C.A. Fortune Newsletter- August 2017 by C.A. Fortune

Newsletter August 2017 Volume 5 - Issue 6

C.A. Fortune Announcements Vol. 5 - Issue 6 Inside This Issue CAF Announcements 2-3 Distributor News 3-7 Industry News 7-8 Consumer Trends 8-12 Retailer News 12-26 Shows & Events 18

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Welcome to C.A. Fortune

Please join us in welcoming the following new employees to the C.A. Fortune team: Debbie Davis comes to our Client Services team with over 8 years of experience processing PO’s at Carlin Group. She started full time with our Client Service team as a Client Service Specialist, Customer Service on July 31st and is reporting to Ben Adelphia, Lead Client Service Specialist, Customer Service. She will be responsible for order processing and customer service needs for our clients. We are very excited to have Debbie’s extensive knowledge on our team! Samantha Sauro started at CAF on August 1st as a Technician, West, Bakery/ Deli Channel and will be responsible for training store employees how to decorate cakes at the Albertson’s/Safeway chains in Denver. She studied Baking and Pastry Arts and Food Service Management in college at Johnson & Wales University and spends her free time reading, baking, watching movies and going to the gym. She reports to Eric Syvertsen, Director Sales, Central, Bakery/Deli Channel. Welcome Samantha! Benny Lemus started at CAF on August 7th as a Retail Sales Specialist, South, Natural Channel reporting to Jon L’Heureux. Benny will be managing the Miami, Florida region. Benny has worked in sales and distribution in the last 25 years. He is excited to consult and build relationships with buyers, clients and our team. Welcome to the team Benny! Blake Mosser comes to us with a wealth of knowledge and experience in sales and administrative roles. Originally hailing from Pennsylvania, Blake earned his Bachelor of Science in Business Administration as well as a Bachelor of Arts in Music from Susquehanna University, graduating Summa Cum Laude with both degrees. Moving from Pennsylvania to Illinois one year and a half ago, Blake most recently worked as a Business Development Representative for Canon in Schaumburg before joining the Client Relations Department at CA Fortune on August 7th. He will be performing a myriad of tasks including on-boarding new clients and getting them set up in SharePoint, tracking on-boarding paperwork, assisting in client resignations, managing many internal documents on SharePoint including the CA Fortune 2.0 Total Client List and the CA Fortune Client Contact List, and qualifying prospective clients. He will be reporting to Jessica Martin, Director, Client Relations. We’re excited to have you Blake! CAF added Courtney Raetzman to our team as a Sales Support Specialist for our Central Region on August 7th and she will be based in the Chicago office. She will be supporting the Central Region’s sales team with filling out forms, assisting with category reviews, paperwork, sample ordering, etc. Courtney graduated from the University of Kentucky with a Bachelor’s degree in Communications. Previously, she was playing professional soccer in the National Women’s Soccer League (NWSL) for the Chicago Red Stars. Please join us in welcoming Courtney who will be reporting to Brian Taylor, VP of Sales, Central, Specialty/Conventional Channel. Welcome to the team! continues next page...

C.A. Fortune Announcements Welcome to C.A. Fortune cont... Jennifer Shenefelt started on part time with us on August 7th as a Retail Sales Specialist, South, Natural Channel reporting to Jon L’Heureux, Senior National Retail Supervisor, Natural Channel. She lives in the West Coast of Florida with her husband, 17 year old son, and mini dachshund. After graduating from the University of Oregon, she was in pharmaceutical sales for 10 years, and later, worked for Procter and Gamble, and Citizen Watch Company in retail sales and training. Her passion is sales and marketing of natural and organic foods. She is also a vegan and is excited to be part of this new sales team. Welcome Jennifer! Katrina Kelly joined our team on August 8th as a Retail Sales Specialist, East, Natural Channel reporting to Jon L’Heureux, Senior National Retail Supervisor, Natural Channel. As a member of this team, Katrina will be responsible for the Philadelphia Region. Katrina lives with her boyfriend and her baby boy Emmitt, who was born in January. We’re excited to have you Katrina! Sarah Quinn comes to us from IRI and worked on their client insights team managing over 30 clients. She also spent time with Hershey in category development and retail sales representation. Sarah started on August 21st as an Account Manager, Central, Natural Channel based in Chicago and reporting to Dwight Richmond, VP Sales, Natural Channel. We are proud to have Sarah on the natural channel team, a balance of sales and analytics that will make her a super star with our clients and retailer partners. Welcome to the team Sarah! Mary Beth Merari is an Account Manager for the East (NYC/NJ), Natural Channel and will report to Dwight Richmond, VP Sales, Natural Channel. Mary Beth comes to us with a wealth of experience from the specialty/ natural area working with brands Terrapin Ridge, Fiorucci Foods, and Toledo Gourmet. Mary Beth also is very well networked in her market having worked with D’Artagnan in the Metro area in a direct sales capacity. Mary Beth started on August 28th and will bring to our natural team a wealth of experience we are excited to have. We also know we now have one of the finest agency teams in the Metro NYC area poised to change the game up there for our clients and retailer partners. Welcome Mary Beth! Tim Gorski will be taking over the reins managing the day-to-day operation of the CA Fortune Business Science team and implementing a new data science platform (more info to come later). Tim has a strong background in business analysis and providing solutions for Specialty-Gourmet brands. Tim comes to us from Acosta where, over the last year, he supervised their Starbuck’s team. Prior to that, he demonstrated similar functions at KeHE for over four years. Tim graduated from the University of Illinois-Champaign. In Tim’s CAF role, he will be coaching the team and developing complex business analyses while identifying efficiency improvements to maximize analytic-based solution production. Welcome aboard Tim!

