Davos Newbies

I don’t usually look to Gourmet magazine for political or business analysis, but one of the best pieces I’ve read on Wal-Mart is in the June issue (not available on the web). It looks at how the world’s biggest company’s entry into food retailing only 17 years ago has transformed the industry. Supermarkets are under unprecedented pressure. Wal-Mart already has 15% of national food sales and is aiming for 35% by 2007. Suppliers have had to trim their product lines and cope with Wal-Mart’s steady pressure to reduce prices.

All of that is familiar to anyone who has read the business press. What makes the article so good is the detail, particularly from the suppliers. Consider dairy producer Organic Valley. At first, it decided to become a Wal-Mart supplier. CEO George Siemon explains:

My family was devoted to downtown business, and the trend was toward mall shopping. So for me, my lesson from that is: If you’re going to have a mission, that’s great. But in order to keep that mission, you have to run a professional business and stay up on what goes on. Nowadays, what’s the trend? Wal-Mart.

But subsequently, Wal-Mart finds another “organic” milk supplier, Horizon (there’s a very interesting discussion about just how Horizon can claim it’s organic, incidentally), that will accept a lower price. What does Organic Valley do? “Realizing that the writing was on the wall — that the pressure to push down prices while maintaining a steady supply might just overwhelm his company, especially since it could hardly keep up with demand as it was — Siemon decided to pull out of Wal-Mart altogether.” It’s apparently the first time that a supplier decided to get out of Wal-Mart.

The article also points out the pro-Wal-Mart arguments. Significantly lower prices for its customers, and access to products — like organic milk — that might otherwise be difficult to source in many of its superstore locations. A really good piece of journalism that helps the reader understand one of the most significant developments in business today.

Brad DeLong has a wonderful Why Not? idea.

To the extent that heavily-populated states that pay federal taxes swing more Democratic, and lightly-populated states that receive lots of giveaways (military bases, agricultural subsidies, cut-price access to national resources) swing more Republican, senate votes will become less and less legitimate.

Time, I think, to reapportion the senate: combine the Great Plains states and divide up California, New York, and Texas for purposes of senate representation.

The fact that it won’t happen for selfish political reasons shouldn’t matter.

Together with one of my colleagues at my new company, Q Network, I was interested in following today’s Champions League final between Liverpool and AC Milan. So from 11.45 this morning (the time of the kick-off for Californians), I had my browser open to The Guardian’s invaluable minute-by-minute report.

On the first refresh of the browser it was already 1-0 to Milan. “It’s over,” we chorused. After all, it was Milan, and everyone knows about solid Italian defending. We went to lunch down the street, to a rather poor Mexican restaurant. Lo and behold, the game was being shown there. So over our enchiladas we watched as Milan overran the poor Reds and went up 3-0 at halftime. If it had been all over at 1-0, there’s no doubt what 3-0 would mean.

We walked back from lunch just as the second half was starting. When I refreshed my browser, it was 3-2. A couple of minutes later it was 3-3. And then, as is only just, Liverpool won the penalty shoot-out after extra time couldn’t separate the two scores.

I wish I could have watched the whole game. But our vicarious, half attentive following was excitement enough. Even filtered through a text report, that was as tense a match as could be imagined.