C.A. FORTUNE the lifestyle brand agency
Newsletter BE IN THE KNOW
C.A.F ANNOUNCEMENTS July & August 2018 Volume 6, No. 4
Contents C.A.F. Announcements 2 Distributor News 3 Industry News 4-5 Consumer Trends 6-7 Retailer News 7-8 Shows & Events 9
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GET TO KNOW US Founded in 1983, C.A. Fortune is a leading full-service national consumer products sales and marketing agency, focusing on lifestyle brand partnerships, across numerous trade channels. With more than 375 associates nationwide, the firm offers clients a turn-key solution — from brand incubation/ acceleration, client development, sales management, marketing and insights, retail services, consultative services, business development/portfolio strategy and more. The company, headquartered in Chicago, has regional offices in Cincinnati, OH., New York City metro, Dallas, TX., San Francisco, CA., Los Angeles, CA., Denver, CO. and Bentonville, AR.
C.A. FORTUNE Opens Dedicated Walmart Office Effective Sept. 1, C.A. Fortune will open a Bentonville office, just a few blocks from Walmart’s corporate headquarters, dedicated to serving more than 5,000 Walmart retail units nationwide. Tyler Gill, previously a vice-president within Acosta Sales & Marketing’s Bentonville team,has been tapped to lead the firm’s Bentonville office. “Building out a full-service dedicated Walmart team has certainly been a critical component of our overall strategic business plan - it was just a matter of identifying the right time to bring to market. Between a significant amount of current and new clients communicating a high level of interest, along with finding the right leader, we’re thrilled to announce our September launch,” said managing partner, Tyler Lowell. Lowell says that Gill is a high-performance, proven leader, with not only a tremendous amount of experience servicing the Walmart business, but across many different business units, predominantly on the agency side. The new C.A. Fortune office in Bentonville will offer: •Full-service headquarter account management •Dedicated insights/analytics team •Complete back-office support Gill said this is the ideal time for him to join the C.A. Fortune team and help build the company’s presence in Bentonville. “C.A. Fortune’s unparalleled reputation, along with their expertise and experience in this arena, make the company the perfect choice as the next step in my career,” Gill said ”Fresh categories and better-for-you options have become a major growth opportunity for retailers and CPG manufacturers. As a result, Walmart is keenly focused on their most productive growth opportunities and continues to prioritize lifestyle brands.” C.A. Fortune’s journey to building a national presence began five years ago from its initial upper-Midwest roots. Today the company employs more than 375 associates with eight offices across the country. The privately held firm continues to provide full-service coverage both from a trade channel perspective and product category.
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DISTRIBUTOR NEWS
Chex Finer Foods Completes Warehouse Expansion Chex Finer Foods, a regional, third-generation family-owned specialty and natural foods distributor, has completed a 20,000 square foot expansion of its warehouse and headquarters in Mansfield, Massachusetts. Company officials say the expansion will increase the breadth and diversity of the products and services Chex offers to its customers—independent markets and leading retailers in the Northeast. “Chex has a long-term outlook in how we manage our business. Taking on this additional space helps both support our current business, but moreover allows us to have the resources to deliver on our future growth…We are looking at a second space next door to create even more capacity for us and our customers,” said Jeremy Isenberg, company president. Mike Isenberg, Chex COO, added the expansion comes “thanks to our growth in customer base and product mix. With the increase in SKUs over the past five years, we need to maximize the use of our square footage and allow us room to continue to grow.” “We are excited to incorporate this new space, which will help accommodate the nearly 400 new items Chex will be onboarding in the coming months,” added Chex Operations Director Kim Carrera. In other Chex news, the company recently launched Handshake, a mobile app and online ordering site, aimed at improving the customer ordering experience. Some of the features of the Handshake app are that it includes more than 500 searchable images of Chex products; allows customers to order at-shelf or on the go with barcode scanning or product searches; speeds up reordering by duplicating and editing past orders; and allows customers to review the catalog and their order status anytime. The app is compatible with all iOS devices.