Distributor News MGA Recognizes Lipari with Outstanding Achievement Award Michigan Grocers Association (MGA) has named Lipari Foods, headquartered in Warren, as one of its 2017 Al Kessel Outstanding Achievement Award winners. “The award is named to honor former MGA Director Albert F. ‘Al’ Kessel Jr., who passed away in 2012,” said MGA President & CEO Linda M. Gobler. “Al was the founder of the Flint-based Kessel Food Market chain. To reflect his generous spirit, each year one Outstanding Retailer and one Outstanding Business Partner are selected to receive the award. Winners are selected by a 12-member committee.” continues next page...

Distributor News MGA Recognizes Lipari with Outstanding Achievement Award cont...

2017 Outstanding Business Partner: Lipari Foods Founder Jim Lipari built Lipari Foods on one core belief: Take care of the customer. Today, success of the company’s strong customer relationships is evident by Lipari’s award nomination. For its “incredible partnership and friendship,” Lipari Foods was nominated by Bryan Neiman, on behalf MGA member Neiman’s Family Markets. “Lipari Foods has been instrumental in our success,” Neiman said. “No matter the request—from late afternoon and special weekend deliveries to creating unique programs, sharing industry knowledge, and helping retailers be first to market with on-trend items—the entire Lipari team gives 200 percent to make it work for their customers.” In the early 1950s, Jim began distributing unique products from the back of his station wagon. He and his business partner created their own barbecue sauce called Bazzo’s and, later, Jim created Bella Mia Spaghetti Sauce. In 1963, Jim formed Lipari Food Distributors to continue distributing Bazzo’s and Bella Mia, with his big break coming in 1967 when he was named Frank’s Tea & Spice distributor. Jim was soon known as the “spice man,” and his customer base included many independent supermarkets. In 1971, Jim’s son, Thom, joined the company. Today, Thom is president and CEO and his sister, Lori Lipari Adams, is SVP. In 54 years, Lipari Foods has become a leading independent “perimeter of the store” distributor, delivering a wide range of bakery, dairy, frozen, retail, deli, packaging, seafood, meat, grocery, foodservice, beverage products, confectionery and convenience foods to more than 8,000 customers in 14 states. With more than 1,000 employees, Lipari also gives back to the community in many ways, including partnering with Gleaners Food Bank of Southeast Michigan and Make-A-Wish Foundation, as well as donating to many community and customer-sponsored events. “Lipari Foods has made significant contributions to Michigan’s grocery industry,” said Gobler. “They are active in the association and have earned the respect and admiration of colleagues and customers throughout the state and beyond. The award is well-deserved recognition.” The award will be presented during the MGA Fall Conference opening dinner on Sept. 17 at Crystal Mountain Resort in Weldon Township.

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Distributor News UNFI to Open Shared Services Center in Lincoln, RI On August 1st, UNFI announced that it is opening a Shared Services Center in Lincoln, RI at 1 Albion Way. “This initiative is very important to us. We are thrilled to open offices in Lincoln just 15 minutes from our Providence headquarters. This expansion reinforces UNFI’s investment in Rhode Island, enhances our customer’s experience, and will maximize career path opportunities for our associates,” said Rick Alberts, Vice President, Shared Services. UNFI, a Fortune 500 company, has grown significantly since moving to Rhode Island in 2009. Net sales of $9.1 billion, over the past year, represent growth of over 165% since the fiscal year that ended in 2008. The company now has 33 distribution centers throughout the United States and continues to grow. In addition to bringing more jobs to Rhode Island, UNFI is community-focused and plans to engage Lincoln and the surrounding communities through its Helping Hands Committee. “Each year our associates donate thousands of hours to people and nonprofits in need. Volunteerism is part of our culture, and we’re looking forward to working with organizations in our new community,” said Alberts.

