C.A. Fortune Newsletter- November/December 2017

Newsletter November/December 2017 Volume 5 - Issue 8

C.A. Fortune Announcements Vol. 5 - Issue 8 Inside This Issue CAF Announcements 2 Distributor News 3-4

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Industry News 4-8 Consumer Trends 8-11 Retailer News 12-20 Shows & Events 21

C.A. Fortune Partnered with Jewel and Northern Illinois Food Bank On November 4th, C.A. Fortune was some of the nearly 200 volunteers that helped kick off Holiday Meal Box packing at Northern Illinois Food Bank.

Locals in need will receive a whole turkey, a bag of potatoes and all of the holiday trimmings, so that they can enjoy a complete and nutritious holiday meal with their family!

Contact Headquarter Office 1831-A Howard St. Elk Grove Village, IL 60007 630.539.3100

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C.A. Fortune & Carlin Group Women’s Network Partners with Chicago Food Depository The C.A. Fortune and Carlin Group Women’s Network has put together a food drive this holiday season, ending December 29th! You can help provide more fresh fruits, vegetables, dairy and proteins to 812,000 neighbors in Cook County, including 1 in 6 children, who face food insecurity by contributing to our virtual food drive.

Thanks to the Food Depository’s buying power where $1 buys 3 meals, you can make an immediate impact! Every dollar raised through this virtual food drive will be used to buy nutritious food for our community. To contribute please follow the link: myfooddrive.org/drive.php?e56aad944.

Distributor News KeHE Reflects on 2017 KeHE Distributors, LLC (KeHE) celebrates a year of growth and accomplishments in 2017. The company opened a distribution center in Georgia, introduced technological innovations to benefit customers and suppliers, and renewed its commitment to doing business for good as a Certified B Corporation and with the introduction of the CAREtrade™ initiative.

“Where KeHE Goes, Goodness Follows is more than our motto, it’s how we do business,” said Brandon Barnholt, president and CEO, KeHE. “Our success is based on improving the lives of our partners, customers, and people in need, a tradition that continues through 2017 and one that we look forward to building on as we enter our 65th year.”

D.C. Expansion KeHE expanded its operations with the arrival of its newest distribution center in Douglasville, Ga., an Atlanta suburb. The LEED-certified, state-of-the-art 450,000-square-foot facility features energy-efficient practices, LED lighting, recycled packaging material and nearly 100,000 square feet of freezer and cooler space. KeHE celebrated the opening of the site in April with a philanthropic “pick and pack” activity that provided 1,000 boxes of food to local area families in need.

Show Enrichment and Growth The first national Natural Show delivered the benefits of KeHE’s popular regional shows on a grander scale, welcoming more than 2,200 natural grocery and specialty customers, suppliers and brokers to the Austin Convention Center in Austin, Texas for the two-day show.

The 2017 Summer Selling Show had a 24% increase in retailer attendance and a 13% increase in exhibiting companies from the previous year. KeHE looks forward to welcoming suppliers and retailers to the KeHE Summer Selling Show in February.

CAREtrade KeHE introduced CAREtrade, an initiative supporting businesses that advance a higher purpose with Divine Chocolate, Growers Alliance Coffee, Kuli, Sunshine Nut Company and Women’s Bean Project joining the ranks as inaugural CAREtrade partners. KeHE officially launched CAREtrade at Natural Products Expo West 2017 as Chef Claudia Sandoval competed with Chef Jeff Rossman, executive chef and owner of Terra American Bistro, during the Celebrity Chef Showdown.

Certified B Corp Status Following its successful first year as a Certified B Corporation that included being named a B Corp “2016 Rookie of the Year” by the nonprofit B Lab, KeHE continued its commitment to using business as a force for good by renewing its B Corp status in November 2017.

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Distributor News SUPERVALU Completes Acquisition of Associated Grocers of Florida SUPERVALU INC., on December 8, 2017 announced it has completed the previously announced acquisition of Associated Grocers of Florida, Inc. in a transaction valued at approximately $193 million. Associated Grocers of Florida adds a dynamic grocery wholesaler to SUPERVALU’s growing national distribution network with annual sales of approximately $650 million in its last fiscal year as estimated under SUPERVALU’s accounting policies. This acquisition marks the second completed acquisition of 2017 for SUPERVALU as the Company continues to strategically invest in growing its wholesale business.

“The addition of Associated Grocers of Florida is another important step on our journey to becoming the wholesaler of choice for grocery retailers,” said Mark Gross, SUPERVALU’s President and Chief Executive Officer. “AG of Florida has a tremendous retailer base across central and south Florida and we’ll immediately gain a vibrant group of customers as well as an ability to expand internationally with AG’s customers in territories that include the Caribbean, and Central and South America.”

Gross continued, “I’m also thrilled that Christopher Miller, AG’s former president, will continue with us in a similar role as president of SUPERVALU Florida going forward. Chris has built a great team and we’re very excited that they’re now a part of our SUPERVALU family. Between the Unified Grocers and AG of Florida acquisitions, we’ve added substantial talent that will help us meet the rapidly changing needs of the markets we serve, including the growing specialty, organic, Latino and Hispanic markets.”

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Industry News 4 Challenges for Organic- and How Retailers & Brands Prevail According to the latest numbers from the Organic Trade Association, the organic sector is a healthy one. In 2016, sales in the United States reached about $47 billion, reflecting new sales of almost $3.7 billion—a clear surge, as the food market overall remained stagnant.