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Whole Food’s Biggest Supplier’s $2.9 Billion Bid to Buy SuperValu is all about its Independence Amazon’s acquisition of Whole Foods has spurred its first big deal among the grocery distributors. With United Natural Foods’ $2.9 billion acquisition of Supervalu, announced in July, UNFI lessens its reliance on Whole Foods, a relationship that has been shrouded in uncertainty ever since Amazon acquired the natural grocer. Whole Foods accounts for roughly 33% of UNFI’s business and has a contract with the distributor that is set to expire in 2025. It remains unclear whether Amazon will renew that contract or attempt distribution on its own. Loss of that contract could “materially and adversely” impact UNFI’s business, UNFI has warned in regulatory filings. With its SuperValu purchase, UNFI has access to 3,323 wholesale stores that service its retail distribution business. The deal “greatly expands UNFI’s customer base,” the company said in a press release. UNFI is also buying SuperValu’s retail business, which operates under banners such as Cub Foods and Shoppers. UNFI plans to divest that business in a “thoughtful and economic manner,” SuperValu said. UNFI is unlikely to be the last food distributor to consolidate. U.S. grocers are under pressure from European competitors Aldi and Lidl, which are attacking them on price, and Amazon and Walmart, which are squeezing them from the high and low end. As more grocers combine, or simply go away, food distributors will likewise need to join forces for scale. Industry sources have pointed to C&S, KeHE Distributors and SpartanNash as potential candidates for further mergers and acquisitions. In trading, Supervalu shares gained nearly 65%, while UNFI shares fell nearly 16%.
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INDUSTRY NEWS
Zippin Launches Next Generation CheckoutFree Technology Enabling Retailers to Quickly Deploy Frictionless Shopping Zippin announced on August 20th, the launch of its nextgeneration, checkout-free software platform that enables retailers to quickly deploy frictionless shopping in stores and brings an end to waiting in line for good. The San Franciscobased startup has also opened a concept store in San Francisco’s SOMA neighborhood to showcase its automated shopping technology in a real-life retail environment. Consumers in the U.S. waste almost 37 billion hours a year standing in line, and a significant portion of that is spent waiting in retail checkout lines. Zippin’s patent-pending approach uses AI, machine learning, and visual cognition technology, to create the best consumer experience: banishing checkout lines and self-scanners, and letting shoppers zip in and out with their purchases. The secure and trusted Zippin platform can be easily and quickly deployed by any retailer wanting to offer autonomous, checkout-free shopping. Sophisticated AI-Based Technology While early approaches to autonomous shopping have relied solely on cameras to track purchases, Zippin’s ecosystem—which integrates its proprietary software with readily available hardware—uses a combination of overhead cameras and smart shelf sensors for the highest level of accuracy. Zippin’s approach stands out for its ability to work accurately even in a crowded store. “Consumer frustration with checkout lines is driving a tidal wave of demand among retailers and real estate owners keen to provide a frictionless retail experience,” said Zippin CEO, Krishna Motukuri. “With annual sales of grocery stores, convenience stores and quick-serve restaurants totaling nearly $1.6 trillion in the U.S. alone, we believe there is a sizeable market opportunity for us to pursue.” Zippin’s platform offers all retailers a way to meet this demand, while increasing profits by freeing-up real estate and human capital, and achieving better inventory and merchandising efficiencies through real-time data captured by the system. “Despite the popularity of shopping online, brick and mortar retail still accounts for more than 90% of all purchases made in the U.S. With Zippin, traditional retailers can now compete against e-commerce companies, which until now have had the advantage of leveraging a host of key data about their customers,” noted Motukuri. How Zippin Works for Shoppers Consumers download the Zippin app (available on iTunes and Google Play) and connect their preferred payment method. The app contains their store “key” or QR code which can be scanned to gain entry to a shop. Overhead cameras follow customers’ movements as they move around the store—without using face recognition. Cameras and smart shelf sensors track when and which products are picked up or put back. Combining these two inputs allows Zippin to place the right items in the right shoppers’ virtual carts. On leaving the store, customers receive a receipt detailing their charges. Watch this video to see Zippin in action. Zippin is currently offering access to its San Francisco concept store through private invitation. The shop will be open to the public for limited hours during the week beginning in mid-September. About Zippin Zippin has developed the next generation of checkout-free technology enabling retailers