Simmons Market Research released a study that shows that cookies are the most popular single-seve food eaten by 6-11 year olds. Other favorites are:

- Cookies 66%
- Fruit snacks 62%
- Yogurt 61%
- Potato Chips 60%
- Popcorn 56%

THE ECONOMY CONTINUES TO TAKE PRISIONERS - CONSUMERS TO SPEND LESS THIS HOLIDAY SEASON

The NPD Group out of New York released a study that shows that 26% of consumers plan to spend less this holiday season in comparison to last year. They also claim that sunglasses are expected to be a must-have item for the season in the young consumer category. Some top items are:

- Apparel 49%
- Toys 37%
- Movies 29%
- Books 27%
- Electronics 23%
- Videogames 22%

NEARLY HALF OF ALL HOLIDAY GIFT CARDS GO TO YOUNG CONSUMERS

Archstone Consulting found that those aged 13-24 receive almost 40% of all gift cards that are expected to be given during the holiday season.

HOW TEENS MANAGE THEIR BUDGETS: 2007 VS. 2008

The amount of money teen girls spend annually on clothing/accessories increased 6% in the fall of 2008 from fall 2007, according to Piper Jaffray's bi-annual "Taking Stock of Teens" study. The study also found that 36% of teen fashion purchases are during the back-to-school season while 40% is done during the spring and summer. Only 20% of the purchases are done during the holiday season. More than half of teens (55%) plan to use cash for their purchases, down from 59% the previous year.

BOYS----------2008---2007-----------GIRLS----------2008-----2007
Clothing---------17%-----16%----------Clothing----------32%-----31%
Food--------------15%----17%----------Accesories -----16%-----17%
Car----------------13%-----11%---------Food-------------14%-----13%
Videogames------11%------9%---------Shoes -------------8%-------8%
Electric gadgets--10%-----9%--------Car-----------------8%-------9%
Music/Movies------8%----10%---------Music/Movies----6%------6%
Concerts------------7%-----8%---------Electric gadgets-5%------3%
Shoes----------------7%-----7%---------Concerts-----------5%------6%
Accesories---------5%-----5%----------Books/magazn----3%------3%
Others--------------4%-----4%----------Videogames-------1%------1%
Books/magazn-----2%-----2%----------Furniture/room--1%------1%
Furniture/room ---1%-----2%----------Others-------------1%-------1%

Has that helped boost consumer spending? The answer is not yet. The stocks continue to lower day after day. The housing industry took a heavy hit, lending institutions shut their doors and now the big car manufacturers are asking for much needed help due to the lack of sales. We have large retailers closing their doors as well as just a couple of days ago Circuit City (electronic store) and Harold (clothing retailer) filed for bankruptcy. Casinos and hotels have also been affected. Las Vegas Sands shares slid 34% after construction was suspended to preserve cash.

So, what is there to do if you are in the restaurant business? How long until YOU are affected or until you have to make substantial changes? Face it, if you have not began making chances to your business and operation, you are falling behind the leaders, however it is NOT too late to incorporate some changes on the way you are doing business.

First of all, take good care of your clients. Your clients are by far your most important tool to success. Treat them right and they will return the favor. Everybody is making changes so offer a special, some sort of combo. Entice them to try something new and show them that you care about their opinions. Treat them as you would like to be treated and they shall come back. They will tell others if they are happy, but they will also tell others if they are not. Concentrate in kids – they have been bombarded with a lot of bad news about the economy. Everyone is stressed and worried. Let them know they can be at ease while they are in your locations. Friendly family relaxing atmospheres will put consumers at ease.

Second, take a good look at your product. Yes, everyone is lowering prices in order to bring in clients and everyone is offering those specials I am telling you about. It is imperative that you stand out from the competition. This is the when you need to be focused on improving the quality of your products. There is ALWAYS room for improvement so begin to look at ALL your menu items and see what can be improved. Once you incorporate the changes, show them and be proud of your products; it will show and clients will notice. Kids love new things and love try that new item you will have. They also are very happy about sharing their opinion: give them a chance to speak up through surveys.

Third, concentrate on presentation and hygiene. Happy clients are directly correlated to how clean your bathrooms are, how often employees check for neatness in the restaurant and how well groomed your workers look. If you don’t think these things matter, you have no business owning a restaurant. Seriously, take a close look at what can be improved in this area and make it happen. This is the time when details matter. Consumers are hurting and they will remember all of these little things…and hygiene and presentation are no little things. While you can not be in your restaurants 24 hours a day, trust someone in your staff and put them in charge of this task. Create contests, make it fun and get your employees involved. Give a small bonus or some sort of incentive for the “cleanest, best groomed employee of the week”. Emphasize the importance of presentation, but make it fun.