Yet despite this good news, a cloud of concern hovers among industry insiders. According to the OTA, it’s a challenge to keep the momentum and enthusiasm for organic up, especially now that organic products are becoming more commonplace. And while retailers agree that organic is still very much in demand, newer, buzz-worthy designations sometimes eclipse the standard bearer.

Here are the top challenges the organic market is currently facing, as identified by organic retailers and brands, as well as their two cents on how to solve these issues—and where to go from here.

Clearing confusion Confusion is still an issue, though perhaps not the way it has been in the past. No longer are consumers unsure of the value of the organic seal or the benefits it brings, but rather, additional seals are muddying the waters. continues next page...

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Industry News 4 Challenges for Organic- and How Retailers & Brands Prevail cont...

“I have customers that come to me and ask if an organic product is also non-GMO. Part of the problem is that I’m looking at a can right now with six different seals and certifications on it,” says Howard Atsma, director of operations at Harvest Health Foods. “On this particular can, the non-GMO label is the largest and most prominent. To me, the organic label should be on top.”

Solution: At MOM’s Organic Market, vice president of grocery Lisa de Lima is breaking out the old signage used to educate on organic. “We’ll do an end cap that educates on the fact that organic is in fact non-GMO,” she says.

Plus, when they develop a private label product, MOM’s is committed to minimizing white noise. “If it’s organic, we will not put a non-GMO claim on the label, even if it helps sales, because it adds to confusion,” de Lima says.

The next step? Getting brands on board. “Right now, they’re adding additional certifications to satiate the consumer,” she adds. “At some point, we have to get on the same page and say we do not need them all if organic covers it.”

Navigating nuance Many certifications on labels today are very easy to understand: non-GMO, gluten free, local. Organic? Not as simple, says Jeff Barry, president of Boston Organics. “As we all know, organic has to do with GMOs, antibiotics, pesticides, growth hormones—all of that,” he says. How can retailers and stakeholders fit the nuances of the organic certification—one of the most stringent and clear-cut around—into a 140-character culture?

Solution: The Organic Trade Association has identified the millennial parent as organic’s biggest buyer. On the one hand, they’re known for craving sound-bite-style information. But on the other hand, as this group becomes parents—a key driver going forward for organic growth, says OTA—what they also crave is transparency. And organic brands and retailers can offer this in droves.

“Transparency is the USDA Organic certification’s greatest asset,” says Barry. “The certification is complicated, but there are clear guidelines. Figuring out how to make that information easily accessible to millennials will be invaluable.” OTA’s consumer survey takeaways? Since millennials use digital sources of information to learn about the products they buy (think online product reviews and blog posts, instead of the commercials preferred by their parents’ generation), retailers and brands would be wise to make their information smartphone-friendly, especially because millennials favor phones over other mobile devices and desktop computers.

Retaining buzz According to Barry, “designations like local and non-GMO tap into current concerns about big business and big agriculture, and the public’s distrust of those entities.” As a result, while these newer certifications and designations may not take up the market share that organic does, their appeal is timely, leading to more perceived excitement.

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Distributor News 4 Challenges for Organic- and How Retailers & Brands Prevail cont...

Solution: Be relevant, says John Roulac, founder and chief visionary officer at Nutiva, and take a page from the book of social media influencers, who tap into what’s going on in the world today. “The organic food movement has to do the same—put out a tweet or Facebook post that resonates,” he says. “The reality is that any movement, brand or sector has to make themselves relevant. And the organic movement was very strong, and has some opportunity to reflect and re-energize.”

The truth of the matter is that organic is doing better sales- and growth-wise than other designations, regardless of buzz. According to SPINS, sales of products carrying a non-GMO claim grew 7.8 percent over the course of the past year. Gluten-free foods grew about 4 percent in sales. Fair trade foods rose 9.4 percent. Organic? Up a whopping 12.6 percent.

Roulac speculates that soil health might be the topic to keep distracted consumers interested in a tried-and-true label like organic. “This is an inclusive topic, rather than a divisive one,” he says. “Everyone’s for better soil. Monsanto says they’re for better soil. It’s a rallying cry that everyone can get behind and can bring a positive light to organic.”

New food movements gain momentum Food movements like gluten free, flexitarian and non-GMO are all relatively new. Millennials, especially, grew up while these eating trends were rising to the forefront. How can organic—a time-tested movement—form the foundation of these newer movements and hold the attention of consumers?

Solution: According to Atsma, it’s all about telling a story. New movements rely on this tactic to bring a personal touch to an unfamiliar concept and, ultimately, gain traction. “The organic label does not do that at the moment,” he says. “It has to get back to the earth and the dirt and the farm, and the people who are salt of the earth. Shoppers need to know that they’re not just getting an awesome product, but that they’re also supporting a person who fought to get certified and has a beautiful and flourishing farm.”

This is something that the local food movement has done very well. Organic brands can tap into this excitement, too, by sharing their stories. Atsma says retailers like himself are starved for this kind of content: “We don’t have the time to make this ourselves. When we’re fed good content, we love to share it. We have cash registers with screens on them, and everyone has social media—give us the video, or give us your facts, and we will show it to our shoppers to help connect them back with organic.”

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Industry News Watch Out, Amazon & Walmart: Kroger is also Building an Advertising Business

Amazon’s advertising business is worth at least $1 billion, and Walmart has a growing advertising platform, too.

Kroger, one of the biggest grocery brands in the U.S., is also venturing into retail media. Kroger is selling its suppliers ad units and solutions, and it is developing a programmatic platform that will go live next year.