to quickly deploy frictionless shopping in their stores. The patent-pending approach uses AI, machine learning and sensor fusion technology to create the best consumer experience: banishing checkout lines and self-scanners for good, and letting shoppers zip in and out with their purchases. Zippin’s platform leverages product and shopper tracking through overhead cameras, as well as smart shelf sensors, for the highest level of accuracy even in crowded stores. Founded by industry veterans from Amazon and SRI with deep backgrounds in retail technology, AI and computer vision, Zippin is headquartered in San Francisco and has raised venture funding from Maven Ventures, Core Ventures Group, Pear Ventures, Expansion VC, and Montage Ventures. For more information, visit www.getzippin.com. Article Source
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INDUSTRY NEWS
Thriving in the New World of Grocery: 5 Keys for Retailers Eighteen major grocers have gone bankrupt since 2014, and that’s not because people have stopped eating. Retailers, operating in a marketplace that has never been more competitive (thank you, internet), are caught up in a foundational shift led by Millennial consumers that has many struggling to successfully activate an increasingly diverse and demanding shopper base. With nontraditional grocery continuing to steal market share – gaining a healthy 6% since 2006, with sales for dollar formats up 6.6% in 2017 – traditional retailers will have to rethink their marketing and operational strategies to maintain their competitiveness and protect their market position. As shoppers engage in an omnichannel pursuit of quality and value, convenience and experience have never been more important. Add to that shoppers’ expectations for localization and personalization – seeking the ultimate “me” experience – and retailers have their work cut out. So what should food retailers do to compete successfully in the new reality of grocery? Eliminate Price Image as a Vulnerability There are those behemoths in the space that have carved out price as their primary differentiator, and we all know who they are. But while they’ve hung their hats on a lower price image, that’s not a viable option for most. Therefore, retailers must eliminate price image as a vulnerability by excelling in other areas where they can compete. This could be service, produce and perishables, meal preparation, or even connection with the community. By focusing on delivering real value and a quality shopper experience, it’s possible to avoid a price-only comparison and the challenges that come with being perceived as a higher-priced provider. Develop Scalable Omnichannel Capabilities Simply enabling shoppers to purchase groceries online isn’t enough for retailers to be competitive. To engage and keep shoppers, retailers need to provide them with a superior experience that’s both seamless
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and transparent – providing maximum visibility into the products they want to buy. Omnichannel engagement must help shoppers find products, understand products, get products, pay for products – and return products. It must be an interrelated, interconnected experience that absolutely has to include a shopper-friendly returns process. ReImagine the Role of Physical Stores With consumers enjoying near-immediate fulfillment through other channels, keeping them coming back to the store requires that retailers offer shoppers a transparent, experiential environment in which they can quickly learn about and acquire the products they want and need. Shoppers, while in store, must have a personalized experience that concurrently meets their demand for convenience. To satisfy and retain shoppers, retailers will need to reallocate and repurpose available space to ensure that their fulfillment capabilities align with shopper expectations. Achieving the needed efficiency will, in turn, create loyalty-building differentiation.
At the same time, shoppers are becoming more and more brand-agnostic and turning away from big brands toward those they believe can best help them meet their demand for more fresh, organic and natural foods. As private labels already overindex in fresh food categories, retailers need to optimize their store-brand assortment and ensure that these products are given appropriate shelf space. Evolve with Changing Dietary Trends Time is the new currency for consumers, and they’re actively looking for assistance with faster, easier meal preparation. Retailers that want to win must make it easier for shoppers to feed themselves and their families with a robust complement of prepared offerings, while also providing guidance and assistance on food selection and at-home preparation. Speed isn’t shoppers’ only consideration, though. According to Inmar’s “2017 Syndicated Data Study,” 52% of shoppers said that they always read food product labels, while 20% reported following a special diet such as gluten-free, Paleo or vegetarian. Retailers looking to capture greater “share of stomach,” and maintain general market share, must maximize product transparency and maintain an assortment that recognizes shoppers’ focus on better diet and nutrition.
