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Plus! 69th Annual Consumer Expenditures Study P. 45

Ian McLeod


Plus! 69th annual consumer expenditures Study P. 45

Ian McLeod President/CEO Southeastern Grocers

Winning Dixie SoutheaStern GrocerS raises the bar for new stores and remodels PaGe 28

July 2016 • Volume 95 Number 7 $10 • www.progressivegrocer.com


NOT ALL

*Than other leading brands for non-enhanced natural pork. ©2016 Smithfield Foods

PORK IS CREATED EQUAL.

SMITHFIELD PRIME FRESH PORK IS 20% MORE TENDER THAN OTHER LEADING BRANDS.* Our fresh pork is different. And we’ll give credit where credit is due — to our hogs. Smithfield has developed a proprietary 100% Duroc breed sire line that is sourced from America’s most trusted farms and bred for superior quality and tenderness. Leverage Smithfield Prime to elevate the status of your fresh pork case and distinguish your store from the competition. The difference is real, and it’s delicious. For more information about Smithfield Prime Fresh Pork, contact your Smithfield Sales Representative or email mwebster@smithfield.com.


464


Blue Moon’s Partner Chef Roy Choi Named One of TIME’s 100 Most Influential* 63% of Millennials prefer retailers to suggest pairings** Nielsen 2015 US Food data shows that Blue Moon has +77% greater incremental display case sales over other craft brands*** TASTE RESPONSIBLY ©2016 BLUE MOON BREWING COMPANY, GOLDEN, CO * Time Magazine, Time 100 Pioneers, By Anthony Bourdain, April 21, 2016. ** Huffington Post 2014. *** Source: Nielsen US Food 2015

Find Blue Moon® recipes at bluemoonbrewingcompany.com


July 2016

features

Volume 95, Issue 7

cover story

grocery 105

26

Industry EvEnts

commErcIAl brEAd And bAkEd goods

Meeting in Vegas The Category Management Conference is a must-attend gathering.

Baked for Success Cleaner ingredients, creative merchandising and marketing add interest to the section.

refrigerated & frozen 107 FrozEn mEAls

Healthy Eating Down Cold Better-for-you frozen meals deliver convenience, taste and nutritional attributes.

28

storE oF thE month

45 ProgrEssIvE grocEr’s 69 th AnnuAl consumEr ExPEndIturEs study

Fresh Leads the Fight Grocery retail continues as the top shopping stop, but it’s losing ground to other channels.

Home in the Meadows Winn-Dixie’s Jacksonville flagship sets a new standard for Southeastern Grocers’ next wave of stores.

fresh food

Cover photo by Ryan Ketterman

special section 90 brEAkFAst hAndbook

Grocery’s Big Break Breakfast foods and beverages appeal beyond the morning daypart.

110 Food sAFEty

Tracing Roots Consumer demand, government regulations and technology are revolutionizing the fresh supply chain.

115

85

sustAInAbIlIty

Greener Grocers Food retailers are reducing their energy usage as 2020 nears.

ProducE

Schooling the Competition Savvy supermarkets make produce a destination for healthful after-school snacks and lunchboxes.

July 2016 | progressivegrocer.com |

5


fresh food 122

Produce category SPotlight

570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 224 632-8200 • www.progressivegrocer.com

Crunch Time New varieties and high-graphic packaging are driving growth in apples.

SvP, brand director 201-855-7621

Jeff Friedman jfriedman@stagnitomail.com

EdiTOrial Editorial director Joan driggs 224-632-8211 jdriggs@stagnitomail.com Chief Content Editor meg major 724-453-3545 mmajor@stagnitomail.com Editor-in-Chief James dudlicek 224-632-8238 jdudlicek@stagnitomail.com managing Editor bridget Goldschmidt 201-855-7603 bgoldschmidt@stagnitomail.com Senior Editor randy hofbauer 224-632-8240 rhofbauer@stagnitomail.com Senior Editor katie martin 224-632-8172 kmartin@stagnitomail.com Senior Editor anna wolfe 207-773-1154 awolfe@stagnitomail.com Technology Editor John karolefski 440-582-1889 jkarolefski@stagnitomail.com art director bill antkowiak bantkowiak@stagnitomail.com Contributing Editors Laura Liebeck, Marc Millstein, Lynn Petrak, Barbara Sax and Jennifer Strailey

nonfoods 124

Beauty, health & WellneSS

Peak Condition Sports nutrition products are growing popular with a broader range of consumers.

127

general MerchandiSe

Open to Experience Innovation on either end of the price spectrum keeps greeting cards going.

technology

advErTiSiNG SalES & buSiNESS midwest marketing manager John huff 224-632-8174 jhuff@stagnitomail.com western regional Sales manager Elizabeth Cherry 310-546-3815 echerry@stagnitomail.com Eastern marketing manager maggie kaeppel 630-364-2150 • Mobile: 708-565-5350 mkaeppel@stagnitomail.com Northeast marketing manager mike Shaw 201-855-7631 • Mobile: 201-281-9100 mshaw@stagnitomail.com marketing manager Janet blaney (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) jblaney@stagnitomail.com 630-364-1601 account Executive/ Classified advertising Terry kanganis 201-855-7615 • Fax: 201-855-7373 tkanganis@stagnitomail.com advertising/Production manager Jackie batson 224-632-8183 • Fax: 888-316-7987 jbatson@stagnitomail.com Classified Production manager mary beth medley 856-809-0050 marybeth@marybethmedley.com

EvEnts • MarkEting • Digital • rEsEarch • circulation

131

Front end

Focus on Service Self-checkout proves a potent resource for independents as much as for big chains.

departments 8 EdiTOr’S NOTE: EdiTOrS diGEST 12 PG PulSE 14 iN-STOrE EvENTS CalENdar: SEPTEmbEr 2016 16 NiElSEN’S ShElF STOPPErS/SPOTliGhT: FrOzEN vEGETablES/ FrOzEN brOCCOli 18 miNTEl GlObal NEw PrOduCTS: dEOdOraNTS 20 all’S wEllNESS: briNGiNG bETTEr NuTriTiON baCk TO SChOOl 22 NEw hOrizONS: NOThiNG lESS ThaN 50/50 134 whaT’S NExT: EdiTOrS’ PiCkS FOr iNNOvaTivE PrOduCTS 136 ThE SuPPliEr SidE 138 ThE laST wOrd: CONNECT aNd rEFlECT

6

| Progressive Grocer | July 2016

vP/Custom media division Pierce hollingsworth 224-632-8229 phollingsworth@stagnitomail.com Production manager anngail Norris Corporate marketing director bruce hendrickson 224-632-8214 bhendrickson@stagnitomail.com Promotion director robert kuwada 201-855-7616 rkuwada@stagnitomail.com director of Events Pat benkner 973-607-1330 pbenkner@edgellmail.com director of market research debra Chanil 201-855-7605 dchanil@stagnitomail.com audience development manager Shelly Patton 215-301-0593 spatton@stagnitomail.com list rental The information refinery 800-529-9020 Brian Clotworthy reprints and licensing wright’s media 877-652-5295 sales@wrightsmedia.com Subscriber Services/Single-copy Purchases 978-671-0449 or email at Stagnito@e-circ.net COrPOraTE OFFiCErS Executive Chairman alan Glass aglass@stagnitomail.com President & CEO kollin Stagnito kollinstagnito@stagnitomail.com Chief Financial Officer Chris Stark cstark@stagnitomail.org Chief revenue Officer Ned bardic nbardic@stagnitomail.com Chief brand Officer korry Stagnito korrystagnito@stagnitomail.com Chief digital Officer Joel hughes jhughes@stagnitomail.com


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editor’s note by Jim Dudlicek

Editors Digest

I

’m writing this in mid-June, which means that I’m surrounded by all of the new products entered in PG’s annual Editors’ Picks contest. No need to thank me — it’s my pleasure, not to mention my sworn duty, to eat them all. It also means that I just got back from the latest International Dairy-Deli-Bake expo (it was in Houston this year), where I also ate many things. But more importantly, I got some additional insights into how our team should be judging all of these fine new products arriving at our doorstep. For example, the general sessions included Sherry Frey, of Nielsen Perishables, speaking on “Merchandising, Marketing and Innovating for Entertaining Occasions,” in which she noted strategic cross-store connections for special-occasion shopping. “If we don’t have total store connectivity, we’re setting ourselves up for long-term failure,” Frey asserted. She laid out “a new road map for looking at categories.” For “fresh and fancy entertaining,” say, key categories like steak, deli snacks and specialty cheeses are natural tie-ins for fruit and vegetables, herbs, and seafood. Consumers want “convenient solutions for turnkey entertaining,” Frey said, noting that deli is a key driver for such purchases. OK, products that offer solutions for turnkey entertaining and lend themselves well to cross-merchandising with other categories: check. At least three speaker sessions at the IDDBA show focused on product transparency, namely allergen information. “If we’re going to continue to build trust with shoppers, we need to be more transparent,” Supermarket Guru Phil Lempert advised in his “Focus on Allergens,” the latest installment of IDDBA’s ongoing food safety initiative. Lempert cited survey data indicating that only 15 percent of consumers have confidence in free-from product label statements. Further, 85 percent of shoppers think companies don’t care about their dietary needs. Further statistics show a strong need for store associates to be better trained to handle products and better educated about allergens in food products: Food allergies among children rose 18 percent between 1997 and 2007, four in 10 claim food allergies or avoidance of certain ingredients, and the number of people with allergies is doubling every 10 years. “As an industry, we have not moved fast enough,” admitted Mike Eardley, president and CEO of Madison, Wis.-based IDDBA. “We can

8

| Progressive Grocer | Ahead of What’s Next | July 2016

May the eats be ever in your favor. all win, or we can all lose.” Eardley also noted that Millennials are overwhelmingly interested in fresh, organic, natural and free-from foods. In response, food manufacturers have gradually been moving toward simpler ingredient labels and dropping artificial ingredients. OK, products that have simple ingredients, clean labels and clearly display their free-from status: check. After missing an opportunity at the National Restaurant Association show a few years ago, I was really excited to hear celebrity chef Anthony Bourdain, who discussed how chefs are perceived by the public in the “pre-Emeril and post-Emeril” worlds. The rise of this “cult of personality” among chefs has helped to drive a greater interest in food as well as the transformation of supermarkets from mere stores selling food to showcases of culinary prowess, according to Bourdain. In a Q&A session led by Albertsons Safeway’s Jewel Hunt, Bourdain identified what he sees as the current key culinary trends: heat; “funk” and “rot” (e.g., fermented foods); “stinky cheeses”; organ meats; slow cooking; and spices. “We are catching up with the great food cultures of Europe, Latin America and Asia,” he asserted. OK, products that are chef-inspired and reflect emerging culinary trends: check. “Chef-inspired” also describes the fresh prepared foods at the Store of the Month in this issue, Baymeadows Winn-Dixie in Jacksonville, Fla., the new hometown flagship of Southeastern Grocers, where Corporate Chef Deanna Stephens (a PG Top Women in Grocery laureate) oversees a team that develops signature recipes for the banner. Read about it starting on page 28. Editors’ Picks winners will be announced in our September 2016 issue. May the eats be ever in your favor. PG Jim Dudlicek Editor-in-Chief jdudlicek@stagnitomail.com Twitter @jimdudlicek


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What’s trending on Progressivegrocer.com …

The winning slate of 385 women hailing from some of the most admired retail and CPG companies across the nation who were chosen as 2016’s Top Women in Grocery by Progressive Grocer topped the leaderboard as Progressivegrocer.com’s most popular online news story. The second-most popular digital news story during the month of June was The Kroger Co.’s lawsuit again Visa, alleging that the card payment network threatened to raise fees and cut off the nation’s largest pure-play supermarket chain from accepting its debit cards because of a dispute about the use of PINverified debit-card transactions.

Progressive Grocer Presentss 2016 Top Women In Groceryy http://bit.ly/298iGw6 6

Whole Foods Market Selects Nielsen as U.S. Analytics Provider http://bit.ly/29ue4fm /bit.ly/29ue4fm

Kroger Files Lawsuit Against Visa http://bit.ly/293viyu

Senators Reachh GMO Labeling Deal

http://bit.ly/29egYaJ

H H-E-B Prez Cites Declining Consumer D Income as Urgent Threat http://bit.ly/297EViQ

Walmart Looks L Ahead via e-Commerce, More

FMI’ ‘Power of Produce’ FMI’s e Peels Into Megatrendss

http://bit.ly/28isWGB

12

| Progressive Grocer | Ahead of What’s Next | July 2016

http://bit.ly/28ZRH2L H2L


GIVE MILK THE PRESENCE IT DESERVES

Milk has strong industry momentum, brand innovations and powerful marketing programs. And with elevated scrutiny on the competitive milk alternative market, the time to maximize milk’s presence in the dairy case is now. MILKPEP IS HERE TO HELP.

Retail experts at Prime Consulting and Willard Bishop conducted research that uncovers growth opportunities in the milk category. We invite you to learn more about these powerful insights that have the potential to help you maximize the dairy case, improve shopper experience in-store, and drive greater profit with fluid milk.

To view the Dairy Case Dynamics webinar,

visit progressivegrocer.com/awards-events

©2016 America’s Milk Companies.®


September 2016 is... National Apple Month National Chicken Month National Honey Month National Mushroom Month Ethnic Foods Month National Potato Month

S

M

T

W

T

1

National Cherry Popover Day Email your calendar submissions to

National Gyro Day. Offer a gyro as today’s special prepared food item.

awolfe@stagnitomail.com

4

Make sure you’re well stocked for lastminute Labor Day shoppers. National Macadamia Nut Day

11

For National Hot Cross Bun Day, have a sale on them in the in-store bakery.

5

Labor Day International Day of Charity. Support local causes with donations. National Cheese Pizza Day

12

National Chocolate Milkshake Day

6

Read a Book Day. Ask your Facebook followers to share their favorite foodcentric fiction.

7

Raise a glass — it’s National Beer Lover’s Day.

National Coffee Ice Cream Day

13

National Peanut Day

14

National Eat a Hoagie Day. No matter what you call them, let customers create their own versions to order in the deli.

8

International Literacy Day

F

2

3

9

10

16

17

National Grits for Breakfast Day. Share grits recipes on your Facebook page.

National I Love Food Day

National Dog Week begins today. Feature all of your dog supplies.

19

National Butterscotch Pudding Day

20

National Punch Day. Offer samples throughout the store.

21

National Pecan Cookie Day

National Cheeseburger Day

25

Make sure everything is in order for Halloween.

15

National Linguine Day

14

National Pancake Day

27

National Chocolate Milk Day

28

National Drink Beer Day

| Progressive Grocer | Ahead of What’s Next | July 2016

National TV Dinner Day

National Guacamole Day

Oktoberfest begins in Munich. Celebrate with your own 16-day festival of beer tastings, brats and pretzel-making demos. National Apple Dumpling Day

22

Natural Products Expo East begins in Baltimore and continues through Sept 24. National White Chocolate Day

26

National Baby Back Ribs Day

Teach a cooking class featuring sweet and savory recipes for apples.

National Creamfilled Doughnut Day

18

S

29

National Coffee Day

23

Sample lots of vegetarian treats and dishes for Hug a Vegetarian Day. Great American Pot Pie Day

30

National Hot Mulled Cider Day. Create a display with cider and mulling spices.

24

National Cherries Jubilee Day. Crosspromote jarred cherries and vanilla ice cream.


IS FAILURE

THE NEW NORMAL? It doesn’t have to be.

Tyson Foods’ Consequences of Failure Study shows that the number of shoppers who experienced incidences of failure in their grocer’s prepared foods area when purchasing prepared chicken products increased from 41% in 2015 to 48% in 2016. Velocity equals speed and direction. The knowledge to choose the right direction and the power to get there quickly. The Tyson Velocity process helps retailers to achieve their maximum velocity to attain their business goals.

It's time for a new direction. Tyson Foods, Consequences of Failure Study, 2016 Tyson Foods, Consequences of Failure Study, 2015 ®/© 2016 Tyson Foods, Inc.


Front End

Market Intelligence By The Numbers

“With two-thirds of consumers intending to buy healthier foods, frozen vegetables are a no-brainer solution to those who are looking for health benefits with minimal food waste. Frozen broccoli stands out in the crowd, since consumers view it not only as nutritious, but also as an easy-to-make side dish or even as an entrée — and the added convenience of frozen makes it an easy fit in everyone’s basket.” —Carman Allison, VP of Consumer Insights

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| Progressive Grocer | Ahead of What’s Next | July 2016


Mintel Global New Products Database Category Insights For more information, visit www.mintel.com or call 800-932-0400.

Deodorants Market Overview The United States is the biggest market for deodorants globally, closely followed by Brazil. Growth is slow in the United States and in neighboring Canada, however, with the market facing competition from other fragranced toiletries (e.g., shower gel/soap) and already high penetration. key issues Growth potential exists for spray formats. Although the stick format drives new product development, accounting for 48 percent of recent launches, and deodorant sales in North America, the strongest gains in the antiperspirant/ deodorant market in the United States came from brands that introduced new spray formats. Marketing cosmetic/skin-friendly benefits can help add value. Only 13 percent of recent launches in North America were marketed as beauty enhancing — although this was double that in the previous 12-month period.

What Does it Mean? More eco-friendly and space-saving compressed aerosols, “instantly-dryon-application” developments and a focus on all-over-body deodorizing — not

18

just underarms — are helping drive interest in sprays. More could be done to position spray formats as especially suitable for older consumers

| Progressive Grocer | Ahead of What’s Next | July 2016

who are less engaged in the deodorant market compared with younger shoppers. Advertising that speaks to older demographics (e.g., via older actors and other celebrities) can help here,

as can a strong focus on quick and easy application. Products with essential oils, antioxidants and superfoods could expand and offer added-value skin-friendly benefits.


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By promoting Guiding Stars through a channel like Fresh Ideas for Education, Marsh has been able to communicate healthy-eating information directly to families.

All’s Wellness By Karen Buch

Bringing Better Nutrition Back to School

Retail dietitians can help families provide healthier solutions at a busy time of year.

B

ack-to-school time is fast approaching. For many retail dietitians, that means a flurry of activity — news interviews, articles, shopping tours, cooking demos, themed sales programs, healthful recipes and the like — focused on easing the annual transition to a hectic school schedule, which affects meals eaten both inside and outside of the home. Families everywhere will be looking for healthy ideas for lunchbox meal planning, nutritious and satisfying breakfasts, meals and snacks to eat before or after sports practices and games, and ready-in-a-flash family meals.

The Importance of Family Meals Proven to improve the health and wellbeing of children and adolescents, eating together as a family additionally helps to fight obesity and substance abuse and to inspire families to make healthier choices. September is National Family Meals Month. The Food Marketing Institute (FMI) Foundation is offering a free online toolkit, available to both retailers and suppliers, to support efforts to encourage families to eat just one more meal at home per week. For more info, visit fmi.org/family-meals. Shop, Cook and Eat Together Retail dietitians across the United States have developed customized programs to make it easier for families to shop, cook and eat together at this busy time of the year. Program elements often include culinary workshops, hands-on cooking classes and in-circular recipes. Some dietitians develop social media contests challenging families to submit photos of their child’s healthy lunchbox or protein-packed breakfast, while others offer nutrition education store tours designed especially for kids and their parents.

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| Progressive Grocer | Ahead of What’s Next | July 2016

Linking School Rewards, Nutritious Choices One interesting back-to-school program is offered by Marsh Supermarkets, an Indianapolis-based grocer with 72 stores in Indiana and Ohio. Marsh’s Fresh Ideas for Education program, which began 11 years ago, has so far contributed more than $2.8 million in free educational equipment to schools. Each school receives a unique code for parents, faculty and local supporters to use when linking a Marsh Fresh Ideas loyalty card via the program website. At present, 610 schools are enrolled and more than 16,000 shoppers have registered to participate. Each time an individual shops and uses a Marsh loyalty card, the enrolled school earns points toward free educational equipment — one point for every dollar purchase. Fresh Ideas for Education now offers a unique way to help individual customers and area schools alike. Beginning in 2014, Marsh began linking the Guiding Stars nutritional scoring system with the program. Each time a participating shopper purchases an item that bears one, two or three Guiding Stars, the designated school earns double points. Registered shoppers receive monthly communications featuring healthy recipes to further inspire their consumption of better-for-you foods. By promoting Guiding Stars through a channel like Fresh Ideas for Education, Marsh has been able to communicate healthy-eating information directly to families, and individual shoppers benefit every time they buy nutritious foods. For her contributions to this program, Mary Snell, Marsh’s director of nutrition and wellness, received a Retail Dietitian Outreach Innovation Award at the 2016 Progressive Grocer Retail Dietitian Symposium, held this past May in Chicago. PG Karen Buch, RDN, LDN, is a registered dietitian/ nutritionist who specializes in retail dietetics and food and nutrition communications. One of the first supermarket dietitians, she is now founder of and principal consultant at Nutrition Connections LLC, providing consulting services nationwide. You can connect with her on twitter @karenbuch and at NutritionConnectionsLLC.com.


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Women make 64 percent of shopping trips and make up 55 percent of our workforce.

Nonfoods

Category

NEW

Horizons

By Joan Toth

Nothing Less Than 50/50 Better isn’t good enough – it’s time for gender parity in our leadership.

T

arget Corp. CEO Brian Cornell and PepsiCo Inc. CEO Indra Nooyi are two of the smartest, most innovative leaders in the retail and consumer goods business. Their companies are brand icons, masters of consumer marketing and trendsetters in talent management and sustainability. As CEOs of Fortune 500 companies, Cornell and Nooyi deal in big numbers. Target’s sales hit $73.8 billion last year, up more than $1 billion from the year before. PepsiCo’s food and beverage portfolio encompasses 22 brands that each generates more than $1 billion in annual retail sales. Now they’re helping the Network of Executive Women (NEW) reshape the retail and consumer goods workplace, and focusing on a smaller number: 50. Nooyi and Cornell are co-chairs of the NEW Future Fund, a two-year, $5 million capital campaign to support the goal of 50/50 gender parity. The fund will invest in new technology that will provide insights and analytics on the barriers women leaders face in our industry and create powerful new on-demand leadership learning, talent best practices, and community and engagement tools to address those barriers.

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| Progressive Grocer | Ahead of What’s Next | July 2016

Little Progress Why are these two industry titans devoting their time and resources to the NEW Future Fund? Because despite the business case proving that women’s leadership improves bottom-line performance, there’s been little progress advancing women in the retail and consumer goods industry. Consider a few more numbers: Women make 64 percent of all retail shopping trips and make up 55 percent of our industry’s workforce, but they comprise just 27 percent of senior management in food and beverage — only 22 percent in retail. The industry isn’t a first choice for college graduates, and it’s losing many of the highly trained emerging and midlevel leaders it already has. Nooyi is serving as the NEW Future Fund’s co-chair because PepsiCo needs to ensure women have an opportunity to rise as far as their talents will take them. “We know that when we open the doors of opportunity to extraordinary women, businesses thrive,” she says. “PepsiCo depends on women,” continues Nooyi. “We depend on our female nutritionists and marketers to develop foods and beverages that meet the needs of today’s consumers. We depend on our female salespeople to understand the purchasing patterns and family dynamics to help them serve our key customers. And more broadly, we depend on women consumers. Women are the gatekeepers to many of the key shopping experiences today, so you need to win over female consumers, otherwise you’re not going to have a successful business.” The power of women’s leadership is why PepsiCo has invested in programs that give women and men equal opportunity to advance their careers. Under the Pinnacle program, a senior-level female executive mentors five high-potential women. Another program, Lift, pairs senior leaders with young high-potential female associates.


On Target Brian Cornell has seen firsthand the positive impact that women’s leadership can make. At Target, women make up 36 percent of the board of directors and 45 percent of its c-suite, well above industry and external benchmarks. Further, almost half of Target’s 1,800 stores — each with several hundred employees, generating tens of millions of dollars annually — are run by women. “There’s no question we’re making progress, but we still have work to do to achieve gender parity in the industry,” Cornell says. “It starts by continuing to build and support a culture of true workplace inclusion and an atmosphere that empowers women to be leaders and grow in their careers.” One such effort is Target’s Women’s Business Council, which engages women through mentorship and career counseling. The council also does male advocacy work, supports Target’s womenowned vendors and suppliers, and engages Target board members in the conversation. “Encouraging these kinds of activities as a part of our workplace culture is helping us close gaps, foster equity and create opportunities for

all leaders,” Cornell says. PepsiCo and Target are the fund’s initial corporate sponsors, with others expected to join the effort soon. Every member of the NEW board, which is composed of leaders from some of the industry’s largest companies, including Ahold, Delhaize, Supervalu, Walmart, CocaCola and Mondelez, has already pledged his or her personal financial support. These industry leaders agree: We’re in a highly competitive, low-margin industry, and talent is the difference between success and failure. Led by industry executives, driven by NEW members and powered by the NEW Future Fund, we can make retail and consumer goods the No. 1 industry for talent. To learn more, visit newonline.org/ ournewfuture. PG Joan Toth is president and CEO of the Network of Executive Women, Retail and Consumer Goods, a learning and leadership community representing 10,000 members, 750 companies, 100 corporate partners and 20 regional groups in the United States and Canada.

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Industry Events

2016 Multicultural Retail Summit

Multicultural Exchange

Strong conference program attracts retailers from all channels as registration deadline nears. By Don Longo

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otel rooms are filling up quickly for this year’s Multicultural Retail 360 Summit, slated for Aug. 24-26 at the Hilton San Diego Bayfront Hotel. This year’s conference is on pace to attract a record number of retailer attendees from across all channels of retailing. Confirmed attendees include general-market grocers such as Brookshire Brothers, Food Lion, Food4Less, Fry’s, Grocery Outlet, H-E-B, Jewel-Osco/Albertsons, Kroger, Publix, Ralphs and Save-A-Lot, as well as multicultural specialists like Northgate Gonzalez Markets, Superior Grocers and Tawa Supermarkets. Also signed up to attend are drug store chains like Walgreens; convenience store chains like 7-Eleven, Maverik, Chevron and BP am/pm; and even discount store chains like Big Lots. The special discounted hotel rate of $229 per

KEY NOTES Multicultural Retail 360 annually features speakers from some of the most innovative marketers in the world. This year’s agenda includes representatives from AARP, Buffalo Wild Wings, CocaCola, Facebook, Jewel-Osco/ Albertsons, Kellogg, Nielsen, Post, Unified Grocers, Zumba and many more.

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night at the Hilton San Diego Bayfront expires soon, so prospective attendees are being urged to make their reservations as quickly as possible.

Optimizing Ominchannel This year’s Multicultural Retail 360 Summit features what is likely the strongest educational agenda in its 12-year history. The theme of the conference is “Optimizing the Omnichannel Experience for Multicultural Consumers.” Among this year’s general sessions are: America@250: How Retailers Will Capture the Multicultural Demographic in America Over the Next 10 Years: In the conference’s opening ses-

sion, speakers from consulting firm A.T. Kearney present the results of a multiyear study conducted in partnership with The Wall Street Journal to explore the profound changes underway in de-


mographics, consumers’ values and preferences, technology, policy, and politics. A Taste of Diversity: Ethnic merchandising leaders

from Jewel-Osco show the supermarket chain’s renowned experiential activations celebrating the Hispanic, African-American and kosher communities through the eighth annual Taste of Hispanic Heritage, 16th annual Taste of Black History and first annual Taste of Kosher events. Reaching Consumers Through Dance and Fitness:

See and hear how Zumba, the international fitness and dance craze, is helping all types of companies, from retailers to insurance companies, make their advertising more relevant and interesting to multicultural consumers.

data, and examine new breakfast category attitudes, perceptions and insights to bring culturally authentic trends to the surface.

How Kellogg Applies a Global, Culturally Relevant Approach to Drive Multicultural Growth: Major

Multicultural Consumers — The Organically Mobile Shopper: Facebook’s head of multicultural,

food company Kellogg illustrates how it has successfully implemented an agile, culturally relevant approach that leverages both local and global best practices to reach, engage and drive growth with multicultural consumers across product, packaging, retail, mobile and social platforms.

Christian Martinez, will unveil insights that can help businesses learn more about the connections people have with their favorite brands and products.

Cultural Authenticity, Employee Training and Social Media Outreach to Multicultural Consumers:

A panel of foodservice operators, including representatives from Sodexo, Brinker International and Buffalo Wild Wings, discusses three key facets to meeting the multicultural challenge. Bicultural Hispanics: Who Are They and Why Should We Be Paying Attention?: Experts from

Coca-Cola’s Multicultural Marketing Center of Excellence explore why brands need to understand the nuanced differences between Hispanic consumers, how bicultural Hispanics embrace the best of two worlds, and how best to reach them. A Fresh Look Into Multicultural Consumers: Disrupting the Mainstream Market: Thought leaders from

Nielsen explain how the multicultural consumer impacts the way stores and products are shopped, and help identify new growth opportunities for retailers. The Multicultural Consumer: From Millennials to Boomers: A panel of expert marketers discusses key

trends being driven by African-American, Hispanic and Asian households, from 50-plus consumers to intergenerational families. A New Roadmap for Connecting With Hispanic Shoppers in the Breakfast Aisle: Hispanic mar-

keting experts from Post Foods take a fresh look at the Hispanic shopper, based on new acculturation

Creating and Nurturing a Productive and Diverse Workforce: Today’s demographic landscape demands

that businesses create a working environment where every employee has an equal chance to contribute to their greatest potential. Debra Sandler, an African/Caribbean/Latina senior executive, will share personal and professional views on approaches to creating a truly productive and diverse workforce.

