Weinberger Law Newsletter – December 2020
Time of Honest Reflection
December is a month of transition and taking stock. We shift from one year to another, and often, from an existing set of resolutions to an updated one. We review and assess, too, the previous 12 months – how we performed and how we showed up for others – and of where we hope and plan to do better in the coming year. We invite you to virtually join us in this time of honest reflection, as we contemplate how to better serve you in 2021.
Happy Holidays from Weinberger Law, and may this be a blessed New Year!
Kroger, K7 and the Hand Sanitizer Kibosh
We know hand sanitizer is a valuable commodity in 2020, but an $85 million lawsuit stemming from a single order?! The value actually makes sense when you consider this issue involves one of the biggest grocery retailers in the country seeming to have a case of buyer’s remorse… and refusing countless cases and beaucoup / “bookoo” / boatloads of dollars’ worth of hand sanitizer that it allegedly ordered. K7 Design Group – not to be confused with K7 who released the 1993 album “Swing Batta Swing” – arranges for the manufacture and distribution of the Ultra Defense brand (Sani + Smart Hand Sanitizer is one of the products under their umbrella), and deciding they had just about enough after months of the Kroger run-around, filed their lawsuit with the court on December 2, 2020. Let’s review the particulars.
When the pandemic made landfall in the United States, major retailers (one of them being Kroger) reached out to K7, a known and reliable sanitizing products supplier. Demand for hand sanitizers was increasing, leaving store shelves empty, and Kroger wanted to capitalize on this. Anything that would fight or kill COVID-19 was scooped up across the country, and even some items that really didn’t make a whole lot of sense – the Great TP Hoard of 2020 will surely be a future story we will tell the kiddos. Kind of makes you wonder what symptoms those toilet tissue tyrants heard they should expect if they were infected! Egads!
Anyway, Kroger wanted to be THE PLACE to get hand sanitizer, so they ordered $5 million worth. K7 delivered with a quickness, and consumers again cleaned out the coffers with an even quicker quickness. Realizing the gold mine that the clear, alcohol-based gel had become, Kroger pulled a Raymond ‘Rainman’ Babbit sure-thing bet, mixed with some Sam ‘Ace’ Rothstein confidence, and their next order was for $100 million worth. (Please note: That is not a typo, we repeat, that is NOT a typo. Kroger did indeed order 20 times their first order, which was hefty enough in its own right.) The initial order and delivery went swimmingly, but allegedly, the second one (you know, the one for $100 million) was refused.
We don’t know what the contract between K7 and Kroger said, but the grocery retailer’s reason for not accepting the order of we have no earthly idea how many bottles that would even be – they ordered too much and there was no room in the warehouse. We find every square millimeter of counter and pantry space before we bring home the 15-course Thanksgiving dinner groceries and everybody’s holiday presents we shopped for in one day (Go us!!), but Kroger knows a $100 million order of the hottest commodity since Cabbage Patch Dolls circa 1983 is li-ter-ally arriving imminently, and when the tractor trailer shows up, it’s “Oops! We forgot to clear off the shelf units in the ‘products that are going to sell like hotcakes and only be here for a few weeks anyway’ part of the warehouse?” Of course, we’re dramatizing the exchange, but come on, Kroger… you ordered it, so clearly, you should’ve been expecting a skyscraper’s worth of boxes of hand sanitizer, and have a solid plan on where to put it.
Something seems like it’s not adding up, right? Guess we’ll find out if there’s more going on here as the lawsuit progresses. Before the filing, Kroger paid for and also accepted a small portion (apparently, $15 million worth) of the order, which was specifically manufactured for them, but not the other $85 million worth.
We’ve all done it – celebratory spreads of every food and dessert you can imagine, and our eyes ended up being bigger than our stomachs. We have a good go at the family buffet of our own accord, and it’s just each of us alone deciding Mount Everest on a plate is totally fine – Kroger has software and staff to handle budgeting, purchasing, logistics, and warehouse management. What the heck happened? Is it a colossal screwup or a Kroger-calculated move because of dissatisfaction? Is anybody else hungry for our family’s favorite foods now?
So, obviously, we don’t know what stipulations were in the agreement between K7 Design Group and Kroger. But what we do know is it seems extremely odd that in the middle of a pandemic, when we are constantly being told to practice good hand hygiene, that on one hand, Kroger wouldn’t find space for the unofficial-but-official-from-health-officials must-have product of 2020 (hand sanitizer) in their warehouses stacked to the rafters ready to go, and on the other hand, the distributor (K7) couldn’t offload them to another retailer, wholesaler, or buyer of some other description? I guess we’ll all just have to wait and see how this one plays out.
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