Kroger, which owns the likes of Harris Teeter, Baker’s and Fred Meyer Jewelers, generated $27.7 billion in sales from July to September of this year, up 4.5 percent from the same period a year prior, according its quarterly earnings report released in November. Approximately half of all U.S. households have a Kroger loyalty card, which drives nearly 90 percent of Kroger’s sales, according to the company. Like Walmart, Kroger boasts that its loyalty program data and purchase data gathered from its mobile apps, brand websites and around 2,800 stores across 35 states in the U.S. can help its suppliers (mostly consumer packaged goods companies like Procter & Gamble) serve targeted ads on Kroger’s properties and the open web.

Kroger’s sales pitch may sound familiar, as mass retailers like Amazon and Walmart all use their consumer purchase data as the cornerstone to carve out a media business. But different from Amazon, which has an in-house media division called Amazon Marketing Group, and Walmart, whose media platform was largely built by WPPowned Triad Retail Media (which also creates ad units to sell for other retailers), Kroger bought the data analytics piece of agency Dunnhumby (formerly a joint venture between Kroger and Tesco) around three years ago to form its own consumer insights subsidiary called 84.51°.

“CPG brands today are splitting their marketing spend between trade and advertising. Trade promotion is one of the industry’s largest investments — this is promotional dollars to influence brick-and-mortar sale pricing like temporary price reductions,” said Cara Pratt, vp of customer communications product strategy and innovation for 84.51°. “CPGs shift their marketing budgets across vehicles — many of which deliver against different business objectives, but all are intended to [generate] sales. Our science and Kroger’s customer insights help CPG brands drive actions.”

Kroger is the only retailer that the 84.51° team of 775 serves. The division also helps more than 300 CPG clients understand how to better use Kroger’s data and third-party data for advertising. The majority of 84.51° employees are based in its Cincinnati office, which is only a 10-minute walk from the Kroger headquarters. A small team in Portland, Oregon, is also responsible for media planning and buying for the Kroger brand, according to Bob Welch, svp of customer communications and Kroger media services for 84.51°.

Welch said Kroger’s advertising business has two pillars: One component is Kroger’s customer communications program, where the retailer runs direct and email campaigns for its suppliers with tailored content and promotions; the other is what the company calls “precision marketing solution,” powered by Kroger’s purchase data from 60 million households.

One offering under Kroger’s precision marketing solution is on-site advertising on Kroger.com. 84.51° is responsible for developing ad formats on the site and managing ad sales for Kroger, continues next page...

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Industry News Watch Out, Amazon & Walmart: Kroger is also Building an Advertising Business cont... much like what Triad Retail Media does for Walmart. “You can say that we borrowed the Triad model, but the differentiation is our ability to personalize the experience,” said Pratt. “We can connect 96 percent of Kroger transactions to a customer, which allows us to serve very targeted product placement and drive better conversion.”

CPG clients can also buy co-branded media on the open web — largely display ads that include the Kroger logo and direct consumers to Kroger properties when they click on the ad — as well as run word-of-mouth campaigns through Kroger’s MyMagazine Sharing Network, where brands give out free products, and members give their feedback and share the product on social media in return, according to Pratt.

Pratt declined to share the total number of ad formats Kroger sells and the corresponding pricing model. “Some formats are CPM-based and some are [cost-per-click]-based,” she said. “CPC-based ads are more connected to search marketing.”

Most Kroger precision marketing buys are placed programmatically through a combination of programmatic direct and open exchange inventory, according to Pratt. 84.51° is also developing a programmatic platform that will be available in the next year to let advertisers buy ads on Kroger.com. Kroger’s ad solutions don’t apply to Harris Teeter or Roundy’s brands at the moment.

“Extending our capabilities to those newer brands to the Kroger family will occur in the future,” said Pratt.

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Consumer Trends Snacks-Especially Healthy Ones-Are Seeing More Growth As consumers’ busy lives get even more hectic, many are substituting three square meals a day for a variety of grab-and-go snacks. The three categories with the largest dollar share in the snacks segment are dairy (22%), bars (17%) and confections (17%). However, cookies and crackers, jerky, salty snacks and produce are seeing greater growth.

Demand for healthier products, like bars and jerky, have seen strong dollar growth from 2013 to 2016 as consumers strive to eat better. Still, people haven’t lost their sweet tooth or taste for potato chips. Sales of individual cookies and crackers ranked third-highest in terms of sales gains at $469 million over those three years.

Manufacturers looking to make their products stand out might consider modifying ingredients and recipes to make the kind of health claims to which consumers respond. Expanding the types of individual snacks they sell would offer more variety, and likely appeal to consumers’ interest in new tastes and flavors. continues next page...

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Consumer Trends Snacks-Especially Healthy Ones-Are Seeing More Growth cont...

In addition, offering better quality healthy options at supermarkets and convenience stores alike cater to consumers’ desire to eat better on the go.

Demand for more snack options is transforming many sections of the food and grocery markets, and already forced some to evolve. Cereal is still most often consumed for breakfast, but just under half of consumers also eat it as a snack in-between meals. Breakfast itself is slipping in popularity, with more people skipping breakfast than they were two years ago. Manufacturers have responded by introducing to-go tubs of cereal and bars that can be eaten while driving to work.

Almost a quarter of all snacking is now occurring during main meals — up from 21% five years ago. Fresh fruit and yogurt — both seen as healthy options — are the two most popular mealtime snacks.