Increase the Presence of Private Label Products
According to the “2018 Total Consumer Report” from Nielsen, private label sales grew three times faster than those of national brands from 2016 to 2017. Private label not only drives additional margin, but this increasingly popular “alternative” also represents a cost-effective strategy for growth in the meal-kit market.
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It’s clear from what’s happening in the marketplace that the days of grocery retailers winning on gross margin or simply spending their way to prosperity are over. With estimates pointing toward almost 20% of groceries being purchased via ecommerce by 2022, retailers must take significant steps – sooner rather than later – if they’re to effectively address a host of challenges that are only going to grow.
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CONSUMER TRENDS
Every U.S. Region Seeing Serious Growth in Natural Food & Beverage Sales Sales growth of natural food and beverage products is greatly outpacing sales growth for conventional products at the national level, a trend that has been consistent now for several years. The same can be said in every region of the United States, according to an analysis of market data by SPINS, the leading provider of retail consumer insights, analytics reporting and consulting services for the natural, organic and specialty products industry. And some of the differentials in sales growth between natural and conventional products are striking. In California, overall sales growth for all food and beverages measured by SPINS was 0.6% over the year ending May 20, 2018. Sales growth for natural food and beverages alone was 9%. In the MidSouth region, overall product growth was 1.7%; sales growth for natural food and beverages was 9.3%. This does not mean that the consumer market for good food has developed uniformly across the eight regions defined by SPINS (including California, so populous it merits its own region). Natural food and beverages make up 13.1% of the overall market in California, with growth continuing apace. Natural market share also is in double digits in the Northeast (11.3%) and the sprawling Western region outside California (10.9%). At the other end of the spectrum is the four-state South Central region (Texas, Louisiana, Oklahoma and Arkansas), where natural has only a 5.5% market penetration. Yet, significantly, some of the regions that have lagged behind are playing catch-up. Natural food and beverage sales grew by 9.1% over the past year in that same South Central region. The fastest growth rate among all the regions—11.1%—was in the Southeast (Florida, Georgia, South Carolina, Alabama and Mississippi), where natural made up 7.8% of the overall food and beverage market as of May 20.
Henkel added, “We use SPINS regional data insights like this to help investors find high-potential local brands, and we also use it to help those brands build successful national growth strategies.”
The slowest natural food and beverage growth rate was 4.4% in the seven-state Plains region, where these products made up 6.5% of the overall market. But even there, natural product sales outpaced overall food and beverage sales growth by nearly a 4-to-1 ratio. There is not one single factor driving the uneven growth and penetration of good food across regions, said Andrew Henkel, SVP for Brand Growth Solutions at SPINS’ Chicago headquarters. “Clearly consumer preferences are a leading indicator of what happens within a market, how quickly natural products develop. But that’s also associated with distribution of natural products as well,” Henkel said. “That can be related to the retail assortment in a given market, including both prevalence of natural retailers as well as the transition of key conventional retailers to a more natural product assortment. If the products aren’t there, people can’t buy them.” But the fast-rising consumer demand is prompting most major conventional grocery chains to raise their good food game, and putting pressure on other competitors to get with the program. “We know that Kroger is now the biggest retailer of natural products in the country,” Henkel said. “Everyone who can see these numbers understands that natural products are the wave of the future and the way people eat is fundamentally changing … for good.” “It’s the pocket of growth,” he continued, “and if retailers don’t change and adapt their assortments, they will fall behind, because consumers expect it.”
