CALIFORNIA BREWS LEGISLATION THAT SPREADS FAR AND WIDE

SACRAMENTO, Calif. -- What happens in California does not always stay in California, much to the dismay of supermarket operators across the country.

"Most of the nation would appreciate it if some of the legislation that originates here would stop here," said Peter Larkin, president of the California Grocers Association here, in an interview with SN last week. "But unfortunately, a lot of public policy issues that arise in California find their way to other states."

Speaking with SN a few weeks before CGA's annual Western Food Industry Expo, scheduled for Oct. 23-25 in Las Vegas, Larkin cited several issues that cropped up in California and have impacted the industry nationally -- including restrictions on the sale of pseudoephedrine and warning labels on potential carcinogens -- or that could have an impact in the future, including proposals on slotting fees, bag taxes and employee retention policies when stores are sold.

Regarding slotting fees, Larkin said the California legislature attempted earlier this year to ban slotting fees or require retailers to make additional disclosures about them, "but we were able to educate [lawmakers] that this was not something they should stick their noses into, and ultimately the bill did not pass -- though if it had, it could have gone to other states."

Larkin said CGA has been trying to convince the city of San Francisco not to impose a 17-cent tax on paper and plastic bags to help fund recycling. "We're close to reaching an agreement with officials there to come up with an alternative approach on recycling. We don't think there will be a tax imposed, but there is mounting pressure among environmentalists for something to be done, and the industry will have to respond by instituting some sort of voluntary programs to reduce the number of bags used and provide opportunities to recycle or work with waste haulers to make sure they are recycled."

Another issue CGA is dealing with is a proposal by the Los Angeles City Council that would require an operator purchasing another supermarket to retain the employees of the existing store for some specified period, Larkin said -- a proposal the council has directed to the city attorney for drafting an ordinance. "In our opinion, this effort has certainly been inspired by the United Food and Commercial Workers Union, and it's a ludicrous proposal we will fight with all our resources," Larkin declared.

Regarding pseudoephedrine, he said California was one of the first states, in the late 1990s, to deal with restrictions on the sale of products with pseudoephedrine because of their potential use in the creation of methamphetamine, "and we were instrumental in creating a statewide bill to set limits on the amount a customer could buy at any one time, and that started a nationwide tide," he said.

"We thought we had taken care of that issue, but it's sprung back to life in the last 18 months as production of methamphetamine has run rampant, with the result that several states have passed laws that require operators to keep products behind the counter, or ask customers to sign logs or sell from locked cases. We've seen legislation passed in Missouri, Oklahoma, Wisconsin, Iowa and other states, and now there are two or three versions of proposed federal legislation floating around."

LABELING LAWS

Another issue raising its head in California that could have national implications, Larkin said, is an outgrowth of Proposition 65, a law passed by the state's voters in 1986 and subsequently reflected in other states, requiring that a warning be posted on products that contain chemicals that might be carcinogens or reproductive toxicants -- a law that's been interpreted to cover hundreds of products beyond what had originally been anticipated, Larkin said, "with subsequent lawsuits on what constitutes an adequate warning if there are trace elements involved."

The latest wrinkle stemming from Proposition 65 is a new round of lawsuits involving acrylamide, a naturally occurring chemical created in the process of burning or frying starchy foods. After environmental groups filed suits against McDonald's, Burger King, several potato chip manufacturers and seven large retail chains, the California attorney general's office has become the plaintiff in the suit, which now excludes retailers, Larkin explained.

"These challenges potentially expand the reach of Proposition 65 to include hundreds or thousands of products in the supermarket, since acrylamide is contained in all kinds of items, including pretzels and coffee. If additional warning labels are required on products sold in California, it could have national implications. And there could be other chemicals that come up in other parts of the store, so this could be a very important issue for the entire industry for years to come."

INDUSTRY EXPO

For the fourth year in a row, the Western Food Industry Expo will focus on one-on-one meetings between retailers and 60 suppliers in rooms located just off an exhibit floor with 105 booths -- a format Larkin said is helping to boost attendance this year and is giving independent operators a chance to interact with suppliers they believe might otherwise overlook them.

"In trade shows with lots of exhibit space, suppliers pay their money, put their best foot forward and hope the right people walk by," Larkin explained. "Our show takes the guesswork out, because we schedule the meetings in advance -- 700 of them this year, based on who suppliers said they wanted to see and who retailers said they wanted to meet with -- so each group knows when it comes to the show it is guaranteed to get its message across to the other."

CGA expects 1,100 to 1,150 attendees this year, compared with 860 a year ago, with a ratio of 2.5 suppliers for every retailer, Larkin said -- "a good ratio for a trade show."

The expo's opening session will offer a California perspective on a study released last May by the Coca-Cola Research Council called "The World According to Shoppers," with two retailers and two suppliers discussing how the study's conclusions apply to their businesses: Christie Frazier-Coleman, vice president, customer loyalty, Bashas', Chandler, Ariz.; Jeff O'Neal, vice president, Novato Foods, Novato, Calif.; Karen Caplan, president, Frieda's, Los Alamitos, Calif.; and Mark Hannay, senior vice president, sales and marketing, Ruiz Foods, Dinuba, Calif. Leading the panel will be Kevin Davis, president of Bristol Farms, Carson, Calif., a subsidiary of Albertsons, Boise, Idaho, who is a member of the research council, and Bill Bishop, president of Willard Bishop Consulting, Barrington, Ill., who is a consultant to the council.