SHARE GROUP Retailers and suppliers network and exchange ideas and tactics in the MR360 Solutions Center to better serve the nation’s growing multicultural population.

More in Store The 2016 Multicultural Retail 360 Summit also features 12 concurrent sessions on specific researchbased or niche topics, two open-discussion intimate working groups, and a pre-conference study tour of San Diego’s top ethnic retailers. Additionally, this year’s opening night will feature actor/comedian/author John Leguizamo, who is sure to provide entertaining stories and a moving message about America’s diverse future. Further, Multicultural Retail 360 will honor one of the true trailblazers in multicultural research and marketing, Isabel Valdés. A pioneer of in-cultural marketing, Valdés will be inducted into the Multicultural Retail 360 Hall of Fame during a special ceremony on Thursday evening, August 25. Now in its 12th year, the Multicultural Retail 360 Summit (formerly Hispanic Retail 360 Summit), is produced by Stagnito + Edgell and its market-leading brands Progressive Grocer and Convenience Store News. PG To register for the conference, go to www.multiculturalretail360.com/summit.

July 2016 | progressivegrocer.com |

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Industry Events

Category Management

Meeting in Vegas The Category Management Conference is a must-attend gathering. By Jamie Bourne

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he 2016 Category Management Conference will be held Sept. 12-14 at The Mirage Hotel, in Las Vegas. 2016 marks the eighth year of the annual conference, and this year’s theme is “Bridging Traditional and Digital: Connecting with Shoppers in the New Retail Landscape.” Organized by the Minneapolis-based Category Management Association (CMA), the conference is known for an excellent networking environment and focus on best practices across multiple categories and channels, as well as total retail development strategies. This is the must-attend event for retailers, manufacturers, industry thought leaders and category management solutions providers, offering endless opportunities for them to learn and grow their professional careers. The conference will host a blend of keynote speakers, case studies presented by well-known retailers and manufacturers, panel discussions, networking, solution provider demonstrations, and much more. At this year’s conference, the CMA is proud to reveal a new speed-networking event and a special CatMan 2.0 panel session.

Dramatic Changes Discussed With the retail industry having changed dramatically since the discipline of CatMan 1.0 was originally

About The Category Management Association The Category Management Association (CMA) is a global professional association that enables professionals to connect with peers, further their careers, and drive meaningful category and brand growth by building shopper satisfaction and facilitating strategic collaboration among retailers, suppliers and solution providers. With more than 7,200 individual members and 160 corporate members on five continents, the CMA provides broad thought leadership, establishes industry benchmarks and best practices, develops relevant certification standards, facilitates collaboration and networking, and creates robust and rewarding career paths and professional development.

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developed in the early 1990s, the CMA felt the need for a major overhaul, and so developed CatMan 2.0, category management for the 21st century. CatMan 2.0 embodies the advances that have emerged in data, analytics, process and success models, and all of the game-changing influence of the digital revolution. To receive an in-depth look into these changes, the conference will feature a special CatMan 2.0 panel session facilitated by Michael Sansolo, featuring the CMA’s Gordon Wade as well as other key contributors to CatMan 2.0. The CMA prides itself on providing broad thought leadership, establishing industry benchmarks and best practices, and creating robust and rewarding career paths for individuals. To support its mission at the conference, it will have a robust lineup of speakers, including business leaders, strategists, practitioners and peers. Speakers will include Daymond John, FUBU Clothing founder, urban entrepreneur, CEO, author, marketing and branding expert, “Shark Tank” reality TV judge, and motivational speaker; Bill Bishop, chief architect, Brick Meets Click; Tom Burkemper, senior director, merchandising, 7-Eleven; Mike Gervasio, VP of category management, Pepsi Beverage Co.; Kevin Hartman, head of analytics, Google; Major Dan Rooney, CEO/founder, Folds of Honor, U.S. Air Force; Michael Sansolo, MC, panel facilitator and retail food industry consultant; Art Sebastian, head of digital shopping and e-commerce, Meijer; Bala Subramanian, SVP global e-commerce, Best Buy; Kelly Ungerman, e-commerce, multichannel, McKinsey; and Rana Nall and Michael McGuire, category management and modular development, Wal-Mart Stores Inc. Attendees can register at www.catman.global/events/ annual-conference. “The conference has been the best opportunity for category management practitioners to learn of successful approaches across all categories, and to take those case studies and apply them to their own categories and retail stores,” says CMA CEO Wendy Fritz. The 2017 Category Management Conference will be held May 15-17, 2017, at Caesar’s Palace, in Las Vegas. PG

| Progressive Grocer | Ahead of What’s Next | July 2016

Jamie Bourne is senior marketing manager at the Category Management Association.


FREE WEBCAST SERIES

CAPTURING the Hungry In-aisle Shopper Today, and FEEDING the Online Consumer of Tomorrow

View It In the Archive Now! Duration: 60 min With the recent buzz about grocery e-commerce from retail power houses like Amazon and Walmart, you’d think this was the first time you could order a carton of milk from your computer. Though many have previously failed to overcome logistics and cost barriers and meet customers’ expectations for quality, speed, and price, companies like Instacart, Postmates, and Ocada are succeeding where others fell short.

SPEAKERS: Ian Strain-Seymour Managing Director – Retail Practice Bazaarvoice

Today 38% of grocery purchases start with online research, and it is expected that 50% of food and beverage sales growth will come from e-commerce between 2016 and 2018. (Boston Consulting Group)

Brendan Yancy Solutions Marketing Manager Bazaarvoice

That leaves food and beverage brands in a tough spot where they are managing two horizons: driving short term growth, while positioning themselves for long term viability. In this webcast you will learn: • About the value drivers for the info-hungry consumer • How digital plays a highly critical role in driving in-store sales today • How food and beverage brands are working to unlock the power of e-commerce tomorrow

Presenting publication:

MODERATOR: Joan Driggs Editorial Director Progressive Grocer

Sponsored by:

www.progressivegrocer.com/Bazaarvoice_2016


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Winn-Dixie, Jacksonville, Fla.

Store of the Month

Winn-Dixie’s Jacksonville flagship sets a new standard for Southeastern Grocers’ next wave of stores. By Jim Dudlicek hen Southeastern Grocers — parent company of the Winn-Dixie, Bi-Lo and Harveys banners — moved to its new corporate headquarters in Jacksonville, Fla., it needed a new flagship supermarket. The result: WinnDixie Baymeadows, a 46,000-square-foot store about 4 miles away that raises the bar for new stores and remodels throughout the company. “We wanted to represent a step change from where we have been, as well as a clear indicator on how we intend to satisfy our customers’ needs in the future,” explains Ian McLeod, Southeastern’s president and CEO. A recent visit by PG to the Baymeadows store, which occupies a former WinnDixie location that had been vacant for several years, reveals an open, bright, welcoming shopping environment with a clear emphasis on fresh local produce, chef-driven prepared foods, everyday deals and top-notch customer service. “This store has been designed with the customer in mind,” McLeod says. “Not only is the store visually pleasing and easy to navigate, it combines more contemporary design features to appeal to a wide variety of customers without compromising value, through our price investment program. We feel this store, these friendly associates and our always-low prices, as well as a commitment to shape our stores, products and offerings to the local community, separate us from our competitors in the area.”

quality anD Service President/ceO ian Mcleod says Winn-Dixie is launching a new standard of service, from the deli, with Deli Manager leslie Watkins (clockwise from bottom); to the café, with barista Marco Williams; to local, natural and organic produce; to in-house smoked meats.

Photos by Ryan Ketterman

July 2016 | progressivegrocer.com |

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Store of the Month

Winn-Dixie, Jacksonville, Fla.

hiGher exPeCtationS Chef-inspired prepared foods like pressed sandwiches and dessert pizzas (above) are key components of the new Winn-Dixie, as explained by McLeod to PG editor-in-Chief Jim Dudlicek (left).

Creating Something Dynamic The produce department greets shoppers as they enter the store with a vibrant display of color and visuals stressing “fresh” and “local,” drawing products from more than 50 Florida farms. Also front and center is the new health food store-within-a-store, Naturally Better, featuring more than 4,000 natural and organic products. “A common expectation among grocery shoppers throughout the world is a desire for quality food and

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service at an affordable price,” McLeod says. “We look for inspiration from everywhere on how best to offer the great value and quality of products at Winn-Dixie, but most importantly, we look to our customers.” The Kitchen features a stone-hearth pizza oven and a smokehouse delivering brisket and pulled pork slow-cooked for up to 12 hours, in addition to many chef-driven recipes — developed by corporate chef Deanna Stephens (a PG Top Woman in Grocery) and her team — offered for enjoyment at home or on site. The day of PG’s visit, the Kitchen offered samples of smoked meats and fruit-topped sweet pizzas, the latter of which elicited comments of “This is so cool!” from a couple of women perusing the selections. “We developed an extensive product mix in the Kitchen, tailored to our customers’ tastes for quality, ready-made and make-at-home meals, from the smokehouse and in-store pizza shop, to hand-rolled sushi from our trained sushi chef, entrées, sides, quinoa salads and organic meals,” McLeod says. “Our Kitchen boasts made-from-scratch sauces for barbecue and pizza, and ready-made meal options.”


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Winn-Dixie, Jacksonville, Fla.

Store of the Month

BIg cheeSe The Baymeadows deli department offers a vast array of charcuterie as well as fine imported cheeses, including at least one selection from ceO McLeod’s native Scotland that has become a big seller.

Points of Interest At the nearby Café, baristas dispense fresh coffee from beans roasted on site for customers to sip in their seats or take along in the cup holders of their shopping carts. “We sent our employees to New York to be barista-trained,” McLeod says. The Café offers a full coffee menu that also includes Prestige Gelato and sorbet, with 12 favorites such as Key Lime Pie, White Chocolate Raspberry and Bananas Foster. The Deli features more than 350 local and international artisanal cheeses, and is staffed by a trained American Cheese Society-certified cheese steward who can advise shoppers on recommendations and pairings. With up to 40 local artisanal cheeses, Baymeadows is the first Winn-Dixie to offer a full range of grass-fed milk cheeses. There’s also a host

of charcuterie, with large, creative signage offering insights on the many varieties available. “The idea is to create points of interest through the store. Stores tend to fall a bit flat at this point, so we created this area of interest,” McLeod says of the stylish deli area. “We wanted to create something more dynamic.” Regarding the cheese selection, McLeod recounts, “I asked the buyers to indulge me: Can we have just one Scottish cheese?” The Scottish McLeod, who spent time running supermarkets in Australia before arriving in Jacksonville, proudly notes that the cheese has become a popular seller.

With a focus on stunningquality food, serving with personality, and great value, this store has been tailored to the Baymeadows Service, Quality and Value community’s A full-service butcher shop offers natural and grassfed beef, organic chicken, USDA Choice and Prime tastes and preferences to beef steaks, dry-aged beef, Berkshire pork, boar help them eat ribs, and an expanded assortment of fresh sausages well for less.” and natural packaged meats. “You can buy wild boar, deer, rabbit, elk,” —Ian McLeod, McLeod says, “giving customers that breadth of president/ceO, choice they normally wouldn’t get.” Southeastern grocers Adam Logan, fresh food manager, adds, “You July 2016 | progressivegrocer.com |

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Store of the Month

Winn-Dixie, Jacksonville, Fla.

MindinG Of the MeAtS the butcher shop offers natural and organic meats, USdA Prime and Choice steaks, sustainable salmon, and a fresh daily catch of the day.

new to this store, churns out fresh sweet goods to great customer response, especially on weekends, McLeod notes. The commercial bread aisle was relocated from center store to be adjacent to the in-store bakery. “Customers will cross-shop anyway, so this is more convenient for them,” McLeod explains. In addition to local craft beers and wines in the main store, there’s a new separate spirits shop next door, including a special section dedicated to local Florida-based craft spirits such as St. Augustine Distillery. “This store is an example of our mission to be constantly innovating while maintaining service, quality and value for our customers,” McLeod says. “The store also brings a new social café experience to our shoppers, giving them an opportunity to spend time with family, friends and our wonderful associates.”

can buy meat and we’ll smoke it for you,” noting that snowbirds, visiting from up north and with limited kitchen facilities, come in for help cooking holiday meals. There’s also a variety of seafood, including 4-Star BAP-certified sustainable salmon and a fresh catch of the day. A trained fishmonger offers guidance as well as “seafood made easy,” packaged with vegetables and seasonings, and ready to cook at home. The bakery includes a full dessert case featuring specialty cakes, a patisserie with local cupcakes from Cupcake 50 Etc., cheesecakes from The Cheesecake Factory, and assorted artisanal breads. At least 10 varieties of artisanal breads are baked daily, along with bagels and croissants, plus 11 varieties of glutenfree bread. Additionally, a mini doughnut machine,

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An Opportunity to Shine A bright spot in center store is the aforementioned Naturally Better section, a health-focused area with up to 4,500 natural and organic products, compared with 2,000 at most other locations. “This area indexes highly for natural and organic,” McLeod says of the Baymeadows community. Similarly, the health and beauty section is positioned as a store-within-a-store. Local products are also called out throughout the store, from Florida wines to hometown beers (Jacksonville has a vibrant craft community) to a local honey made by a 21-year-old who’s “passionate about his product,” McLeod says. “We like to give local products an opportunity to shine.” Winn-Dixie Baymeadows has also been designed to make shopping a little easier for parents. The store features mini shopping carts for children and educational engagement throughout the store, with “moo moo!” and “cluck cluck!” sound features located near the milk and eggs, engaged through buttons at heights easy for kids to reach.


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Store of the Month

Winn-Dixie, Jacksonville, Fla.

10915 Baymeadows Road Jacksonville, FL 32256 Grand opening: Feb. 4, 2016 Total square footage: 45,956 Selling area: 31,736 square feet SKUs: More than 40,000, including 4,000 natural and organic items; 450 fresh produce items; 260 beer varieties, including 150 craft brews; 1,000 wines; 350 artisan cheeses; and more than 100 local products Employees: 107 Checkouts: 10, plus two kiosks Hours: 7 a.m.-11 p.m. daily Designer: Southeastern Grocers

“We want to make sure customers get a sense of value,” McLeod says, noting that Winn-Dixie has lowered prices on 3,000 items since last fall. The price-cutting campaign, driven home in commercials with special lyrics to Dolly Parton’s hit song “9 to 5,” has created “great engagement with the customer — strong recall and strong association with the brand,” he asserts. McLeod continues: “We believe in eating well for less. This means that while we are offering quality food, customers will not be paying more for their basket. Since October last year, we have invested over $70 million into lowering our prices. We now have over 3,000 new lower prices, and over 600 products on Down Down — prices that are down and staying down.”

A Notable Step Forward Winn-Dixie has received an “incredible response” from customers since the Baymeadows store opened in February. “They tell us they love the product selection and meal inspiration, the friendly faces and helpful service they receive when they walk

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Store of the Month

Winn-Dixie, Jacksonville, Fla.

through our doors, and the consistently affordable prices,” McLeod says. “This store and the offerings within it ultimately reflect the needs and preferences of the local community. We want them to feel that we’ve listened to them to best understand their expectations and needs, and that they can

Southeastern Grocers LLC, parent company of Bi-Lo, Harveys and Winn-Dixie grocery stores, is the second-largest supermarket in the Southeast based on store count. The company employs nearly 60,000 associates at 750 grocery stores, 140 liquor stores and 500 in-store pharmacies throughout Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina. Southeastern’s banners are well-known and -respected regional brands with deep heritages, strong neighborhood ties, proud histories of giving back, talented and loyal associates, and strong commitments to providing the best possible quality and value to customers. For more information, visit www.segrocers.com, www.winndixie.com, www.bi-lo.com and www.harveyssupermarkets.com. Founded in 1925, Winn-Dixie operates more than 500 grocery stores, 145 liquor stores and 390 in-store pharmacies in Alabama, Florida, Georgia, Louisiana and Mississippi.

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vine and dandy Local wines and beers are featured selections in the Baymeadows spirits department, as well as being offered in a dedicated shop next to the supermarket.

turn to us for the selection and convenience they want most, with prices they can count on.” With more than 2,600 new products at Baymeadows, the store provides Winn-Dixie’s suppliers with “a unique opportunity to provide innovation to our customers,” McLeod says, “but our suppliers that can strike the most effective balance between quality and value will certainly have the most opportunity in this store.” Shoppers appear to love the Baymeadows store, so Winn-Dixie — which plans up to 50 remodels this year — should expect a similar response as it extends the store’s features to other markets. While incorporating its best practices, the company expects to create a unique identity for new stores in each community, according to McLeod. “This store was a notable step forward in demonstrating to our customers and our associates how serious we are about transforming this business,” he says. “It clearly shows that we’re capable of great innovation and growth, and that we are completely focused upon shaping our stores to the unique tastes and preferences of the communities in which we operate.” PG


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Why Your Dairy Case Can Be Your Key to Profitability

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our dairy case may be underleveraged as a profit performer, according to new research conducted by MilkPEP (Milk Processor Education Program). Not only is milk a trip driver for your current shoppers, milk is one of the key opportunities to drive true profit, maximize sales and even attract new shoppers. Yet, the dairy case has seen dramatic changes in recent years with the proliferation of new product segments competing with milk for space. Milk has lost ground, and this may be negatively affecting your profitability, according to the research. In most categories, profit trails off as space grows, but milk is the exception.1

With strong milk industry momentum, including new product introductions, powerful national marketing programs and elevated scrutiny on the competitive milk alternative market – the time is right to maximize the dairy case.

How Can You Maximize Your Milk Profit TODAY? Shelf space in the dairy aisle is precious. To get it right and reinvigorate your dairy case, it’s critical to make every foot count. That means considering how you optimize the product mix, and especially how you manage fluid milk – typically the largest component of the case. Why there’s an opportunity: Milk far outperforms on space: Generates 18 percent of dairy department profit from only 10 percent of the space.1

potential milk profit since 2008.2 You can capture this opportunity by ensuring milk is in stock, focusing on days-of-supply, increasing milk variety, targeting the right shoppers and merchandising milk with in-store messaging. Read on for more information on how you can make the most of your dairy case.

About the Research The new, in-depth MilkPEP research included in-home interviews, shop alongs and leveraged national IRI data and Willard Bishop’s SuperStudy™ for Grocery and C-store, which includes the most comprehensive information available on total store performance in the supermarket industry today. The research uncovered key growth opportunities, best practices and insights that have the potential to maximize your dairy case sales and ultimately, drive profit. Contact MilkPEP at info@MilkPEP.org for more information. Watch our webinar here: www.progressivegrocer.com/MilkPEP_June2016

Milk drives trips + profit: Leads the dairy case in sales productivity. Baskets with milk are 23% more profitable than those without.1 Milk has huge merchandising potential: The dairy case and fluid milk often lack the in-store interest of other categories. Yet, milk’s benefits are in-line with consumer demands, and MilkPEP programs offer significant support for program messaging opportunities in-store. Milk has an uncaptured C-store opportunity: Sales have shifted to other channels, and C-stores have lost more than $1 billion in potential milk sales and $321 million in

ADVERTORIAL


The Grocery Opportunity:

Four Ways to Optimize Milk Sales, Store Profit

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ilk is a key driver of shopping trips. As an item bought by more than 95 percent of households1, its availability (or lack thereof) impacts shoppers’ overall image of your store. Ensuring you have variety in your milk case, proper space allocation and merchandising has the potential to drive greater store profitability. According to MilkPEP’s proprietary research, milk: Drives Shopper Trips: Milk trips to grocery average 21 times per year – far more than other top categories.1 Drives Shopper Basket Rings: Large baskets with milk are 23 percent more profitable than those without milk.3 Drives Your Bottom Line: Out of 227 total store categories, milk ranks No. 2 in true profit1

MILK IS A TRIP DRIVER. IT DRIVES MORE THAN 21 TRIPS TO THE GROCERY STORE PER YEAR

There are four ways you can invigorate your fluid milk business at grocery: 1. Remedy the out-of-stock issue: In many stores, milk’s space reductions have led to out-of-stocks and ultimately, lost sales and decreased shopper satisfaction.4 Because of milk’s fast turns and extremely low days-of-supply, roughly half of the milk category must be restocked every Friday, Saturday and Sunday – resulting in higher labor costs. Midday restocking is required but costly, and not always realized; restocking alone is not the solution.5 The research shows that retailers lose when underspacing milk – and overspacing other parts of the dairy case. When you add in extra stocking labor, retailers lose $1,800 to $3,000 per shelf, per year by converting that last milk shelf to milk alternatives.6 It is time to “reset” the dairy case and balance inventory and days of supply to ensure milk stays in stock. 2. Increase days of supply for more profit: One of the most important ways to ensure milk stays in stock is to focus on days of supply. Conventional milk’s last / worst-performing shelf – captures three times the profit of almond milk’s last shelf. Yet, currently milk’s days-of-supply is lower than almost any other product in store. On average, milk gallons only have 1.5

days of supply and half gallons 2.3 days of supply, compared to almond milk at 5.9 days of supply and soy at 7.8 days of supply.4 To get to the right amount of supply, retailers should ensure there’s adequate shelf space, most importantly, in addition to ensuring back stock is adequate and restocking approach is sound. To meet demands, the research recommends: 3-4 days-of-supply for traditional milk (which translates to 1-2 days on the weekend to ensure consistent availability during heavier shopping days)12 5-7 days for value-added milk due to variability of demand from week-to-week, uniqueness of items (some do not have substitutes) and often limited back stock and supply chain7 While space recommendations should be customized to each store, the research suggests four categories that should be reviewed for potential reduction in favor of more fluid milk facings: dairy alternatives, juice, yogurt and refrigerated baking.3 3. Make space for new product introductions: Shoppers demand options and variety in their food choices – milk is no exception. Milk companies have been focusing on innovation and new product introductions, which means that retailers need to make more space on shelf for more milk SKUs. New product introductions satisfy a variety of shopper needs and wants. Over the past four years, lactose-free milk sales have increased 42 percent, health enhanced products are up 73 percent, single-serve flavors are up 30 percent and organic milk is up 12 percent. Taken together these represent nearly $500 million in sales.7 These value-added products now represent a sizeable part of the category — 21 percent of dollar sales — and an opportunity to increase milk sales.7 New dairy milk product introductions should be evaluated against other new products within the dairy case and not the established milk gallon. Comparing to the established category leader may misrepresent the potential value of a new introduction. The best way to asses profit potential is to compare the new product opportunity to similar value added products.3 4. Optimize milk merchandising: Shopper insights suggest that communicating the benefits of milk — not just price — could drive increased purchase. In particular, focusing on milk’s protein advantage — 8 grams in every 8 ounces — and chocolate milk’s benefits as a post-exercise recovery drink. Leveraging MilkPEP’s nationally supported retail marketing programs and support from your milk suppliers, has the potential to help optimize your dairy case, and drive incremental sales.


The C-Store Opportunity:

Three Ways to Win Back Milk Volume

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t’s not just grocery that has potential to optimize milk sales. C-stores have lost ground to other channels for milk sales, resulting in a loss of more than $1 billion in potential sales and $321 million in potential profit since 2008.2 And while milk space is some of the tightest, MilkPEP’s new research shows it is also some of the most profitable in C-stores.2 Key insights show the negative profit trend can be reversed.

There are three sizable opportunities for growth for milk at C-store:

C-stores need eight to 10 SKUs and in some cases, more.8 2. Missing target shoppers like Millennials and those looking for recovery after exercise. C-stores are losing ground with Millennials. Millennials are gravitating to mass-merchandisers and dollar stores for flavor varieties and added value milk (recovery, added protein/calcium, etc.).9 For shoppers who have shifted to other channels, about half say it’s because they can’t find what they want — single serve, right fat level — at their C-store.10

Shoppers who choose chocolate milk for recovery are a valuable 1. Missing variety. Consumers expect variety, particularly for C-store audience. And current chocolate milk drinkers are quick trips when they look to C-stores over grocery stores to likely to actively grab their milk and seek out product at get on their way a C-store. quickly. NineChocolate milk ty-four percent of as a post-workout milk purchases are quick trips and recovery beverIN LOST MILK SALES AND C-stores have a age is growing competitive adin popularity. In vantage over other fact, the sales of IN LOST PROFIT SINCE . retailers, if they flavored milk are stock appropriately up 8 percent from to deliver the valast summer and riety their shoppers are demanding. Milk sold at a C-store isn’t there’s an opportunity to grow that even more.8 Shoppers say one-size-fits all and C-stores are not leveraging their natural understanding the recovery benefits could prompt even more proposition – convenience and variety.3 purchase – beyond just opting for chocolate milk as an occasional treat.2 Considerations for milk options include:3 3. Minimal space causing out-of-stocks and lost sales Brands: national and local and profit potential. Milk is a strong profit generator in limitSize: single-serve and larger format ed space. In fact, milk delivers the highest profit per linear foot Fat levels: whole, 2 percent, 1 percent, fat-free – specifically single-serve and gallons at neighborhood C-stores and single-serve at on-the-go C-stores.2 Flavors: white, chocolate, vanilla, strawberry and others

$ BILLION $

MILLION

Value-added: added protein/calcium for athletes, organic or lactose-free Other new product introductions To meet shopper demands, the research recommends that

Findings show that milk generates $21 per linear shelf foot (adjusted gross profit per linear foot in neighborhood C-stores) which is higher than many other categories. However, milk’s allocation is much smaller than those beverage categories which it outperforms.5

1

6

2

7

Willard Bishop 2015 Grocery SuperStudy™. IRI C-store Channel 2015 and Gross Profit (GP) Margin from Willard Bishop 2013 C-Store SuperStudy™. 3 2015 Willard Bishop, LLC shopper database representing 371 stores, 20 million households, 600 million transactions, across 21 states. 4 IRI Panel, Bishop Shopper Database, Prime Consulting. 5 Costs $10-24/store/week Projected by Willard Bishop and Prime Consulting based on time studies, labor costs of $24.40 an hour, 2015 sales rates, incremental work for extra stocking and range of days involved each week

FMI/GMA Study and Bishop SuperStudy™ values. Source: IRI 2014 New Product Pacesetters. 8 IRI C-store Channel 2015. 9 National Consumer Panel, Nielsen/IRI Latest 52 Weeks Ending 11/29/2015. 10 Proprietary Chocolate Milk Consumer Study, MilkPEP. 11 Excludes chocolate milk. 12 News America retail data 2016. 13 MilkPEP proprietary data from national grocery channel.


RECHARGE MILK SALES

And sTOPPING POWER AT THE DAIRY CASE MilkPEP offers powerful national campaigns and retail opportunities that you can leverage to drive shopper interest and deliver on expectations.

U.S. Olympic Committee Partnership11 The Milk Life Campaign, showcasing nutrient-rich white milk, is proud to support Team USA through the Rio 2016, PyeongChang 2018 and Tokyo 2020 Olympic and Paralympic Games. As an official sponsor, MilkPEP, along with milk brands across the country are creating powerful marketing campaigns and strategic in-store opportunities to engage shoppers and drive to the milk case. You can activate in store by working with your local milk suppliers. National Campaign – includes breakthrough advertising, digital content, marketing support and more. Retail Promotion – Milk’s Raise A Glass shopper promotion is live in 17,000 stores nationwide and online. The promotion gives shoppers the opportunity to enter for a chance to win over 1,000 prizes, including a U.S. Olympic Training Center Experience, when they purchase white milk and submit receipts. On-pack / In-store Milk Brand Plans – milk companies are customizing on-pack creative and in-store plans to feature official Milk Life / U.S. Olympic Team marks.

The Great American Milk Drive The Great American Milk Drive is a first-of-its-kind partnership between Feeding America, milk companies and dairy farmers to deliver gallons of milk to families in need. Including check-out programs, POS and turnkey assets, there are many ways to customize the program to benefit your store. The program is fully optimized for retail and more than 12 million servings of milk have been delivered to food banks. This charitable giving program:12 Supports local families in need

Delivers category sales – 15MM incremental gallons sold in 2014 Drives new shoppers – 14% of voucher redeemers are NEW shoppers and 18% are new milk shoppers Increases basket ring – 73% of voucher redeemers purchased an additional item Builds community connection

My Morning Protein My Morning Protein emphasizes the importance of getting the 25-30 grams of protein before noon that many nutrition experts recommend, and shows how milk’s natural high-quality protein can help shoppers reach that goal. You can use My Morning Protein POS and other materials to cross-merchandise milk with other high-protein foods. MilkPEP research shows that communicating milk’s protein benefits as a morning “pairing” drives demand. In fact, a 2016 test delivered a 1.3% sales lift and 19 incremental gallons per $1 spent on in-store advertising.13

BUILT WITH CHOCOLATE MILK MilkPEP’s BUILT WITH CHOCOLATE MILK campaign inspires athletes to perform at their best and purchase lowfat chocolate milk for post-workout recovery. More than 20 scientific studies support the benefits of recovering with the high-quality protein and nutrients in chocolate milk after a tough workout. The national campaign has driven strong momentum, awareness and is improving perceptions of chocolate milk for recovery among adult exercisers, and is driving more sales across channels. The campaign is generating even more shopper demand by showcasing it as the “Official Recovery Beverage of USA Swimming.” You can take advantage of this excitement by stocking your dairy case with chocolate milk and utilizing MilkPEP assets.