The continued interest in portable, simple ingredient snacks has made some categories hyper-successful, like fruit and nut bars. Kind is a leader in this space, and confectionery giant Mars announced it was taking a minority stake in the company last week.

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From Pea Protein To Moringa, 13 Emerging Investor-Backed Ingredients As new food-focused startups are changing the lineup on grocery store shelves, plant-based ingredients are all the rage.

Using CB Insights data, we analyzed food and beverage startups that have raised investment since 2016 to surface 13 trending ingredients, which show up on many of their recipes list:

- Probiotics - Pea Protein - Seaweed - Ginger - Turmeric - Matcha and yerba mate - Oats and barley - Chia - Mushroom protein - Chickpeas - Niche Trends: Moringa, Maca, and Monkfruit

PROBIOTICS Probiotics are live microorganisms that help support digestive health. Traditionally found in yogurt, kimchi, and other fermented foods, startups have been integrating probiotics into beverages, protein powders, and more. startup Farmhouse Culture and probiotic granola startup Purely Elizabeth. Probiotic beverage startup Revive Kombucha, which recently launched a kombucha/coffee crossover product, attracted $7.5M from Peet’s Coffee continues next page... in August.

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Industry News From Pea Protein To Moringa, 13 Emerging Investor-Backed Ingredients cont...

PEA PROTEIN Pea protein may not be as well known yet as whey protein or soy protein, but it has gained traction among startups such as Ripple Foods. Pea protein has no dairy, which makes it easier to digest than whey protein for many people. It is also gluten-free.

We see pea protein showing up in protein supplement startups, such as Skoop and Revere; low calorie ice cream, such as Wink; and even in Beyond Meat, which sells its plant-based meat substitutes in dozens of top grocery chains throughout the US. Traditional meat leader Tyson backed Beyond Meat in late 2016 (through Tyson New Ventures), and the startup recently added Leonardo DiCaprio to its list of investors.

SEAWEED Seaweed is good for more than sushi. Startups are using seaweed, algae, and spirulina (a type of algae high in protein, amino acids, vitamin B, and iron) in a variety of plant-based products. UK startup Oppo even uses spirulina in its high-protein, low-calorie ice cream. Other startups, such as Hum Nutrition and Moon Juice, more directly emphasize seaweed’s nutritive value by offering it in powder form.

GINGER Many recently funded startups use ginger to add spice and increase health benefits. Ginger reportedly has anti-inflammatory properties, and can support digestive health. Many probiotics startups — including Humm Kombucha and Farmhouse Culture — use ginger in flavoring. We also see ginger adding spice to energy drinks, such as Kill Cliff and CORE. TURMERIC Like ginger, turmeric combines bold flavor with health. A number of startups have added turmeric to bone broth, coffee blends, and more. Turmeric is traditionally common in Indian foods, and startups such as Bandar Foods (condiments) and The Chaat Company (yogurt) take Indian flavors as inspiration.

Other startups, such as REBBL, emphasize turmeric’s health benefits in their products. good culture, which aims to promote single-serve cottage cheese as a snack food, uses turmeric in several of its flavors to add spice.

MATCHA AND YERBA MATE Matcha and yerba mate are meeting consumer desire for healthy energy. Matcha, a powdered form of green tea, combines antioxidants and caffeine with an Instagram-friendly bright green color that’s pushed it onto coffee shop menus over the past few years.

Many beverage startups now offer ready-to-drink matcha lattes, including REBBL. MatchaBar, which recently added singer Drake to its investor list, operates matcha cafes and sells bottled drinks. Other startups, such as detox beverage brand Dirty Lemon, focus on matcha’s metabolism benefits.

Yerba mate, which hails from South America, is a tree leaf high in caffeine. Startup Guayaki aims to introduce American shoppers to yerba mate through flavored energy drinks, while startups like Revive Kombucha combine the ingredient with probiotics. continues next page...

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Consumer Trends Celiac Consumers Demand Quality and Nutrition OATS AND BARLEY Startups are aiming to reinvent oatmeal and use oats in unexpected ways. Powerful Yogurt, for example, sells packaged oatmeal with added protein marketed to athletes, while Grainful makes oat-based, gluten-free frozen meals. Unlike oats, barley does contain gluten. Startups such as Canvas are promoting barley as a healthy, sustainable source of protein and fiber.

CHIA Chia seeds contain protein, antioxidants, and calcium. Startups are using chia seeds to add texture to yogurts and sauces, as well as to add protein to bars. KNOW Foods, which sells gluten-free breads and raised $12M in September, combines chia seeds with flax seeds and coconut flour in many of its products.

MUSHROOM PROTEIN Mushrooms aren’t typically associated with sweet foods.

However, startups are integrating reishi and other mushrooms into coffees, vanilla protein powders, and drinkable meals. Startup MycoTechnology — recently backed by Kellogg’s fund Eighteen94 Capital — uses mushroom molecules to create a vegan protein source.

CHICKPEAS Pulses (a category that includes beans, peas, chickpeas, and lentils) have become a valued source of plant protein for the food industry. Pulses are high in protein — meaning they can be a good substitute for meat — and are gluten-free, soy-free, and dairy-free.

Among pulses, chickpeas have gained particular traction due to their flavor and creamy texture. Startups like HungryRoot use chickpeas’ creaminess to create cookie dough substitutes, while startups like Banza use chickpeas for a high-protein pasta substitute.

NICHE TRENDS: MORINGA, MACA, AND MONKFRUIT Among food startups that recently raised funding, we see experimentation with flavors from South America and Southeast Asia.

