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Interesting Developments in the Food Sector

By Herb Shields | 07/29/2011 | 2:31 PM

 Several recent news articles signal some interesting changes in both food products themselves and in the food supply chain.

 Wal Mart opened the first of 5 Express stores in Chicago.  These stores will be located in areas that have for years been termed “food deserts” due to the lack of traditional grocery chain stores.  Recently both Walgreens and some dollar stores had entered some of these markets with fresh food offerings added to their more traditional lines of consumer products.  The new Wal Mart stores are one-tenth the size of a standard Wal Mart Supercenter. Given the scale of these stores it will be interesting to follow what adjustments, if any, Wal Mart has to make to provide the right mix and quantity of products.  An article in the Chicago Tribune mentioned that “Wal Mart is counting on shoppers to tell them what they want.”  Even before the first store opened, Wal Mart had changed the product mix in the hair care category to emphasize more ethnic products.

 McDonald’s announced a change in the product mix for the Happy Meals which are targeted at young children.  The changes include apples or other fruit as standard instead of an option, making milk the beverage unless a customer asks for soda and reducing the size of the fries portion from 2.4 ounces to 1.1 ounces. All told, the changes are expected to cut the calorie count of a Happy Meal by about 20%.

 The third news item this week discussed a proposed tax on soft drinks to reduce their consumption among young people. According to the Wall Street Journal, “The Center for Science in the Public Interest, a Washington-based watchdog group that pressures food companies to make healthier products, plans to propose a federal excise tax on soda, certain fruit drinks, energy drinks, sports drinks and ready-to-drink teas. It would not include most diet beverages.”  This is clearly not a done deal, but it would potentially change the demand for some products if a law is finally passed.

 The food industry, both the marketers and the retailers, are always making changes to products and store offerings designed to get the consumer to try new products, stick with old products, etc.  It will be interesting to track some of these events to determine what, if any, changes result in the supply chain process for food products.

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About Herb Shields

Herb Shields

Herb Shields has run Chicago-based HCS Consulting since 2000, helping clients across multiple industries and in higher education improve their supply chain strategy and execution. Shields has more than 30 years as an operations executive for capital equipment, automotive, electrical machinery and consumer products companies. As vice president of materials management at consumer goods company Helene Curtis, Shields led the supply chain organization that helped Helene Curtis win "Vendor of the Year" awards from Wal-Mart Stores and Target Corp. Shields has a B.S. degree in Electrical Engineering from Clarkson University and did graduate work in business at Bowling Green State University.



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