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Pamplona Capital Management Completes Purchase of BakeMark

Last month, Pamplona Capital Management announced that it had reached an agreement to acquire the BakeMark business of CSM Bakery Solutions. Yesterday, that sale was finalized and BakeMark will now be a part of Pamplona Capital Management. CSM’s decision to sell BakeMark to Pamplona will allow them to focus on their core business in Europe and North America, according to CSM’s President and CEO Marianne Kirkegaard. “Completing the sale of BakeMark allows us to strengthen our core business in Europe and North America by focusing more on our portfolio of bakery products and ingredients,” Kirkegaard says. “Under Pamplona, BakeMark can further enhance its position as the industry’s supply and distribution market leader in North America.” Based in Pico Rivera, California, BakeMark provides distribution services through a network of 25 distribution centers and 3 manufacturing facilities across the United States and Canada. The company offers a diversified line of products, ingredients, and supplies to the food industry under brands that include Westco, Trigal Dorado, and BakeSense. Financial terms of the deal were not disclosed.

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Industry News B&G Foods Gobbles Up Snackwell Cookies, Back to Nature Bars B&G Foods Inc. has struck a deal to buy SnackWell’s cookies and Back to Nature granola bars for $162.5 million, adding to its stable of older brands that have faltered as eating habits change. Chief Executive Bob Cantwell said acquiring SnackWell’s low-fat products and Back to Nature’s bars from a joint venture between Oreo maker Mondelez International Inc. and private-equity firm Brynwood Partners will give B&G more leverage with natural-foods retailers. “We’ll have a bigger place at the table to talk to Whole Foods and Sprouts,” he said. “Hopefully we’ll add more brands like this under that platform.” B&G has developed a taste for longstanding brands like Cream of Wheat and Green Giant frozen vegetables that Mr. Cantwell said had been neglected by the big food companies that have long owned them. Lagging sales have pushed Nestlé SA, General Mills and other conglomerates to shed laggard brands in recent years and focus on their most popular products. Nabisco created Snackwells in 1992 at a time of high demand for low-fat products. At its peak the brand’s Devil’s Food Cookie Cakes and other treats generated more than $500 million in annual sales, but their popularity has waned as consumers shifted to low-carbohydrate and low-sugar diets. About five years ago, Mondelez sold controlling interests in SnackWell’s and Back to Nature to Brynwood Partners and tasked the private-equity firm with reviving SnackWell’s and expanding the Back to Nature brand. Sales of Snackwell’s products have continued to struggle, but Brynwood had more success boosting Back to Nature by introducing new products and getting them into more stores. Today SnackWell’s and Back to Nature generate about $80 million in annual sales. Brynwood Chief Executive Henk Hartong said smaller brands that are part of a bigger conglomerate can benefit from the attention a smaller company can bring. B&G’s sales were about $1.4 billion last year, compared with Mondelez’s $26 billion. “What it’s starving for and what it needs to be successful, it can’t get from a giant company that is trying to manage so many brands,” he said of a smaller brand.

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Jackson Reamer, the Inspiration Behind Crested Butte’s Jackson’s Honest Chip Company, has Died

Jackson Reamer, the charismatic inspiration for Crested Butte’s Jackson’s Honest chip company, succumbed to his rare neurodevelopmental disorder on August 13th. He was 16. Jackson was a healthy baby when he was born in the spring of 2001, walking and talking shortly after he turned 1. continues next page...