SPINS also shared more granular data by region for the 10 top natural product categories, using a Dollar Share Index that shows how much higher or lower a category’s sales are in a region compared to the overall national sales figure. This measure shows that natural food and beverage sales not only vary across regions, but also across product categories within regions. For example, sales of refrigerated juices and functional beverages in California have a 130 Dollar Share Index, meaning that category’s percentage of the overall natural food and beverage sales is nearly a third higher than the national percentage for that category. On the other end, percentage sales of frozen and refrigerated meat, poultry and seafood in California is about a quarter less than is the case nationwide, something Henkel said may reflect “a bit of a leading-edge migration away from some of those categories toward plant-based [foods].” One of SPINS’ most interesting findings is that shelf-stable chips, pretzels and snacks—not a category traditionally viewed as “health food —have the thirdhighest percentage of overall natural food and beverage sales with 5.4% of the total market, trailing only produce and refrigerated yogurt and kefir. “It’s a way that people start to convert to a better-for-you lifestyle,” Henkel said. “Maybe I’ll try the natural version of this snack item I’ve been eating previously.”
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CONSUMER TRENDS/RETAILER NEWS Article Source
Plant-Based Product Claims See Substantial Growth Plant-based product claims increased by 62% globally from 2013 through 2017, according to Innova Market Insights. Global sales of dairy alternative drinks are set to reach $16.3 billion in 2018, while global sales in the meat substitutes market are set to grow to $4.2 billion by 2022. Growth is expected to occur in sectors such as plant proteins, active botanicals, sweeteners, herbs and seasonings, and coloring foodstuffs, researchers say. They note that while the dairy alternatives category continues to be led by beverages, cultured products such as yogurt, frozen desserts, and ice cream have grown in popularity, as well. Spoonable non-dairy yogurt has seen rising levels of interest, but from a smaller base, with 48% growth for 2013 through 2017, taking its share of dairy launches from less than 0.5% in 2012 to 1.5% in 2017. Gravitation toward plant-based diets in general has been complemented by an interest in vegan, vegetarian, and flexitarian lifestyles and concerns over animal welfare, and there has been 11% growth for 2013 through 2017, according to NPD. Research also indicates that four in 10 U.S. consumers increased their consumption of meat substitutes/alternatives during 2017.
Walmart Acquires Perimercados, Super Compro, & Saretto Stores from Gessa Corporate Group Walmart de México y Centroamérica is expanding its reach in Costa Rica with a new agreement to acquire supermarkets from Gessa Corportate Group, including Perimercardos, Super Compro, and Saretto locations. “The combined operation of the Walmart and Gessa stores generates an excellent complementarity to better serve the Costa Rican market. In this way, Walmart promotes its growth plans in the region, and Gessa’s current stores and collaborators will be able to offer increasing value to its customers,” said Cristian Barrientos Pozo, Senior Vice President and General Manager of Walmart in Central America, according to an article by The Costa Rica News. The deal is still under review by the Commission for the Promotion of the Competition (COPROCOM) and the Ministry of Economy, Industry, and Commerce (MEIC), but if approved, Walmart will acquire and rebanner a total of 52 supermarkets. Walmart will also implement the company’s over 1,300 employees, reported The Costa Rica Star. Currently, Walmart operates 247 stores in Costa Rica, including 11 under the Walmart banner, 35 under Mas X Menos, 39 under Maxi Palí, and 162 under Palí.
H-E-B Awarded for Poilitical Engagement in the Pharmacy H-E-B has been awarded for its advancement of its pharmacy through political engagement. Honored at the National Association of Chain Drug Stores (NACDS) Total Store Expo, which began Aug. 25, the San Antonio-based grocer received the “Politically Engaged Pharmacy Award” in recognition of its exemplary leadership and participation in the NACDS Political Action Committee. H-E-B COO Martin Otto, who also is a past chairman of NACDS, accepted the award on behalf of the grocer. “Under Martin’s leadership, H-E-B has demonstrated an unwavering commitment to advancing community pharmacy legislative priorities with lawmakers. H-E-B has consistently displayed its support for NACDS-PAC and its role in our advocacy efforts,” said NACDS Vice Chairman Chris Lane, who also is EVP at Wakefern Food Corp./Shoprite. Also, with 400 stores in Texas and Mexico, H-E-B is No. 6 on Progressive Grocer’s 2018 Super 50 list of the top grocers in the United States.