Moringa — a plant native to India — contains protein, vitamins, and antioxidants, and startups such as Kuli Kuli have begun to push moringa as a “superfood” in the US. Monkfruit, also native to South Asia, serves as a no-calorie sweetener for startups like Aloha. Maca root, a traditional food and supplement in Peru, has been said to give energy and aid the immune system, and is beginning to be used by early-stage beverage and protein bar startups.

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Retailer News Amazon is Raising Prices at Whole Foods After its Highly-Publicized Cuts Whole Foods’ prices are creeping back up after highly-publicized cuts following its acquisition by Amazon, according to an analysis by the research firm Gordon Haskett.

The firm checked prices on 110 items at a Whole Foods store in Princeton, New Jersey, and found that the cost of the total basket of items has increased 1% since the end of September.

The average price increase on each item was about 1.6%, the firm said.

The findings are surprising, given the “myriad of positive press” around Amazon’s price cuts at Whole Foods since the acquisition, Gordon Haskett analyst Chuck Grom wrote.

Whole Foods’ prices are now just 1.1% lower than before the Amazon deal closed in August, according to the data.

Amazon’s promise of price cuts drew new shoppers to Whole Foods following the acquisition. Whole Foods will have to keep offering lower prices if it wants to keep those shoppers around, Grom wrote.

“Demonstrating lower prices to this new customer will be critical to the early success of the integration, in our view – first impressions are the most lasting,” he said.

Most of the latest price increases affected dry, packaged goods, according to the price study. At the same time, there were some price cuts in produce and dairy.

The prices of produce fell 4.9%, while snack foods rose 5.2%, dry grocery rose 2.5%, beverages and bakery each rose 1.3%, and frozen goods rose 1.3%.

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Target to Acquire Shipt Target Corp. has agreed to acquire same-day delivery platform Shipt for $550 million, in a move that will accelerate the retailer’s digital fulfillment efforts and bring same-day delivery services to about half of Target’s stores by early 2018. It will expand the service to the majority of Target stores before the 2018 holiday season. At launch, products available for same-day delivery will include groceries, essentials, home, electronics, and other products, and by the end of 2019, it will include all major product categories, according to Target.

“We laid out an ambitious strategic agenda in early 2017, which included a focus on giving our guests a number of convenient ways to shop with Target, whether it’s ordering online and picking up in one of our stores, driving up to pick up an order, or taking advantage of services like our new Restock program. continues next page...

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Retailer News Target to Acquire Shipt cont...

With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable ame-day delivery to guests across the country,” said John Mulligan, executive vice president and COO for Target, in a statement.

Shipt will be a wholly-owned subsidiary of Target, and will continue to run its business independently. Target will integrate Shipt’s expertise with its recently acquired transportation technology company Grand Junction. Shipt plans to continue to expand partnerships with other retailers’ delivery capabilities. Shipt CEO Bill Smith will remain in his current role. The transaction is expected to close before the end of calendar year 2017.

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Publix gets $250M Sales boost from Hurricane Irma Publix Super Markets said it received a significant sales boost in the third quarter from the impact of Hurricane Irma as consumers stocked up on groceries in anticipation of the storm and replenished their supplies after it was over.

Comparable-store sales were up 4.3% for the quarter, including a 3.1% contribution from the impact of the hurricane. Incremental sales as a result of the storm totaled an estimated $250 million, Publix said in a filing with Securities and Exchange Commission. The storm hit Florida Sept. 10, causing scattered damage throughout the state and extensive power outages, after wreaking havoc in the Caribbean.

“We have faced many hurricanes in our past, but none with the size and impact of Hurricane Irma,” said Todd Jones, president and CEO, Publix. “I could not be more proud of our associates for their passionate service to our customers before and after the hurricane.”

Lakeland, Fla.-based Publix, which operates the majority of its 1,157 stores in Florida, has perhaps as much experience as any retailer preparing for and recovering from hurricanes. When Hurricane Irma hit, the company said most of its stores that had to close for evacuations or severe weather were reopened within two days following the passage of the storm, operating on generator power if necessary. All stores were reopened within six days, with the exception of one location in Key West, Fla., which reopened the following week.

Net income for the third quarter, which ended Sept. 30, totaled $474.9 million, an increase of 12.8% over year-ago levels. Total sales were up 6.2%, to $8.5 billion.

Publix estimated that the profit from incremental sales due to the hurricane more than offset inventory losses due to power outages and other additional expenses. In the SEC filing, Publix estimated that costs for inventory losses, fuel for generators and facility repairs and cleanup totaled $25 million, for which the company is self-insured. continues next page...

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Retailer News Publix gets $250M Sales boost from Hurricane Irma cont...

Hurricane Irma also boosted Publix’ gross profit margin and lowered its operating and administration expenses as a percent of sales, primarily due to volume efficiencies from the storm. Third-quarter gross profit as a percent of sales was 27% in the recent quarter, vs. 26.5% in the year-ago period, while operating and administrative expenses as a percent of sales were down 30 basis points, to 20.3%.

Publix year-to-date results Through the first nine months, Publix reported that net income was up 3%, to $1.53 billion, on a sales increase of 3%, to $25.6 billion. Year-to-date comparable-store sales were up 1.2%, including an estimated 1% impact from Hurricane Irma.

Effective Nov. 1, 2017, Publix’s stock price increased to $36.85 per share, up from from $36.05 per share. The stock is not publicly traded and is made available for sale only to current Publix employees and members of its board of directors.