Industry News Jackson Reamer, the Inspiration Behind Crested Butte’s Jackson’s Honest Chip Company, has Died cont... By his fourth birthday, his body was ravaged by an unexplained illness. Unable to walk, talk or eat, he was a mere 17 pounds. His parents Scott and Megan Reamer toured him through all the nation’s top hospitals, desperate for a diagnosis. Ultimately, he was sent home with pain medication and apologies from befuddled doctors. Scott and Megan’s Hail Mary to save their first-born child was a diet heavy in saturated fats. After a year of arduous elimination, they flipped the food pyramid, feeding their son fish, wild game, eggs, butter, lard and coconut oil. Jackson thrived, gaining weight, sleeping through the night and playing with his family. Two years ago, after almost a decade of feeding Jackson a paleo-type diet rich in saturated fats, doctors diagnosed him with the super-rare Aicardi–Goutières syndrome, a genetic, inflammatory disease that affects the brain. There are maybe 400 people with the syndrome and there is no cure, but treatment includes a carbohydrate and sugar-free diet laden with saturated fats that can ease chronic inflammation in the brain. Few who suffer from the early-onset form of the syndrome live beyond childhood. Jackson was an inspiration among the tight-knit community of families with kids who have the syndrome, with his enthusiastic smile inciting hope for a better life. During the process of crafting the saturated fat diet that sustained their son, the Reamer family — including siblings Charlie, Olivia and Ella, all of whom were fluent in Jackson’s body language and could interpret every glance from their older brother — developed a potato chip simmered at low heat in coconut oil in their Crested Butte kitchen. After feeding friends for several years, the family in 2012 bagged their creation under the Jackson’s Honest brand, creating a vibrant Colorado-based company in an industry dominated by major corporations. They were the first company to cook chips in coconut oil and Scott and Megan directed more of a mission than a company, trumpeting the values of ancestral, natural foods dense with nutrients Jackson and his family recently moved from their home in Crested Butte to Boulder, where services and therapies for Jackson were more abundant. He attended Fairview High School and last year he scored a touchdown for the football team, rolling across the goal line in his chair. His namesake company continues its rise, offering an array of chips cooked in coconut oil and available at Natural Grocers and other stores across the country. “His legacy will live on in the company his struggle founded,” said Scott Reamer. “And that’s as strong a salve as can be applied to our absolutely broken hearts.”

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Industry News Major Retailers Bringing back Pumpkin Spice Flavors Early this Year August is the new September, as evidenced by the early arrival of pumpkin spice flavors normally reserved for the fall season. What started in the last few years as a way for competitors to one up each other has now turned into the norm, as retailers across the country will look to get this flavor to consumers quicker than ever. Just last year, McDonald’s decided to roll out its pumpkin spice lattes at the end of August in response to Starbucks’ decision to allow customers with a secret code to purchase pumpkin spice lattes in early September of 2015. This week, Dunkin’ Donuts announced that it would begin serving its pumpkin spice flavored beverages and pastries on August 28. Among those will be a pumpkin cream cheese spread. Meanwhile, reports state that many Starbucks and McDonald’s locations have already received shipments of pumpkin spice flavored sauce. While no release date has been set for either one, it’s expected that both will make those products available towards the end of August. Many on social media are complaining about the seemingly-too-early return of the flavor to menus, but the move is being done for purely business reasons. As long as the pumpkin spice flavor remains a big seller for retailers, they will continue to offer it ahead of the change in season. With the market trending that way, local shops may be looking to follow in these footsteps and provide their own pumpkin spice offerings early as well.

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Consumer Trends Viewpoint: ‘Superconsumers’ Drive Sales in Fresh Departments IDDBA Research finds Growth Opportunity Shopper traffic in our fresh departments has traditionally been a key measure of success. Logically, it makes sense: The more shoppers visit a department, the greater the sales volume. But what if I were to tell you that 10% of shoppers drive as much as 25% of sales in a given department. How would that impact the manner in which your stores and departments engage your shopper base? IDDBA’s latest research classifies these shoppers as “superconsumers,” individuals who over-index in volume, sales and profit. These consumers are engaged and insightful when it comes to shopping, and they have a passion for the food they purchase and consume. And these traits are reflected in their shopping behaviors: • They eagerly look for new products; • They happily pay price premiums; continues next page...

Consumer Trends Viewpoint: ‘Superconsumers’ Drive Sales in Fresh Departments cont...

• They shop the bakery, deli, cheese or dairy categories frequently; • They have above-average category knowledge; • They are more open to marketing messages; and • They can articulate and anticipate latent demand.

By zeroing in on these characteristics, departments can not only tailor their messaging and products to capture the attention of these important shoppers, but develop ways to turn potential superconsumers into actual superconsumers. Let’s take a look at a typical bakery superconsumer, one of the five fresh department shoppers examined in “The Superconsumer Opportunity in Dairy, Deli, and Bakery.” Despite representing only 10% of households, bakery superconsumers drive 24% of total bakery spend. They also spend an average of $357 per year in the department, purchasing from six product subcategories. In a sense, bakery superconsumers are “hiring” the in-store bakery to elevate meals, as evidenced by the shopping patterns of one bakery superconsumer interviewed for the research. “John” enjoys cooking dinner for his family, but when running late, looks for something that can quickly be made: sandwiches. But not just any sandwich. John creates his dinnertime sandwich using a toasted croissant, which keeps his family happy and his values intact. It’s a win-win for John: He’s providing a meal with a homemade feel to it, while at the same time saving money by not purchasing a more expensive quick-serve restaurant meal. What lesson can in-store bakeries learn from John? Quite simply, that the department can be a source of every daypart—even dinner in the form of sandwiches—which is exactly how superconsumers view it. And this idea can also resonate with potential superconsumers, with the proper messaging. In this example, the messaging would be that it’s OK to prepare and serve sandwiches as a meal option, if they’re made with special bread from the in-store bakery. Superconsumers like John are shopping our bakery, deli, dairy, cheese and prepared food departments. By examining their food preferences and shopping behaviors—which is what IDDBA has done through this latest research—stores can not only better engage with these customers, but also help create new superconsumers that drive department success.