69th Annual Consumer Expenditures Study

Fresh Leads the Fight Grocery retail continues as the top shopping stop, but it’s losing ground to other channels. Analysis by Joan Driggs, Jim Dudlicek, Bridget Goldschmidt, Randy Hofbauer and Amelia Levin / Research by Debra Chanil

O

n the surface, supermarkets’ status as the top grocery channel appears to be a constant. Don’t be fooled. Findings from Progressive Grocer’s 69th Annual Consumer Expenditures Study (CES) reveal that while the channel still retains its top spot, it’s increasingly challenged by other channels and foodservice options. Further, population shifts back to urban areas, the recovering economy, and trends toward health and wellness, as well as transparency, are impacting not only how consumers shop, but also how retailers are responding.

Perhaps the biggest challenge for supermarkets is that shoppers are, alas, channel agnostic. While they would prefer a one-stop shop, they feel forced to visit several retailers to satisfy their wants and needs against assortment, convenience, value and experience. Retailers are — or should be — in a perpetual state of honing and tweaking their ability to get shoppers in the door, help them find the products they seek, demonstrate value and expeditiously get them out the door with a smile. The good news for the grocery industry is that operators no longer subscribe to the failed “all things to all people” approach, yet there often is a disconnect between a banner’s stated mission and its execution against that mission. Do the July 2016 | progressivegrocer.com |

45


69th Annual Consumer Expenditures Study level of service, experience and product assortment connect the mission to shoppers? Does the banner even know who its core shoppers are, or which shoppers it wants to attract? Supermarkets’ share of the grocery dollar continues to slip, down more than 6 percentage points since 2007, to 54.5 percent of total grocery sales. Supercenters and warehouse clubs, with their large footprints and value positioning, are the big gainers, with a combined 31.3 percent share of the grocery dollar, up from 25.1 percent in 2007. These channels benefited from a combination of strategic geographic growth and the recession, the latter of which forced dramatic changes in buying behavior. Retailers are resilient, however. Buoyed by population shifts back to metro areas (80 percent of the population is considered urban), growing adoption of healthier eating, and a willingness to experiment with new formats, footprints and e-commerce solutions, retailers have hardly given up the fight.

The End of Isolation Do shoppers even remember when there was just one game in town? Today, most consumers have access to several levels of traditional supermarkets, including premium, mainstream and value options, all of which can be defined by their approach to fresh, convenience and even e-commerce.

Trended Dollars Spent

Grocery

Percent Dollars in Grocery ($2mm Supermarkets and Other Grocery)

All Other

70% 60.7%

60

59.7%

59.2%

59.1%

58.2%

50 40

39.3%

40.3%

40.8%

41.8%

40.9%

57.4%

42.6%

57.0%

43.0%

55.2% 44.8%

54.5% 45.5%

30 20 10 0

2007

2008

2009

2010

2011

2012

2013

2014

Grocery includes $2mm supermarkets and other grocery; All other includes convenience/gas, drug, mass merchandisers, supercenters, warehouse clubs, dollar stores and all other channels. Source: Nielsen, Progressive Grocer Market Research, 2016

46

| Progressive Grocer | Ahead of What’s Next | July 2016

2015


69th Annual Consumer Expenditures Study With more than $2 trillion in total U.S. grocery sales, it’s worth the fight for a slice of the food pie. Food is a major expenditure, trailing only housing and transportation. In total, food accounts for 13 percent of total consumer expenditures, with food at home accounting for 7.8 percent and food away from home accounting for 5.1 percent, according to the Bureau of Labor Statistics. This gap is also narrowing, and there’s strong evidence that grocery retailers understand that they’re vying with restaurants for share of stomach. Shoppers are also increasingly turning to their computers and smart devices for shopping. E-commerce solutions — including click-and-collect and home delivery — can help retailers retain shoppers. EKN Research’s 2016 Future of eCommerce and Omnichannel survey of 75 North American retailers reveals that e-commerce sales for grocery and general merchandise retailers are expected to grow from 4.9 percent of actual total sales in 2015 to an estimated 9.2 percent of total sales in 2018, a compound annual growth rate (CAGR) of 23.4 percent. In terms of mobile commerce sales, grocery and general merchandise retailers are expected to grow from 2.8 percent of total sales in 2015 to an estimated 7.4 percent of total sales in 2018, a CAGR of 38.3 percent. This is staggering growth for a sector that has so far given a tepid reception to e-commerce and digital sales, at least in North America in the past few years, compared with specialty, apparel and fashion retail. According to analysis by Deerfield, Ill.-based EKN, a PG sister company, this growth can be attributed to the rising acceptance of online and digital orders by consumers, and the fact that grocery, supermarket and general merchandise retailers are already investing in e-commerce and digital storefronts and back-end infrastructure, including platforms; personalization; digital payments; apps; clickand-collect; curbside pickup; buy online, pickup in-store; and other home/last-mile delivery infrastructure. While e-commerce could help stem traditional supermarkets’ share bleed, retailers admit that they’re woefully lacking the infrastructure that today’s mobile shoppers prefer, as initial investments were web-based rather than mobile-based. Consider that 38 percent of shoppers use a mobile device as part of their pre-shop. As one retailer noted at PG’s Pulse event at FMI Connect in June, today’s digital shopper is acting far differently today from two years ago, and in turn will behave differently in the months and years to come. The challenge for all is getting ahead of that behavior.

Format Flexibility Savvy retailers are also learning that they can be more successful by playing along the supermarket spectrum. Wilton, Conn.-based Kantar Retail reports that those retailers enjoying growth are the most likely to tout various

48

formats, including specialty, small-footprint and urban. For example, earlier this year, Kroger debuted Main & Vine, a small fresh-concept store with a focus on local and sustainable foods, in Gig Harbor, Wash. Last year, the retailer purchased Milwaukee-based Roundy’s, along with its upscale Mariano’s markets in Illinois, and more recently formed a strategic alliance with specialty retailer Lucky’s Markets, a 13-store chain based in Niwot, Colo., which has the tagline “Organic for the 99%.” Cincinnati-based Kroger has been filling in gaps, both in terms of formats and geography, lending its scale and experience to further boost banners that have already demonstrated desirable positioning. Publix, which has a reputation as a “hospitable” store, is another Kantar leader. The Southeast regional chain, based in Lakeland, Fla., is not only pushing north, it’s also going after specific demographics with its Hispanicinfluenced Publix Sabor and the 2017 debut of its first college campus store, a 45,000-square-foot outlet at the University of Southern Florida. Quincy, Mass.-based Ahold USA, which Kantar pegs as lagging, has taken a dramatic turn with its new Bfresh urban format, which is a separate entrepreneurial

Projected Dollar Growth, 2016E-2021E Premium Mainstream Value

Market Share

Compound Annual Growth Rate

19.9% 31.5 48.0

5.5% 1.7 5.4

Source: Kantar Retail Analysis; Company Reports, May 2016

| Progressive Grocer | Ahead of What’s Next | July 2016


lemon lime

grape

cherry vanilla

be a deli celebrity add choices, increase sales

vanilla

Delis offering Coca-Cola Freestyle

are experiencing on average • 5% revenue growth • 3% traffic increases • 5% growth in total beverage sales.*

get in on the action™ cokesolutions.com/freestyle *Source: TCCC Proprietary Research, CCFS Large Store Performance, Dec. 2013


69th Annual Consumer Expenditures Study engagement and even hiring strategies. Kantar reports that leading retailers are tapping into the high-growth segments of premium (5.5 percent CAGR) and value (5.4 percent CAGR). Value continues to resonate with shoppers even postrecession, as many habits developed as cost-saving measures proved satisfactory and worth hanging onto. With U.S. headquarters in Batavia, Ill., Aldi, a leader in the value space, has been expanding rapidly. It will soon be tested by the launch of another German powerhouse, Lidl, which is setting up its U.S. base in Arlington County, Va., and will provide shoppers in the Mid-Atlantic region — to start — with another value shopping option.

Department Snapshot Total grocery sales across all channels were $2.1 trillion in 2015, which is an increase from $2.06 trillion in 2014, but supermarkets’ share of total grocery spend declined to 23.4 percent, down from 24.6 percent in 2014. Mass and supercenters venture sometimes described as an “innovation lab” for account for closer to half of total grocery spend, weighnew store formats. Bfresh, located in Allston, Mass., ing in at a 45.2 percent share. specializes in made-from-scratch, organic and specialty Despite a slide in share, supermarkets reaped $498 bilitems. While Bfresh enjoys some operational support lion in sales in 2015, up 2.6 percent from 2014. The dollar from its parent company, it operates independently, testsales increase was greater than the 2.1 percent gain of 2014 ing new assortments, marketing, social media, digital and the 1.8 percent gain of 2013, indicating that shoppers are slowly regaining confidence and loosening their purse strings. Further evi(in Millions of Dollars) dence of this is where some of these gains are taking place, including 2016E CAGR Retailer Sales Status (‘16E-’21E) Growth nonessential health and beauty Kroger $103,583 Expanding 4.5% Leading (sales up 3.2 percent) and alcoholic beverages (sales up 5.6 percent). Albertsons Market (LLC) 56,535 Consolidating 0.3 Lagging According to Kantar Retail’s Publix 33,801 Expanding 6.2 Leading 2016 ShopperScape, shoppers Ahold/Delhaize USA 43,815 In Flux 2.1 Lagging say high-quality fresh food is the H-E-B 21,084 Stable 5.6 Leading top factor when grocery shopWhole Foods 15,293 In Flux 4.6 Leading ping. More than half of store sales — 54 percent — come Walmart 14,696 In Flux 15.5 Leading from perishable items, accordWakefern 14,615 Stable 5.0 Parity ing to the CES Study. PerishSoutheastern Grocers (Bi-Lo) 10,129 Stable 1.9 Lagging ables is keeping pace with total Wegmans 8,248 Expanding 5.2 Leading store growth; sales were up 2.8 Hy-Vee 8,086 Expanding 2.5 Lagging percent in 2015, compared with Giant Eagle 6,991 Stable 2.8 Lagging 3.2 percent growth in 2014. But center store, while diminishWinCo 6,644 Expanding 5.9 Leading ing rapidly, still accounts for Supervalu 4,791 In Flux 2.8 Lagging $7 billion in annual growth, Save Mart 4,742 Stable 1.1 Lagging according to Nielsen. And just DeCA 4,669 Stable 0.6 Lagging as the perimeter departments Sprouts 4,312 Expanding 14.5 Leading reflect the trend toward healthier eating, so, too, does center store. Stater Bros. 4,030 Expanding 2.3 Lagging Healthier options are driving DeMoulas Market Basket 3,732 Expanding 5.8 Leading gains for such center store stalGolub (Price Chopper/Market 32) 3,693 Stable 3.3 Lagging warts as salty snacks, New Age Source: Kantar Retail Analysis, 2016 beverages, candy and nuts.

Supermarket Sales

50

| Progressive Grocer | Ahead of What’s Next | July 2016


the world’s first. the world’s only.

THE WORLD’S BEST. Grand Cru® Surchoix, awarded the World Champion of cheese.


69th Annual Consumer Expenditures Study

Supermarket Category Share of Sales 3.1%

3.1%

5.5% 34.5%

Grocery Perishables General Merchandise Health & Beauty Care Pharmacy

53.8% Source: Progressive Grocer Market Research, 2016

The king of health, fresh produce, enjoyed a 4 percent bump in sales. Other fresh departments also fared nicely in 2015, including fresh meat, fish and poultry, which collectively were up 3.5 percent. Floral enjoyed gains of 2.9 percent.

PERCENT OF BUYERS IN RETAIL CHANNELS

Service deli sales were up 3.8 percent, and self-serve deli rose 2.7 percent. Retailers have been giving the service and self-serve deli areas a lot of attention in recent years, upping fresh-prepared food offerings, introducing more fresh and packaged perishable items, and expanding cheese offerings, all of which cater to time-strapped shoppers who are looking for meal and entertaining solutions. Grocerants, as PG describes retailers’ fresh-prepared food platforms, are on the rise as a method of gaining the loyalty of shoppers, but can also go a long way toward supporting a banner’s mission and satisfying the increasing demand for meal solutions. Nielsen reports that deli is the fastest-growing sector of the store, and that fresh-prepared is leading the department in food sales. Pharmacy is also experiencing healthy growth, with more supermarkets upping their game through clinical and dietitian services, affordable prescriptions, and, in some cases, dedicated wellness zones. Overall pharmacy growth was 3.6 percent in 2015. Shoppers’ commitment to health is demonstrated in attractive gains seen in the largest categories within pharmacy: vitamins, cough/cold remedies and other medications. Other large segments, including hair care and skin care, are experiencing lower growth, indicating that these purchases are likely going to other channels, including mass merchandisers and e-commerce. Read on for deeper dives into specific categories of the supermarket, and learn how traditional grocery is demonstrating its continuing commitment to shoppers.

% BUYERS IN ITEm PENETRATION PERCENT

$2mm+ GROCERY

mASS mERCH WITHOUT SUPERCENTERS SUPERCENTERS

DRUG

CONvENIENCE/ GAS

WAREHOUSE CLUBS

DOLLAR STORES

ALL OTHER CHANNELS

TOTAL GROCERY

100.0%

98.1%

72.2%

51.3%

55.1%

26.2%

50.2%

54.5%

76.1%

ALCOHOLIC BEVERAGES GROCERY-NONFOOD

60.0 100.0 99.8

71.2 97.9 88.4

31.1 71.4 66.4

8.1 50.3 43.5

10.7 53.4 38.1

6.8 22.4 10.7

19.6 48.6 40.2

2.3 54.0 50.6

39.8 72.0 66.5

BREAD AND BAKED GOODS-FRESH

98.6

93.9

56.0

20.9

7.2

6.6

29.4

20.0

22.4

DAIRY

FRESH PRODUCE

99.7 94.8 99.2 63.7 95.7 96.7

96.3 88.9 95.0 73.3 91.5 93.1

60.2 44.8 55.5 41.3 48.1 49.7

25.4 11.0 19.8 8.0 12.3 12.2

17.6 2.7 8.9 0.4 3.4 1.2

8.9 2.3 4.9 0.3 1.1 1.3

37.3 29.1 35.8 6.5 25.4 34.2

16.4 7.4 16.7 1.6 8.7 4.3

23.3 10.6 17.3 4.4 12.4 15.0

GENERAL MERCHANDISE (TRACKED)

98.9

70.8

66.4

43.9

31.1

2.4

27.2

48.1

73.7

HEALTH & BEAUTY CARE

99.7

79.9

66.5

43.9

61.1

2.9

34.4

43.6

51.6

GROCERY-FOOD

DELI-IN-STORE (SERVICE) FROZEN FOODS MEAT PACKAGED MEAT-DELI

Percent of buyers for 52 weeks ending Dec. 19, 2015 Source: Nielsen

52

| Progressive Grocer | Ahead of What’s Next | July 2016


New Look, Same Great

Gluten Free Taste!

10 New Delicious Gluten-Free Products! WE MAKE FOOD THAT MAKES SENSE The new Dr. Praeger’s certified gluten-free items include Black Bean Quinoa Veggie Burgers, Heirloom Bean Veggie Burgers, Kale Littles, four Veggie Hash Browns and three Veggie Puffs. With over 25 certified Gluten-Free products now available, your entire family can enjoy convenient sensible meals and snacks. We also have non-GMO Project Verified, Kosher, and Vegan options that are also gluten-free certified. Our products are available in the frozen aisle nationwide. To learn more and find a store near you, visit us at drpraegers.com.


69th Annual Consumer Expenditures Study

Methodology Progressive Grocer’s 69th Annual Consumer Expenditures Study (CES) is based on data collected by Schaumburg, Ill.based Nielsen for UPC-coded products, as well as sales estimates made by PG’s research department for nontracked categories, including perishables and general merchandise. Data for total retail sales and share of market for supermarkets and mass supercenters is drawn from Nielsen’s “Homescan Consumer Facts 2015” report. The Nielsen Homescan Panel is made up of more than 100,000 U.S. households. This geographically and demographically representative longitudinal panel tracks UPC and perishable products from all retail outlets with mobile apps and handheld scanners. This report spotlights sales trends by total supermarket sales (the orange chart), channel share of sales (the red chart) and percentage of buyers per retail channel (the blue chart).

54

Sales for U.S. supermarkets for 2015, shown in millions of dollars, are based on data from Nielsen’s Strategic Planner database of UPC-scanned items, as well as on PG estimates for categories for which Nielsen doesn’t collect scan data. Other data for fresh food is provided by the Nielsen Perishables Group. Some totals may not justify due to rounding or suppression of sales detail. Categories with sales of less than $10 million are subject to omission. Top brand data for the Category Spotlights is provided by IRI, a Chicagobased market research firm. This data encompasses total U.S. food sales. EKN Research provided data and insights from its 2016 Future of eCommerce and Omnichannel survey. EKN, a Stagnito+Edgell company, is a boutique research and advisory firm focused on business technology insights in retail, consumer goods, travel and hospitality. An expanded version of PG’s 69th Annual Consumer Expenditures Study, which includes in-depth supermarket category sales results, is available for sale at Progressivegrocer.com.

| Progressive Grocer | Ahead of What’s Next | July 2016


69th Annual Consumer Expenditures Study

SUPERMARKET SHARE Of SAlES

% DOllARS in % DOllARS in SUPERMARKETS & MASS MASS TOTAl RETAil SAlES % DOllARS in ($ MilliOnS) SUPERMARKETS SUPERcEnTERS SUPERcEnTERS

SUPERMARKET SHARE Of SAlES

TOTAL GROCERY

$402,608.68

42.7%

20.4%

63.1%

$ 55,156.96

40.8%

10.0%

50.8%

Soup Spices, Seasoning, Extracts

ALCOHOLIC BEVERAGES

Sugar, Sugar Substitutes

% DOllARS in % DOllARS in SUPERMARKETS & MASS MASS TOTAl RETAil SAlES % DOllARS in ($ MilliOnS) SUPERMARKETS SUPERcEnTERS SUPERcEnTERS

6,007.11

61.9

20.0

81.9

4,300.07

57.5

20.0

77.4

2,632.27

52.2

24.3

76.5

950.14

56.2

20.7

76.9

20,189.92

49.4

15.2

64.6

Table Syrups, Molasses

Coolers

1,014.55

51.2

20.4

71.5

Tea

4,957.39

56.6

19.6

76.2

Liquor

16,056.33

24.7

4.3

28.9

5,422.22

65.1

19.3

84.4

Wine

17,896.17

45.0

8.3

53.3

1,866.43

59.3

19.3

78.6

53.0%

21.5%

74.5%

Vegetables-Canned Vegetables, GrainsDried Water-Bottled

11,338.25

48.0

17.6

65.6

24.4%

21.8%

46.2%

1,932.08

33.7

21.8

55.5

9,712.90 4,249.01 2,663.73 4,572.82 4,892.70

32.0 21.2 22.1 24.9 19.2

23.6 29.1 33.0 27.5 28.6

55.6 50.2 55.2 52.4 47.8

1,784.26

14.0

29.7

43.8

4,685.83 23,753.83

26.1 32.7

29.7 22.7

55.8 55.4

4,993.39

23.1

26.6

49.8

Pet Food

21, 551.92

24.1

26.3

50.4

Tobacco and Accessories

30,296.79

15.0

3.6

18.5

Wrapping Materials, Bags

5,942.16

34.1

25.5

59.6

Beer

GROCERY-FOOD Baby Food

$226,420.30 6,467.07

42.7

28.5

71.1

GROCERY-NONFOOD

Baking Flour

916.48

62.9

20.1

83.0

Baking Mixes

2,058.64

59.4

22.0

81.4

Baking Supplies

3,092.50

59.2

23.2

82.4

Charcoal, Logs, Accessories Detergents Disposable Diapers Fresheners, Deodorizers Household Cleaners Household Supplies Insecticides, Pesticides, Rodenticides Laundry Supplies Paper Products Personal Soap, Bath Additives

Breakfast Foods

4,603.56

49.2

21.7

70.9

Candy

17,034.95

31.1

24.1

55.2

Cereal

10,436.96

57.8

21.9

79.7

Coffee Condiments, Gravies, Sauces

12,085.17

44.9

18.0

62.9

9,804.77

63.6

20.4

84.0

7,584.74

54.0

20.5

74.5

Crackers

5,343.93

60.7

19.1

79.8

Desserts, Gelatins, Syrup Fruit-Canned Fruit-Dried Gum Jams, Jellies, Spreads Juices, DrinksShelf-stable

2,582.57 1,747.59 2,314.61 2,321.05 4,009.39

53.6 62.0 45.7 28.5 54.9

23.8 22.7 17.8 24.2 21.1

77.4 84.6 63.5 52.7 76.0

10,791.55

54.8

20.5

75.3

6,793.66

37.9

15.8

53.7

4,104.08

57.3

23.1

80.4

2,295.54

69.8

16.8

86.6

2,472.02

63.8

19.8

83.6

6,350.90

60.7

23.2

6,748.44

58.9

4,338.93

Cookies

Nuts Packaged Milk, Modifiers Pasta Pickles, Olives, Relish Prepared Foods-Dry Mixes Prepared FoodsReady-to-serve Salad Dressings, Mayo, Toppings Seafood-Canned Shortening, Oil Snacks Soft Drinks-Carbonated Soft DrinksNoncarbonated

56

PERISHABLES

$121,031.42

$456,206.85

58.7%

15.4%

74.1%

BAKERY-IN STORE (SERVICE)

$12,065.76

86.3%

13.7%

100.0%

BREAD AND BAKED GOODS-FRESH

$24,299.80

60.0%

21.5%

81.4%

83.9

DAIRY

$ 70,578.14

63.4%

19.4%

82.8%

21.7

80.5

Butter and Margarine

4,395.65

63.2

18.8

82.0

Cheese

18,653.12

62.9

20.0

83.0

61.8

21.4

83.2

2,323.92 3,988.84 25,725.92 18,368.34

56.9 54.8 51.1 62.2

17.4 19.1 21.0 16.8

74.2 73.9 72.1 79.0

Cottage Cheese, Sour Cream, Toppings

3,552.72

68.0

20.2

88.2

Dough Products

1,961.08

64.9

25.6

90.4

7,728.25

58.9

20.1

78.9

5,858.44

65.8

17.1

82.9

2,240.35

47.1

26.0

73.1

Eggs Juices, DrinksRefrigerated

17,244.65

63.3

18.8

82.2

Milk

| Progressive Grocer | Ahead of What’s Next | July 2016


69th Annual Consumer Expenditures Study

SUPERMARKET SHARE Of SAlES Pudding, Desserts Snacks, Spreads, Dips Yogurt

% DOllARS in % DOllARS in SUPERMARKETS & MASS MASS TOTAl RETAil SAlES % DOllARS in ($ MilliOnS) SUPERMARKETS SUPERcEnTERS SUPERcEnTERS

415.45

71.6

17.4

89.1

Gloves

2,754.42

60.5

15.5

76.0

8,014.34

DELI-IN-STORE (SERVICE)

$31,012.15

DELI-REFRIGERATED (SELF-SERVICE)

$11,216.74

FROZEN FOODS

$50,385.02

65.4

19.8

85.1

60.0%

18.9%

78.9%

59.1%

21.4%

80.5%

60.6%

20.4%

81.0%

Baked Goods Breakfast Foods Desserts, Fruits, Toppings

2,106.39 3,196.30

67.5 55.1

21.2 25.3

88.7 80.4

2,318.74

55.2

19.5

74.7

Frozen Novelties

3,667.66

64.8

18.9

83.7

Ice Ice Cream Juices, Drinks Meal Starters Pizza, Snacks, Hors D'oeuvres Prepared Foods Unprepared Meat, Poultry, Seafood Vegetables

851.56 5,505.05 337.14 30.05

65.0 74.2 66.7 41.8

13.2 16.2 18.8 24.1

78.1 90.5 85.4 65.9

6,279.32

60.2

21.8

82.0

14,541.41

56.0

23.7

79.6

6,210.53

53.4

18.7

72.0

5,340.87

66.9

20.3

87.3

$133,194.88

53.1%

36.3%

89.4%

PACKAGED MEAT-DELI

$20,021.19

61.7%

21.4%

83.1%

FRESH PRODUCE

$96,262.20

60.6%

15.2%

75.7%

$7,190.97

12.4%

4.1%

16.5%

$ 59,570.43

11.2%

30.1%

41.3%

2,516.58 3,455.53 1,255.98 1,749.80

5.8 16.2 37.1 20.0

46.6 24.2 24.8 22.2

52.4 40.3 62.0 42.2

329.44

23.8

36.3

60.1

2,312.18 7,829.25 960.39

21.6 2.9 2.1

25.8 30.0 17.1

47.4 32.9 19.2

MEAT, FISH, POULTRY-FRESH

FLORAL GENERAL MERCHANDISE (TRACKED) Automotive Batteries, Flashlights Books, Magazines Candles, Incense Canning, Freezing Supplies Cookware Electronics, CDs, DVDs Film and Cameras

58

SUPERMARKET SHARE Of SAlES

% DOllARS in % DOllARS in SUPERMARKETS & MASS MASS TOTAl RETAil SAlES % DOllARS in ($ MilliOnS) SUPERMARKETS SUPERcEnTERS SUPERcEnTERS

464.24

15.1

26.2

41.3

Hardware, Homeware

2,310.60

6.5

41.2

47.7

Housewares, Appliances

8,843.57

5.4

32.8

38.2

Kitchen Gadgets Lawn and Garden Light Bulbs, Electronic Goods Office/School Supplies

5,575.16 1,286.83

20.8 4.1

28.5 22.0

49.2 26.1

6,057.10

6.0

21.4

27.4

6,399.13

9.2

35.8

45.0

Pet Care

7,938.32

17.5

26.9

44.4

Seasonal

286.35

19.7

18.9

38.6

GENERAL MERCHANDISE (NONTRACKED)

$907,843.48

2.3%

10.7%

13.0%

HEALTH & BEAUTY CARE

$ 80, 348.55

19.0%

27.0%

46.0%

1,683.55

10.7

37.3

48.0

32.75

8.0

40.1

48.1

5,181.60

11.4

27.5

38.8

7,270.65

21.7

26.0

47.7

2,349.54 503.13 142.82 701.51 542.50 2,608.96 1,143.77 1,825.72 7,612.79 13,684.15 635.39 7,418.92 3,694.02 2,348.28 3,184.64 6,493.70 11,290.13

26.2 30.7 8.1 16.6 18.3 19.2 3.8 14.2 21.5 17.3 7.6 21.6 22.8 25.9 21.1 14.1 21.5

31.7 35.3 28.4 32.1 36.1 29.0 16.0 36.0 29.7 29.3 26.6 27.7 28.3 32.7 29.2 24.3 21.1

57.8 65.9 36.5 48.7 54.4 48.2 19.7 50.2 51.2 46.6 34.2 49.3 51.1 58.6 50.3 38.5 42.6

Baby Needs Children's Cologne Cosmetics Cough and Cold Remedies Deodorant Diet Aids Ethnic Hair Preparations Family Planning Feminine Hygiene First Aid Fragrances-Women Grooming Aids Hair Care Medications, Remedies Men's Toiletries Oral Hygiene Pain Remedies Sanitary Protection Shaving Needs Skin Care Preparations Vitamins PHARMACY

$231,749.10

6.7%

4.7%

11.4%

GRAND TOTAL

$2,138,327.09

23.4%

21.8%

45.2%

Source: Nielsen, “Homescan Consumer Facts 2015” report, 52 weeks ending Dec. 26, 2015; Progressive Grocer Market Research, 2016

| Progressive Grocer | Ahead of What’s Next | July 2016


SUPERMARKET SAlES TOTAL GROCERY ALCOHOLIC BEVERAGES Beer

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

$402,608.68 $172,006.82 $55,156.96

$22,496.35

% Chg vS YR AgO 2015

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

2.0%

0.4%

0.7%

5.6%

3.6%

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2015

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

17,034.95

5,302.98

3.4

2.1

3.8

Cereal

10,436.96

6,029.43

-1.9

-4.0

-3.1

4.0%

Coffee

12,085.17

5,426.24

8.9

4.7

5.3

Condiments, Gravies, Sauces

9,804.77

6,232.89

2.3

0.9

0.8

Cookies

7,584.74

4,094.24

0.8

0.2

3.0

Crackers

5,343.93

3,243.23

1.0

-1.6

1.0

Desserts, Gelatins, Syrup

2,582.57

1,385.29

0.5

-1.5

0.2

Fruit-Canned

1,747.59

1,082.98

-3.7

-3.3

-0.7

9,971.80

4.6

2.7

1.3

Coolers

1,014.55

518.94

-3.4

2.8

14.1

Liquor

16,056.33

3,959.49

7.1

3.9

7.7

Wine

17,896.17

8,046.12

6.3

4.8

5.1

$226,420.30 $120,012.90

TOTAl RETAIl SAlES ($ MIllIONS)