Fourth and last, do NOT stop investing in marketing. Competition is fierce. Be clear in your marketing message and be even clearer about what they need to accomplish. Find good partners and suppliers that understand YOUR way of doing business and keep an open mind about what they have to offer. You must trust experience and choose wisely, better yet, invest wisely. There are plenty of businesses struggling and they will do or say anything to make some profit from you. Learn who is trying to sell you something and who is trying to listen to your needs and offer you something to help you be more successful. There is a big difference between one and the other.

Now, be patient. You have incorporated a few things into the equation and it will take some time for them to pay off. Things don’t happen overnight. The economy did not go down the drain overnight. It was a constant and progressive (and yes, a lot of people saw it coming) and coming out of it will feel the same. Just trust that things will get better but trust that YOU will do your part to help. Be happy, be energetic and get motivated. You have something great to offer and you have consumers that want it. Go get them!

Kids express their opinion about the new president
In a research study done by Just Kid Inc., it was found that kids ages 8-12 want the new president of the US to focus on:

- 70% - find a way to lower gasoline prices
- 62% - protect the US from terrorism
- 61% - stop the war with Iraq
- 60% - improve their schools
- 50% - better our health system

Krispy Kreme expands internationally:
Krispy Kreme Doughnuts signed a development contract with KKD Lotte Holdings Co. to open 35 units in China. These stores will be opened in the next 4-5 years in Beijing, Tianjin and Shanghai. Krispy Kreme based out of North Carolina, currently operates 494 stores in the US and 15 stores internationally.

KIDS, TEENS AND CELLPHONES
According to C&R Research, text messaging and cameras are the most popular uses for cell phones by teens. The study also found that teens are twice as likely as tweens, to use their phones at school (61% vs. 29%). Teens used their phones to text message (84%) more than tweens (71%). Teens also used their phone cameras more frequently (78%) than tweens (71%).

MOST POPULAR FRUITS AND VEGGIES AMONG KIDS (ACCORDING TO PARENTS)
PBS released these figures after re-teaming with PFK (Produce for Kids), a group that tries to get kids to eat more fruits and veggies. On the fruit field, Bananas and Apples are fighting for the gold while on the vegetable starring field, the Potatoes took it followed by Baby Carrots and Tomatoes.
- Bananas 85%
- Apples 84%
- Grapes 75%
- Strawberries/berries 48%
- Citrus Fruits 34%

As far as Vegetables go…
- Potatoes 86%
- Baby Carrots 60%
- Tomatoes 54%
- Lettuce/salad 53%
- Corn 44%

- hot weather (40%)
- first date (23%)
- tests/finals (23%)
- first day of school (9%)
- school dance (8%)

**** ECONOMY FORCES MALL TENANTS TO CLOSE LOCATIONS
The economy continues to take down retailers. These are the companies that have reported a number of closings for 2008:

- Starbucks 600 stores
- KB Toys 356 stores
- PacSun’s d.e.m.o. 153 stores
- Foot Locker 140 stores
- The Children’s Place 100 stores
- Gap 85 stores

**** GIRLS LIKE MUSIC AND BOYS LIKE GAMES?
A research by Mediamark R&I based out of New York, reported that boys aged 6-11 are nearly three times as likely as girls the same age to have gone online to get tips or cheat codes for videogames in the prior month (26% vs. 6%). Girls are more likely than boys to have listened to music online in the prior 30 days (33% vs. 24%). The research also found more girls (32% vs 26%) have their own email over boys. Also, while girls are more likely to use instant messenger (12% vs. 7%), boys watch and download more videos (29% vs. 24%)

**** ECO-FRIENDLY TRENDS?
Kids put recycling at the top of the list on their fun gauge. When a survey of about 1,000 kids were asked: What is the most fun thing you can do to help the earth?