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What it Means to be ‘Clean’ in today’s FMCG Market As all marketers are well aware, today’s consumers are more educated than ever, largely because they have access to more information than ever—and that’s only going to continue. So when it comes time to shop, consumers are putting that knowledge to use, and they’re making their selections carefully and for specific purposes. They’re also willing to pay for products that meet their specific needs, and for many, those needs revolve around knowing exactly what’s in—and not in—the items they buy. continues next page...

Consumer Trends What it Means to be ‘Clean’ in today’s FMCG Market cont... According to recent survey results from our strategic partner and product data company Label Insight, 39% of U.S. consumers say they would switch from the brands they currently buy to others that provide clearer, more accurate product information. Additionally, 73% of consumers surveyed by Nielsen say they feel positively about brands that share the “why behind the buy” information about their products. And what’s more, 68% say they’re willing to pay more for foods and beverages that don’t contain ingredients that they perceive are bad for them. In some cases, consumers are more interested in knowing what’s not included than what is included in the products they buy. In fact, 53% of consumers say the exclusion of undesirable ingredients is more important than the inclusion of beneficial ingredients. So what does this mean for fast-moving consumer goods (FMCG) manufacturers and retailers? It means the “why” and “how” behind the products have become as important as the product itself. Notably, they’re the primary decision-making criteria that drives a purchase. As a result of the consumer focus on transparency, claims like “natural,” “organic” and “gluten free” have become common on the packages of products throughout the store. The focus has also given way to a growing “clean” label trend—one that hinges on consumers’ desire for labels that are easy to read and contain simple ingredients. For consumers looking to take transparency a step further, claims on how products are made, such as fair trade, have become a factor in the purchasing decision. Despite the growing use of the term “clean” to describe products across the FMCG space, however, there is no universally accepted definition for what constitutes a clean product. So to provide some analytical rigor to this term and to understand how sales have shifted toward cleaner products, Nielsen and Label Insight have created a progressive scale that describes the attributes within the clean arena. But transparency and label claims aren’t just providing insight—they’re driving sales. For example, sales of products that make organic claims are up 10% from a year ago, sales of products that make “all natural” claims are up 7.8% and sales of products that claim “no additives or artificial ingredients” are up 8.0%. We can also see increased sales across the broader categories along the progressive scale that describes the attributes within the clean arena.

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Consumer Trends What it Means to be ‘Clean’ in today’s FMCG Market cont... Given the state of information that the world now lives in, success along the path forward will depend on clear communication with consumers and a focus on what matters to them. Manufacturers, brands and retailers will need a keen sense of current trends toward product transparency in order to deliver on evolving consumer needs. Clean label is a spectrum, and companies need to know where the shifts are happening. The bottom line is that transparency and clean label are not point-in-time fads. They have gone mainstream and competition for consumers seeking clarity, purity and responsibility is going to continue to increase.

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Frugality Hangover gives Private Labels Staying Power Though 55% of U.S. consumers claim that their household financial health is good, nearly half of all shoppers are still looking for deals in order to make ends meet, the latest IRI Consumer Connect survey shows. The report revealed that when it comes to selecting which retailer to patronize, 95% of all shoppers prioritized low price points, and 82% said a store’s selection of private labels was important. The sustained strength among store brands—75% of shoppers view them as “just as good” as the national competitors—may be indicative of permanent habits. “Things are healed,” Susan Viamari, vice president of thought leadership for IRI, said of the economy. “I think the underlying issue is that people haven’t regained their confidence.” Viamari explained that while less Americans may have their backs against the wall than at the height of the financial crisis, the experiences of the recent downturn instilled habits of frugality that have not been shaken. This is especially true among Millennials, a group that entered adulthood both in the wake of economic hardship and in the golden age of private label strength. “If you think about when seniors entered their adult lives and formed their lifelong shopping behavior, private label was a lot different than it was today,” explained Viamari. She said that generic store brands were truly a step down at that time. “Millennials entered adulthood when private label had taken off,” she added. Nearly 85% of Millennials feel that store brands are of equal quality as their national competitors while 76% argue that the private labels are a better value. While Baby Boomers trail in both instances, the discord is not great. Nearly 70% of the oldest age bracket sees private label and major brand names as equals and continues next page...