Candy

20,189.92

GROCERY-FOOD

SUPERMARKET SAlES

1.4% -0.1%

0.2%

Baby Food

6,467.07

2,758.85

-1.2

-0.9

-0.4

Baking Flour

916.48

576.28

-1.9

-0.7

1.8

Fruit-Dried

2,314.61

1,058.24

-0.8

-1.6

1.0

Baking Mixes

2,058.64

1,223.04

-4.9

-4.5

-0.6

Gum

2,321.05

661.50

1.0

-3.4

-5.0

Baking Supplies

3,092.50

1,831.69

-0.8

-2.4

-0.5

Jams, Jellies, Spreads

4,009.39

2,199.55

-0.7

-1.5

1.5

Breakfast Foods

4,603.56

2,264.49

-0.6

-1.3

1.4

Juice, Drinks-Shelf-stable

10,791.55

5,911.61

0.3

-3.0

-3.7


69th Annual Consumer Expenditures Study

SUPERMARKET SAlES

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2015

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

SUPERMARKET SAlES

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2015

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

Nuts

6,793.66

2,572.76

2.6

4.0

2.4

Soup

6,007.11

3,719.60

-2.3

-1.4

0.8

Packaged Milk, Modifiers

4,104.08

2,353.28

0.7

1.5

4.8

4,300.07

2,471.25

3.5

1.6

3.7

Pasta

2,295.54

1,601.37

1.6

-2.2

-2.6

Spices, Seasoning, Extracts

Pickles, Olives, Relishes

2,472.02

1,577.89

1.8

0.6

-1.1

Sugar, Sugar Substitutes

2,632.27

1,374.57

-1.6

-8.4

-5.9

Prepared Foods-Dry Mixes

Table Syrups, Molasses

950.14

534.36

-0.7

-2.9

0.7

6,350.90

3,854.36

-0.7

-0.1

0.6

Tea

4,957.39

2,804.89

5.7

2.8

0.0

Prepared Foods-RTS

6,748.44

3,972.13

1.5

1.5

2.9

Vegetables-Canned

5,422.22

3,529.32

-0.9

-1.3

-1.4

Salad Dressings, Mayo, Toppings

4,338.93

2,679.29

-1.8

-1.7

-4.0

Vegetables, Grains-Dried

1,866.43

1,107.35

-1.0

2.7

-0.5

Seafood-Canned

2,323.92

1,321.38

-3.8

-0.8

-0.5

Water-Bottled

11,338.25

5,442.36

9.1

5.1

3.3

Shortening, Oil

3,988.84

2,187.08

-1.8

-0.9

-0.2

GROCERY-NONFOOD

$121,031.42

$29,497.57

2.0%

-0.2% -1.1%

Snacks

25,725.92

13,143.37

3.6

2.8

2.7

Charcoal, Logs

1,932.08

651.69

0.6

0.4

3.0

Soft Drinks-Carbonated

18,368.34

11,428.78

1.1

-1.8

-3.8

Detergents

9,712.90

3,110.07

0.4

-2.6

-2.7

2,240.35

1,054.98

-0.5

-1.7

-0.3

Disposable Diapers

4,249.01

899.09

1.1

1.2

-3.6

Soft DrinksNoncarbonated

All around champion. Fully automated, true hearth-baking: multi-deck oven MIWE ideal with loading unit MIWE athlet E Great, consistent baking results E Cost-effective, fast production E Modular systems for continued growth E Reliable and robust

Contact Ben (CAN): b.garisto @ miwe.com or Harry (US): miweusa @ aol.com · www.miwe.com /bakery-systems

60

| Progressive Grocer | Ahead of What’s Next | July 2016


69th Annual Consumer Expenditures Study

SUPERMARKET SAlES

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2015

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

2014 SUPERMARKET SAlES ($ MIllIONS)

SUPERMARKET SAlES

TOTAl RETAIl SAlES ($ MIllIONS)

$50,385.02

$30,520.58

% Chg vS YR AgO 2015

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

0.9%

-0.5%

-0.9%

Fresheners/Deodorizers

2,663.73

589.75

5.5

-0.7

1.3

FROZEN FOODS

Household Cleaners

4,572.82

1,137.26

1.1

-0.3

-0.5

Baked Goods

2,106.39

1,421.81

-0.5

-2.1

-0.1

Household Supplies

4,892.70

938.91

1.6

-1.1

-0.9

Breakfast Foods

3,196.30

1,760.52

1.2

0.6

5.0

Insecticides

1,784.26

250.51

6.2

-1.0

-2.7

Dessert, Toppings

2,318.74

1,279.25

5.9

2.3

5.0

Laundry Supplies

4,685.83

1,223.47

2.7

-1.2

1.1

Frozen Novelties

3,667.66

2,376.28

1.1

-1.1

-4.5

23,753.83

7,774.63

1.6

-0.1

-0.5

Ice

851.56

553.26

6.4

5.8

-6.5

4,993.39

1,155.47

2.5

1.5

1.7

Ice Cream

5,505.05

4,086.95

1.1

0.4

-0.3

Pet Food

21,551.92

5,190.48

0.8

-1.6

0.4

Juices, Drinks

337.14

224.77

-6.3

-8.8

-13.6

Tobacco, Accessories

30,296.79

4,532.40

2.9

-1.1

-4.2

Meal Starters

30.05

12.55 -32.3

-44.1

63.5

5,942.16

2,028.06

4.4

0.5

-2.0

Pizza, Snacks

6,279.32

3,780.15

2.9

0.8

0.5

14,541.41

8,135.92

0.1

-1.7

-1.2

2.8%

3.2%

-0.4%

Unprepared Meat, Seafood

6,210.53

3,313.94

0.7

1.8

0.2

5,340.87

3,575.18

-0.8

-2.3

-0.7

$133,194.88

$70,753.12

3.5%

4.1%

2.6%

PACKAGED MEATS

$20,021.19

$12,351.07

0.6%

4.9%

1.3%

FRESH PRODUCE

$96,262.20

$58,296.39

4.0%

4.5%

7.3%

$7,190.97

$889.09

2.9%

3.1%

3.6%

$59,570.43

$6,658.45

1.6%

0.7%

0.6%

Automotve

2,516.58

145.71

-0.2

3.6

3.7

Batteries, Flashlights

3,455.53

558.76

2.2

-2.1

-4.0

Books and Magazines

1,255.98

466.22 -12.7

-14.1

-14.9

Paper Products Personal Soap, Bath Additives

Wrapping Materials, Bags

Prepared Foods

PERISHABLES

$456,206.85 $267, 760.00

BAKERY-IN-STORE (SERVICE)

$12,065.76

$10,412.75

2.7%

2.3%

1.8%

Vegetables

BREAD AND BAKED GOODS-FRESH

$24,299.80

$14,567.73

1.9%

0.4%

-0.2%

MEAT, FISH AND POULTRY-FRESH

DAIRY

$70,578.14

$44,736.25

1.3%

3.6%

1.0%

4,395.65

2,779.81

-0.2

5.1

-1.0

18,653.12

11,738.41

1.8

4.8

1.0

Cottage Cheese, Sour Cream

3,552.72

2,417.27

2.9

2.9

-0.7

Dough ProductsRefrigerated

1,961.08

1,271.76

-4.7

-3.6

1.8

Eggs

7,728.25

4,548.85 21.8

11.1

3.3

Juices, DrinksRefrigerated

5,858.44

3,853.68

-0.3

-2.7

1.6

17,244.65

10,921.04

-5.5

2.7

-1.9

415.45

297.59

-1.2

1.3

-7.8

Snacks, Spreads, Dips

2,754.42

1,667.25

3.2

9.3

9.0

Yogurt

8,014.34

5,240.58

3.0

3.5

6.7

Candles, Incense

1,749.80

349.96

2.0

-0.9

-1.1

329.44

78.44

-7.9

-1.0

5.3

DELI-IN-STORE (SERVICE)

Canning, Freezing Supplies

$31,012.15

$18,607.29

3.8%

4.0%

5.8%

Cookware

2,312.18

499.43

0.6

2.1

1.5

Electronics

7,829.25

230.18 -20.2

-11.7

-8.7

DELI-REFRIGERATED (SELF-SERVICE)

$11,216.74

Film and Cameras

960.39

19.88 -17.8

-16.7

-20.9

Gloves

464.24

70.10

2.8

14.3

Butter, Margarine Cheese

Milk Puddings, Desserts

62

$6,625.73

3.5%

1.0%

2.5%

| Progressive Grocer | Ahead of What’s Next | July 2016

FLORAL GENERAL MERCHANDISE (TRACKED)

-0.8


SUPERMARKET SAlES

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2015

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

SUPERMARKET SAlES

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2015

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

Hardware, Homeware

2,310.60

150.42

5.4

0.6

3.9

Family Planning

701.51

116.10

2.2

-0.2

-0.2

Housewares, Appliances

8,843.57

481.09

-1.1

-1.8

3.1

Feminine Hygiene

542.50

99.44

3.3

0.0

1.6

Kitchen Gadgets

5,575.16

1,157.96

5.2

2.5

6.5

First Aid

2,608.96

500.92

3.7

1.8

1.5

Lawn and Garden

1,286.83

52.76

6.5

-0.9

-1.0

Fragrances-Women

1,143.77

43.12

-4.5

2.9

8.0

Light Bulbs, Electric Goods

6,057.10

362.82

6.2

8.8

1.2

Grooming Aids

1,825.72

259.07

4.0

0.8

0.4

Office, School Supplies

6,399.13

588.08

3.7

1.5

0.4

Hair Care

7,612.79

1,636.75

0.3

2.6

0.4

Pet Care

7,938.32

1,390.22

4.0

5.5

5.9

13,684.15

2,365.99

3.9

3.7

2.2

Seasonal

286.35

56.41

-8.6

21.4

76.9

635.39

48.29

-1.5

3.7

-0.2

GENERAL MERCHANDISE (NONTRACKED)

$907,843.48

$20,880.40

1.8%

2.3%

3.2%

Oral Hygiene

7,418.92

1,599.52

3.0

2.6

1.2

Pain Remedies

3,694.02

840.76

3.7

0.3

1.3

HEALTH & BEAUTY CARE

$ 80,348.55

$15,260.43

3.2%

2.1%

2.4%

Sanitary Protection

2,348.28

607.97

1.9

-0.3

-1.8

1,683.55

180.14

0.8

0.7

-1.0

Shaving Needs

3,184.64

671.96

-0.8

-3.7

-0.6

32.75

2.61

-0.5

-3.4

-14.6

Skin Care Preparations

6,493.70

916.91

0.6

1.2

0.7

Cosmetics

5,181.60

588.63

4.1

1.6

4.5

11,290.13

2,426.25

7.5

2.8

7.2

Cough and Cold Remedies

7,270.65

1,575.55

9.7

3.4

6.4

PHARMACY

$231,749.10

$15,527.19

3.6%

3.9%

3.0%

Deodorants

2,349.54

614.64

2.4

3.7

1.9

Diet Aids

503.13

154.26

-0.1

-1.7

-5.5

Grand ToTal

$2,138,327.09 $498,093.29 2.6%

2.1%

1.8%

Ethnic Hair Preparations

142.82

11.54

-5.0

-5.0

-2.3

Baby Needs Children's Cologne

Medications, Remedies Men's Toiletries

Vitamins

Source: Nielsen, “Homescan Consumer Facts 2015” report, 52 weeks ending Dec. 26, 2015; Progressive Grocer Market Research, 2016


69th Annual Consumer Expenditures Study

The Nondairy Alternative

A

mericans are increasingly drinking less fluid milk, with each new generation consuming it less often than its predecessor, according to the U.S. Department of Agriculture in its May 2013 “Economic Research Report.” IRI data appear to confirm this reality, with dollar sales of both refrigerated skim/low-fat milk and refrigerated whole milk seeing declines during the 52 weeks ending May 15. Likely contributors to this decline in consumption, and thus purchasing, range from an increasing number of people with food allergies — an allergy to cow’s milk being the most common food allergy in infants and children, the Food Allergy Initiative reports — to a rise in consumers avoiding animal products altogether, with 7.5 million vegan Americans and 33 percent of Americans reportedly decreasing their consumption of animal products, according to a Harris Interactive study commissioned by the Vegetarian Resource Group. However, these contributors appear to be a boon for the nondairy fluid-milk business. Market research firm Mintel reports in its July 2015 “Dairy Drinks” Category Insight piece that 45 percent of U.S. consumers drink dairy-free fluid milk for nutritional reasons, and the IRI data correspond to this: Refrigerated almond milk, coconut milk and other milk substitutes all enjoyed dollar sales gains during the period. According to the Mintel report, compelling flavor innovation and new processing methods have further contributed to the success of the segment, leaving the door open for innovative value-added offerings.

64

“The growing variety of grains, nuts and seeds in nondairy milk alternatives provides a natural source of flavor,” the report says. Growing variety, indeed: While IRI data show almond and rice milks enjoying healthy dollar sales gains during the 52-week period, “all other” refrigerated milk substitutes, which includes such beverages as cashew milk and flax milk, saw sales jump 112.8 percent during the same timeframe. The report adds that since “plain” is the most common milk variety, brands have been inspired to innovate more around indulgent flavors to extend consumption further. According to Mintel’s Global New Product Database, recent offerings centered on flavor include Forager Project’s Forager Nuts & Coffee Organic Nut & Oat Milks Blend, which combines cashew, almond and oat milks with cold-brewed coffee, vanilla beans, dates and sea salt, and WhiteWave Foods’ Silk Nutchello Caramel Almonds + Cashews Nut-Based Beverage, which is described as “enticing and luscious, with notes of caramel blended with the taste of toasted almonds and the creaminess of cashews.”

Refrigerated Milk Category Brand

Total Skim/Low-fat Milk Whole Milk Flavored Milk/Eggnog/ Buttermilk Almond Milk Soy Milk Kefir Milk Substitutes Coconut Milk Milkshakes/Nondairy Drinks

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$9,855.7 5,460.6 2,542.2

-7.6% -12.9 -3.4

3,419.6 1,907.0 862.0

6.7% -4.9 4.4

751.5 664.9 193.6 90.7 66.3 50.1 -15.8

4.2 5.1 -8.5 14.0 112.8 5.6 -0.2

309.5 205.8 58.1 28.2 19.5 15.2 14.4

6.8 6.7 -7.7 16.3 118.9 6.2 -16.8

Percent of Total/Share Dollars 2.0%

0.9%

6.7% 7.6%

25.8%

0.7%

0.5% 0.4%

55.4%

Skim/Low-fat Milk Whole Milk Flavored Milk/ Eggnog/Buttermilk Almond Milk Soy Milk Kefir Milk Substitutes Coconut Milk Milkshakes/ Nondairy Drinks

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016. Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

| Progressive Grocer | Ahead of What’s Next | July 2016


Sunny Side Up

P

rotein is in, and eggs have got it. Once a pariah over cholesterol concerns, eggs are making a comeback. And despite recent setbacks due to bird flu, consumer demand for alternative protein sources have put eggs back on the fast track. Per capita egg consumption is rising, and the highest it’s been in nearly two decades (see PG’s Breakfast Handbook on page 90 for more info).

Refrigerated Fresh Egg Category Brand

Total Fresh Eggs Egg White Substitutes Egg Substitutes

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$4,929.2 4,690.0 129.7 109.5

18.7% 19.4 12.3 2.3

1,537.9 1,482.1 29.4 26.4

-1.0% -0.7 -1.9 -12.4

Percent ofTotal/Share Dollars 2.6%

2.2%

95.2%

Fresh Eggs Egg White Substitutes Egg Substitutes Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

Top 10 Fresh Egg Category Brands Top 10 accounts for 85% of total category dollar sales, 86% of unit volume Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

Total $4,690.0 Private Label 2,947.3 Eggland’s Best 670.0 Eggland’s Best Land O’ Lakes 62.5 Dutch Farms 62.4 Pete & Gerry’s 47.6 California Ranch Fresh 42.4 Nellie’s 38.3 Sauder’s 37.3 4 Grain 34.1 Hillandale Farms 28.3

19.4% 18.6 20.8 -0.7 18.5 54.1 12.3 71.9 9.4 -2.4 14.8

1,482.1 984.1 173.4 16.7 27.5 10.3 11.9 9.6 14.8 10.5 11.2

-0.7% -3.1 6.0 -12.4 3.6 43.0 -3.8 62.4 -0.5 -14.9 -1.3

Brand

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

Concerns for health as well as animal welfare are driving innovations in the $4.9 billion egg category. Among the leaders of top-selling brands in the fresh egg subcategory — up more than 19 percent in dollar sales — are Eggland’s Best and Pete & Gerry’s, which experienced growth of 20 percent and 54 percent, respectively, in the year preceding May 15. With the slogan “better taste, better nutrition, better eggs,” Eggland’s Best cartons trumpet their contents as a prime source of multiple vitamins and heart-healthy omega-3 fatty acids; the brand offers “classic,” “organic” and “cage-free” varieties. Meanwhile, Pete & Gerry’s is riding its wave by rolling out a program to educate consumers about its organic, Certified Humane, free-range eggs produced by 120 independent family farms. As brands have grown in a category long dominated by private label, so, too, have competition and confusion, with labels, callouts, health claims and other marketing noise making the egg case a perplexing place for grocery shoppers. Grocers themselves are jumping on the bandwagon. Since the beginning of the year, Albertsons, Ahold USA, BJ’s Wholesale Club, Delhaize America, Ingles Markets, Kroger, Supervalu, Raley’s, Walmart and Weis Markets all have announced timetables for transitioning to cage-free egg supplies, most within the next 10 years. Delhaize, in the process of merging with Ahold, “supports continuous improvement in animal welfare practices through its comprehensive approach to sustainability,” J.J. Fleeman, the grocer’s chief strategy and development officer, said in March, describing the move as “another step we are taking to ensure the humane treatment of animals while also reinforcing a number of strong sustainability practices we have implemented across our organization.” Hy-Vee, acknowledging that the race to go cage-free is being driven in large part by pressure from environmentalJuly 2016 | progressivegrocer.com |

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69th Annual Consumer Expenditures Study ists and through social media, noted in May that because its stores are located in states that are home to some of the largest egg producers in the United States, “we always think through how our decisions will impact our customers.” Recognized for its sustainable seafood program, the West Des Moines, Iowa-based supermarket chain said it “will not make irrational decisions,” noting that it

already had plans for its Market Grille restaurants to go cage-free by August 2016 and is “committed to having a solution in place by the end of 2022.” On the supplier side, General Mills, Kraft Heinz, Mondelez International and The Schwan Food Co. are among the CPG companies to make cage-free pledges for eggs used in their products.

Fishing for Profits

Top 10 Refrigerated Fish/Herring/ Seafood Brands Top 10 accounts for 56% of total category dollar sales, 62% of unit volume

T

he growing demand for clean ingredients has made its way to the processed seafood category — that is, fresh, frozen, dried, preserved, smoked or canned items — with more consumers avoiding products containing what they consider to be undesirable additives such as artificial colors, flavors and preservatives. This has led to an increase of products making all-natural claims, according to Mintel. Despite this, the market research firm warns that shopper perception of products remains a key challenge for the category. While manufacturers have stepped up their clean-label efforts, opportunities still remain to increase development of items that address consumers’ health concerns through streamlined formulations and clear labeling. Along with communicating the nutritious benefits of their offerings, manufacturers should boost transparency efforts related to ingredients, as Bumble Bee has done through the introduction of the Trace My Catch program, which offers detailed information on its tuna products and is scheduled to expand to cover the brand’s salmon, sardine and clam products. Further, making the link between consumers’ interest in their own health with their interest in the health of the

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Brand

Total Private Label Trans Ocean Echo Falls Acme Vita Dockside Culinary Reserve Louis Kemp Ducktrap Lasco

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$425.0 78.0 29.5 21.6 20.9 18.3 17.1 13.7 13.3 12.9 12.5

3.3% 3.7 -4.2 -0.3 13.1 -1.4 3.2 84.6 2.5 7.3 2.9

77.9 15.4 11.1 2.8 2.6 3.2 2.7 1.0 5.6 1.6 2.1

3.3% 2.8 -3.1 -1.6 18.1 -2.7 6.9 138.8 4.0 8.0 1.3

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

planet, Bumble Bee offers a sustainable line of tuna, salmon and sardine products under the Wild Selections name, whose sales support a cause-related program with the World Wildlife Fund to establish fishery improvement projects globally. Convenience also remains a key driver of new product development across the category, with convenience-related claims appearing on 50 percent of total new product launches in North America in the 12 months up to October 2015, Mintel notes. Pre-flavored and otherwise partially prepped items, such as Trangs Group USA Red Miso Glazed Salmon Skewers with pineapple chunks and red bell peppers, which can be grilled from frozen, have also proved popular with time-pressed consumers. These products can be positioned as easy ways to add flavor and ethnic flair to dishes with little effort, but they must also deliver on taste and texture. Although Mintel reports that Americans’ consumption of processed seafood is expected to rise only moderately over the next five years, since private label items are by far the biggest sellers in the refrigerated seafood category, accounting for a whopping $78 billion in sales and an 18.35 dollar share for the 52 weeks ending May 15, according to IRI, grocers have an unique opportunity to use ownbrand products to showcase their respective companies’ commitment to providing healthy, convenient and innovative products for customers.

| Progressive Grocer | Ahead of What’s Next | July 2016


Bread Line

A

in a big way, fresh bread purveyors may have to consider s with so many other categories, consumer whether they can provide comparable shelf-stable items. demand for clean labels has driven innovation in As for the fresh bread segment, private label remains an fresh bread products, with more brands expected to follow the example of Panera, which has committed to eliminate by the end of 2016 any remaining artificial flavors, artificial sweeteners, artificial preservatives and colors from artificial sources in its Panera at Home line of retail products, including fresh bread SKUs in Tomato Basil, Country White, Multi-Grain and Honey Wheat varieties. For its part, Flowers Foods went down a similar path with its Nature’s Own brand, and is touting its recently acquired Dave’s Killer Bread’s USDA certified organic, Non-GMO Project Verified status. (Read more about the commercial bread and baked goods category in the article “Baked for Success” on page 105). Flavor is also at the forefront, with North American manufacturers offering such innovative sweet or savory varieties as Panera’s Tomato Basil, as well as Fruit & Nut, Strawberry Swirl, Jalapeño Cheddar, and even Chocolate and Sunflower Seed, according to Mintel. The market research firm believes that engaging consumers through a wider variety of flavors and colors could be a way of reigniting interest in the category. Speaking of which, U.S. sales of bread products hit $24.7 billion in 2014 and are forecast to reach $27 billion in 2019, Mintel notes, attributing the slow growth mainly to consumers’ concerns about bread’s high carbohydrate content and often less-than-healthy ingredients. Such concerns may become less of a barrier to bread consumption if a grain-free product line from a company called Barely Bread, made from such superfoods as non-GMO eggs, almond flour, coconut flour and flax, proves popular. Although the product, slated to debut this sumVisit Robbie at www.robbiebagsandpouches.com mer, will be offered in the refrigerated/frozen section, if it catches on to learn our newest way of keeping it fresh!

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69th Annual Consumer Expenditures Study Top 10 Fresh Bread Brands

Fresh Bread Category Brand

Total Fresh Bread All Other Fresh Rolls/ Buns/Croissants Hamburger and Hot Dog Buns Pita Bread

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$8,984.9 6,252.5

0.3% 0.0

3,785.4 2,553.1

-2.1% -2.2

1,356.4

2.7

472.6

0.0

1,273.8 102.2

-0.7 -3.9

707.1 52.6

-2.8 -6.5

Top 10 accounts for 83% of total category dollar sales, 87% of unit volume Brand

Total Grupo Bimbo Private Label Flowers Foods LLC Campbell Soup Co. Aunt Millie’s Bakeries Inc. Lewis Bakeries United States Bakery Aryzta LLC Dave’s Killer Bread Pan-O-Gold Baking Co.

Percent of Total/Share Dollars 1.1% 14.2%

69.6%

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$6,252.5 1,564.6 1,490.9 971.8 504.9 147.5 108.8 108.6 106.4 84.7 77.3

0.0% -1.3 -4.3 2.1 -0.9 4.2 0.0 9.4 -1.3 23.6 0.1

2,553.1 551.2 896.4 367.2 143.7 72.8 57.9 44.9 32.5 16.4 27.8

-2.2% -3.8 -5.7 1.2 -1.3 4.2 -0.5 10.3 1.1 16.3 1.2

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

15.1%

Fresh Bread All Other Fresh Rolls/ Buns/Croissants Hamburger and Hot Dog Buns Pita Bread

Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

important player, according to IRI, despite a 4.3 percent decline in dollar sales from last year, raking in $1.5 bil-

Mount of Olives

H

ealth is one of the top two reasons that gives the advantage to olive oil over other oils and fats, according to consumers surveyed for a 2013 study by the Olive Center at the University of California, Davis. Considering that the desire to eat more healthful foods has only strengthened since the study came out, it comes as little surprise that while cooking and salad oils experienced a 3.4 percent dollar sales decline during the 52 weeks ending May 15, olive oil enjoyed 5.5 percent growth, IRI data report. “Sixty-three percent of American consumers who buy oils think it’s important for products to be low in trans fats when buying them, and 47 percent think it’s important for them to contain omega-3,” says market research firm Mintel in its September 2015 “Butter, Yellow Fats and Oils” Category Insight. Olive oil contains monounsaturated fatty acids, which are considered healthful dietary fat, as well as omega-3 and -6 oils, putting olive oil brands in a good place to highlight their products’ cardiovascular benefits.

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lion for the 52 weeks ending May 15, which places it only slightly behind multinational powerhouse Grupo Bimbo, whose American arm, Bimbo Bakeries USA, produces such familiar U.S. brands as Sara Lee, Nature’s Harvest, Arnold, Beefsteak, Freihofer’s and Stroehmann. Mintel predicts upward progression in organic bread sales, citing strong interest in organic products, and notes that growth potential for major brands could be derived from acquisitions of small-scale organic players, as was the case with Flowers’ acquisition of Dave’s Killer Bread and Alpine Valley Bread Co.

Shortening & Oil Category Brand

Total Cooking & Salad Oils Olive Oil Microwave Browning/ Pan Spray Shortening

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$2,139.7 1,050.4 769.6

3.0% -3.4 5.5

475.0 268.8 103.6

-0.1% -1.3 3.8

212.2 107.5

2.4 -6.1

73.7 28.9

0.9 -4.2

Percent of Total/Share Dollars 5.0% 9.9% 49.1%

36.0%

Cooking & Salad Oils Olive Oil Microwave Browning/ Pan Spray Shortening

Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

| Progressive Grocer | Ahead of What’s Next | July 2016


Also of interest to consumers are additive-free, non-GMO and organic formulations as consumers increasingly seek more natural foods, Mintel notes. This is especially true of olive oil, as products in the segment can be used across a variety of dishes and types of cooking. Among consumers who use oils, 61 percent consider no artificial additives or preservatives an important factor, while 43 percent and 37 percent feel the same about GMO-free and organic, respectively. North America has the highest level of new product development for each of these claims: Among oils, butter and yellow fats, 24 percent of launches between August 2014 and July 2015 were organic (compared with 13 percent globally), while 17 percent were GMO-free (versus 8 percent globally), and 16 percent contained no additives or preservatives (as opposed to 8 percent globally). Additionally influencing olive oil development and sales is consumers’ growing interest in regional products and understanding the source of the foods they eat, Mintel observes.

U ANN D R THI

Top 10 Olive Oil Brands Top 10 accounts for 81% of total category dollar sales, 81% of unit volume Brand

Total Private Label Filippo Berio Bertolli Pompeian California Olive Ranch Colavita Botticelli Star Lucinitalia Goya

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$769.6 185.7 116.9 97.0 81.1 39.3 32.5 24.4 22.7 11.0 9.8

5.5% 4.6 -0.4 6.2 10.1 51.3 1.5 9.1 -1.7 13.2 -0.4

103.6 30.8 14.5 11.4 12.7 4.0 2.7 2.9 2.7 0.6 2.0

3.8% 4.7 -1.0 3.6 7.9 43.5 -2.7 4.8 -4.8 7.2 -4.0

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

Examples of products appealing to this interest include Lucini Organics Limited Reserve Premium Select Extra Virgin Olive Oil, from Lucini Italia, made from estate-grown handpicked olives, and Frankies 457 Spuntino Nocellara del Belice Olive Oil, from Oleifici Asaro, made from cold-pressed Nocellara Del Belice olives grown and harvested in Sicily.

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69th Annual Consumer Expenditures Study Top 10 Convenience/PET Still Water Brands

Rising Tide

Top 10 accounts for 72% of total category dollar sales, 68% of unit volume Brand

D

espite ecological concerns over bottled water, more consumers seem to be reaching for this product — and its naturally flavored variations — over sugary sodas and juices, to maintain overall health and hydration. As such, sales for bottled water have continued on an upward trajectory at 8 percent this year compared with the prior year, according to IRI sales data. Mintel has forecasted sales growth to increase 5 percent to 6 percent year over year, reaching an estimated value of $18 billion in 2019, from nearly $14 million in 2014. Sparkling water and seltzers in particular have seen the most growth, at 16.7 percent, IRI research shows. Again, this is likely due to consumer preferences for low- or nosugar-added and low- or no-calorie beverages when looking to hydrate. Consumers are even moving away from diet sodas in an attempt to avoid chemicals. Sparkling water has found its place in the “diet” drink category as a result. It’s no wonder, then, that Sundance Beverage Co.’s La Croix has led the race in this emerging category, with nearly

Total Private Label Dasani Poland Spring Nestlé Pure Life Aquafina Glaceau Smartwater Niagra Deer Park Crystal Geyser Glaceau Vitaminwater

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$3,677.3 1,036.8 295.9 264.3 247.3 225.2 127.8 127.5 114.9 106.0 100.4

7.4% 6.7 7.6 9.9 9.5 4.8 16.1 10.6 9.7 16.3 -2.3

1,452.7 397.5 93.8 78.8 72.6 72.2 61.9 50.9 35.3 40.6 81.1

7.3% 9.8 4.5 10.7 13.5 1.9 10.9 14.3 12.8 18.0 -3.2

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

60 percent sales growth just this year, according to IRI. Naturally flavored, plant-based still waters are also popular; they’re well received among Millennials and active consumers looking for less caloric, less processed and more uniquely tasty ways to replenish electrolytes, rather than sugary juices or sports drinks with artificial ingredients.