Publix opened 27 supermarkets through the first three quarters, including four replacement stores, and remodeled 100 locations. It also closed nine supermarkets, including two that were replaced during the current year, with the remaining seven to be replaced in subsequent periods.

The company said it expects to spend $400 million on capital expenditures for the remainder of 2017, primarily on new supermarkets, remodeling existing stores, technology and the acquisition of shopping centers where Publix is the anchor tenant. It invested $1.06 billion in cap-ex during the first nine months of 2017.

Among the store openings planned for the remainder of 2017 are two in North Carolina (Clemmons and Fayetteville), two in Florida (Aventura and Crestview), one in Midlothian, Va., and one in Pooler, Ga., according to the retailer’s website.

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Ahold Delhaize announces Ahold Delhaize USA, a new parent company for its U.S. businesses; appoints Kevin Holt CEO Ahold Delhaize USA Ahold Delhaize announced the creation of Ahold Delhaize USA, to be effective on January 1, 2018. Ahold Delhaize USA will be the parent company for all of Ahold Delhaize’s U.S. companies, including its local brands, Stop & Shop, Food Lion, Giant, Hannaford, Giant/Martin’s, and Peapod, as well as Retail Business Services (RBS), a U.S. shared services company providing support to the brands.

Ahold Delhaize USA will be led by Kevin Holt, who will be appointed Chief Executive Officer Ahold Delhaize USA, effective January 1, 2018. Kevin is currently Chief Operating Officer of Ahold USA. In this new role he will remain a member of Ahold Delhaize’s Management Board and Executive Committee and will continue to report to Dick Boer, CEO Ahold Delhaize.

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Retailer News Ahold Delhaize announces Ahold Delhaize USA, a new parent company for its U.S. businesses; appoints Kevin Holt CEO Ahold Delhaize USA cont...

Frans Muller, Deputy CEO Ahold Delhaize and Chief Integration Officer, who serves as acting COO Delhaize America (ad interim) will focus on the continued smooth integration of Ahold Delhaize.

Dick Boer, CEO Ahold Delhaize, said, “combining the parent companies of the U.S. brands and RBS is the natural next step in our brand-centric strategy in the U.S. Kevin is an outstanding leader with extensive food retail experience and a great choice to guide our U.S. businesses through this time of continuing change and evolving customer expectations.”

Kevin joined Delhaize Group in 2014 as CEO Delhaize America and transitioned to Chief Operating Officer of Ahold USA in 2017. Prior to joining Ahold Delhaize, he served in executive leadership roles at SUPERVALU and Meijer.

“I’m excited that we are moving into this next phase where we can focus on further strengthening our brands and winning in our markets,” said Kevin. “Ahold Delhaize USA and its U.S. brands are well positioned to continue to drive growth and innovation and meet the evolving needs of customers, both in stores and online.”

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Fresh Thyme Farmers Market’s CEO Chris Sherrell Outlines Expansion Plans and a New Market Fresh Thyme Farmers Market has no plans of slowing down its rocket-speed growth anytime soon, announcing 10 new store openings slated for 2018, along with entering into its 10th state—Pennsylvania. Since opening its doors in 2014, Fresh Thyme has built up a coalition of 66 locations throughout the Midwest, and has plans to hit a 150-store mark by the year 2020.

“From acquisitions and mergers to shifting consumer habits, 2017 was marked by significant changes, and the grocery and food retail industries continue to be ever-evolving,” said CEO Chris Sherrell in a press release. “We enjoy the challenge this brings and work hard to continuously improve our shopping experience.”

“As a three-years-young company, we’re extremely proud of our 5,000 employees and the communities we serve throughout the Midwest,” Sherrell continued. “Over the past year, we’ve made significant hires at the executive level, further developed our private label offerings, and continued to support the organizations that matter most to our communities. We’re excited for 2018 and all that is in store.” continues next page...

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Retailer News Fresh Thyme Farmers Market’s CEO Chris Sherrell Outlines Expansion Plans and a New Market cont...

2017 marked a flurry of changes for the retailer in flux. In addition to Scott Schuette being promoted to Vice President of Produce, Carol Okamoto joined as Chief Financial Officer in March, and Mark Doiron was brought on as Chief Merchandising Officer in May. Schuette came to his produce role with 33 years of retail experience, including time with Bashas, and Okamoto and Doiron bring three decades of experience to the retailer as well.

Just last month, Fresh Thyme also welcomed Dean Little as Chief Operations Officer, giving his 40 years of industry experience new life in. The following other new roles were highlighted in the release:

- Amy Parker as Vice President of Marketing - Art Scott as Senior Director of Marketing - Kerry Clifford as a in-house registered dietitian - Meghan Sedivy as a in-house registered dietitian

Now with stores in Wisconsin, Minnesota, Michigan, Missouri, Nebraska, Indiana, Illinois, Iowa, Ohio, and soon-to-be Pennsylvania, AndNowUKnow will be keeping a close eye on this one to watch for 2018.

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Piggly Wiggly Holds its Ground in the South “The Piggly Wiggly name in the South is a historic, powerful brand,” said David Bullard, president and CEO of Piggly Wiggly Alabama Distributing Co., Bessemer, Ala. “We have operators that do well across all economic strata.”

Piggly Wiggly Alabama is a cooperatively owned wholesaler serving about 270 independents in a seven-state territory in the Southeast. About 200 of the 270 stores in the co-op carry the Piggly Wiggly banner, which enables them to purchase the Piggly Wiggly private label through the co-op. The other 70 stores that are co-op members operate under other banners.