Consumer Trends Frugality Hangover gives Private Labels Staying Power 64% believe that store brands provide a better bang for the buck. “I feel that private brands are pretty well entrenched at this point in time,” Viamari said, echoing the report’s findings. According to the study, spending on non-food store brand items finished ahead of national brands for the second segment of 2017. Viamari added that even as the economy continues to heal, she does not foresee shoppers straying away from the products that they have grown accustomed to. Though private labels have made the most of the recession launching pad, Viamari does not recommend that retailers turn their backs on national brands. “You need to have both,” she said. “As a retailer it’s up to me to understand what kind of a complement of store brands and national brands are going to fit my key shoppers. You want to make sure you have a product that matches the quality that my shoppers want at a price they’re willing to pay.”

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Retailer News Sprouts Farmers Market Announces Expanded Partnership with Amazon

The chain expands its reach as the e-commerce giant moves further into fresh food Sprouts Farmers Market has announced that it has expanded its partnership with Amazon, to deliver groceries to consumers within one to two hours. Sprouts products will be offered through Amazon Prime Now in the Atlanta, GA, region. Groceries from high-end Sprouts Farmers Market will now be available to consumers daily from 8 a.m. to 10 p.m. According to The Atlanta Journal-Constitution, Amazon Prime Now already offers fresh foods, but its extended partnership with Sprouts will allow convenience-minded consumers access to its produce, meat, and seafood. Sprouts’ goods will be available within the Atlanta region, with a one-hour delivery for $7.00 and two-hour delivery provided at no additional cost. For one step further in easy access, orders can be placed through the Prime Now app. Though Amazon has been making continual headlines over the pursuit of its Whole Foods acquisition, this isn’t the e-commerce giant’s first foray with the sought-after fresh goods of Sprouts. continues next page...

Retailer News Sprouts Farmers Market Announces Expanded Partnership with Amazon cont... Sprouts discussed at the end of last year moving its Amazon partnership forward. Last month, the companies announced their partnership had also moved to Denver, CO, as well. This partnership expansion is right in line with Amazon’s mission to further strengthen its same day delivery offerings, and that of its fresh foods selection, according to The Atlanta Journal-Constitution.

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Southeastern Grocers Names Anthony Hucker President/CEO Southeastern Grocers LLC (SEG) has appointed Anthony Hucker president and CEO, effective immediately. Hucker has been interim president and CEO since the June departure of Ian McLeod. “We are pleased to welcome Anthony as CEO of Southeastern Grocers as he was always part of our succession plan,” the Jacksonville, Fla.-based company said. “He has played an integral role in our successful transformation over the last 18 months, and we are positive he is the right leader to guide SEG. Anthony brings significant industry expertise, and we are confident that he will continue to improve the business to the benefit of our dedicated customers across the Southeast.” Before coming to SEG, Hucker, a native of the United Kingdom, was president and COO of St. Louis-based Schnucks, and earlier held the role of president of Ahold USA banner Giant Food, based in Landover, Md., as well as serving on the executive board of Ahold USA. Prior to joining Giant Food, Hucker spent seven years at Wal-Mart Stores Inc. in a variety of leadership positions, internationally and domestically. He was hired by the Bentonville, Ark.-based mega-retailer as its CIO of the Americas, created the global format development division, and rose to become head of strategy and business development for Walmart USA and a corporate officer. Earlier still, after a few years as a food industry analyst, he worked for a decade with Aldi, where he held a range of senior roles in Germany, the United States and Austria, and was part of the original startup leadership team that spearheaded Aldi UK. “I’m grateful to our leadership team for the smooth transition over the past six weeks, and I’m excited for the opportunity to continue to drive the strategic direction of the company,” noted Hucker. “I’m humbled and honored to lead our team of more than 50,000 associates who are our greatest assets, putting our customers first, always. Over the past two years, we’ve made substantial progress in our transformation, and we’re ready to push forward.”

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Retailer News H-E-B Disaster Relief Convoy Rolls into Victoria, TX. More than 8,000 hot meals have been served by the H-E-B disaster relief units in Victoria as of August 28th, as the Texas grocery chain rallies around hurricane and flood victims in the state. A convoy of 15 H-E-B trucks arrived in Victoria August 27th, including mobile kitchens, food, H-E-B Pharmacies and Business Services units to help residents in disaster areas. The mobile kitchens are serving meals to first responders and residents while the pharmacy ensures disaster victims can still get the medicines they need. H-E-B customers can help support relief efforts by donating $1, $3 or $5 through a tear off campaign at H-E-B registers. Funds raised through the campaign will benefit the American Red Cross, The Salvation Army and Feeding Texas.