- Boys (8-11):
Collect cans to recycle – 42.1%
Clean up a park – 22.5%
Plant a garden – 22.5%
Plant trees in your town – 9.2%

- Girls (8-11)
Plant a garden – 49.6%
Collect cans to recycle – 25.0%
Clean up a park – 18.1%
Plant trees in your town – 6.2%

- Boys (12-15)
Collect cans to recycle – 42.4%
Plant a garden – 21.2%
Clean up a park – 20.0%
Plant trees in your town – 12.9%

- Girls (12-15)
Plant a garden – 46.8%
Collect cans to recycle – 24.5%
Clean up a park – 14.9%
Plant trees in your town – 9.3%

The only direct-to-kids programs that did score well in the survey were reward programs. For example, the one offered by Pizza Hut's Book It!, which offers free pizza coupons for reading books and Topps of the Class, which offer free trading cards for good grades. Eighty-five percent of the moms said reward programs -- those two were mentioned specifically in the question -- were acceptable.

A full 91% said samples distributed in parent gift bags on special nights were OK. And while only 22% thought food and beverage samples given directly to students are acceptable, when the wording was changed to say "healthy food and beverages that meet School Nutrition Association guidelines," the approval rating jumped to 72%.

The findings about the initiative also showed that other industries that sell to children should be paying attention, too. More than one-third (38%) of the moms surveyed strongly agreed -- and another 36% agreed -- that the initiative should be extended beyond the food and beverage industry to all companies that advertise to children.

While it was clear that her attempts to break into the market failed in numerous countries, we decided to talk about one market in particular which is Brazil. A lot of businesses fail to enter that country mainly due to a couple of reasons: the very heavy taxes/duties imposed on foreign goods and the cultural differences and language barriers between the United States and Brazil.

In this particular case however, it was clear that one of the potential reasons could be narrowed down to the payment terms established during the early negotiation stages. Currently in Latin America, Brazil leads the market in annual lending interest rates ranging anywhere from 19 to 32%. Typically, as she has done with companies in Europe and Asia, her company required a 50% downpayment in order to begin manufacturing and the other 50% balance would be paid once goods were delivered. While this method of payment, along with LC’s (letters of credit), are leading choices for doing business with international markets, they can have a negative effect in transactions done with Latin America partners.

The business culture in Brazil and throughout Latin America as a whole is a culture of trust. Yes, it is ok to ask for a downpayment, but you have to be very careful about how you ask for it. Business people understand you carry a risk but you must avoid using examples and direct emphasis on the “what if’s”. Rather, try to explain and highlight the benefits of that this could bring to their business and to the relationship between the companies. For example, “if you are able to provide us with a 50% downpayment, we will be able to negotiate better rates in advance” or “we could secure better pricing for the raw materials”. I am, BY NO MEANS, asking you to come up with a story to sell or to tell to your client, but rather, emphasize the TRUE benefits – I am sure you can come up with one or more.

If you are selling US$ 200,000 worth of goods, and you are require of them to give you US$ 100,000 as a downpayment, keep in mind that in some cases, the client will have to spend an additional US$ 10,000 to 20,000 depending on how long it takes them to turn the product around and to recoup their original investment. If you offer an item that is too innovative (is there such a thing?) and that will take longer to turn around, then this could turn potential clients away. You also have to keep the local competition in mind as they have a much better understanding of the market place and culture than you do; if they can offer better financing terms than the ones offered by you, then that puts you out of the competitive group.

Considering financing payment terms over a longer period of time could scare some businesses away. However, some US banks or financial institutions will allow for this if you have a purchase order in hand and if the buying agent has done several transactions before under similar terms and have proofed to be a reliable client (even if it has not been through you). Needless to say, you will have to spend some time researching your client and ensuring that they will pay, but, remember that trust and payment terms are extremely critical to enter a new market place.

I am glad to say that Mrs.X received her very first purchase order from clients in Brazil and in Mexico; both extremely strong markets that shared similar financial obstacles but also share tremendous growth potential. While the issues were not with the product she offered or the services she facilitated, there were issues that could be addressed in the financial terms she offered and most importantly on how they were offered and presented to the client. Flexibility goes a long way and keeping an open mind certainly helps.

I had a chance to talk to several attendees and also to several factory owners during my visit this year. When asked what their main concern was for 2008, they all, without exception, mentioned the continued rise of costs and US dollar depreciation against the RMB. Costs had continued to rise on raw materials and when it comes to labor as China continues to impose new regulations that benefit factory workers.

A second concern shared by many attendees were increased regulations in safety. While they felt this is a positive thing, the concern lies in the fact that safety testing costs will continue to increase as awareness has reached an all time high after Mattel and Fisher Price had to recall millions of toys in 2007. While quality control in factories has increased, the government has began to regulate safety control as well. All of these result in an overal increase in prices.

