeks and, by 2005, Rescate and husband Christian had launched www.citikitty.com, selling kits for $29.99.

It was Rescate's desire to take the company to the next level - getting product in stores - that prompted her appearance on Shark Tank six years later. It worked. In exchange for a 20 percent equity stake in the company, infomercial czar (and TV Shark) Kevin Harrington helped get CitiKitty on store shelves, including Walgreens'.

In awe, Hindley took it all in from his desk at A.L. Patterson.

"I became very inspired by them," he said of the Rescates. And he asked them to be his partners, hoping to, in part, benefit from the warehousing and order-fulfillment infrastructure already in place for CitiKitty.

The Rescates agreed, getting a 30 percent stake in HoodiePillow for their $15,000 investment. In June 2012, the product debuted online, and Rebecca Rescate tried to build buzz among gadget bloggers.

"From there, it just kind of blew up immediately," she said.

Hindley said 10,000 HoodiePillows were sold in the first six months, helped by national exposure on ABC's Good Morning America and NBC's Today within three weeks of its launch.

He expects about $500,000 in revenue this year and to exceed $1 million in 2014 - with college students being a primary focus group. He and Rescate wanted a chance on Shark Tank to get funding to invest in social-media marketing and develop a commercial. They were offering 15 percent of the company for $90,000.

But the Sharks aren't pushovers. First, they laughed when one of them, Daymond John, a fashion expert, agreed to lie down on a couch and model a red HoodiePillow.

They got serious when Hindley disclosed that a travel version has been developed, with an inflatable pillow that fits around the neck. It sells for $16.95.

"I like that it solves a problem," said Herjavec, the winning investor. As majority shareholder, Hindley made the decision, including agreeing to Herjavec's terms: a 20 percent ownership stake.

Before that, Rescate was a wall when Harrington, her CitiKitty Shark investor, offered $90,000 for 33 percent ownership in HoodiePillow. She also rebuffed real estate maven Barbara Corcoran's proposal: that she and John together would invest $90,000 for a 40 percent cut of the company and 10 cents on every sale.

Rescate made clear that she and Hindley were not desperate, and that the market for this product was far larger than the one for her cat toilet-training kits:

"It's anybody with a head that sleeps."

Saturday, February 16, 2013

10 Trends to watch

10 trends to watch in new consumer packaged goods in 2013.

By Tom Vierhile, Innovation Insights Director, Innovation Tracking

The Mayan calendar may be kaput, but packaged goods makers haven’t let that slow them down for 2013. A bevy of emerging trends ranging from products that put “safety first” and novel ways to “show you care” about social and environmental issues to foods and drinks that deliver multi-dimensional “3D flavor” are covered in Datamonitor Consumer’s 10 Trends to Watch in Consumer Packaged Goods in 2013.