ADVERTORIAL

Q&A

Talking with…

Matthew Prescott Senior Food Policy Director, The Humane Society of the United States

Progressive Grocer: Why do you think so many food companies are switching to 100% cage-free eggs? Matthew Prescott: The way companies interact with the world around them can have major bottom line implications. Nowadays, consumers are searching for products that both come at a value and align with their values—including around issues like animal cruelty; they want animals to be treated well in the supply chain, and want to support companies that agree. But there’s a gap between the way consumers want animals to be treated, and what’s actually happening in some areas of agribusiness. It’s within that gap that we see, for example, egg suppliers locking chickens in cages so tightly, the animals can’t even spread their wings. Imagine being in an elevator packed wall-to-wall with other people. The elevator suddenly breaks down. People are frantically trying to escape, frantically trying to move. Then imagine the door just never opens, the people stuck languishing in the elevator for the rest of their lives. That’s what life is like for caged hens in the egg industry—and it’s simply out of step with what consumers want. To try and narrow that gap between consumer expectation and reality, many companies are taking proactive measures to show their customers that they’re aligned on this important issue. One way they’re doing that is by shifting to 100% cage-free eggs. Modern cage-free facilities allow birds the freedom to engage in their natural behaviors—to walk, flap their wings, lay their eggs in nests and more. They’re large scale, automated production systems that can churn out massive volumes of eggs all while giving animals a better quality of life—a real win-win for birds and buyers alike. PG: Is there support for shifting to cage-free eggs? MP: Regarding the growing support for animal welfare-minded sourcing policies, in 2010, Supermarket Guru Phil Lempert predicted, “There’s organic, there’s fair trade, but humane is the next big thing.” Indeed, Lempert was right. Dozens of the world’s largest food companies have now publicly pledged to

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shift their supply chains to 100% cage-free eggs. Those companies—detailed in full at www.bit.ly/EggPolicies—include Walmart, Kroger, Albertsons, Ahold, Delhaize, Costco, Target, Giant Eagle, SUPERVALU, Trader Joe’s, BJ’s Wholesale Club, CVS, Wawa, McDonald’s, IHOP, Denny’s, Kraft Heinz, Unilever, ConAgra Foods and so many more. “As our customer base has been moving to cage-free at an increasing rate, Kroger’s goal is to transition to a 100% cage-free egg supply chain by 2025,” states the country’s largest traditional grocery operator. Reports Ahold, “Animal welfare is an issue that we care about greatly and we believe that cage-free environments are a more humane way to treat hens.” “Consumers have responded positively to the expanded choices in the egg aisle,” says Albertsons about its growing cage-free assortment. “Albertsons Companies…will be working with its suppliers toward a goal of sourcing only cage-free eggs for its store operations by 2025.” These policies make perfect sense, in a customer climate where people actively want to support companies which support their values. As the Food Marketing Institute reports: “Shopper interest in animal welfare has been consistently growing,” and “shoppers want food retailers to prioritize animal welfare” even over other issues, like the environment.” PG: How would a company go about switching to cage-free eggs? MP: Many of the country’s largest egg producers have also committed to a cage-free future, making the transition easier than it has ever been. Rose Acre Farms—the second largest table egg producer—has said it’s switching to 100% cage-free production, for example. Retailers interested in moving in this direction should feel free to reach out to me directly any time at mprescott@hsus.org. The Humane Society of the United States is proud to partner with the world’s largest food companies, helping them navigate these issues and crafting policies and programs to create a more humane supply chain, and more humane world.

| Progressive Grocer | Ahead of What’s Next | July 2016


“Retailers adopting cage-free eggs sooner rather than later could gain a profit advantage.” – Bloomberg

“ Costco is committed to going cage-free for its

egg procurement…In calendar 2016 we expect to sell over one billion cage free eggs.”

“ Albertsons Companies sets goal for cage-free eggs ”

“ Kroger’s goal is to transition to a 100% cage-fr ”

“ Walmart U.S. and Sam’

announced their goal to transition to a 100 percent cage-fr

The Humane Society of the United States offers our appreciation to the dozens of major grocers with policies to source 100% of their eggs from cage-free hens. To Kroger, Albertsons, Costco, Ahold, Delhaize, Target, BJ’s Wholesale, Trader Joe’s, The Fresh Market, CVS, ALDI, Whole Foods and all the others: Your work addressing this important social concern is creating a cage-free future, a mor and a mor


69th Annual Consumer Expenditures Study Coconut water’s rapid rise to fame continues to push ahead and open up doors for launches of other plantbased beverages that offer consumers more natural, lower-sugar alternatives, according to Mintel. Some producers have blended coconut water with aloe, which has been linked to reducing inflammation in the body as well as, when in topical format, on the skin. Maple water has enjoyed strong media buzz in the past year as “the next coconut water.” The nutrientdense water — naturally filtered by maple trees — is the first form of sap that comes out of a tap before it’s cooked off into more recognizable maple syrup. Rich in bioactive compounds, or powerful antioxidants, maple water can reduce the risk of cancer and other diseases, according to its advocates. Pairing new ingredients such as bamboo and artichoke with established ingredients like coconut water has also helped with the introduction of new plant waters to the market. Like coconut water, bamboo water has a short ingredient list, a low calorie level and a distinguishing

Pop Goes the Snack

nutrient, silica, which is an essential building block in creating and maintaining structural support in the body. The product is made by extracting the liquid from bamboo leaves through a cold-press process. Arty’s artichoke water has been positioned as the next natural electrolyte beverage, loaded with essential vitamins, antioxidants and minerals, including sodium, potassium and calcium. The drink is naturally sweetened with lemon, mint, monk fruit and agave to make it more palatable, according to Mintel. Alkaline waters are also seeing some growth. These waters claim to contain natural electrolytes and alkalizing compounds, among them calcium, silica, potassium, magnesium and bicarbonate, by way of their filtering method. They are touted for supposedly reducing acid and restoring chemical balance in the body. This might be why among jug waters, The Alkaline Water Co. saw the most sales growth this year, with a whopping 103 percent increase versus other brands with much smaller numbers in the single-digit growth range or even in decline, according to IRI.

Salty Snack Category Brand

Total Potato Chips Tortilla/Tostada Chips Other Salted Snacks (No Nuts) Cheese Snacks Pretzels Ready-to-eat Popcorn/ Caramel Corn Corn Snacks (No Tortilla Chips) Pork Rinds

C

onsumers want to eat more healthfully without sacrificing taste, and this continues to be an important factor in the $9.86 billion salty snack category. Dollar sales in the overall category were up a mere 2.17 percent for the year ending May 15, according to IRI data, and the growth isn’t coming from traditional items like potato chips and pretzels, sales of which were down 0.71 percent and 1.6 percent, respectively.

Top 10 Tortilla/Tostada Chip Brands Top 10 accounts for 82% of total category dollar sales, 83% of unit volume Brand

Total Doritos Tostitos Tostitos Scoop Private Label Santitas Mission Tortilla On the Border Barcel Takis Fuego Calidad Food Should Taste Good

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$2,489.0 776.9 418.0 290.4 151.2 146.7 66.9 62.1 55.5 50.6 27.9

3.0% 5.2 1.9 3.4 3.9 -2.6 -4.2 11.6 29.4 8.3 -6.4

943.8 307.3 130.7 86.3 82.6 72.7 23.7 22.8 24.7 28.1 8.9

4.5% 6.5 4.3 6.4 3.4 -1.5 0.2 14.9 28.5 13.4 -13.3

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$9,862.1 3,529.1 2,489.0

2.2% -0.7 3.0

3,950.9 1,535.1 943.8

2.4% -0.2 4.5

1,447.8 714.8 621.0

5.2 3.6 -1.6

451.6 341.9 232.6

5.5 2.3 -1.2

500.9

16.5

190.4

14.8

457.8 101.7

0.2 3.6

197.7 57.8

0.9 3.2

Percent of Total/Share Dollars 4.6%

1.0%

5.1%

6.3% 35.8% 7.2%

14.7% 25.2%

Potato Chips Tortilla/Tostada Chips Other Salted Snacks (No Nuts) Cheese Snacks Pretzels Ready-to-eat Popcorn/ Caramel Corn Corn Snacks (No Tortilla Chips) Pork Rinds

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

72

Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

| Progressive Grocer | Ahead of What’s Next | July 2016


What’s booming is ready-to-eat popcorn, where sales jumped more than 16 percent. Reflecting the trend toward claim, up 4 percent over the prior year. health, this category is being led by such brands as SmartOther trends: vegetable-based snacks, including kale, food, Skinnypop and Angie’s BoomChickaPop, which carrot, garlic and chickpeas; more gourmet flavors for offer simple clean-ingredient labels and on-trend flavor popcorn, such as blue cheese, maple bacon and chocolate combinations. peanut butter; and “skinny” and “mini” varieties, posiThe next-closest growth is 5.25 percent for the “other” tioned as “permissible indulgences.” subcategory, where products like Sun Chips and Harvest Snaps rub shoulders with Funyuns and Cheetos. Cheese snacks, tortilla chips and pork rinds enjoyed single-digit dollar growth, while corn snacks — think Fritos and Bugles — limped along with a 0.18 percent bump. “The variety of snacks available and constant product innovation [continue] to keep the category alive, despite health concerns,” Mintel reports in its February 2016 Category Insight report on salty snacks. “Additionally, consumers are increasingly treating themselves with salty snacks, indicating that while health is an important factor in the category, so is a sense of indulgence.” According to Mintel consumer research, 80 percent say salty snacks should “only be eaten in moderation,” while 76 percent say “there are more healthy options than there used to be,” 63 percent are “more concerned with the taste of these products than nutrition,” and 58 percent are “more likely to try a new product if it’s in a smaller package.” To be sure, the category is seeing smaller and portion-controlled packages to meet this demand, and the trend is carrying over to products that straddle the line between snacks and candy. One example: GoodnessKnows snack squares from Mars Inc. (a 2015 PG Editors’ Pick), sold in “bars” made of four small squares featuring nuts, dried fruits and dark chocolate. “Hybrid snacks are becoming more popular as consumers are increasingly snacking and mealtime food choices blur,” Mintel notes. “Portability and convenience are more likely than specific food type to define a snack for consumers, suggesting a new angle for new product development.” Across category segments, product claims related to health, ingredients and allergens remain most common. One of the top claims is low/no/reduced trans fat, which accounted for 23 perConnect with us to put a top performer in your cent of the total new product launches in the 12 months prior to January 2016, healthy snacking lineup: marketing@bvdg.com Mintel reports. Natural product claims are also popular, with 51 percent of the total North American launches in the year before January 2016 featuring this

NATURAL PERFORMANCE

*Source: Nielsen Perishables Group FreshFacts®


69th Annual Consumer Expenditures Study

Natural Protein Gains

A

lthough granola and cereal bars are on trend with the growing interest in convenience-minded snacking, hunger-satiating nutritional bars are even hotter right now. IRI data detailing the 52 weeks ending May 15 show small dollar sales gains in the breakfast/cereal/snack bar and granola bar segments, but nutritional/intrinsic health value bars approached double-digit dollar sales growth during the same timeframe. Nutrient-rich bars’ sales growth appears to correspond with the sales decline of ready-to-eat cereal. Time-pressed consumers, led by Millennials, continue to turn away from sit-down breakfast options in favor of more portable snacks that are high in protein, according to market research firm Euromonitor in its October 2015 “Breakfast Cereals in the U.S.” report. Nevertheless, high-protein bars appear to have plateaued at 7 percent of total new product launches in the

Snack Bar/Granola Bar Category Brand

Total Nutritional/Intrinsic Health Value Bars Granola Bars Breakfast/Cereal/Snack Bars All Other Snack/Granola Bars

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$2,610.3

5.6%

1,098.3

2.8%

1,184.5 833.5 565.6 26.6

8.6 1.7 3.4 79.7

551.5 300.1 234.2 12.6

3.0 0.0 4.0 56.2

Percent of Total/Share Dollars 1.0%

21.7% 45.4% Nutritional/Intrinsic Health Value Bars Granola Bars Breakfast/Cereal/ Snack Bars All Other Snack/ Granola Bars

31.9%

Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

Get Your Products

Off the Floor!

Top 10 Nutritional/Intrinsic Health Value Bar Brands Top 10 accounts for 62% of total category dollar sales, 58% of unit volume Brand

FRONT CASE PLATFORMS

STAIR STEP DISPLAYS / BASES

Total Clif General Mills Fiber One Quest Bar Nature Valley Protein Kind Nuts and Spices Kind Plus Clif Luna Atkins Clif Builderrs ThinkThin

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$1,184.5 172.0 109.9 95.8 64.3 55.0 49.2 48.8 47.2 46.8 41.5

8.6% 19.6 -17.2 241.6 6.2 11.1 -11.0 8.2 0.9 11.2 25.6

551.5 98.2 31.6 33.8 17.4 28.8 24.4 37.9 6.4 18.8 21.9

3.0% 7.5 -17.6 230.3 2.7 3.2 -15.5 7.4 -1.2 3.8 10.9

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

TRASH / RECYCLING CENTERS

www.masonways.com

NEWSPAPER BASKET STANDS

12 months through February, market researcher Mintel reported in its April 2016 “Cereal, Energy & Snack Bars” Category Insight piece. That’s not to say that snack bar consumers don’t continue to see high protein content as a high-priority inclusion. The kinds of protein they seek have changed, however: Consumers, who increasingly are demanding less-processed food, expect the same from their bars.


The Hershey Co. is one such company innovating to meet this demand, blurring the lines between protein bars and jerky with its Krave Bars. Made with fruit, ancient grains and dried meat, the bars come in four “culinaryinspired” flavors: Chipotle Cherry Beef, Thyme Turkey, Mango Jalapeño Pork and Wild Blueberry BBQ Beef. Hershey joins other companies that have entered the meat bar category, including Epic Provisions and Caveman Foods.

Pod Cast

A

s it has in previous years, growth in the coffee category was largely driven by single-cup coffee: IRI data detailing the 52 weeks ending May 15 show dollar sales of single-cup coffee up 15.1 percent. This compares with the smaller dollar sales gains in whole-bean coffee (4 percent) and ground coffee (1.4 percent), and declines in ground decaffeinated coffee (3.4 percent), instant coffee (2.2 percent) and instant decaffeinated coffee (6.7 percent). In its March 2016 “Coffee in the U.S.” report, market research firm Euromonitor finds that pods have seen colossal growth, thanks largely to the popularity of the Keurig single-cup brewing system, with the vast majority of sales in 2015 continuing to come from Keurig Green

Companies moving toward more natural sources — but not meat — are using nuts, seeds and grains, which lead as the desired protein sources for U.S. consumers, according to Mintel. General Mills introduced Nature Valley Honey, Peanut & Almond Protein Chewy Bars with Pumpkin Seeds, which provide 10 grams of protein per bar, while Santa Barbara Essential Foods launched Santa Barbara Peanut Chocolate Cherry Bars, made with peanuts, chia and sesame seeds, containing 8 grams of protein per bar. Some companies are turning to pea protein. Raw Rev Glo, for instance, recently rolled out a range of snack bars made with pea, brown rice and hemp proteins, as well as organic ingredients such as omega-rich superfoods that are “sure to leave you feeling satisfied and radiant from the inside out.” Assertions like this, Mintel says, correspond with the overarching trend that more consumers are recognizing that their diets can connect with the way they look and feel.

Coffee Category Brand

Total Ground Coffee Single Cup Instant Whole Beans Ground Decaffeinated Instant Decaffeinated Additive/Flavoring Substitutes

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$5,177.5 2,369.2 1,888.9 366.7 295.8 192.4 46.7 16.7 1.2

5.6% 1.4 15.1 -2.2 3.9 -3.4 -6.7 9.8 -11.6

795.3 384.0 255.9 76.0 35.7 30.0 9.9 3.6 0.1

4.9% 2.1 13.3 -0.6 2.6 -3.0 -4.9 12.2 -9.8

Percent of Total/Share Dollars 0.9% 3.7%

5.7% 7.1%

36.5%

0.3%

45.8% Ground Coffee Single Cup Instant Whole Beans Ground Decaffeinated Instant Decaffeinated Additive/Flavoring

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016. Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

Mountain. However, IRI data report that Keurig experienced a small decline in dollar sales, while close-trailing brands such as Starbucks, Kraft and store brands (collectively) each saw double-digit gains, suggesting that July 2016 | progressivegrocer.com |

75


69th Annual Consumer Expenditures Study in the coming years, Keurig will have an uphill battle to keep its dominant spot. Still, modest growth is anticipated across the subcategory, Euromonitor reports. Further growth will come from organic coffee, which caters to consumers’ rising interest in premium and better-for-you products. Singleorigin and -estate offerings, too, have become increasingly important as consumers grow more interested than ever in knowing how the food they purchase, including coffee, is sourced. Such products allow brands to offer a story that adds value to and better sells a product. On the single-origin side, Starbucks’ limited-release Single Origin Sulawesi K-Cup Pods, which launched in March, and Keurig Green Mountain’s Keurig Hot Laughing Man Colombia Huila Single Origin Dark Roast Coffee, which hit shelves in late 2015, are two examples of recent rollouts. Originating from the remote high-mountain jungles of Toraja in southern Sulawesi, the Starbucks coffee is verified by an independent party to ensure that it’s grown according to high economic, social and environmental benchmarks. Meanwhile, the Keurig coffee, which is grown in the volcanic soil of Colombia’s high peaks, is responsibly sourced and Fair Trade Certified. As for single-estate, Blue Horse’s 100% Kona Coffee

Baby Drivers

Top 10 Single-cup Coffee Brands Top 10 accounts for 74% of total category dollar sales, 73% of unit volume Brand

76

Percent Change

Unit Volume (in Millions)

Percent Change

$1,888.9 298.6 249.2 238.7 116.0 108.7 83.8 81.4 80.4 77.9 60.1

15.1% 20.9 17.9 -3.2 -14.2 n/a -7.6 -4.0 40.4 62.3 157.3

255.9 37.8 39.5 29.5 15.2 14.4 11.6 12.0 9.9 9.0 8.2

13.3% 22.3 17.8 -7.9 -19.6 n/a -8.2 -6.8 37.5 64.7 146.1

Total Starbucks Private Label Keurig Green Mountain Folgers Gourmet Selection Dunkin’ Donuts Gevalia Keurig Eight O’Clock Peet’s Coffee Keurig Donut Shop Coffee McCafe

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

capsules, which launched in the fall of 2015, are roasted, ground, packed and sealed using solar power on a single farm in Kona, Hawaii. The coffee is made in strict adherence to government quality standards.

Top 10 Baby Food/Snack Brands Top 10 accounts for 54% of total category dollar sales, 57% of unit volume

S

ales in the baby food and baby snack category increased only nominally this year, up 0.88 percent from last year, according to IRI. But that percentage could change in years to come, Mintel predicts. The number of children age 1 to 3 years is expected to grow by 6.7 percent between 2013 and 2019, which will provide a boost to the baby food industry. Specifically, North America had the highest level of new launches in baby fruit products, desserts and yogurts compared with other regions, representing 32 percent of launches between April 2014 and March 2015, versus 22 percent globally, according to Mintel. Broken down, cereals/snacks seem to be most important in Canada (12 percent), while U.S. wet foods are more popular (19 percent) in the United States. As such, the United States has seen growth in convenience-driven fruit and yogurt pouches that are ready to eat with no preparation and ideal for toting around. Some of these fruit and yogurt blends also include ancient/whole grains like quinoa and barley, for added fiber and nutrition. Sales were also highest for natural and private label baby food and snacks, with an increase of around 30 percent, while sales for traditional baby food declined. Gerber suf-

Dollar Sales (in Millions)

Brand

Dollar Sales (in Millions)

Total Gerber Gerber Second Foods Gerber Graduates Gerber Second Foods Nature Select Private Label Plum Organics Yum Gerber Second Foods Organic Stonyfield Organic YoBaby Gerber Graduates Grabbers Beech-Nut Stage 2

$812.9 157.1 45.2 41.4 36.3 29.8 28.6 27.3 26.0 25.0 23.8

Percent Change

Unit Volume (in Millions)

Percent Change

0.9% 144.3 -42.4 -0.6

589.7 102.3 52.1 19.0

-5.5% 279.3 -47.1 2.1

-61.6 34.2 10.8 3.4 -13.4 11.5 -3.8

30.7 30.5 20.0 19.6 6.4 16.6 36.4

-63.0 38.1 9.2 5.7 -31.3 11.7 -4.9

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

fered the greatest hit, with heavy declines across the board for various products, IRI reports. Plum — a maker of natural and organic blended fruit pouches — saw some notable growth this year, with a sales increase of nearly 25 percent, while Nurture Inc. — producer of HappyFamily organic baby pouches and snacks — saw a sales increase of 33 percent, compared with only nominal

| Progressive Grocer | Ahead of What’s Next | July 2016


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69th Annual Consumer Expenditures Study growth or even declines for other brands. Even private label brands saw a sales bump of more than 34 percent as prices for those products went down by a few cents. Purity and transparency are important issues in baby food and drink, with many parents sticking to homemade foods because they think they know what goes into their baby’s food, according to Mintel. In fact, 36 percent of American parents who have infants or toddlers up to 3 years old and buy store-bought baby food check the nutrition labels for nutrient content. In response, baby food manufacturer Beech-Nut has started to list online the exact percentage of each ingredient contained in its products, in a bid to establish transparency as a core value. There has also been a recent rise in GMO-free baby food launches across North America as this issue continues to gain traction. Between April 2011 and March 2012, only 5 percent of launches were flagged as GMO-free, but between April 2014 and March 2015, this figure rose to 20 percent. Now, 58 percent of American consumers who purchase any free-from foods say they think it’s important for their food to be GMO-free, Mintel reports.

‘Raw’ Story

G

iven the ongoing criticism of high-fructose corn syrup, beet sugar and processed alternative sweeteners, it’s no wonder that sales of sugar and sweeteners have been lackluster. Data from IRI show dollar sales of sugar and sugar substitutes flat at -0.21 percent and down 2.9 percent, respectively, during the 52 weeks ending May 15. Consumers’ interest in eating foods that are less processed and better for them continues to grow, and many forms of sugar and sweeteners don’t mesh with this mindset. However, this growing desire for more natural foods also could explain why some growth pockets exist in the sugar and sweetener category. For instance, while white sugar saw a slight decline, brown/powdered/flavored sugar saw healthy growth of 5.1 percent during the period. Some brands that focused on more natural offerings enjoyed improved sales, such as Wholesome Sweeteners, whose dollar sales of brown/powdered/flavored sugar grew 8.2 percent during the period. Likely helping the company’s growth were such recent launches as its Wholesome! Live Sweetly Natural Raw Cane Turbinado Sugar, made from sustainably grown sugar cane from Malawi and communicating its “raw” form by highlighting its production process on the packaging. Indeed, several companies are using “raw” claims to

78

Sugar Category Brand

Total White Granulated Sugar Substitutes Brown/Powder/Flavored

Dollar Sales (in Millions)

$1,032.4 771.6 341.0 260.8

Percent Change

Unit Volume (in Millions)

-1.9 -2.9 5.1

455.8 310.0 76.9 145.8

Percent Change

-3.2 -4.1 0.8

Percent of Total/Share Dollars 33.o%

25.3%

74.7%

White Sugar Brown Sugar Sugar Substitutes

Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

distinguish their products from competitors’. Market research firm Mintel, in its October 2015 “Sweeteners and Sugar” Category Insight, reports that 45 percent of total

| Progressive Grocer | Ahead of What’s Next | July 2016


Top 10 Sugar Substitute Brands Top 10 accounts for 90% of total category dollar sales, 90% of unit volume Brand

Total Splenda Private Label Truvia Sweet’N Low Stevia in the Raw Equal Wholesome Sweeteners Madhava Sweetleaf Pure Via

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$341.0 91.7 60.9 52.8 29.6 28.6 15.1 11.3 8.6 5.1 4.4

-2.9% -7.6 4.2 -1.9 -3.2 -0.5 -7.0 -5.0 -4.8 9.3 -0.8

76.9 16.5 18.2 9.2 9.8 6.0 3.6 1.7 1.5 1.0 2.0

-4.1% -9.0 1.2 -3.9 -4.9 -0.9 -10.9 -9.5 -7.3 22.3 12.0

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

new sugar and sweetener launches during the 12 months up to October 2015 carried some sort of natural claim, an increase of 12 percentage points over the same period the year prior. This has pushed some manufacturers to use “raw” claims to make their products stand out in an increasingly cluttered category. On the alternative sweetener side, the new product saturation may have contributed to several companies experiencing flat or lower dollar sales during the period, according to the IRI data. “Raw” claims on new products could be what helped Wisdom Natural Brands log an 18.9 percent dollar sales gain while competitors saw flat or decreased sales: The company markets its SweetLeaf stevia as lacking a bitter aftertaste because it contains only organic stevia leaf extract, natural flavors and purified water, while others may contain artificial ingredients or chemicals. In addition to sugar and alternative sweeteners, sugar syrups such as agave nectar are likely to benefit from the “raw” movement, Mintel predicts. Even though the nutritional advantages remain unproven, consumers are apt to buy into the idea that these “natural” sweeteners are more healthful and of better quality than traditional white sugar.


69th Annual Consumer Expenditures Study

Breathing Easy

Top 10 Cold/Allergy/ Sinus Tablet/Packet Brands Top 10 accounts for 68% of total category dollar sales, 69% of unit volume Brand

T

he high incidence of colds, coughs, sore throats, flu and allergies continues to drive demand in the expanding over-the-counter market. According to Mintel, between January 2014 and 2015, 74 percent of U.S. consumers experienced a cold, while 69 percent had a cough and 58 percent a sore throat. It makes sense, then, that cough, cold and flu medicines lead the segment, ahead of vitamins, analgesics and gastrointestinal medications. Liquid meds dominate the decongestive, cough, cold and flu relief market (29 percent), but lately they’ve been closely followed by non-ingested meds, namely nasal sprays, with a 27 percent share. According to IRI sales data from 2015 to 2016, Flonase in particular has blasted ahead with a whopping 253 percent sales increase in the past year compared with most other brands, which either saw nominal growth or sales declines, some of which were steeper than others. Products with “natural” or “no additives” claims are on the rise, with more room for homeopathy, herbal remedies and alternative therapies, for which consumers are willing to pay more. In the 12 months to March 2015, 27 percent of pain, decongestive, cough, cold, flu and allergy relief products in North America had a natural claim, an increase on the 20 percent reported in the previous 12-month period, according to Mintel. The greatest natural new product development was in decongestive, cough, cold and flu relief (34 percent), followed by pain relief (25 percent) and allergy relief (4 percent). Children’s cold/cough medicine has also gone natural, led by Hyland’s products that claim to use only natural and herbal ingredients. Another product, Similasan Junior Strength Cold & Mucus Relief Quick Dissolve Tablets, claims to contain 100

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$897.7 231.4 76.2 52.5 48.6 46.5 39.1 36.3 33.1 22.5 22.1

2.8% 2.7 6.1 6.2 13.7 -7.0 3.9 5.3 -2.7 -0.5 28.7

98.8 36.8 3.8 3.3 2.8 7.8 2.6 5.8 2.3 1.1 1.8

0.5% 2.3 2.5 4.0 8.7 -8.2 1.6 3.8 -4.0 -2.9 21.4

Total Private Label Zyrtec Claritin Allegra Alka Seltzer Plus Mucinex DM Benadryl Mucinex Claritin D Mucinex Fast Max

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

Top 10 Cough/Sore Throat Drop Vendors Top 10 accounts for 98% of total category dollar sales, 98% of unit volume Brand

Dollar Sales (in Millions)

Total Mondelez International Inc. Ricola Inc. Prestige Brands Holdings Inc. Private Label Reckitt Benckiser Inc. Burt’s Bees Inc. Insight Pharmaceuticals Lofthouse of Fleetwood Ltd. Fields of Nature Inc. Lane’s Health

$162.5 75.5 37.5 18.2 16.0 4.7 2.3 2.3 1.4 1.0 0.9

Percent Change

Unit Volume (in Millions)

Percent Change

1.4% 1.0 7.8 2.2 -1.5 -6.2 -3.1 -16.1 5.2 -8.7 -3.6

86.2 40.2 17.6 10.4 12.4 1.2 1.1 0.6 0.6 0.3 0.4

-0.9% -0.5 0.4 5.0 -4.6 -4.7 -3.9 -16.7 3.2 -5.5 -1.9

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016 Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

percent natural active ingredients that provide multisymptom relief for mucus, cough, fever, and chest and head congestion by stimulating the natural abilities of the body, without the use of harsh chemicals. Convenience claims have also increased, accounting for 42 percent of launches, and catering to consumer interest in relieving pain as quickly and easily as possible, according to Mintel. These products are marketed as portable and easier to take without water. GlaxoSmithKline cold remedy products in sinus liquid and powder form (e.g., Theraflu), similar to Flonase, saw a whopping 253 percent sales increase in the past year, according to IRI data.