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RETAILER NEWS Target Get Back into Meal Solutions with Archer Farms Private Label In an attempt to help shoppers heading home from work with nothing planned for dinner, Target Corp. is launching a line of “easy meal offerings” under its Archer Farms private label line that can be mixed and matched to quickly build a meal for the whole family.
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How Kroger is Embracing the Technology Revolution Kroger’s enthusiastic embrace of technology promises to help the grocery chain thrive during the Fourth Industrial Revolution, a technology expert writes. The $9 billion Restock Kroger initiative, launched in the fall of 2017 to help develop Kroger’s omni-channel business, combined with a major harnessing of technology for better knowing and serving each customer, is part of the company’s overall response to a rapidly changing business and social environment, argues Bernard Marr, an author of books on business and technology, in an article in Forbes.
The line comprises more than 100 ready-to-heat meats, salads, pasta, sides and soups, from Grilled Fajita Chicken Strips and Burrata Lemon Zest Herb Ravioli to Apple Pecan Quinoa Salad and more. Each component is priced between $2.99 and $8.99. “We know our guests are always looking for time-saving measures, but we also know they’re not willing to compromise on quality or taste,” Target said on its website. “We heard from guests that they were looking for easily accessible, trend-forward and globally inspired dinnertime, lunchtime and anytime options. So, we got to work creating an expansive array of delicious new items.” The new line is reminiscent of another Archer Farms mealsolutions line that Target introduced several years ago. Archer Farms Mix & Match Meals, launched in 2014, were designed to simplify family meal planning and boasted 500 meal combinations, portioned to feed a family of four. With a color-coded system to make it “mindless” for shoppers to find corresponding meal components, the line was divided into three categories of ethnic foods --Mexican, Italian and Asian -- and four categories of component types: vegetables, starch, sauces and protein.
Kroger already sends some 3 billion personalized recommendations A search on Target’s website shows that the Mix & Match Meals line appears no longer to be available. to its customers each year; the company is working to apply technology toward tailoring those to the individual tastes and needs Minneapolis-based Target Corp. operates 1,800 stores and of each shopper. its ecommerce site, Target.com. The company is No. 13 on Progressive Grocer’s Super 50 list of the top grocers in the United The company is also on track to place its Scan, Bag, Go program — which enables customers to scan and pay for products using their States. smartphones — inside some 400 stores by the end of this year, Marr notes.
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Kroger is also at work automating its warehouses to offer a customer-delivery service using autonomous vehicles. “With 2,782 grocery stores under nearly two dozen names in 35 states, Kroger plans to leverage its data, shopper insights and scale to help it remain a leader in the marketplace of the future,” writes Marr. “According to a study by the Food Marketing Institute, online grocery is expected to account for 20% of all grocery retail by 2022 and reach $100 billion in consumer sales, so Kroger and its competitors are smart to figure out ways to use technology to their advantage.”
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SHOWS & EVENTS KeHE West Coast Table Top Fullerton, CA September 12, 2018
Expo East
Baltimore, MD September 13-15, 2018
KeHE Great Lakes Table Top Bolingbrook, IL September 19, 2018
Carmela Foods Fall Food Event Detroit, MI September 19, 2018
KeHE Northeast Table Top New York, NY September 26, 2018
UNFI North Atlantic Showcase Uncasville, CT October 2-4, 2018
KeHE Spring Show Salt Lake City, UT October 3-4, 2018
KeHE Great Lakes Table Top Fort Wayne, IL October 10, 2018
Winter Fancy Food Show San Francisco, CA January 13-15, 2019
KeHE Summer Show Nashville, TN February 5-6, 2019
UNFI South Atlantic Showcase Orlando, FL February 19-20, 2019
Lipari Food Show Novi, MI April 3, 2019
UNFI Pacific Showcase Long Beach, CA May 8-9, 2019
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