Trading companies were very popular in Hong Kong as they would go to battle with factories in China and would ease the mind of importers as they only had to deal with one company and not carry the risk of being left behind with a deposit on the table. This has also changed in the past years as more and more companies now go directly to the source. However, now is probably not a good time to begin to evaluate new relationships, especially with brand new factories, as the risk of them disappearing is now more than ever.

Today, the relationships that were built with suppliers through the years are extremely important, as that will ensure that the business that is ran, is ran smoothly. Yes, there will be increase in costs...there is nothing that can be done about that. What will differentiate the successful companies from the ones that fall behind the mark, are the ones that are smart about how they increase their pricing to their customers. It will be imperative to not only increase pricing, but it is more important to show and offer the consumer something more for their money. It will be extremely important to give something additional in order to compensate for the increase. Either offer better logistic alternatives, consolidation, an additional service...something else will be necessary to ride this one out in 2008.

As they say here...have a "hen hao 2008"...

Ganz, the Toronto based private company that owns Webkinz dolls and that introduced them to the marketplace in the spring of 2005, obviously listened to the critics. A few days ago the movie ads disappeared from the page.

Lutz Miller, the owner of Klosters Trading suggested that Ganz might be repositioning the Webkinz line as a mass product so that it could be sold to a larger corporation. He was also quoted as saying: "There you are paying a lot of money for a piece of plush that probably cost Ganz 15 cents"....????

It is clear that a lot of companies and executives do not have a clear understanding of the true costs of manufacturing for these items. A plush of the nature and quality distributed by Ganz is CONSIDERABLY more expensive. I question if Miller has even seen a Webkinz plush in real life and has touched and felt it...if we can produce an item of this nature at this price, he is definitely in the wrong line of business.

McDonald's gets pounded by ad-free advocates
McD's picked up US$ 1,600 of the cost of printing report card jackets for the 2007-08 school year in a Florida county in exchange for a Happy Meal coupon on the card's cover. Based on the 27,000 elementary school kids taking these covers home a total of 3-4 times per year, that is less than 2 cents per impression. The program rewarded children who earned A's and B's and that had less than 2 absences entitling them to a free meal, provided they presented their card.

This program has riled a few consumer groups. Susan Linn, director for The Campaign for a Commercial-Free Childhood was at the top of the list claiming the Golden Arches has now hit an all new low by directly targeting kids and bypassing parents.

Regina Klaers, spokeswoman for the school district, defended their take by saying that the report cards contained some form of advertisement for the last decade. Pizza Hut sponsored the printing up until last year and added that to date, ONLY one parent had complained about the jacket.

The NRA announces the top 5 trends for 2008
- Green / Environmental practices: 38%
- Health Consciousness: 32%
- Culinary Tourism: 13%
- Exotic Flavor Exploration: 10%
- Beverage Focus: 7%

It is clear the "eco-friendly" themes will continue to be popular in 2008 as well. These trends will also apply to international markets rapidly.

Moe's offers free child ID's
This was the best franchisee-driven program per QSR Best of 2007 list. Along with the National Center for Missing & Exploited Children, Moe's Southwest Grill called on its franchisees to host Child ID events at various locations. Each participating franchisee paid US$ 240 for the kits from Polaroid, which make about 150 ID's. The program launched in 2006 has now yielded more than 1,000 children cards. Moe's said the goal of this program was NOT to increase sales, but rather to create a positive connection with neighbors.

CPK expands into South Korea
California Pizza Kitchen, Inc. opened its first location in South Korea earlier in the month. This new location seats 200 people and is located and allows guests to take center stage and watch as all of the CPK innovative dishes are prepared. A special menu is also available for children 12 and under.

Former Hasbro CEO speaks up
Former Hasbro's CEO Alan G. Hassenfeld served as chairman and CEO of Hasbro, the toy maker founded by his grandfather in 1923, for 18 years. He also serves as co-chair of the International Concil of Toy Industries' CARE Foundation and chief adviser to the China Toy Association.

Recently he spoke up regarding the many issues and bad reputation toys manufactured in China had given the industry. He outlined some facts and misconceptions arisen by the recalls. Here is an outline of the things talked about:

Misconception: Product design and quality issues are endemic in the toy industry.
Fact: All of the products recalled so far in 2007 amount to about nine-tenths of 1% of the 3 billion toys sold in the United States each year. There are many hundreds of toy brands (500 in the Toy Industry Association), but only four accounted for 75% of all the products recalled. And just two of those four accounted for about 54% of the toys recalled for excess lead in their paint.