80

| Progressive Grocer | Ahead of What’s Next | July 2016


Supplemental Guidance

A

s consumers grow more concerned about their overall health and nutrition and maintain more active lifestyles, vitamins and supplements continue to see rapid year-over-year sales growth. Vitamin sales account for 91 percent in the United States, leading over minerals, but those sales are predicted to grow over the next five years, according to Mintel. Considerably more than half of Americans (73 percent) take vitamins regularly, compared with 45 percent who take minerals every day. Capsules and tablets remain the preferred formats for all new vitamin and mineral supplements. With skepticism around how vitamins and supplements are made, more consumers are looking for natural claims when making purchasing decisions. Some brands have taken natural claims one step further, touting GMO-free benefits. GMO food has been an important issue recently, with

Vitamin Category Brand

Total Mineral Supplements Multivitamins 1- & 2-letter Vitamins Liquid Vitamins/Minerals

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$1,335.8 610.6 355.9 251.9 117.4

6.5% 6.8 5.7 8.3 3.9

154.1 60.3 37.7 36.1 20.0

2.8% 2.5 2.2 2.4 5.4

Percent of Total/Share Dollars 8.8%

45.7%

18.9%

Mineral Supplements Multivitamins 1- & 2-letter Vitamins Liquid Vitamins/ Minerals 26.6% Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

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69th Annual Consumer Expenditures Study as many as 39 percent of American consumers looking for food and beverages with a GMO-free label, a figure that rises to 47 percent among those age 35-44 and 57 percent of those age 25-34, according to Mintel’s May 2016 “FreeFrom Food Trends” report. In fact, North America had the highest level of GMOfree launches (14 percent, compared with 5 percent globally). A number of these products were also flagged as organic, vegan or made with raw ingredients, which helps to enhance their “pure” feel. Still, as many as 29 percent of American consumers who use vitamins, minerals and supplements aren’t sure how effective these actually are, Mintel reports. As such, manufacturers are additionally tasked with emphasizing their products’ results against other brands and products.

Top 10 Mineral Supplement Brands Top 10 accounts for 65% of total category sales, 73% of unit volume

Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

Gender targeting has also grown in the vitamin and mineral category. Products for women tend to offer solutions for menopause, pregnancy or weight loss, while products for men often address prostate health or muscle growth. Women are much more likely to take minerals; calcium is a popular supplement to prevent osteoporosis, which affects many women, and 34 percent of American women use minerals daily, compared with 21 percent of men, according to Mintel. Probiotics have seen rapid growth in recent years as women reach for them in search of overall digestive, immune and reproductive health. Antioxidant-rich supplements have seen some growth as well. For example, Four Seasons Gourmet Foods makes a pure blueberry powder from 100 percent certified-organic Washington state berries.

Pest Case Scenario

Top 10 Indoor Insect/ Rodent Control Chemicals

Brand

Total Nature’s Bounty Nature Made Private Label Sundown Naturals Culturelle Osteo BiFlex 5 Loxin Advanced Align Nature’s Way Caltrate Nature’s Bounty Q-Sorb

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$610.6 93.2 88.6 87.6 40.0 21.2

6.8% 9.0 4.4 4.4 -1.3 27.6

60.3 11.6 10.0 11.6 5.7 1.0

2.5% 2.9 1.2 2.0 -6.3 27.5

14.3 13.7 13.5 13.5 11.7

-18.1 3.9 10.9 10.1 -4.9

0.8 0.4 1.4 1.2 0.5

-21.9 4.9 8.1 13.0 -9.2

Ranked by total U.S. food dollar sales for 52 weeks ending May 15, 2016

Top 10 accounts for 87% of total category dollar sales, 88% of unit volume

W

ith concerns about Zika spreading like the virus itself, consumers had already begun exploring options for mosquito control before summer even began. And while IRI sales for pest control show only modest growth of 6 percent this year, that number could continue to increase — groceries, for one, have taken note of Zika concerns, expanding their range of products. After all, insect killers and repellents continue to represent the bulk of launches in pest control, accounting for 94 percent of launches between November 2014 and October 2015, according to Mintel. Activity in rodenticides has dropped slightly of late, with the subcategory representing 4 percent of launches, compared with 6 percent previously.

82

Brand

Total Raid Hot Shot Raid Max ENOZ Raid Flea Killer Plus Ortho Home Defense Max Hartz Ultraguard Plus Combat Source Kill MaxR3 Black Flag IMS

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$65.1 18.6 16.5 6.4 4.2 3.0 2.2 1.6 1.5 1.3 1.0

3.3% 6.8 -0.8 7.2 5.3 0.7 8.2 2.6 15.2 32.2 -16.1

12.8 3.8 4.1 0.7 0.9 0.3 0.3 0.2 0.3 0.4 0.3

0.2% 5.5 -6.9 4.9 4.4 -2.3 6.1 3.2 15.3 45.8 -17.4

Source: IRI, a Chicago-based market research firm (@iriworldwide); Progressive Grocer Market Research, 2016

| Progressive Grocer | Ahead of What’s Next | July 2016


Dust mite products continue to be the smallest subcategory, at only 2 percent of launches in this period. Further complicating things in the insect killer/repellent category is a general fear among consumers that traditional pest control products pose health risks to themselves or their families, and this is likely deterring nonusers, too. According to Mintel, 23 percent of American pest control product/ service users limit their usage because of potential health risks, and only 32 percent feel these products are safe to use even when the usage instructions are followed. As a result, the range of eco-friendly products has expanded as consumers look for nontoxic pest control, resulting in 30 percent of launches between November 2014 and October 2015 and an increase of 27 percent since 2012, according to Mintel. Most green pest control products are sprays that contain no CFCs or don’t affect the ozone layer, while some are biodegradable or made from cellulose, water or various sustainable ingredients. Using botanical/herbal ingredients like lavender and oil of oregano seems to reassure consumers about formulations, and these products also offer more transparency about the ingredients used, how they are sourced, and how they affect different pests and the environment. Still, companies are

tasked with proving their effectiveness. Convenience still drives nearly half of all pest control sales, with 49 percent of launches between November 2014 and October 2015 featuring at least one convenient claim, according to Mintel. The most important of these was time/speed (25 percent), with many products said to act quickly. About 15 percent of launches were deemed easy to use, allowing consumers to get rid of pests conveniently, while refills have seen an increase, now representing 14 percent of launches, up from 6 percent in 2012. More manufacturers are also developing portable formats. On-the-go formats represented 4 percent of launches this period, up from 1 percent a year ago. These include many stickers and patches to apply to clothes, as well as battery-operated and clip-on fan repellents. To ensure the success of these products, companies will need to continue to emphasize the portability benefits of the devices: They don’t require consumers to say in one place, unlike insect-repelling candles. PG

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July 2016 | progressivegrocer.com |

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Sustainability

Feature

Greener Grocers Food retailers are reducing their energy usage as 2020 nears.

G

By Laura Liebeck

rocery chains across the country are making substantive progress toward their 2020 sustainability goals. With four years to go, chains are checking off their accomplishments one by one — from installing LED lights in stores and parking lots to placing motion sensors in refrigerated cases — and adjusting their to-do lists with additional objectives that will strengthen their long-term green goals, deliver bottom-line results and impress shoppers. “Things are tracking well,” affirms George Parmenter, sustainability manager at Salisbury, N.C.-based Delhaize America, parent company of Food Lion and Hannaford, not-

ing that the company’s 2020 goals are still a work in progress. Parmenter adds that Delhaize America’s goals weren’t meant to be easily achieved and were thoughtfully structured. “If we had achieved any of them, the business would be asking if the goal was stringent enough, and that would mean that we didn’t have the right goal,” he explains. Marissa Nelson, SVP responsible retailing and healthy living at Quincy, Mass.-based Ahold USA, parent company of Stop & Shop, Giant Carlisle, Giant Landover, and Martin’s Food Markets — and soon to merge with Delhaize America — concurs, telling Progressive Grocer that she’s “very pleased with our sustainability program. Our results were driven largely by innovative, out-of-the-box

eco-FriendLy endeavors delhaize america’s Food Lion and Hannaford stores employ signage informing customers of their green initiatives, including Led lights in refrigerated cases and water-saving seafood cases (top images). operationally, the stores collect cardboard for recycling and check produce sell-by dates for waste management (bottom images).

July 2016 | progressivegrocer.com |

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Feature

We’re able to show the impact of a recycling program to our [stores] … and provide them the positive impact composting has on the environment and their P&Ls.” —Marissa Nelson, Ahold USA

Sustainability

thinking that was applied across all business areas to deliver on our aspirations and goals. Indeed, we have traveled this road as one Ahold USA team, and for the next five years we will continue to push the envelope to reach ambitious targets in key areas of food insecurity, food waste, healthier eating and reducing our carbon footprint.” With more than 1,100 stores between them, both companies boast finely turned sustainability programs that are thoughtfully executed and appear to have complementary long-term goals. According to Parmenter, Delhaize America and Ahold USA are “companies with similar ambitions and sustainability objectives, and together we’ll be able to push our ambitions further. There’s an interesting synergy that can happen, and as soon as we can begin sharing, there will be some exciting energy.”

New Targets The environment for sustainable progress is fertile throughout the grocery industry. Of course, each chain’s various goals are in different stages of completion. Sunbury, Pa.-based Weis Markets revealed in May that it had surpassed its greenhouse gas (GHG) emissions reduction goal five years ahead of schedule. Instead of cutting emissions by 20 percent by 2020, in 2015 the chain achieved a GHG emissions cut of 22.1 percent. “Hitting this important milestone five years ahead of schedule gives us the opportunity to continue to explore new initiatives and technologies that will further reduce our impact on the environment and streamline efficiencies in our operations,” notes Weis

WANT NoT WASTe Many grocers are reducing waste by donating “ugly” yet edible items to food banks.

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| Progressive Grocer | Ahead of What’s Next | July 2016

Markets President and CEO Jonathan Weis. He’s not alone. Grocers nationwide are setting new targets that will provide each of them with a game plan to further reduce their energy footprint and meet new challenges. Continuing goals remain to increase the use of renewable energy sources, curtail water usage, reduce waste sent to landfills and enhance recycling, as well as to offer only sustainably sourced fish, coffee, tea, cocoa and palm oil. Goal adjustments are being made to account for changes in information and technology that are providing new and improved solutions that enable retailers to update their timelines. Delhaize America, for example, strengthened its commitment to deforestation initiatives when new information became widely known about forests devastated by the harvesting of wood fiber, palm oil and other commodities. The company is now working toward increasing the recycled wood fiber content in its private-brand packaging to 90 percent or requiring Forestry Stewardship Council certification by 2020. For its part, Rochester, N.Y.-based Wegmans Food Markets uses secondary refrigerants for its medium-temperature cases and has begun using natural refrigerants on a case-by-case basis for frozen areas as part of its efforts to reduce the company’s carbon footprint. Wegmans is also working to capture more plastic to expand its plastic bag-recycling program. Currently, the grocer is collecting and recycling 50 percent of each store’s plastic, with an ultimate goal to collect and recycle all plastic. Wegmans is on a “journey to zero waste,” says Jason Wadsworth, sustainability manager for the 89-store chain. “Our goal is to not waste anything, and we’re always looking at ways to get there.” Wegmans started a pilot program in one store in January to see how far it could get by focusing its efforts and documenting its progress. The store is now diverting 72 percent of its waste, and should hit 80 percent by yearend. Other Wegmans stores divert 62 percent of waste.

Waste Not Waste management has become a hot-button issue for many retailers to achieve their zero-waste goals. Multilayered programs are emerging that feature enhanced efforts to divert edible food to local pantries that feed the hungry, scraps that go to farmers for animal feed, and the balance to composters for, among other things, biofuel (biogas). The keys to success with these programs are clearly stated corporate goals and procedures, as well as educated store-level associates who implement the waste management program on a daily basis. “We’re able to show the impact of a recycling program to our [stores], and show them and provide them the positive impact composting has on the environment and their P&Ls,” explains Ahold USA’s Nelson. The grocer has “green captains” who help


stores ensure “waste success,” as they’re the ones on the front lines of the program. In April, Ahold USA opened a green energy facility in Freetown, Mass., that’s expected to process about 95 tons of inedible food per day and an estimated 34,000 tons per year. The energy produced by the 12,000-square-foot center will provide up to 40 percent of the energy needs of the company’s 1.1 million-square-foot distribution center in Freetown – enough power to operate the facility for four months. Once fully operational, the facility will create approximately 1.25 megawatts of clean electricity. Key to the green energy facility is the anaerobic digester (AD), a new addition to Ahold USA’s sustainability efforts. ADs weren’t on many people’s radar six years ago, including Ahold USA’s, but the company is already exploring a 2.0 version that’s more expedient and less capital intensive, according to Nelson. Delhaize America also has an AD program. Having joined forces with a dairy farm in Maine that works with the grocer’s 40 area stores, the company is now looking to scale up the initiative. Overall, Delhaize America stores nationwide diverted 20.2 million pounds of food from landfills last year, up 10 percent from 2014. A higher reclamation rate is expected for 2016, with 90 percent to 92 percent of stores engaged in community relationships that are making this possible. At West Des Moines, Iowa-based Hy-Vee, food waste has emerged as a key component to its sustainability efforts. Currently, the retailer diverts more than 2 million pounds of food waste from landfills every month. Some Hy-Vee stores sell the compost from their food waste-recycling efforts to customers, or use the compost to fertilize the grocer’s community garden plots. “Food waste diversion is a key component of Hy-Vee’s overall sustainability efforts,” affirms Pat Hensley, the company’s SVP nonfoods, who oversees its sustainability efforts. “Over the course of the past year, we have dramatically increased our efforts to divert food and other organic waste from landfills, because we felt it was the right thing to do. It’s also evident our employees understand the difference they are making on the environment, and that is something they are taking great pride in.”  According to Hy-Vee, one ton of recycled inedible food waste saves three cubic yards of landfill space, eliminates about 5,000 gallons of methane, helps retain 300 gallons of water per acre as compost and reduces the need for agricultural chemicals, and generates about 800 pounds of soilenriching compost.

Charging Ahead Industry-wide, other sustainability program enhancements now include electric car-charging stations, rooftop solar arrays and rain catch-

ment systems. While none of these were part of grocers’ original goals, or only mildly so, they’ve continued to gain momentum as new technologies and financial incentives have made such accomplishments possible. Hy-Vee is further down the road than many, with 103 electric car-charging ports at 32 stores in five metro areas, up 25 percent from 2014. Delhaize America is getting ready to flip the switch on a 10-store test of electric charging stations at Maine Hannaford stores, which will fully charge a car in 30 minutes, about the time it takes to complete a weekly food-shopping trip. While Delhaize America is interested in the car-charging program, Parmenter notes that it’s not a big focus area, “because it doesn’t reduce our carbon footprint. It’s more about being a productive member of the community.” Ahold USA currently has three sites, all in Massachusetts, and is adding two more locations, one each in Maryland and Connecticut. Nelson says the company is working on a longterm strategy for this initiative. Meanwhile, solar panel arrays are cropping up on more store rooftops as installation costs decline. Ahold USA currently has 41 solar-powered stores and three others run by fuel cells, while Hy-Vee employs solar panels to power parking lot lights and has installed rooftop systems on some of its convenience stores. Wegmans is slowly expanding its rooftop solar program, with panels on three stores in New York, one office building and one distribution center. According to the company, placement is based on a case-by-case basis and requires a clear span on the roof, which also supports the store’s refrigeration unit. Rain catchment is also gaining some attention among retailers. Austin, Texas-based Whole Foods Market recently opened a cutting-edge location in San Jose, Calif., that catches rain to feed the store’s landscaping, while Wegmans has been collecting rainwater for some time, and Ahold USA’s Nelson says that the topic is “ripe for conversation.” PG

keep on truCkin’ A Greenru truck visits a Hy-Vee store to collect organic waste.

our employees understand the difference they are making on the environment, and that is something they are taking great pride in.” —pat Hensley, Hy-Vee

July 2016 | progressivegrocer.com |

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ADVERTORIAL

Q&A

Talking with…

Jordan Grevis Research Professional, Barilla

Progressive Grocer: Most consumers know Barilla as a premier producer of pasta and sauces. But they probably aren’t as familiar with your sustainability efforts and your motto, “Good for You, Good for the Planet.” Can you briefly explain what that motto means and why you’re pursuing that path? Jordan Grevis: Barilla’s mission is to be the preferred pasta brand around the world, committed to promoting wholesome and joyful food habits inspired by the Mediterranean Model, and safeguarding the wellbeing of people and the planet along the entire production chain. “Good for You, Good for the Planet” is our guidepost for that mission. On the one hand, it means improving our products, motivating people to adopt healthy lifestyles and improving food access and social inclusion. On the other, it means promoting and supporting sustainable supply chains and reducing the CO2 emissions and water consumption that occur during the production process. PG:What are some of the most important sustainability initiatives you’ve undertaken in the past year or so--things grocery retailers would be especially interested to learn about? JG: The 2015 Barilla Initiative Highlights include, but are not limited to: Coop’s Supermarket of the Future. During the World Expo in 2015 in Milan, Barilla premiered a special edition of pasta and sauce completely traceable from field to fork in Coop’s Supermarket of the Future, one of Barilla’s largest Italian retail partners. Animal Welfare. Due to Barilla’s stance against animal testing, the People for Ethical Treatment of Animals (PETA) declared, “Barilla is stepping up and acting as a role model for other food and beverage companies.” Also in 2015, Compassion in World Farming and World Animal Protection placed Barilla as the highest ranking Italian company in the global benchmark on Farm Animal Welfare, Business Benchmark on Farm Animal Welfare (BBFAW). Food Waste. Barilla is collaborating with food banks in Italy, Feeding America in the USA, and FoodBank in Australia to ensure that any surplus production is not wasted. Similarly, Barilla is optimizing production

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processes to reduce waste along the supply chain. By doing so, Barilla has reduced water consumption by 19 percent in five years in its pasta making facilities and bakeries. PG: Why is it important for grocery retailers to work with vendors who are committed to sustainable practices? Does offering products from sustainability-minded companies give stores a competitive edge? JG: According to Nielsen’s analysis of 2014 global retail sales, “brands with a demonstrated commitment to sustainability grew over 4 percent, while those without saw less than 1 percent growth.” Further, “Sixty-six percent of consumers were willing to pay more for brands that showed commitment to sustainability in 2015.” In addition, Millennials (aged 21 to 34) worldwide are most willing to pay extra for products and services from companies committed to sustainability, according to a November 2015 report from Nielsen. Almost threequarters of this generation favor ethical brands—an increase from about half in 2014. Other things to consider: Conscious-Buying Boom. The number of global consumers prepared to pay more for sustainable products is growing. Overall, two-thirds are willing to spend more on sustainable goods in 2015, compared with just over half in 2014. Ethical Gen Z. A rising number of Gen Z (aged 15 to 20) would pay more for products from brands committed to positive social and environmental change, with an increase from 55 percent in 2014 to 72 percent in 2015. “Brands that establish a reputation for environmental stewardship among today’s youngest consumers have an opportunity to build loyalty among the power-spending millennials of tomorrow,” says Grace Farraj, public development and sustainability expert at Nielsen.

| Progressive Grocer | Ahead of What’s Next | July 2016


Grocery’s Big Break Breakfast foods and beverages appeal beyond the morning daypart. By Lynn Petrak

D

ay after day, sunrise follows sunset. The earth revolves. Time clicks on. Certain patterns, of course, are set. But people’s eating habits, from sunrise to sunset and back again, are shifting and usurping previous expectations and behaviors. For one thing, people aren’t as defined by the clock as they used to be. That’s evident in all-day menus (hello, QSRs), a spate of new cross-daypart products and the decline of some morning meal staples. Product lines are expanding as the lines between dayparts blur. “The need for greater convenience, changing social mores and an increasingly mobile workforce are changing the definition of breakfast,” declares Joice Pranata, research associate at Boston-based Lux Research, which released a report on breakfast cereals earlier this year. Amanda Topper, food and drink analyst at Chicago-based Mintel, agrees. “Because consumers are blurring snacktime and mealtime, they desire foods that are portable, nutritious and simple to prepare or eat,” she says. “Some consumers are eating breakfast foods as a snack, while others eat a snack instead of a meal for breakfast. This has influenced categories, especially cereal, to cater to these behaviors.” Beyond changing definitions, there’s sometimes a complete absence of the morning meal. Last year’s breakfast consumer trend report from Chicago-based market research firm Technomic found that although two-thirds of people believe it’s not good to skip breakfast, only 26 percent actually eat it every day. Research from the firm Instantly (acquired by Survey Sampling International (SSI), of Shelton, Conn., earlier this year) reveals that more than half of consumers aren’t eating breakfast consistently and 12 percent “rarely” eat it. In both the Technomic and Instantly/SSI research, consumers’ most common reason for skipping breakfast or eating it less consistently was lack of time. “In the U.S., with longer workdays that break out of the nine-tofive model, timing and convenience have become a deciding factor in what many Americans eat in the morning,” remarks Andy Jolls, chief marketing officer at SSI.

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| Progressive Grocer | Ahead of What’s Next | July 2016


That said, there are ways to entice customers with breakfast options that meet their busy lifestyles. “If companies can provide breakfast in a format that accommodates busy schedules while appealing to taste and nutrition, they could see significant incremental growth,” observes Jolls. Proving that point is research from Schaumburg, Ill.-based Nielsen. Earlier this year, in its report “Tops of 2015: U.S. Grocery,” the market research company reported a 40.5 percent increase in sales of shelf-stable convenient breakfast, making it a top-growing category.

Winners and Losers Data on sales and consumption of breakfast foods and, for that matter, foods commonly consumed at breakfast, seem to reflect categories at different stages of growth, opportunity and challenge. In the cereal category, despite some bright spots and new product innovations from major and niche brands, overall sales are declining. According to Lux Research, sales of ready-to-eat breakfast cereals started to erode about a decade ago, and the market has continuously slumped since 2011. Moreover, Lux notes that lower sales seem to reflect a longer-term downward trend rather than a fad, with half of consumers age 2 to 11 shifting away from traditional breakfast cereals. The future of cereal may rest in addressing the need for on-the-go eating, says Mintel’s Topper: “Cereal has become more portable in singleserve cups and pouches that can be eaten with or without milk.” Another category that has had a certain ebb and flow based on consumer demands and perceptions is on the upswing right now. Per capita egg consumption is pegged at 263.6 for 2016, compared with 252.9 in 2015, according to figures cited by the American Egg Board, in Park Ridge, Ill. Current per capita consumption is the highest it’s been in the past 18 years. Convenient frozen breakfast foods are a hot spot in the overall frozen food category. Chicago-based research firm IRI reports that sales of frozen breakfast food topped $3 billion from February 2015 to February 2016, a 2.2 percent sales increase from the previous year. Within frozen breakfast foods, frozen breakfast entrées were up 5.63 percent and frozen handheld breakfasts rose 3.11 percent. Also underscoring the role of convenience is the increase in other handheld foods for on-the-go breakfast consumption. The number of households using cereal bars jumped by 50 percent in the past decade or so, while more than 80 percent of households consume granola bars, according to a report from Rockville, Md.-based Packaged Facts. Sales of other foods popular at, or linked to, breakfast are also indicative of the current consumer mindset. According to IRI, in the overall yogurt category, sales reached $7.6 billion in the past year, a 3 percent jump; refrigerated bacon sales topped more than $4.2 billion for the year ending May 15, down 3.5 percent; and refrigerated sausage/ham sales reached more than $1.68 billion, down 3.11 percent. July 2016 | progressivegrocer.com |

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All Day Long

Consumers’ extended appetite for breakfast items presents grocerant, merchandising opportunities.

W

hen fast-food behemoth McDonald’s began offering all-day breakfast in 2015, the ensuing bump in sales caused a buzz across both the foodservice and retail channels, indicating similar opportunities for grocery store foodservice as well as for home consumption. After moving to all-day breakfast last fall, Oak Brook, Ill.-based McDonald’s reported that fourth-quarter revenues and earnings exceeded forecasts and that same-store sales in the United States climbed 4.7 percent. CEO Steve Easterbrook attributed the sales jump to consumer interest in breakfast menu items across the daypart.

Other quick-service restaurants are expanding their breakfast menus as well. White Castle recently launched a 24-hour breakfast program, while Taco Bell unveiled a new $1 breakfast menu in March. Burger King introduced an Egg-Normous breakfast burrito in May, and Arby’s is currently testing brisket biscuits, flatbread sandwiches and breakfast sliders at a New York City location. Dunkin’ Donuts, a quick-service chain that’s practically synonymous with breakfast, recently refocused on all-day choices, adding a new breakfast burrito. Following suit are many c-stores, such as 7-Eleven Inc., which recently rolled out a line of Melt sandwiches. Grocery stores with grocerant

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Texas Pete® Hot Sauce is the nation’s largest provider of branded hot sauce PCs in the business. CHA! by Texas Pete® is also available in PCs, giving your customers more great ways to add flavor and heat to your supermarket deli selections on their way out the door.

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| Progressive Grocer | Ahead of What’s Next | July 2016


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areas and hot-food bars have also added morning options such as handheld breakfast sandwiches, burritos and pizzas. According to Supermarket Guru Phil Lempert, breakfast has all-day appeal for many reasons. “Breakfast foods are among the most affordable and most nutritious — think protein and eggs — dollar for dollar, of all foods. Coupled with the innovation in handheld offerings, breakfast 24/7 is a logical step that offers consumers convenience, affordability and satisfaction,” he asserts, adding that on the operator side, breakfast foods are also easier to prepare and require a less skilled workforce. That appeal is noted — and, indeed, felt — by industry players. “I will tell you personally that having McDonald’s go to all-day breakfast has got me going to that restaurant for breaks at other parts of the day,” confides Lance Layman, VP of business development for SugarCreek, in Washington Court House, Ohio, which provides both raw and cooked items, including bacon and sausage.

Layman adds that there’s a trickle-across effect from all-day breakfast, which is why SugarCreek is noting strong breakfast consumption throughout the day at home. “If you look at growth in the breakfast category, there is no question that it’s grown in the home as well,” he notes. Genevieve Poirier-Richards, SVP of marketing for the Milk Processor Education Program (MilkPEP), in Washington, D.C., says that the buzz about all-day breakfast is having a broad impact on a variety of products and industries. “We know people love their milk at breakfast, so I’m excited to see the all-day breakfast trend grow,” she adds.

Snacking on Breakfast Foods Opening up breakfast has also had an effect on the types and timing of snacking. According to a recently released report from Rockville, Md.-based Packaged Facts, consumers’ snacking behavior is spurring changes in breakfast consumption. “Snacking is clearly shaping this momentum for the breakfast daypart and beyond,” says David Morris, an analyst at Packaged Facts. “Embracing snacking as a breakfast option is clearly important: Roughly one-quarter of consumers often snack in the morning

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| Progressive Grocer | Ahead of What’s Next | July 2016


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Reg. U.S. Pat. & Tm. Off. © Sealed Air Corporation (US) 2015. All rights reserved.


instead of having a full meal, according to the report. Not surprisingly, the tendency to do so is more prevalent among Millennials, who are more likely to view themselves as time-pressed and on the go.” That snacking uptick also depends on the type of breakfast food, Morris adds. “Yogurt straddles breakfast and snacking: Some 39 percent of adults eat it as a snack, while 44 percent eat it for breakfast,” he says, “but other foods closely associated with breakfast also make their way into the snacking realm, such as bacon and cold cereal. For many breakfast foods, comparatively low snacking-usage penetration suggests that snack-based growth opportunities may still exist, given proper product alignment with packaging, portability and preparation requirements.” That mashup of breakfast and snacking is echoed by researchers at Chicagobased Mintel, who found that 70 percent of snackers in the United States agree that “anything” — including breakfast foods — can be

considered a snack. According to the research firm, more than one in five consumers eat frozen breakfast foods for another meal occasion than breakfast. On the flipside, consumption of breakfast-style foods at all times of the day, both at home and away from home, is affecting lunch, dinner and snack options. According to the “2015 Breakfast Consumer Trend Report” from Chicago-based Technomic, 60 percent of consumers who are buying breakfast away from home, including at c-stores and restaurant cafés, hot-food bars, and service deli counters, said that they’re cutting back on other daypart purchases as a result. Packaged Facts’ Morris echoes the idea that breakfast trends have an impact on other eating occasions. “The Denver omelet will never put the hamburger out to pasture,” he says, “but as traditional meal times and expectations give way, opportunity is ripe to blur the lines between times of day and traditional dayparts. I think lunch is the new battleground for breakfast. So many nineto-fivers wait to have a late breakfast or brunch on the weekends. Why not for Wednesday lunch? And why not more than McMuffins? And why not offered by more nonbreakfast operators?”

ADVERTORIAL

Q&A

Talking with…

Oliver Perez Pebbles Senior Brand Manager Post Consumer Brands

Progressive Grocer: At a time when children have more options for morning meals, how is the Pebbles brand a success story?

OP: In a highly competitive category, we recognize that we are competing for share of heart. That’s why we are actively engaging with our fans through relevant touch points and not just through ad campaigns. By focusing on what makes Pebbles unique, and on what we know kids love about cereal, vibrant colors and a flavorful sensory overload in every bowl, we have been able to consistently grow our market share. Our new Yabba Dabba Do campaign inspires playfulness and fosters the joy of childhood for kids and kids at heart. PG: What are some examples of new varieties and promotions?