The Piggly Wiggly banner has largely withstood the expansion of chain supermarkets and the ascension of Walmart as a grocery juggernaut, which have decimated both independent and weaker chain supermarkets around the country.

Now Piggly Wiggly Alabama members are bracing for the entry of Lidl, the German discounter that crashed ashore in the U.S. earlier this year with stores in the Carolinas and Virginia.

But Piggly Wiggly operators have thrived by differentiating themselves with strong customer service and in many locations a focus on sharp pricing. About 20% of the co-op’s members, including many Piggly Wiggly operators, use the cost-plus format, in which they add 10% to the cost of items to create what some operators tout as “a sale every day.”

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Retailer News Piggly Wiggly Holds its Ground in the South cont...

“We’ve got some large operators who’ve really flourished with the cost-plus concept. It’s been very successful,” said Bullard, adding that Piggly Wiggly is a versatile banner that serves a range of economic strata.

“We’ve got lower income Piggly Wiggly’s that do great, we have upscale Piggly Wiggly’s in the most affluent neighborhoods that do great, and then, of course, in the mainstream of the rural Southeast they can do great,” he said.

Founded by Clarence Saunders in 1916 in Memphis, Tenn., Piggly Wiggly is widely considered to have been the first supermarket to offer shoppers a self-service experience.

Today the Piggly Wiggly name is owned and licensed by Keene, N.H.-based C&S Wholesale Grocers, which does not operate any Piggly Wiggly stores but instead licenses them to individual store owners across the Midwest, mid-Atlantic and Southeast.

Bullard said the Piggly Wiggly operators in the Alabama co-op are holding their own in a challenging environment. Although about three or four locations closed in the past year, at least that many new locations are slated to open in the near future, including two stores converting to the Piggly Wiggly banner in the first quarter and three more under construction from the ground up.

“The industry is an interesting place right now, but in our area, the Piggly Wiggly banner is remaining stable,” said Bullard. “We have had a small handful of Piggly Wiggly stores close or perhaps change ownership and become another store, but we’ve also got new stores coming and organic growth with our current operators.”

Bullard estimated that while volumes of some stores were up in the past year, overall sales of co-op members have been down about 0.5% to 1%, which compares favorably with many supermarket operators that have struggled in a prolonged deflationary environment.

In addition to a focus on price, Piggly Wiggly stores in the region are also known for having a high-quality meat program featuring Certified Angus Beef, Bullard said.

“Oftentimes the meat cutter at Piggly Wiggly is the most popular man in town,” said Bullard. “I’ve heard people say a thousand times, ‘I shop Piggly Wiggly because of the meat.’”

Increasingly, Piggly Wiggly operators are also embracing e-commerce through delivery partners such as Shipt in the Birmingham, Ala., area. In addition, about 40 stores have adopted a click-and-collect program offered through the co-op.

Another distinguishing feature for Piggly Wiggly operators is the private label brand, positioned as a low-priced national brand equivalent. The troubles of Piggly Wiggly Carolina, however, which dissolved in 2014 and shed about 30 stores, have weakened overall demand for the private label a bit, Bullard noted.

The South Carolina stores formerly served by and operated by Piggly Wiggly Carolina are now all independently owned and are supplied by C&S Wholesale. Piggly Wiggly Alabama, which serves some non-Piggly Wiggly stores in South Carolina, does not have distribution rights for Piggly Wiggly stores in that state.

Meanwhile the Piggly Wiggly banner has also remained strong in Wisconsin, where Piggly Wiggly Midwest operates and serves 101 locations (including three in Illinois), according to its website.

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Retailer News Piggly Wiggly Holds its Ground in the South cont...

Bullard said he’s confident for Piggly Wiggly Alabama’s prospects heading into 2018.

“Some of our successful operators are building some nice ground-up locations, so we’re looking forward to a volume bump from that,” he said. “We’ve got stores getting into the e-commerce business, and they are doing a great job with their private label business.

“We’re happy to be — hopefully — leaving deflation behind us, and hopefully with the economy picking up, that will help as well.”

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Bristol Farms Celebrates Grand Opening of New-Concept Store Bristol Farms recently celebrated the grand opening of its prototype store on Mulholland Drive in Woodland Hills, California. It is the first major design departure for Bristol Farms in its 35-year history and is “a store that we’ve been dreaming up for a decade,” Kacie Davis, owner of KMDesign Co., which implemented the design, told The Shelby Report in an interview prior to the store’s opening.

The opening-day event was attended by city and company officials, kicking off with a “cookie cutting” ceremony.

“The cookie is one of our signature items for the bakery department,” Bristol Farms’ Chairman and Co-CEO Kevin Davis told The Shelby Report’s Bob Reeves at the event. “‘The Cookie,’ as we call it, is a giant chocolate chip cookie—all natural, no artificial ingredients. It’s 37 percent by weight Belgian chocolate, so when you break it open, it just melts. And we only serve them hot. We make them hot, we put them on that heated tray, and if they don’t sell within 30 minutes, we actually break them up and sample them. No cookie is longer than 30 minutes on the tray. They’re always melty inside.”

Bristol Farms hangs its hat on that cookie and, according to Davis, its stores run their ovens constantly to keep up with demand.

“We’re not doing a ribbon cutting because we look at ourselves as a food company,” President and Co-CEO Adam Caldecott told event attendees. “This is our No. 1 point-of-difference item.”

But the cookie isn’t all the Mulholland store has to offer.