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Target Acquires Transportation Tech Firm Grand Junction; Increases Competitiveness With Amazon There has been quite a bit of hearsay on the power of transportation technology in retail, and who will nab the lead. With its latest acquisition, Target is making one leap forward towards first place. With the pending purchase of transportation technology company Grand Junction, Target has shown an effort to improve and expand its delivery capabilities–putting it right on Amazon’s heels. “Grand Junction’s technology and algorithms will help Target deliver to guests faster and more efficiently,” said Arthur Valdez, Target’s Executive Vice President, Chief Supply Chain and Logistics Officer. “This acquisition is part of Target’s ongoing efforts to strengthen Target’s supply chain to provide greater speed, reliability, and convenience for guests.” It seems a renewed interest in spicing up its food operations is not all the retailer has in mind. In recent months, Target has done much to invest in transforming its supply chain: earlier this year, CEO Brian Cornell announced a $7 billion investment plan focusing on digital channels and supply chain. It also recently invested in supply chain start up Inspectorio, covered in our sister publication AndNowUKnow, to bring further transparency to its supply chain operations. Now, with the acquisition of San Francisco-based Grand Junction, Target looks more focused on supply chain than ever. continues next page...

Retailer News Target Acquires Transportation Tech Firm Grand Junction; Increases Competitiveness With Amazon Cont... “Target is seizing a tremendous opportunity to leverage local delivery as a retail differentiator,” said Rob Howard, Grand Junction’s Founder and CEO, who will now become a Vice President of Technology at Target. “We’re thrilled about helping to pursue this opportunity, and to join Target at this unprecedented time in retail.” According to a press release, Grand Junction offers a software platform that’s used by retailers, distributors, and third-party logistics providers to manage local deliveries through a network of more than 700 carriers. As of now, Grand Junction is working with Target on its same-day delivery pilot at Target stores in New York, and when the deal is closed, the retailers says that Grand Junction’s employees will officially become Target team members.

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Alibaba and Paytm Mail Eye $200 Million Investment in Grocery Delivery Firm BigBasket Though the U.S. market is still swirling with the completed Amazon and Whole Foods merger, the e-commerce giant isn’t the only one looking to gain a stronger presence in the growing online grocery sector. Alibaba and its subsidiary Paytm are reportedly considering a $200 million investment by way of an acquisition. Paytm is considering purchasing BigBasket, an online grocer that Amazon had also previously explored buying, according to Economic Times. For those unfamiliar, Alibaba, Paytm’s parent, is a China-based e-commerce powerhouse and boasts a market cap that is now marginally larger than Amazon’s own. Though the U.S. market is still swirling with the completed Amazon and Whole Foods merger, the e-commerce giant isn’t the only one looking to gain a stronger presence in the growing online grocery sector. Alibaba and its subsidiary Paytm are reportedly considering a $200 million investment by way of an acquisition. Paytm is considering purchasing BigBasket, an online grocer that Amazon had also previously explored buying, according to Economic Times. For those unfamiliar, Alibaba, Paytm’s parent, is a China-based e-commerce powerhouse and boasts a market cap that is now marginally larger than Amazon’s own. “It’s going to be an Alibaba versus Amazon play in the long run,” Ankur Bisen, Senior Vice President at Technopak Advisors, told source VCCircle in an earlier interview. The world looks to be smaller in cyberspace, as multiple sources note Paytm and Alibaba’s investment in BigBasket will give it a stronger defense against Amazon’s expansions across the Atlantic, as well as gaining an entry into additional retail segments and regions. BigBasket’s in-house brands include Fresho for fruits and vegetables and Happy Chef for gourmet foods, which accounted for more than one-third of its sales. It is seeking a valuation of $1 billion, according to people familiar with the situation, a term that Amazon did not accept but Paytm Mall might.

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Retailer News Amazon Clobbers Grocers’ Stocks with Price Cuts at Whole Foods

Amazon.com Inc. said it would begin slashing prices on grocery items from bananas to baby kale at its new Whole Foods Market unit right away, serving notice that the e-commerce giant plans to move quickly to shake up the supermarket industry with its $13.7 billion acquisition.