Oliver Perez: It’s always important to remember that cereal is by far the #1 choice for breakfast and is found in over 90% of homes in the US. Child cereals are 26% of RTE category sales, and that means there are still a lot of kids eating cereal for breakfast every day.Pebbles is the 4th largest Child Cereal franchise and is the only one of the top five Child brands posting dollar growth +6.9% (26 weeks ending 5/28/16 Total US XAOC). And Pebbles has posted dollar sales growth for 14 consecutive months. PG: To what do you attribute the growing market for Pebbles?

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OP: We have seen success by introducing larger size offerings which have driven increased consumption and increased dollar ring for our retailers. We’re also expanding our targets. Kids (and by default, Moms) will always be important to our success but we have started to broaden our reach to target Hispanic consumers and Teens.Our Yabba Dabba Do campaign is a fully immersive multi-touchpoint campaign including:Kid and Hispanic TV, a multi-city experiential mobile tour, teen-targeted digital media and a gaming partnership, and blogger and PR outreach to Moms.

| Progressive Grocer | Ahead of What’s Next | July 2016


We’re not afraid to put the words growth and cereal in the same sentence.

Are we crazy? Not so much. Nobody is more focused on growing the cereal business. That includes showing you how our Malt-O-Meal® brand RTE cereals can be incremental to your category. And how you can grow with our bestselling iconic brands like Honey Bunches of Oats,® Great Grains® and Pebbles.™ Call us bold. Call us a fresh voice. Just don’t call us late for breakfast. Talk to your rep and visit postconsumerbrands.com/fresh to learn more.


Healthy Competition The desire for healthy living spurs buying trends, product development.

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he healthy outlook for certain breakfast foods and beverage categories is linked in part to actual consumer health. In its research related to the breakfast eating occasion, The Hartman Group, in Bellevue, Wash., found that 55 percent of consumers focus on eating healthy foods and beverages for breakfast. Earlier this year, Schaumburg, Ill.-based Nielsen released the findings of a survey showing that 59 percent of consumers are

Massimo Zanetti Beverage Debuts First Compostable Coffee Pods assimo Zanetti Beverage USA has launched the first 100% compostable single-serve coffee pods through its Hills Bros.® Coffee brand.

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Other MZB coffee brands such as Chock full o’Nuts®, Kauai Coffee® and private label products will be next to adopt the compostable format for single-serve offerings.

The innovative format is compatible with all K-Cup® style brewers.

“We are confident that this new single-serve pod will provide the right solution for the industry and will answer the consumer demand for a more sustainable single-serve coffee options,” Cunningham said.

“In 2014 alone, more than 10 billion plastic single-serve cups were thrown into landfills,” said Sarah Cunningham, Senior Marketing Manager of Hills Bros. Coffee. “Our new coffee pods are certified 100% compostable and designed to go back to the land - not the landfill.” The new pods launched on Earth Day, April 22, 2016, in several Midwestern supermarket chains including Jewel, Mariano’s Fresh Market, Copps, Woodman’s and Pick ’n’ Save, as well as online through Amazon.com. What differentiates the new pods from any U.S. competitor is the certification through the Biodegradable Products Institute (BPI), Cunningham explained. The PURPOD100TM, a coffee package developed by Club Coffee of Canada, it certified to break down in less than 100 days in municipal composting facilities.

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Products that are BPI Certified Compostable have met rigorous independent testing and verification standards for compostability, explained Rhodes Yepsen, executive director of BPI. “With food waste being the largest portion of what is sent to landfills and incinerators in North America, ‘certified compostable’ products and packaging are an opportunity to facilitate diverting organics away from disposal, and back to the soil,” Yepsen said. Introduction of this innovation builds upon the leadership that MZB-USA demonstrated with its 2013 rollout of The Filter CupTM, which uses less plastic than traditional single-serve cups.

| Progressive Grocer | Ahead of What’s Next | July 2016

eating more natural/fresh foods, and that nearly half (48 percent) are planning to make healthy food choices this year. Top health attributes influencing their purchases include high-protein foods, high-fiber and whole grain foods, foods made mainly with fruits and vegetables, natural flavors, and low-salt/-sodium options. The long-term, ongoing clamor for better-for-you and free-from foods is influencing the breakfast category in a variety of ways, especially when it comes


Perk Up Single-Serve Sales with Certified 100% Compostable Pods Nationally, growth in the single-serve coffee segment has slowed, partly as consumers step back from single-serve due to concerns over the waste it generates.

44%

of single-serve coffee users

decrease consumption because of

negative environmental impact.*

88%

of single-serve coffee users want

biodegradable or compostable packaging.*

Certified 100% compostable pods are a breakthrough innovation that can help you drive new sales in the coffee aisle.

www.mzb-usa.com For more information, contact your Massimo Zanetti Beverage USA sales representative or your Crossmark broker.

* Source: Mintel, 2015

©2016 Massimo Zanetti Beverage USA, Inc.

nd PU URP RREGISTERED RA DEM M AR T I V E OWNER, TIV USSED UNDE DER ER LICENSE. LI CEN SE BPI BP ® aand PURPOD100™ RPO POD10000™ ™ AARE R E RE RE EGIS TER ED TRA TRADEMARKS EM ARK OF ITS I TSS RESPECTIVE D RKK S OF RESSPE PECC TI OW WNER NER, USED D UNDER LICEN CENSE. SE.


Consumers know that protein helps them feel full longer, so they are reaching for highprotein foods, especially in the morning or for snacking occasions.” —Rachel Cullen, Ruiz Food Products Inc.

to high-protein foods. Supermarket Guru Phil Lempert points to the increasing interest in protein-rich diets. “The change has been driven by the move away from carbs, in particular wheat and sugars, to protein,” he observes. “Many more people have switched to a gluten-free/ Paleo/Atkins way of eating for two reasons — weight loss and improved strength from protein. The science has supported these dietary changes, and now we are seeing breakfast cereals struggling to add protein, from a variety sources, to compete.” “It’s all about protein for consumers,” agrees Lance Layman, of Washington Courthouse, Ohiobased food manufacturer SugarCreek, who says that bacon and sausage have benefited from the protein push. “This is a trend, too, and not a fad. High-protein diets like Atkins may have been a fad, but now everyone is much more into eating protein as part of a healthier lifestyle.” In keeping with that, he adds, there’s a correlating interest in all-natural bacon.

Egg, Milk Consumption Up Egg products have also been affected by the trend for high-protein diets. At Omaha, Neb.based ConAgra Foods, that has translated into

products like Egg Beaters. “Egg eatings are up significantly year on year, with consumers embracing the fact that they are good and affordable sources of protein,” says Ciare James, ConAgra senior brand manager. “With Egg Beaters, not only are people able to reap the benefits of a whole egg with only half the calories and zero cholesterol, they are also getting the convenience of not having to crack an egg. This is especially useful on occasions where people are making larger dishes or preparing meals for a larger audience, like weekend brunch.” Frozen breakfast foods containing eggs also appeal to health-conscious shoppers. “Our El Monterey

ADVERTORIAL

Q&A

Talking with…

Scott A. Baker

Founder and President, 5 Generation Bakers

Starting any business is a daunting task, especially when competing in the same market segments long dominated by industry giants. But Scott Baker, founder and president of 5 Generation Bakers—producers of Jenny Lee® Swirl Breads—felt he had an advantage: his family’s 140+ year baking tradition in Western Pennsylvania and its dedication to quality. Progressive Grocer asked Baker how he turned his dream into a reality, and created a company known not only for its baked goods but for its food safety and quality assurance program, too. Progressive Grocer: What were some of the challenges you faced? Scott A. Baker: We knew no one could make our types of cinnamon swirl breads with any more quality and consistency. We also knew (based on the continuing demand for those products after my family’s last bakery had closed a few years before) that there was proven consumer acceptance of them. But my dream was bigger than simply meeting demand in the Pittsburgh area.

retail outlets from New England, to Missouri, to Florida. We now produce more than 20 SKUs. The original two, however, still provide over three quarters of company sales. PG: Your food safety and quality assurance program is an important part of your success. Describe some of the recognition you’ve received. SAB: With ever larger customers came more sophisticated requirements, not the least of which were third party audits. Many small companies balk at these due to the complex sanitation and bookkeeping requirements, but many large retailers’ insurers demand them. And even for those who don’t, a third party audit serves to lessen their apprehensions about dealing with a vendor. It took us over a year to meet the requirements for our first A.I.B. audit, which we passed. On a followup audit a year later, we earned a “superior” rating. And after moving into our new bakery, we improved on even that score. Following that, in a private audit done by an international “big box” store, we earned a 100 percent rating. We’ve been told by several people that this is the highest such rating they’ve ever seen.

An immediate challenge was extending the market reach of an all-natural product beyond local customers without using chemical preservatives. I knew that frozen distribution and storage—a costly and logistically challenging proposition—was our only choice. With faith and stubborn dedication, beginning with a single local customer, I founded the company producing two SKUs: “Cinnamon Swirl Bread” and “Cinnamon Swirl with Raisins” as “thaw & sell” products. PG: How has your business grown since those early days? SAB: In just six years, our customer count has grown to nearly 5,000

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| Progressive Grocer | Ahead of What’s Next | July 2016


Breakfast Burritos reflect a trend, originally initiated by athletes and dieters, of the consumer’s desire for protein,” notes Rachel Cullen, president and CEO of Ruiz Food Products Inc., in Dinuba, Calif. “Consumers know that protein helps them feel full longer, so they are reaching for high-protein foods, especially in the morning or for snacking occasions.” Rich in nutrients, milk has been a perennially popular part of breakfast. Even as fewer young people eat cereal, milk remains on the morning menu in other ways and is touted by health experts as important in a good-for-you diet. “There is a lot of strong research supporting the benefits of milk at breakfast; specifically, many experts now recommend getting 25 to 30 grams of protein at each meal, especially at breakfast,” points out Genevieve Poirier-Richards, SVP of marketing at the Washington, D.C.-based Milk Processor Education Program (MilkPEP), adding that most people tend to load up on protein in the evening, leaving their morning meals lower in a nutrient that helps them to feel full. In addition to milk, other nutrient-rich beverages are shaking up the idea of a healthy breakfast — sometimes literally. New research from Chicagobased Mintel shows that 39 percent of consumers are consuming nutritional and performance drinks as a

replacement for beverages, including for breakfast. “Nutritional and performance drinks are the apex of convenience for the modern American lifestyle and diet, as consumers are moving away from three meals per day and are snacking more often,” observes Beth Bloom, senior food and drink analyst at Mintel. “These beverages deliver on convenience, affordability and efficacy, a trio of positive advantages that appeal to today’s on-the-go consumers who are simply too busy to eat a sit-down breakfast at home.” At the same time, the availability of more coldpressed juices and in-store juice bars attests to the increasing role that beverages play in a healthy diet at breakfast and beyond. Additionally, in the yogurt category, IRI reports sales increases in yogurt drinks and refrigerated kefir. No matter how categories may expand and contract, Mintel Food and Drink Analyst Amanda Topper underscores the importance of appetite appeal as much as daypart appeal. “Despite interest in convenience and portability, it’s important to remember that taste and nutrition remain the strongest purchase factors when buying breakfast,” she says, “so products not only need to be convenient, they also need to taste good and be good for you.”

FOOD SAFETY AND TASTE ARE OUR PRIORITY! CLEAN & EXPANDED

NEW PRECISION EQUIPMENT

NEW OVENS

NEW FREEZER

At 5 Generation Bakers we take pride in our food safety and ingredients to ensure a satisfied customer everytime. For more information contact Scott Baker at scott@5generationbakers.com

5generationbakers.com

July 2016 | progressivegrocer.com |

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Promo Code Merchandising breakfast in the morning and beyond.

A Bacons & eGGs The american egg Board has tapped actor/performer Kevin Bacon (right) and his brother, Michael, to sing the praises of eggs’ healthfulness.

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s consumers change the ways and times they eat, getting people to try breakfast-style foods, or foods that can be consumed in the morning, takes a new — and sometimes urgent — tack. Promotions span traditional advertising, in-store promotions and integrated campaigns, as well as social media and other electronic platforms. The Milk Processor Education Program (MilkPEP), for its part, has launched a program called My Morning Protein to deliver protein solutions including milk. “The program offers unique retail opportunities for cross-merchandising across protein foods, like milk and eggs, milk and peanut butter, milk and breakfast sandwiches, and much more,” explains SVP of Marketing Genevieve Poirier-Richards, who points out that the Washington, D.C.based organization’s research shows that when stores communicate milk’s protein benefits as a morning “pairing,” it drives shopper demand for milk. “In fact, a similar program in January delivered a 1.3 percent sales lift and 18 incremental gallons per each $1 spent on in-store advertising,” she notes. Another breakfast-centric campaign comes from Irving, Texas-based Avocados from Mexico (AFM),

| Progressive Grocer | Ahead of What’s Next | July 2016

which is zeroing in on new opportunities for the morning meal with a new campaign dubbed the Avocado Breakfast Club. The initiative, designed to show how avocados can be part of a convenient, nutritious breakfast, includes co-branded bins and POS materials with “Sesame Street” characters, as well as loyalty coupons, ads, demos, display contests, in-store radio and digital/social media. Launching in July and August, the promotion is timed to coincide with back-to-school season Meanwhile, the American Egg Board, in Park Ridge, Ill., has expanded its collaboration with actor and performer Kevin Bacon. This spring, the board launched a new ad campaign, Wake Up to Eggs with the Bacon Brothers, featuring Kevin and his brother, Michael, as they promote the nutritional benefits of eggs through online videos, an original song called “E-G-G-S” and other materials. In addition to trade groups, CPGs and breakfast brands have also sought to bolster sales through their own campaigns. For example, the Special K brand, from Battle Creek, Mich.-based Kellogg Co., recently came out with a new campaign with the tagline “Eat special. Feel Special,” focused on the positive nutritional benefits of ingredients like whole grain, fiber and vitamin D. Meanwhile, aiming to reach younger consumers, Cinnamon Toast Crunch, a brand of Minneapolisbased General Mills, introduced a Selfie Spoon for cereal lovers to use when taking photos of themselves with their phones, while the brand’s more recent Squad Bowls campaign is a riff on the Millennial social media hashtag #squadgoals. PG


Commercial Bread and Baked Goods

Grocery

Baked for

Success Cleaner ingredients, creative merchandising and marketing add interest to the section. By Bridget Goldschmidt

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hen Flowers Foods acquired Dave’s Killer Bread last September, it knew it had a winner on its hands. To that end, Thomasville, Ga.-based Flowers determined to introduce the brand to more consumers. “This past April, we expanded Dave’s Killer Bread nationally into more than 9,000 new retail stores, with six varieties,” notes Flowers SVP/Organics David Roach. To engage customers, the company has adopted a merchandising strategy that strives “to disrupt shopping patterns in-store and at the bread shelf,” explains Roach. “Tactics include branded corrugate secondary displays placed in other parts of the store, like perimeter departments; channel strips; floor decals; and onpack stickers. All these are designed with bold colors and brand imagery so they are both visually arresting and effectively call attention to our key selling points — that we’re USDA certified organic and Non-GMO Project Verified. The grocery bread wall is filled with so many options, [so] our biggest priority has been to make Dave’s Killer Bread stand out from the rest.” Such moves have proved successful. “In the first quarter of 2016, our sales grew 5.1 percent over first quarter 2015, driven by recent acquisitions of organic bread brands – Dave’s Killer Bread and Alpine Valley Bread Co. – which together added over $60

million in incremental sales,” says EVP and COO Brad Alexander. “These brands are on trend with consumers’ desire for fresh, organic foods, and are well positioned for many years of growth.”

Pure and Simple This growth isn’t just at Flowers. “Sales of organic bread for calendar year 2015 were up 29.5 percent in dollars and 26.8 percent in units over 2014,” notes Alexander, citing IRI data. “It should be noted that interest in foods that are simple, natural and organic is not limited to the affluent. The household penetration for organic breads, as reported by Mintel, is actually higher in households with income less than $75,000.” Beyond its recently acquired organic options, Flowers has worked to raise the profile of its Nature’s Own line of breads and buns, which now, in line with greater consumer interest in “enlightened eating,” sports “a cleaner, simpler nutritional panel … without sacrificing taste or quality,” according to Alexander. “This spring, we launched a new campaign for [the] brand, called Good and Simple, that reminds us that the best things in life are usually the simple things. The campaign is running primarily in Colorado, Kansas, Nebraska, Ohio, Oregon and Washington, our newest expansion markets, with a focus on billboard, digital and radio advertising.” He adds: “This is the first new integrated creative

The grocery bread wall is filled with so many options, [so] our biggest priority has been to make Dave’s Killer Bread stand out from the rest.” —David Roach, Flowers Foods

July 2016 | progressivegrocer.com |

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Grocery

Commercial Bakery and Baked Goods

campaign for our Nature’s Own brand in a number of years. ... One example of our approach is creating what we call a ‘Simple Sandwich Night,’ where TreATS For All moms get a break and everyone gets otis Spunkmeyer the sandwich they want.”

is reintroducing its brand — now featuring such items as snack cakes — with the only for everyone promotion.

I think there is lots of opportunity to bring more excitement to the category in terms of flavors, forms and other innovations.” —ellen Copaken, Hostess Brands llC

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A Private Matter Another key element in commercial bread is private label, which, according to Chicago-based Mintel, currently holds a 23.85 dollar share — the secondhighest in the segment (for more about commercial bread and other categories, read the Consumer Expenditure Study, starting on page 45). Redner’s Markets Inc., for instance, saw “sales growth within our commercial bread” line offering of white and honey wheat varieties after a switch to a new manufacturing partner within the past two fiscal years, says spokesman Eric B. White. As a result of the new partnership, the Reading, Pa.-based warehouse grocer “moved to a contemporary lookingpackage with differentiating colors for the style of product,” explains White, noting “positive store sales and customer support from the change.” For the commercial baked goods section as a whole, he observes, “Price point and promotion have been the key to driving sales for us. We have used some in-store tables … as supplemental displays.” Keep ’em Sweet There’s also a sweeter side to the category, with long-established names and relatively new retail players alike performing well. “Hostess has seen spectacular sales growth over the past year,” affirms Ellen Copaken, senior director of marketing at Kansas City, Mo.-based Hostess Brands LLC. “Our growth is primarily a result of us delivering high-quality, iconic snacks.” The company hasn’t been content to rest on its laurels, however. Copaken notes that “we have been listening to recent consumer trends and implemented some efforts to clean up our labels and offer healthier alternatives, like our new Mini Muffins, now with whole grain.” She adds that Hostess has also “dialed up our innovation efforts in exciting line extensions and seasonal flavors, as well as new platforms like brownies.” Hostess also relaunched its fondly remembered Suzy Q snack cakes and released Ghostbusters Key Lime Slime Twinkies to tie in with the summer blockbuster film. As well as leveraging social conversations in its

| Progressive Grocer | Ahead of What’s Next | July 2016

new product launches, as with the Suzy Q campaign, which included packaging that referenced actual consumer quotes from social media, “Hostess uses a variety of display vehicles across our large- and smallformat customers to drive excitement around new product launches and interrupt at the point of purchase,” says Copaken. “Shipper displays in grocery and countertop units in convenience stores are two of our most leveraged merchandising tools.” “We have seen a lot of excitement and interest in our foods,” observes Kristina Dermody, president of Otis Spunkmeyer, a brand of Zurich, Switzerlandbased Aryzta and previously best known for its ubiquitous foodservice cookies. “With our recent retail launch of 20 new sweet snacks sold in grocery stores and Walmart locations nationwide, we’ve noticed that consumers are really responding to our ‘No Funky Stuff’ seal. ‘No Funky Stuff’ is our commitment to no high-fructose corn syrup, artificial flavors, colors and partially hydrogenated oils.” The new items include snack cakes, mini muffins and mini cupcakes. At press time, the brand was “getting ready to kick off our Only for Everyone advertising campaign reintroducing the Otis Spunkmeyer brand to consumers,” explains Dermody. “The campaign includes digital ads, in-store demos and a 10-city tour to include outdoor sampling events.” An interactive consumer event on the Santa Monica Pier in Los Angeles, scheduled for July 2, invited people to sample the new treats and take part in a giant inflatable obstacle course ending in an Otis Spunkmeyer branded ball pit. Although the items are currently merchandised with other snack cakes, Dermody notes that Otis Spunkmeyer has “also been able to secure secondary corrugated displays throughout the store.” Beyond cleaner-ingredient products, what can shoppers expect in the commercial baked goods aisle? Hostess’ Copaken, for one, envisions more upscale offerings. “I think there is lots of opportunity to bring more excitement to the category in terms of flavors, forms and other innovations,” she says. “There is opportunity to bring more premium products and flavors to the snack cake aisle.” PG For more about commercial bread and baked goods, visit Progressivegrocer.com/commercialbread.


Frozen Meals

Refrigerated & Frozen

Healthy Eating Down Cold

Better-for-you frozen meals deliver convenience, taste and nutritional attributes.

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By Lynn Petrak

ust as it isn’t a white-bread world anymore, it’s not a fried-chicken TV dinner world, either. There was a time when healthy frozen meals might have been seen as an oxymoron of sorts. Misperceptions about the production of frozen foods, coupled with different ingredients, formulations and preparation methods, didn’t do much to help the reputation of the category when it came to wholesome nutrition. Fast-forward to 2016, a time when a host of consumer concerns about health, wellness, nutrition and overall good eating is reflected in an ever-growing variety of frozen foods that can be deemed better-for-you. Niche, midsized and large manufacturers, along with industry organizations, have worked to provide such products and educate consumers about frozen food production. Those initiatives have focused on a number of product attributes at a time when the definition of healthy eating has broadened. “‘Healthy’ means different things to different people, because we all have unique starting points,” asserts Amy Lotker, owner and head of sales and marketing for Better For You Foods LLC, in Delray Beach, Fla., which manufactures the Better4U line of products. “For someone who’s seeking to lose weight, ‘healthy’ may be most closely tied to fewer calories. For the person living with diabetes, ‘healthy’ may allude to foods with a lower glycemic index. For the person who has an allergy or sensitivity to gluten, ‘healthy’ begins with gluten-free. That said, foods most universally associated with ‘healthy’ among today’s consumers are products made with a healthy balance of wholesome, natural ingredients.”

Keeping it Clean On that point, a significant shift in recent years has been the move toward more natural ingredients, with the steady refrain of “clean label.” That emphasis is underscored by Kevin McAdams, president of Marshall, Minn.-based Schwan’s Consumer Brands Inc. “We are working to change perceptions of frozen food by helping consumers make choices they feel good about and focusing on ingredients, sourcing and preparation,” McAdams says. “We are committed to eliminating four ingredient groups from our broad portfolio to make foods with more familiar ingredients, and we’re on track to meet those commitments. The Simplicity Ingredient Initiative is part of our longtime work to evolve our foods to meet the health-and-wellness expectations of consumers and customers.” As a result, McAdams notes, Schwan’s Pagoda brand revamped its egg rolls and sourced real, high-quality ingredients like 100 percent white-meat chicken and freshly chopped vegetables, while the company’s Freschetta pizzas are made with 100 percent all-natural cheeses, olive oil and sea salt, and sauces containing vine-ripened tomatoes and sliced vegetables. Other companies have eliminated ingredients for cleaner labels, too. Solon, Ohio-based Nestlé, for example, has worked to reduce sugar and sodium content and remove trans fat from its products. In May, Alexia, a brand of Omaha, Neb.-based ConAgra Foods that makes baked appetizers, artisan breads, organic frozen vegetables and potato sides, said that all of its offerings would be nonGMO by the end of the year. The line of frozen meals from Denver-based Atkins Nutritionals Inc., which includes Beef Merlot and Chicken Margherita, also aims to address consumer health concerns. July 2016 | progressivegrocer.com |

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Refrigerated & Frozen

We are working to change perceptions of frozen food by helping consumers make choices they feel good about and focusing on ingredients, sourcing and preparation.” —Kevin McAdams, Schwan’s Consumer Brands

Frozen Meals

“Healthy is really about eating food as close as possible to its original form, without added chemicals,” notes Public Relations Director Jennifer Livingston. “Atkins aligns well with this by not using preservatives, artificial flavors or fillers.” Along with clean labels and natural profiles, the frozen food sector has expanded to include more organic offerings. “Sales of organic appear to be on the rise, due to their perceived healthfulness, which has played a large part in attracting younger and more health-conscious consumers also seeking the convenience of frozen products,” observes Adrienne Seiling, VP of communications for the Washington, D.C.-based American Frozen Food Institute. Sometimes, the nutritional benefits of frozen foods are enhanced by adding better-for-you ingredients, compared with past practices of focusing on the removal of things like fat and calories. “Today’s healthoriented natural food consumers have better frozen meal options,” says Lotker, citing Better4U’s organic frozen pizzas made with whole grains, sprouted grains and ancient grains.

A Better Private Label Partner!

Talking Points Meanwhile, communication can be just as important as formulation in capturing audiences for, and sales of, better-for-you frozen foods. “We maintain a constant dialogue with the people who eat our food to ensure we’re providing even more options that satisfy these needs,” explains Alan Brooks, associate brand manager at ConAgra, noting that the company added four organic options to its Healthy Choice Simply Café Steamers line, based on customer feedback. Expect healthy frozen food development to continue. “The cool thing about frozen food right now is that it is so innovative,” says Rob Johnson, senior brand manager for ConAgra. “There is immense competition for freezer space because so many great companies are coming up with new products and solutions for people’s busy lives.” PG

Create a Freezer Frenzy

Made with high quality ingredients: • Certified Gluten Free • USDA Certified Organic • Ancient Grains • Sprouted Grains • Whole Grains

Discuss your private label needs with Amy Lotker (Owner) alotker@better4ufoods.com

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| Progressive Grocer | Ahead of What’s Next | July 2016

Good fish. Good sauce. IT'S THAT SIMPLE TRY OUR AMAZING FLAVORS


NEW!

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IS NOW IN THE SEAFOOD FREEZER CASE.

Stock up with the Bold flavors of Sea Best ® Soup Bowls. Inspired by true Asian flavors and quality seafood, our Soup Bowls are the newest addition to the Frozen Seafood Category. Add some flair to your case with our two frozen soup items made from a seasoned broth infused with garlic and spring onion, or a sweet coconut broth with fiery chilli, and base for wontons filled with whole heat in its own microwaveable

lemongrass. Both create the perfect tender shrimp. Just add water, bowl, and enjoy!

For more information, contact a Sea Best Seafood Expert.

866.950.2378 | seabest.com |


Fresh Food

Food Safety

Tracing Roots

Consumer demand, government regulations and technology are revolutionizing the fresh supply chain. By Jennifer Strailey

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early three-quarters of consumers want more information about the origin of their food, according to Food Marketing Institute (FMI). They want to know where it came from, and that it’s safe, minimally processed and handled with care every step of the way from the farm to the supermarket. What’s more, FMI’s “U.S. Grocery Shopper Trends 2015” found that shoppers increasingly recognize the role of farmers and retailers in the food safety landscape. In 2009, only 8 percent of shoppers reported that they relied on farmers for a safe food supply, versus 23 percent in 2015. And while just 25 percent of shoppers relied on retailers to ensure food safety in 2009, that number jumped to 41 percent in 2015.

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Consumers expect a safe food supply, and government regulations stemming from the Food Safety and Modernization Act (FSMA) seek to ensure that those expectations are met. Regulatory compliance is spurring new technology, traceability and more stringent food safety standards. And while there are costs associated with implementation, the improved efficiencies that result indicate long-term benefits. “Case studies show the business efficiencies that come with having traceability systems in place, and retailers are already seeing the benefits,” asserts Hilary Thesmar, chief food and product safety officer and VP, food safety programs at Arlington, Va.-based FMI. As an example, Thesmar points to supplier advance ship notices that inform retailers exactly what products, lot

| Progressive Grocer | Ahead of What’s Next | July 2016


numbers and pack dates are on their way before the product arrives. “Knowing what products are in the pipeline can help reduce over-ordering and shrink,” she says. “Companies were wasting a lot of money by not knowing what they had where.” Innovation and technology are transforming the supply chain, and helping to translate traceability into profitability. “The industry found that if you’re using traceability for food safety only, the cost is too high and the benefit is too low,” explains Thesmar. “But when the IT and logistics people came to the table, they showed how cost-effective traceability can be, and even how the benefits outweigh the cost.” To that end, FMI has teamed with ReposiTrak, from Park City Group, to provide its members with a record management solution that enables all participants in the farm-to-table supply chain to access advanced traceability (more than one forward or one back) as products and their ingredients move between trading partners. “When you need it, it gives you visibility into the supply chain,” notes Thesmar, who sees traceability as a bridge between compliance and business efficiencies. Advanced traceability is also the future of the food industry. “The pending regulations from the

FDA will affect traceability,” she predicts. “Right now, it’s one back, one forward. But five years from now, that probably won’t be the case.” “Track and trace is one of the most onerous elements of FSMA, but it doesn’t have to be,” says Randy Fields, CEO of Salt Lake City-based Park City Group. “The one-forward-and-one-back requirement can and should be extended to help companies gain visibility of the entire supply chain. This in turn can result in better supplier collaboration, reduced out-of-stocks, improved customer service and higher margins.” The entire supply chain has a stake in elevating food safety standards and traceability, and collaboration is key to the success of all. With this in mind, FMI has championed industry-wide communication on the subject, bringing everyone to the table, from seafood to produce to meat and dairy/deli/ bakery, in an effort to ensure that all computer systems are speaking the same language. “The goal is not to develop one system that everyone needs to use, but rather to create a framework-based open marketplace that’s based on agreed-upon systems,” observes Thesmar, pointing to the success of the Institute of Food Technolog

Case studies show the business efficiencies that come with having traceability systems in place, and retailers are already seeing the benefits.” —Hilary Thesmar, FMI

Show love for our peppers and the earth. At Wholesum Harvest, our peppers are sustainably grown using responsible farming practices. We turn our depleted plants into nutrient-rich compost, use mechanical weed control and apply natural, integrated pest management. We see farming as a stewardship, leaving the planet better than we found it.