“This is a culmination of about 35 years of Bristol Farms serving Southern California,” Caldecott said. “I am hopeful that you will have an experience inside this store that takes your breath away. You get to see all the nooks and crannies and the new items that we’ve brought to you. I really, truly believe that we brought a wonderful community store, and my team has just worked tirelessly to make this all happen. We look forward to serving this community for years to come, and I think we’ve given you just the store that can accomplish that goal.” continues next page...

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Retailer News Bristol Farms Celebrates Grand Opening of New-Concept Store cont...

A refreshed produce department Among the new offerings featured at the Mulholland store is an updated produce department. John Savidan, director of produce merchandising, highlighted some of those new features for The Shelby Report.

“The whole department has about 260 organic items in it,” he said. “The conventional offering is very, very minimal, and we have only placed conventional items when we can’t find organic. So, we’ve got a real heavy presence of organic in this store…We’ve got a really nice, in-house chop shop program. We do all the vegetables right here, and we also have a very nice cut fruit offering. We have a guacamole station in this store…The center of the produce department is done with European-style tables. That makes it easier for the customers to shop—low profile. They still hold an adequate amount of product for shopping, but it really, really showcases the product better, and it’s a great way to show all the signage right in front of the products. Everything just looks really nice.”

The department is a little larger than most Bristol Farms produce departments, and now is located at the front of the store, near the foodservice area.

Support from fans and officials alike The consumer response to the store so far has been positive. Reeves had the opportunity to speak with Bristol Farms’ “No. 1 fan,” George Martinez, at the event. Martinez, a local attorney, has been a loyal shopper since 2004, and the new store blew him away.

“This store sets the gold standard. And Bristol Farms is the preemptive retail store because of the wide aisles, the great presentation, unique customer service. All of those things combined make it very attractive and irresistible for customers. That, in a nutshell, is what Bristol Farms represents,” Martinez told Reeves.

He is particularly fond of the grocer’s prepared foods, cheese and produce departments, where he can find items that are hard to find elsewhere.

“That’s the magic of it,” he said. “And now, Bristol Farms has expanded, and they have a clean, clear vision, a path to even more success.”

City officials are almost as happy about the new store as Martinez “We are so happy that Bristol Farms chose this location. Bristol Farms in a great boost for our economy, providing many jobs for our local workforce,” said Diana Williams, CEO of the West Valley-Warner Center Chamber of Commerce, during the cookie cutting. “We are excited to shop and explore this concept store. The neighborhood has been abuzz for quite some time now, and we are excited to hear about and experience all the unique features of this Bristol Farms.”

“This is truly an exciting day,” added Los Angeles City Councilman Bob Blumenfield. “Bristol Farms is going to be such a great addition to our community. I’m looking forward to shopping here with my family.”

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Retailer News Hy-Vee Announces Nearly 300,000 Square Feet of Facilities Expansion Projects

Trailing the news that Hy-Vee intends to introduce three new fulfillment centers, the Midwest-based company has even newer news to bring to its consumers: expansions to its facilities. The company’s in-store changes are aiming to address the constantly shifting consumer lifestyles, which relays into evolving demands.

“This fiscal year, we have approved one of our largest capital expenditure budgets in our company’s history to make sure we are not only meeting our customers’ needs, but fulfilling their wants, now and in the future,” said Randy Edeker, Chairman, CEO, and President, in a press release. “We’ve studied customer habits and lifestyles and know that fewer people are cooking meals at home than ever before. We want our offerings to help individuals who are looking for something healthy to eat on the go as well as families who want to enjoy a sit-down meal that they can easily claim as their own.”

In the company’s press release, it expressed current construction is underway in its eight-state region. Major projects include:

- Construction of a 240,000-square-foot production facility in Ankeny, Iowa, which will serve as a commissary and central bakery as Hy-Vee offers more fresh prepared options and meal kits to its customers. The project also includes an expansion of Hy-Vee’s subsidiary PDI

- Construction of a 48,000-square-foot production facility that will support Hy-Vee’s Short Cuts produce brand. The facility, which is adjacent to Hy-Vee’s current distribution center in Chariton, Iowa, will produce fresh cut, retail-ready fruits and vegetables for customers beginning in January 2018

- Construction of Hy-Vee’s new 10,000-square-foot convenience and meal solutions stores, named Fast & Fresh, in the Des Moines area and Davenport, Iowa. These stores will feature grocery items, fresh prepared foods and a coffee shop. Another type of small store concept will open in West Des Moines, Iowa, in 2018

- Additionally, the company noted that its planned e-commerce fulfillment centers in Kansas, Twin Cities, and Omaha—in addition to an existing fulfillment center in Des Moines—will meet the needs of the company’s growing online ordering service In addition to the changes being made to the company’s facilities, Hy-Vee has announced an transition in its restaurant format from Hy-Vee Market Grill to Hy-Vee Market Grille Express, where customers can order food, pay at a nearby pay station, and then sit to enjoy their meal in an ambiance marked with casual, self-service, and contemporary influences. While the Express location offers on-the-go eating experiences for those looking for conveince, it also caters to those with more time on their hands.

Consumers looking to fill their leisure with delicious food can head to the Express for a full-service bar and televised sporting events to their liking. But, the icing on top of the cake -- or maybe I should say bun on top of the patty–is that the company has its first of 26 planned Wahlburgers Wahlburgers restaurant locations in the works.

Will the retailer’s expansive plans continue to pay dividends as consumers’ lifestyles and shopping habits change?

Deli Market News will continue to report.

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