The world is an uncertain place, never more so than today. Every day, consumers are bombarded with new things to worry about, from pesticide residue and food contamination to petrochemicals throughout the consumer landscape. “Safety first” is a 2013 trend that addresses these concerns with products that reduce the dangers of everyday living. From fingernail polish that washes off with soap and water (no need for acetone-based nail polish remover) to cheese made from the milk of cows that graze on pristine grass and hay, 2013 is shaping up to be the safest year yet for new products.
Part of the fun of eating out is experimenting with new foods, which is one reason why exotic game meats are rapidly gaining popularity on restaurant menus. Packaged food makers are preparing for a “new game in town” in 2013 as game meats begin to penetrate the market. Game meat is not only tasty and often lower in fat than “regular” meat, it’s also naturally free range and sustainable, features that could spur the use of wild game like venison, rabbit, alligator, elk, and more in packaged foods. Pet foods are also rolling out the red carpet for game meats.
The Internet has put the consumer just one click away from knowing the (sometimes ugly) truth about where products and ingredients come from. This desire to “know the source” of product ingredients highlights a trend toward greater transparency as a way to improve consumer trust. Increasing use of ingredients from a single country or region is one trust-enhancing approach for 2013. Also look for the concept of extreme local sourcing to begin to take root, where companies source ingredients, flavors, and more from nearby locations. A Datamonitor global consumer survey from 2011 showing that 77% of consumers say it is “important” to choose grocery products made in their home country shows that this issue has been percolating for a while, and may be ready to pop in 2013.
3D animation makes movies come to life. Can “3D flavor” do the same for foods, beverages, and more? The answer seems to be “yes,” with 2013 shaping up as the year that flavor goes multi-dimensional. New products that promise to heat or cool or that pair opposite tastes like sweet and salty could be big in 2013. And so-called “leave-them-guessing flavors” that give few hints as to what to expect prior to actual consumption add mystery and adventure to 2013′s food and drink innovation menu.
To quell public health epidemics like obesity, governments around the world are cracking down on so-called “junk” food. So what is the 2013 answer to this conundrum facing snack and drink makers? “Junk health” products. Foods like chips, mayonnaise, soft drinks, and even beer are being transformed into “better for you” products fortified with yogurt, probiotics, “fat-blocking” ingredients, and protein. A plurality of consumers worldwide (40%) neither agree nor disagree that food and drinks makers are “actively improving product nutrition and combating obesity,” so there is plenty of room for improvement, according to a 2011 Datamonitor global consumer survey.
Technology is touching our lives in ways we never expected. “There’s a gadget for that” is a 2013 trend that highlights the growing proliferation of time- and labor-saving gadgets that are transforming consumer packaged goods markets. From bread makers and beer dispensers to automatic soap dispensers, e-cigarettes, and portable vibrators that have the sexual health market buzzing, there definitely is a “gadget for that” in 2013.
Sugar is sweet and an increasing number of food and drink categories do not quite seem complete without a little sweetness from Mother Nature’s smile factory. “Revenge of the sweet tooth” is a trend that highlights the invasion of sweet flavors into categories like salty snacks, alcoholic drinks, meat, and even vegetables. Chocolate covered beets, anyone? Or how about marshmallow, cupcake, or bubblegum flavored vodka? Sweet times, indeed.
And who says that energy drinks should have all of the fun when it comes to energy enhancement? “Healthy power” is a trend that heralds the democratization of energy with energizing yogurt, milk, biscuits, fruit snacks, peanut butter, oatmeal, and more promising a kinder and gentler energy boost – in many cases without caffeine.
Brands today want to connect with consumers, and there may be no better way to do that than trying to “show you care” – a trend expected to gain traction in 2013. It’s a trend that sees a soap maker demonstrating its eco-friendliness by turning trash (plastic refuse collected from beaches) into treasure (packaging for its dish and hand soap bottles). It’s also a trend that has one detergent maker easing the burden of water collection in India by cutting the amount of water needed to rinse a load of laundry by up to 75%. And it’s a trend that is leading to new efforts to improve animal welfare by banning the use of pig gestation crates by pork producers, in one example.
Consumers today know they should eat more fruits and vegetables, but who has the time to mess with either? Enter “snackified vegetables”, a 2013 trend that sees vegetables gaining ground as a wholesome ingredient for snack food as well as other types of food. Yogurt and snack chips are two categories that are embracing healthful vegetables like carrots, kale, beets, and more. Global introductions of chips based on beets, in fact, have nearly doubled since 2009, according to Datamonitor’s Product Launch Analytics database of new products.

Social Media Users Say Pinterest Is as Popular as Twitter

Camille Bautista20 hours ago

While Facebook reigns supreme in the social media landscape, the latest study by Pew shows users are pinning just as much as they're tweeting.
Twitter attracted 16% of social media users, followed by 15% on Pinterest in 2012. Everyone's favorite pastime is still Facebook, though, raking in a majority of respondents' votes. Tumblr comes in as the least popular with only 6% of people on the site.
The report details who exactly is using these networks, explaining that sites like Instagram appeal more to women, Latinos and African-Americans.
It's no surprise the study finds young adults more interested in social media. An overwhelming 83% are more likely to be on the sites than older demographics. Each network offers distinct services and draws specific audience groups. Image-heavy Pinterest attracts women, adults under 50 and whites. Twitter users tend to be urban residents.