The announcement Thursday, which sent stocks of traditional grocers into a fresh tailspin, said price changes for both staples and more high-end foods would go into effect as soon as Amazon closes the Whole Foods deal on Monday. The company also said its Amazon Prime program, which analysts estimate has more than 60 million members, will become Whole Foods’s customer-rewards program and that new deals at the supermarket chain will be available through Prime. “We’re determined to make healthy and organic food affordable for everyone,” said Jeff Wilke, Chief Executive of Amazon Worldwide Consumer. Stocks for six large food retailers, including Kroger Co. and Wal-Mart Stores Inc., lost around $12 billion in value after the announcement. Shares of grocery-store companies had already been battered since the deal was announced in June, and analysts say they expect grocery stocks could fall further. Grocers and investors say they are concerned that Amazon could start a price war as it works to broaden the reach of a chain that has long focused mainly on higher-income shoppers. Amazon has often sold items at breakeven or a loss to gain market share in sectors it sees as a priority, a strategy that former Amazon executives said it is likely to replicate in groceries. “The reality is that Amazon has done this with every part of their business to create customer loyalty,” says James Thomson, a former Amazon executive who advises brands on their online strategies. “Yes, it’s lower margins, but it’s about the long term.” But grocers, suffering from lethargic growth, could struggle to compete. They already spar over price on the most commonly purchased items such as bananas and eggs, and would sacrifice already thin margins to go lower. Even moderate drops in Whole Foods’s more-expensive items could hurt traditional grocers given the high quality of Whole Foods’s stores, said Rupesh Parikh, senior equity research analyst at Oppenheimer & Co. Inc. “Even if they get closer to some of the peers, that could have a detrimental impact,” Mr. Parikh said. Kroger, the largest U.S. grocery chain by stores and revenue, already dropped prices this year, and is closely watching how competitors respond. “It’s less expensive to keep your customers in your store with the crazy price than trying to get them back if they start shopping somewhere else for milk and eggs,” Mike Schlotman, Kroger’s chief financial officer, said in a recent interview. Shares of Kroger fell by more than 8% on Thursday, while those in Wal-Mart and Costco Wholesale Corp. also traded lower. Shares in United Natural Foods, Inc., Whole Foods’s main distributor, fell by more than 5%. continues next page...

Retailer News Amazon Clobbers Grocers’ Stocks with Price Cuts at Whole Foods cont...

Amazon “believes that lower prices drive traffic,” says Eric Heller, a former Amazon executive who now works with brands selling to the company. “Products that have a higher-than-perceived quality, and a lower-than-expected price drive customer loyalty.” Other foods Amazon selected for price cuts -- such as almond butter and organic salmon -- tend to be pricier and more targeted to core shoppers. Whole Foods once dominated the natural food market, but Wal-Mart, Costco and other mainstream retailers have rapidly expanded their organic offerings at cheaper prices. Kroger sold around $16 billion in natural and organic products last fiscal year, roughly equal to Whole Foods’s total sales. Now Whole Foods items will get a massive new distribution channel. Whole Foods’s private-label items, such as the 365 Everyday Value brand, will be sold on Amazon. There is a big overlap between the two retailers already. A Morgan Stanley survey shows about 62% of Whole Foods shoppers are members of Amazon’s Prime service, opening the door for cross-selling to entice customers who shop at both to spend more. Amazon’s discussion of its plans in Thursday’s announcement was brief, but it provided the first details of its intentions for a deal that will give the online retailer a network of more than 460 brick-and-mortar stores. Some of those stores will soon have Amazon’s in-store lockers for package pickups, Amazon said. The lockers could be a first step in reducing Amazon’s delivery costs by offering customers more pickup or delivery options. Wal-Mart, for instance, over the past couple of years started rolling out curbside grocery pickup to hundreds of its stores. Prime, which costs $99 annually and offers perks including unlimited two-day shipping, is a cornerstone of the integration. Prime will be incorporated into Whole Foods’s point-of-sales system starting Monday, and membership benefits will be added later. The two companies hadn’t determined exactly what a combination would look like before announcing the deal, because it came together in about six weeks. Amazon revealed its plans a day after it received Federal Trade Commission approval on the deal and Whole Foods shareholders voted in favor of it. Whole Foods, based in Austin, Texas, began lowering prices roughly two years ago to reverse a sales slump. It also ran promotions and advertised on television for the first time in years. Still, Whole Foods continued to lose sales and shopper surveys have shown that many customers believe the chain is too expensive. A Morgan Stanley survey earlier this month found that while Whole Foods prices were down slightly from last year, they still were roughly 15% higher on average than regional supermarkets. Sarah Lustberg, 28 years old, shops at her nearby Whole Foods in New Orleans primarily for produce and “splurge meals,” but she does the other half of her grocery shopping at a nearby regional chain. She says she plans to shop at Whole Foods more if prices go lower.

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