Misconception: China is one of the main culprits in all these recalls; it is their fault that our children are in danger.
Fact: That is simply not true. Companies manufacture, import and sell products; countries do not. The Consumer Product Safety Commission rightly holds those who order the toys and bring them into the country responsible for the safety of those toys. Equally important is the fact that about 74% of the toys recalled were for design-related issues, not manufacturing-related ones. The designs are the primary responsibility of those who order the toys, not only of those who manufacture them. Let us take responsibility for our actions and not blame others.

Misconception: China is responsible for the loss of American jobs in the toy industry.
Fact: Again, not true; China is simply the latest country where production has concentrated so that its cheaper labor costs can translate into lower prices to consumers. Toy production started moving out of the United States over 50 years ago, going first to Japan, then to Taiwan and Korea and other Asian countries. It was in the mid-1980s that China began its export of toys.

Misconception: The toy industry is so focused on reducing costs that it is willing to use factories that mistreat their workers.
Fact: The worldwide toy industry is an acknowledged leader in ensuring that workers in its suppliers' factories are treated fairly. The International Council of Toy Industries' (ICTI) Code of Business Practices, one of the first such codes in the world, obligates its members to treat workers fairly. Through its ICTI CARE Process, a comprehensive system has been developed to ensure that factories adhere to the standards established by the Code.

In the past three years, nearly 1,200 factories employing over a million workers have entered the program. Its Seal of Compliance, issued to factories who have achieved those standards, are accepted by just about all of the major toy retailers in the U.S. There is still much to do, as this is a long journey that brings retailers, brands, civil society and government together. For now, we must continue to monitor and audit all factories in the system, but our primary objective is to build capacity through education programs. Our stated goal is one global standard for the ethical manufacturing of children's products.

An important point about the U.S. toy industry's safety standards--they are voluntary, for the most part, but are the best in the world, widely emulated by other countries. By the time the U.S. Toy Industry Association's Conformity Assessment program is in full operation next year, the U.S. will also have the best safety testing standards and procedures in the world

Lead is currently in the mind of many consumers as they look into toys in order to promote their kids meals during restaurant visits. While lead is one of the many elements that plastic and paints are tested for content, there are many other elements that fit the criteria of "heavy metals" which should also be considered. These elements are:
- Arsenic
- Barium
- Cadmium
- Chromium,
- Mercury
- Antimony
- Selenium

Any and all of these heavy metals (as per ASTM and EN71 standards) could cause a threat to kids in ingested in large amounts so these organizations have set limits of contents which are covered during "heavy metals examination" or during "migration of certain elements" testings.

Most of these metals allowance of content is tested based on mg (miligrams) per kg (kilogram). While the allowances are extremely small, research has proven that it does not take a whole lot of these elements to cause a risk in the health of kids.

Let's talk about lead (Pb). EN71 regulations allow a maximum limit of 90 mg/kg of this heavy metal during the Migration of Certain Elements test. Usually, this test is performed via Atomic Absorption or via Inductively Coupled Argon Plasma Spectrometry. Without going into technical data, both of these media are extremely accurate at yielding the results we seek when testing toys. Keep in mind this CANNOT and SHOULD NOT be confused with the Total Lead Content as per CFR (Code of Federal Regulations) which talks about "ban of lead-containing paint". The CFR dictates thatn the maximum allowable limit is 600mg/kg.

So what is the main difference between the Total Lead Content and the Soluble Lead or "migration" of this element?

To put it in simple terms, the total content is pretty much that. It deals with the total lead content in that given paint or material. As far as the soluble lead or the lead that could migrate, this portion of the test has to do with the amount of lead that could actually migrate or be passed on from a given product to a human. This is the most important portion of the test.

Typically, if a given paint has lead, it WILL have lead. What you will find in test results are that the contents of lead and/or other metals, but specifically lead, are either VERY small or EXTREMELY high.

These tests range from US$ 500 to US$ 2,000 just for the heavy metals portion and it all depends on how many samples you are testing, the amount of intervals during testing and other variables that could have an impact on the overall costs. Pricing, like in many industries, varies depending on how much business do you do with a given safety testing lab. The more testing you do, the better discounts you will get so it pays off to do business with companies that have a lot of offerings and are well known in the industry.

I will try to touch base and information on many other testings that are performed for children's products. We will discuss mechanical hazards in a couple of weeks.