Unlike other networks, Pinterest is equally popular with different age demographics; 19% of younger users and people 30 to 49 use the site, and it also yields the largest difference in gender than any other of it social counterparts. Women are five times more likely to be pinning (secret wedding boards, anyone?) than men.
Though Pinterest is catching up in popularity, the percentage of Internet users on Twitter doubled in the past two years.

Driving the Market for Healthy Kids Snacks

By Matt Devine

According to a USDA survey of nearly 10,000 children, twice as many kids today eat snack foods than did 20 years ago. For children younger than nine, nearly half of their recommended caloric intake comes in the form of snacks – while according to the CDC the rate of childhood obesity has more than tripled since 1980.
Thanks to strong educational efforts by First Lady Michelle Obama, the Center for Disease Control and numerous non-profit organizations, parents today are taking this threat seriously, intent to do better and committed to providing their children with healthier snacking options. When examining their buying habits, it’s clear that they want snacking options that are delicious, nutritionally balanced, travel well and appeal to children.

With the rise of the mom-blogger/parent blogger comes a wealth of data on what parents value when it comes to feeding their children. Recent studies support the idea that mothers, traditionally considered the primary grocery shopper for their families, are actively seeking out healthier products for their shopping carts. A recent survey by MediaPost noted that mothers are spending more time scrutinizing what goes into their child’s lunchbox, with 79 percent opting for whole grain bread over white and 82% packing fruit for their little ones.
While parents are opting for healthier food options for their children, studies suggest that convenience is also a major factor in purchase consideration. In September of 2012 the Pew Research Center and U.S. Bureau of Labor released statistics noting that 86 percent of working mothers feel stressed and 40 percent say they “always feel rushed.” Therefore, it is no surprise that mothers are rewarding retail brands that make their lives easier by offering portion-controlled servings of healthy snacks, with 57 percent of moms opting for nutritional items that are packed in individual servings.
With the desire and purchasing behavior suggests a major opportunity for retailers, it’s surprising to learn that the number of nutritionally conscious food products being produced for children is relatively low. According to Mintel GNPD, since 2009 the number of low/no/reduced low sugar products being launched for children has remained flat at 4%. Those launched with a lo/no/reduced fat claim come in only slightly higher at 8 percent. When examining brands that have turned their marketing efforts towards the support of healthy offerings for children, it’s no surprise to see that Annie’s, GoGo SqueeZ, Stonyfield and Funny Face Dried Cranberries continue to show strong market traction.
While obvious factors, such as taste, marketing and packaging are also major factors when considering the success of products being produced for children, it’s clear that there is a major opportunity for retailers already producing low sugar/fat/calorie items to branch off into a healthy kids offering.
Beyond the opportunity to capitalize on an underserved market segment, is a chance to be part of the conversation and movement that drives this country towards a healthier, more balanced way of eating. Manufacturers that position themselves within that conversation give themselves a unique advantage when appealing to retail distributors.

Peter Hollens Brave

Oreo Twitter Ad

SuperBowl Marketing At The Speed of Light (Or Lack Thereof): OREO #DunkintheDark

As you’ve probably seen by now, our OREO TV spot pitting Cookie vs. Creme didn’t wind up being our only SuperBowl ad. When the stadium lights went out, our “Mission Control” team (made up of our 360i, Mediavest, Wieden + Kennedy teams and our amazing OREO brand team) got creative and turned around an on-the-fly ad in minutes, with the caption: “Power out? No problem.”

Since tweeting it out from @Oreo, it’s been retweeted more than 14,260 times, which not only shows the power of real-time engagement, but also the sheer importance of understanding the overall media ecosystem. I couldn’t be prouder of our teams for their quick off-the-script thinking.

Friday, February 15, 2013

Kids rewarded for behavior at Kitsap eatery

Staffers at a Poulsbo restaurant were so impressed with the good behavior of a family’s young children that they gave the family a $4 “well behaved kids” discount.

The Associated Press