Wholesum Harvest | PO Box 7348, Nogales AZ 85628 Phone: 520.281.9233 | Fax: 520.281.4366 | wh.farm | contact@wh.farm Wholesum Harvest is proudly certified organic by QAI, San Diego, CA.

©2016 Wholesum Harvest

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Track and trace is one of the most onerous elements of FSMA, but it doesn’t have to be.” —Randy Fields, Park City Group

Food Safety

ist’s Global Food Traceability Center (GFTC), which delivers applied research and expertise on food product traceability and data collaboration. “The GFTC has been a huge success,” she asserts. “FMI has been involved from the beginning, as have some other trade associations. The momentum comes from people agreeing on a common goal.” Food safety and traceability are connecting all of the players in the supply chain like never before, and ultimately moving the industry in a positive direction. “Historically, we haven’t had traceability in the food supply, but things are better than they were a year ago, and way better than five years ago,” affirms Thesmar. “It’s everyone working together — growers, suppliers, retailers and industry organizations. It goes all the way back to the seeds, and it takes the whole industry to achieve.”

Consumer-driven Transparency Consumer demand for transparency is also driving change in the fresh supply chain — indeed faster and more profoundly than the evolving FSMA regulations are. “Interest in food transparency is high,” observes Chris DuBois, principal at IRI Worldwide. “There’s been a move to organic, antibiotic-free and nonGMO, as well as a secondary big push for local and traceability back to the farm.” FMI conducted a fresh trends series with Chicago-based IRI, including a “Top Trends in Fresh Food Transparency” webinar that explored consumer expectation for clarity, accuracy and usefulness of food-related information from the companies that produce and sell it.

It Takes a Village Powered by Park City Group’s technology, the ReposiTrak platform consists of two systems: compliance management and track and trace. “We believe it takes a village to manage compliance and track and trace, so we offer an active versus a passive approach,” says Randy Fields, CEO of Salt Lake City-based Park City Group. “Reducing complexity is at the heart of the industry’s efforts to ensure a safe supply chain. Companies need to manage document compliance and track and trace in a single system.” ReposiTrak monitors data from existing documents, such as ASN, delivery receipts, invoices, and bills of lading, and combines these data with scan label data where possible, for increased accuracy. Relevant data, such as product name, identifier, from/to locations, date of shipment, and quantity shipped, used or sold, are pulled each time a product moves to a new location in the supply chain, to provide visibility of its path.   Fields further notes that FSMA requires companies to

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Among the top trends revealed, IRI found that animal welfare ranked extremely high with consumers. “I think it stems at least in part from pet owners,” says DuBois. “They have respect for their animals, and it’s very easy for them to feel that other animals should be treated with respect, too.” The pace and scope with which information is shared through technology and social media can create an overnight groundswell of support for an issue such as humanely treated chicken or pork, he adds. IRI also found that seafood sustainability is increasingly on consumers’ radar. They are aware of issues like water bottles and other pollutants in the oceans, and indicate growing concern about ocean health and fish supply. “Another big trend is fair wage and working conditions,” notes DuBois, who points to the Coalition of Immokalee Workers’ (CIW) Fair Food Program in Florida that ensures humane wages and working conditions for the pickers of fruits and vegetables on participating farms. “Walmart, Ahold and a few other retailers signed on to ensure that workers were paid a fair wage. It’s a commitment to do the right thing.” While FSMA compliance is inevitable, the real change is coming from the most proactive in the industry. “Some retailers and processors are actively changing their businesses to be more transparent, and they are growing sales much faster than their competitors,” asserts DuBois. IRI’s research found that the top 20 percent of retailers, in terms of market area, grew their produce departments 44 percent faster when they offered more organic produce. Additionally, the top 20 percent of retailers grew their meat departments 40

collect verification data of their supply chain’s adherence to regulations for up two years and have it accessible within 24 hours. “Similar to Sarbanes-Oxley [an act that protects investors from the possibility of fraudulent accounting activities], CEOs are responsible for verifying the compliance of their supply chain under FSMA,” he says. Managing and sustaining a safe food supply requires a good deal of work for all parties in the supply chain. Supermarkets have an opportunity to earn shoppers’ trust by communicating this good work with consumers. “Retailers and manufacturers also need to understand that communications and transparency are critical to managing the new normal in food safety,” asserts Fields, who believes that sharing tips of safe food preparation and storage, for example, helps to build a reservoir of good will with shoppers. “Shielding the public from the internal food safety workings of the store or distribution center may seem like it’s protecting the company, but it’s really creating more risk,” he continues. “Companies need to be as open and upfront as possible with consumers in order to retain their trust.”

| Progressive Grocer | Ahead of What’s Next | July 2016


percent faster when they offered antibiotic-free meat. “Clearly, consumers are voting with their wallets,” says DuBois, who predicts that we’ll see more producers pursuing third-party certifications, especially for the humane treatment of animals. “When you look at these top trends,” he adds, “I’m highly confident that the retailers who push on them are going to be successful in the long term.”

New Technology “[Food safety and traceability] has moved more toward, and will continue to move toward, cloudbased, real-time monitoring and recording with electronic documentation,” observes Michelle Alvino, MARCOM administrator for DeltaTrak Inc., in

Pleasanton, Calif. “These types of systems minimize or eliminate room for human error and deliberate falsification of records. It makes data sharing easier and supports faster response time to gather information in the event of an audit or recall.” DeltaTrak recently introduced the FlashCheck Temperature Management System, a web-based wireless solution that provides visibility and documentation of food safety and HACCP plan compliance across an entire foodservice operation.  The solution offers a Bluetooth thermometer and tablet with a customizable application featuring HACCP plan checklists for documenting food safety standard operating procedures. Data are stored in a secure account in the cloud, making the store’s HACCP plan automated and paperless.  “We have cloud-based, real-time telematics monitoring and recording systems that can be used for facility monitoring, as well as a mobile fleet-monitoring solution with a GPS locator for managing delivery routes,” explains Alvino. “These give companies 24/7 access to real-time data and archived records to make critical management decisions. It essentially gives them better overall visibility of their cold chain.” PG

Some retailers and processors are actively changing their businesses to be more transparent, and they are growing sales much faster than their competitors.” —Chris DuBois, IRI Worldwide

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Schooling

the Competition Savvy supermarkets make produce a destination for healthful after-school snacks and lunchboxes. By Jennifer Strailey

W

hen given the choice between ice cream and fruit, more children choose the sweet treat, according to a new study. While not surprising, the results of “Do Elementary Students Substitute Ice Cream and Baked Goods for Healthier National School Lunch Program Meal Items?” underscore the ongoing need to make fruits and vegetables more enticing to kids and their families. Selected to appear in Applied Economic Perspectives and Policy, the study, by doctoral student Gabrielle Miller, found that students are substituting baked goods and ice cream for National School Lunch Program meals, as well as for healthier fruit components. As kids return to school next month, grocers have a tremendous opportunity to make the produce

department a destination for healthful lunchbox and after-school snack solutions that appeal to children and parents alike. Produce for Kids (PFK), in Orlando, Fla., is rolling out several initiatives this fall that are designed to assist supermarkets and retail dietitians in readying families for school in a healthy way. In August, PFK will ship its We Heart RDs box filled with resources a retail dietitian might need to help families prepare for a nutritious school season. Avocados from Mexico and Michigan Apple Committee are teaming on the August kits. In conjunction with the RD kits, which will ship to more than 300 retail dietitians, PFK will offer additional downloads for RDs on its website. For the third year, the organization will run its digital Power Your Lunchbox Pledge (www. poweryourlunchbox.com). The program, which encourages families and classrooms to start off the school

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JumP For Produce Produce for Kids is launching its fall meijer campaign to raise funds for the in-school rockand-roll nutrition show “Jump with Jill.” The funds go specifically to school shows within the meijer footprint. Since 2014, this instore program has funded 75 nutrition shows.

Produce

year in a healthy way with produce-packed lunchbox ideas, after-school snacks, and quick and easy breakfast and dinner recipes, features 10 produce partners this year. “Our Power Your Lunchbox Pledge has been extremely successful year over year,” notes PFK VP Trish James. “We started the program in 2014 and doubled all of our results in 2015. This year, we have a lot of great partners supporting the program, so we are hoping to see an even larger awareness of the campaign.”  Grocers can appeal to time-strapped parents by offering healthful produce items that are also convenient. “Fresh-cut is a great option, and grab-and-go is key,” asserts James. “Offering nutrition information that is easily digestible for parents is also a good idea, as well as housing recipes that include items available in-store.” And because kids love to dip, parents will be looking for produce-based snacks that offer a nutritious way to do so. “There’s a lot of healthy options out there to choose from,” James points out. “We’ve seen some fun new options from Good Foods, Wholly Guacamole and Del Monte.”

Lunchbox Love From Cuties to Wonderful Halos to Stemilt’s Lil Snappers, fruit that’s perfectly sized for kids has proved phenomenally successful. “Lil Snappers has grown tremendously since its inception, as it wraps kid-sized fruit in the perfect package,” says Brianna Shales, of Wenatchee, Wash.based Stemilt. “In our latest data pull from Nielsen [Sept. 1, 2015 to April 2, 2016], Lil Snappers Apples showed a 131 percent increase in sales over the previous year and a 123 percent increase in retail dollars.

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Progressive Grocer: Perimeter/fresh departments are becoming increasingly important for grocery retailers. How can Del Monte Fresh help grocers attract customers to those areas? Dionysius Christou: Del Monte Fresh helps grocers attract customers to the produce department by aligning our products with consumer trends and seasonal demands. As we expand some of our current operations and seek new product opportunities, we are constantly working to create promotions focused on expanding fresh produce sales and reaching new consumers, as well as increasing usage frequency by current consumers. One example of this has been the growth of our Del Monte Gold® Extra Sweet pineapple line. We currently market a range of whole fruit to satisfy the increasing demand of our customers and our own fresh-cut facilities. We offer our Del Monte Gold® Extra Sweet pineapple as whole fruit but also in fresh cut cylinders, chunks, rings and spears in a multitude of sizes and fruit medleys. Value-added pineapple has become increasingly popular and has also helped to increase the overall per capita consumption of pineapples.

Del Monte has helped revolutionized the category and is credited for a 250 percent increase in consumption of fresh pineapple in the USA. With the vast majority of pineapples for the North American market grown on our own farms in Costa Rica, Del Monte is uniquely positioned to ensure consistent supplies of premium quality Del Monte Gold® Extra Sweet Pineapple on a year-round basis. This product has become increasingly important for produce departments, as the nationwide focus on health and wellness has lead consumers to demand and expect healthier options whenever and wherever they shop. Consumers can always trust a Del Monte Gold® Extra Sweet Pineapple to be the most consistently succulent fruit in the produce department and in fact it is.

PG: Del Monte Fresh Produce was the first company to introduce a new Gold variety of pineapple. Why it is an important item for produce departments? DC: Fresh pineapples are now a staple in all produce departments in North America. With the introduction of the Del Monte Gold® Extra Sweet Pineapple in the mid 1990’s,

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PG: How can grocers merchandise and promote the pineapple? DC: As always, enhanced display sizes will increase sales of pineapples. Retailers must also stay current with consumer trends, needs, and shopping behaviors when merchandising the product. Our category managers do an excellent job of helping retailers develop category strategies, design plan-o-grams, perform sales analyses, conduct business reviews, and assess promotion and pricing initiatives. Cross-merchandising can also drive sales as well as strategic POS. In addition, Del Monte Fresh knows that one of the most effective ways of driving sales and promoting a product is by continuously providing consistent quality fruit. This includes consistency in size and shell color as well as the internal fruit quality.


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Produce

“We’ve also increased distribution points by 194 percent, which means Lil Snappers have been in stores more weeks out of the year,” Shales adds. This year, Stemilt will introduce Tosca (exclusive to the company) and Concorde pears to the Lil Snappers line of 3-pound pouch bags of premium-quality kid-sized fruit. “Tosca, in particular, is great for back-to-school timing, as it harvests in early August, making it available for back-to-school promotions along with Gala apples, red pears or Bartlett pears,” explains Shales. When it comes to promoting apples and pears, the back-to-school season is critical to success in these categories. To help increase product visibility, Stemilt has new Lil Snappers lane bins for retailers to use at checkout. “For apples and pears, the back-to-school timeframe offers retailers a jump-start to the season by promoting the first fruits of the new harvest,” notes Shales. “It sets the stage for the season to follow.” Timely ads and displays of pears and apples drive sales in the fall. “When you consider that apples are 6 percent of the total produce department dollars on average, that’s money that retailers can’t afford to miss out on,” she adds.

Convenient Olives Pearls Olives to Go! from Musco Family Olive Co., in Tracy, Calif., is another lunchbox-friendly snack that’s resonating with busy, health-conscious families.

“The whole idea behind Olives to Go was to make olives portable, because at the time, you could only buy olives in a can, jar or at the olive bar,” explains Dan Kelly, VP of sales. Using a unique nitrogen gas flush process, Olives to Go are packaged free of liquid in a single-serve cup with no brine. They come in a 4-pack and are available in four varieties: Black Pitted, Pimento Stuffed, Pitted Kalamata and Sliced, the last designed more as a single-serve ingredient for salads or pizza. “According to our latest Nielsen data, Olives to Go are the most distributed item in total xAOC [extended all-outlet combined], which included food, mass and club stores,” notes Kelly, who adds that Musco will launch additional products in 2017 that will focus on creative snacking. Each cup contains 10 ripe pitted olives — one for each finger for lunchtime fun. “This is a low-calorie, healthy snack alternative, and kids love it,” says Kelly. While olives are traditionally promoted during the holidays, Olives to Go creates an opportunity for year-round olive promotion and the all-important back-to-school season. “We see a high lift for Olives to Go — a 30 to 40 percent lift factor over base volume in August and September,” observes Kelly. “In some cases, it’s even higher, and repeat purchases are incredibly high on this product.” In its work with several large supermarket chains, Musco has learned that close to 70 percent of purchasers of this product

Fresh Food


Fresh Food

Produce

are new users, and there’s almost no Consumers cannibalization from are looking other types of olives.

for healthy snacks to pack in their kid’s lunchboxes, which is why back-toschool-themed merchandising units resonate well during this time period.” —Dan Connors, Buddy Fruits

Fruits and Nuts “As lives get busier, more and more consumers are snacking at least once a day,” says Dan Connors, VP of marketing and communications for Buddy Fruits, in Coral Gables, Fla., “and, believe it or not, fruit is their No. 1 preferred snack. But one out of every two moms doesn’t think her family is eating enough fruit, mostly because it’s not always easy to do so.” Buddy Fruits is hoping to make fruit consumption easier than ever with its newest product designed with lunchboxes in mind. The company’s FruitTubes line offers fruit purée in tube packaging that can be kept shelf-stable or frozen. “Consumers are looking for healthy snacks to pack in their kid’s lunchboxes, which is why backto-school-themed merchandising units resonate

well during this time period,” asserts Connors. With this in mind, Buddy Fruits is joining with Easton, Pa.-based Crayola to provide a convenient and colorful way to bring back-to-school excitement to produce. From late summer through early fall, Buddy Fruits will offer co-branded back-to-schoolthemed merchandising displays with a sweepstakes opportunity for consumers to win a year’s supply of school essentials for an entire classroom, including Buddy Fruits and Crayola products. “Through consumer research, we’ve learned that families are looking to pack produce items in lunchboxes that are convenient and easy to consume,” adds Connors. Unlike whole fruit that might bruise, FruitTubes is an easy solution for kids of all ages, including older kids, in a category that is primarily focused on babies and younger kids. In the past eight years, Buddy Fruits has grown from a small family-owned startup to the No. 3 share-

Grown to shine.

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holder in the children’s pouch category. The company further reports a double-digit sales lift during the back-to-school season and a similar lift after New Year’s, when kids return to school after winter break.

Spicy or Sweet Snacking California Sun Dry Foods, in Danville, Calif., makes tomato snacking a snap with its cello bags of sun-dried tomatoes in six varieties. Each 3-ounce bag contains almost 4 pounds of California-grown tomatoes. The six varieties are Sun-Dried Tomatoes Halves, Sun-Dried Tomatoes Julienne Cut, Smoked Sun-Dried Tomatoes Halves, Smoked SunDried Tomatoes Julienne Cut, Italian-Style Halves with Herbs, and SouthwesternStyle Halves with Spices. While the last one might be too hot for some kids, the company’s Gary DeAtley still maintains, “The classic sun-dried tomatoes are perfect for lunchboxes and after-school snacks.” Mariani Packing Co., in Vacaville, Calif., offers a number of lunchboxready products, including 1.5-ounce snack sizes of Cranberries, Raisins and Vanilla Yogurt Raisins, as well as Honeybars in six flavors: Cranberry, Trail Mix, Granola, Apple Cinnamon, Sesame, and Sweet & Salty. “We feel it’s important to appeal to not only the parents by offering a nutritious and healthy alternative snack for kids, but to make sure that kids enjoy the flavor as well,” says Brand Manager Christine Lewis. Mariani also sees a sales lift in its lunchbox-friendly products when they’re promoted for the back-toschool occasion. Lewis recommends highlighting these items with signage or displays and promoting them with special pricing during this time of year. “It’s also a good idea to merchandise these items out of department, in secondary locations — near school lunchboxes, near the checkout area and anywhere back-to-school items are sold,” she adds. PG July 2016 | progressivegrocer.com |

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Produce Category Spotlight

Crunch Time New varieties and high-graphic packaging are driving growth in apples. By Jennifer Strailey

A

pples have become one of the most f lavorful and colorful categories in produce, thanks to a host of new varieties and dynamic packaging solutions that are proving to be a compelling combination year-round. “The 2-pound high-graphic pouch bag has been such a success because it offers a unique merchandising opportunity,” asserts Steve Lutz, VP of marketing for Columbia Marketing International (CMI), in Wenatchee, Wash. “It’s the only segment of the apple business that’s growing. Retailers are beginning to merchandise pouch bags differently than they have in the past — building upright displays that play off the power of the packaging.”

CMI offers a number of top-selling apple varieties in the pouch bags, including Ambrosia and Kiku. “Ambrosia has really been a hot apple,” notes Lutz, who points to Nielsen data indicating that it was the ninth-highest-selling apple for the last 52 weeks; in the meantime, Kiku is No. 15 and climbing in popularity, and “Kanzi is coming on strong,” he adds. The new varieties in the market range from sweet to tart, with fans all along the spectrum. Lutz sees the most desirable new varieties as those better adapted to withstand the trials of distribution while retaining their integrity. CMI has several product rollouts this fall. It’s expanding its Daisy Girl Organics line with Kiku and Kanzi apples. Additionally, one of CMI’s growers has received a license to sell Jazz, Envy and Pacific Rose apples for the first time, starting with this fall’s crop. The Next Big Thing (NBT) Cooperative, in Alden, N.Y., has also met with success using the high-graphic pouch bag for its SweeTango apples. NBT will launch a new design for its pouch and box, too. “We want to make sure the first thing

The 2-pound high-graphic pouch bag has been such a success because it offers a unique merchandising opportunity. It’s the only segment of the apple business that’s growing.” —Steve Lutz, Columbia Marketing International

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people see is the SweeTango brand,” explains Theron Kibbe, of NBT. The old packaging included a brand statement and taste profile, which have been eliminated. “When we created the initial packaging, SweeTango was new, but now that it has a following, we just have to shout the name,” notes Kibbe.

Seasonal Sellers Consumers not only crave more variety from the apple category, they also want more choices year-round. Minneapolis-based Honeybear Brands, which

launched Pazazz apples in more than 350 new retail locations across North America in the first quarter of 2016, reports selling out in record time in many markets. The season for Pazazz is December through March. “Pazazz hits the stand when other apple varieties have lost a lot of their luster and flavor,” says Don Roper, VP, sales and marketing. “We consistently heard from [consumers] how it is difficult to find a good apple early in the year.” Meanwhile, Los Angeles-based Giumarra is looking for a bite of the summer apple market with Diva brand apples, which hit stores last month. Exclusively grown in New Zealand orchards, Diva is a bright-red premium apple with high flavor and aroma. This marks the second season for the Diva apple from Giumarra, which is expecting larger volumes this year due to an excellent growing season in New Zealand. PG

take a Stand Pouch bags allow for dynamic upright apple displays.

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Health, Beauty & Wellness

Peak Condition Sports nutrition products are growing popular among a broader range of consumers. By Barbara Sax

W People are moving away from synthetics and lots of added sugars, and moving into natural sports nutrition ingredients.” —Kate Shanley, Vibrant Health

ider consumer appeal and more plant-based natural and organic products are driving the sports nutrition category, and supermarket retailers are expanding their selection in this growing category to capture a greater share of sales. Dollar sales of sports nutrition products were up 24.9 percent across natural supermarkets (excluding Whole Foods Market), specialty supermarkets and conventional multioutlet channels for the 52 weeks ending May 15, according to data from Schaumburg, Ill.-based SPINS. Meal replacement and supplement powder dollar sales surged 9.4 percent during the same period. Sports nutrition products are designed to improve physical endurance, increase muscle growth/development/mass or speed recovery after exercise. The category includes bars, powders and ready-to-drink products, as well as newer formulations such as gels and snacks. Once targeted only to core athletes and body builders, the products are now being offered to a much wider audience, and manufacturers are making their marketing and packaging more appealing to women. Newer products with less complex formulations, more convenient formats, and simple, natural ingredients are helping to widen the appeal of the sports nutrition category among consumers with active lifestyles looking for healthy-snacking and meal replacement options.

Clean and Natural Manufacturers say that “clean-label” products, organic items and unique flavor profiles are driving category growth. “People are moving away from synthetics and lots of added sugars, and moving into natural sports nutrition ingredients. Consumers are realizing that many synthetic sports nutrition products are not as safe as they thought,” says Kate Shanley, a spokeswoman for Canaan, Conn.-based Vibrant Health, which recently introduced Pro Mat-

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cha, a protein powder containing matcha green tea. Sports protein powder continues to dominate sports nutrition, accounting for 70 percent of sales in 2015, according to Euromonitor. The Londonbased market research company has found that whey is the most common protein source in sports nutrition products in the United States, since its fast-absorbing source of protein has traditionally been preferred by many fitness enthusiasts and muscle builders. Newer plant-based products from sources like pea, rice and hemp are driving category growth and attracting new users. SPINS data show that dollar sales of plant-based powders grew more than 500 percent for the previously cited period. Manitoba Harvest Hemp Foods, which markets the Hemp Hearts line of bites, powders and bars and Hemp Pro hemp powder, introduced the Hemp Protein Smoothie at Natural Products Expo West last March. “Choice is really important to consumers looking for new trends, and plant-based sources of protein and healthy snacks are two big trends we are targeting,” notes Kelly Saunderson, a spokeswoman for the Winnipeg, Manitoba-based company. According to Saunderson, retailers have promoted Manitoba’s line on end caps and held crosspromotions in the store. “Our Hemp Hearts bagged products are often merchandised in the sports nutrition section, as well as the dairy and produce section to remind people that they can mix the powder into a shake,” she says. “The chronic use of these products is a big opportunity for retailers.”


Nonfoods

Health, Beauty & Wellness

Consumers who use sports nutrition products use them every day, so they want variety. Retailers need to offer a variety of delivery options and flavors.” —Eric Golman, Javazen

Standing Out in a Crowd Also at Natural Products Expo, Amazing Grass launched a threeSKU Protein Superfood line of all-in-one plant-based protein nutrition shakes in three flavors. “Protein products have gotten so big, retailers are looking at the category twice a year,” observes Tom Tierney, EVP of sales at Newport Beach, Calif.-based Amazing Grass. “It’s a crowded category, and more channels are increasing the space they give to the products. Two years ago, Costco didn’t carry protein powders, and now they carry around 10 SKUs. One supermarket retailer added 30 percent more products to the category. Consumers tell us they want to buy the products at stores where they are shopping, and the channels of distribution for the category are blurring.” The category’s expansion in supermarkets means that more niche products such as Chantilly, Va.based Javazen, a blend of coffee and tea promoted as a pre-workout energy booster, are being added

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www.masonways.com

to retailers’ selections. “Consumers who use sports nutrition products use them every day, so they want variety,” explains Javazen CEO Eric Golman. “Retailers need to offer a variety of delivery options and flavors.” The company will add a pumpkin spice variety to its three existing flavors this fall and will offer in-store product samples this summer. Manufacturers say a good product mix includes protein powders, energy/meal replacement bars, and ready-to-drink energy and protein shakes, as well as new formulations. Rochester, N.Y.-based Wegmans Food Markets, for example, merchandises bars next to powders and adjacent to ready-to-drink beverages, identifying the category as “sports nutrition” with signage. Novato, Calif.-based Navitas Naturals recently introduced Superfood + Bars, gluten-free bars that don’t contain whey, artificial sweeteners, fabricated proteins or dairy. Organic simple-ingredient products are having an impact across the category.

Organic Growth Organic products are some of the fastest-growing products in the $312 million ready-to-drink protein-based sports beverage category, including Organic Valley Organic Fuel and Organic Balance. “The category has seen huge increases in usage over last year,” affirms Nicole Mydy, marketing manager at CROPP Cooperative, marketer of the La Farge, Wis.-based Organic Valley brand. “People who use the products use them 100 times a year, and they are buying three at a time, so it’s important that retailers have products in singles and in multipacks.” “There’s been a lot more investment in organic brands,” says Richard Laver, founder of the Kate Farms brand of superfood meal replacement beverages, based in Santa Barbara, Calif. “Beverages have quicker absorption than bars, and a lot of people want liquid nutrition, especially from an organic product loaded with superfoods.” Sometimes category innovation outpaces even industry knowledge. “When we introduced our fruit and protein pouches, we had to explain them to retailers,” notes Krystle Orlando, marketing coordinator at Natick, Mass.-based Fuel for Fire, a line of snacks invented by Iron Man triathlete Rob Gilfeather. “Now that the category is growing so rapidly, we don’t have to do that anymore.” According to Orlando, consumers as varied as moms on the go, firefighters, EMTs and cancer patients are turning to the product as a quick energy booster. “The possibilities are endless,” she says. PG


General Merchandise

Nonfoods

Open to O

Experience E

Innovation on either end of the price spectrum keeps greeting cards going. g. By Barbara Sax

T

echnology has hardly killed the greeting card category. Consumers still find that for certain occasions, only traditional greeting cards will do, and premium-priced cards with eye-catching visuals and sound features are adding excitement by offering consumers experiential cards designed as keepsakes that command prices nearing the $7 mark. American Greetings recently launched Twirly Tops, a collection featuring a quirky illustrated character with brightly colored silky “hair” that spins along to an original song when a pull tab is activated to reveal a message. This fall, the Cleveland-based company will debut Chill Outs, a collection of refrigerator-themed cards that open to reveal characters singing and dancing to original music; Hyper Pop-ups, a collection featuring high-quality audio, synchronized lights and small animatronics with the power to produce motion, vibration and other sensory effects; and Remote Control Wishes, which include a character that can be detached and activated by remote to shake and “sing.” Chips are also being used in a line of Twirly Treasures music and motion gift card holders. Kansas City, Mo.-based Hallmark is also concentrating on innovation on the premium end of the market, having recently introduced everyday Felt & Song cards, a collection featuring full-felt designs with dimensional layers and faux stitching that play a song when opened. Other innovations from Hallmark include Bubble Wands and Paint with Water cards, some of which feature characters from Disney’s “Finding Dory” film and little gifts.

License to Thrill Licensing remains an important part of the category. “Hallmark has licensing agreements with seven of the top 10 most popular licensors, and our licensing agreements extend beyond greetings to gift wrap, ornaments, gifts, plush, stationery and invitations,” says James Melton, the company’s VP

and general manager of national accounts. In 2016, Hallmark will offer products tying into “Finding Dory,” “Trolls,” “Star Trek Beyond,” “Rogue One,” “Disney’s Moana” and “Peanuts.” Further, this Halloween, Hallmark will debut its Spooky Doors with Silly Sounds collection. Each card invites consumers into a story experience featuring pop-ups, papercraft effects and audio. Some cards will play a different sound each time they’re opened, while others will play sounds when the card is closed. Hallmark’s Signature is its fastest-growing premium card brand, and the company plans to build on that success with new card designs, seasonal

more BeLLS aNd whiSTLeS american Greetings’ premium-priced Twirly Treasures cards feature music and motion.

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Nonfoods

CATEGory oUTPoSTiNG recycled Paper Greetings’ beverage napkins and bags sold well when merchandised in the beer and wine department.

The impulse nature of our category provides tremendous opportunity for crossmerchandising. Utilizing displays at checkout stands and seasonal displays in high-traffic areas are all excellent crossmerchandising opportunities.” —Patrice Sadd, American Greetings

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General Merchandise

collections for all major holidays, captions and Signature for Kids cards, as well as more gift wrap and stationery offerings, and a new collection of Hallmark Signature ornaments. “We are even offering retailers an elevated Signature merchandising solution that reflects the style and quality of Signature,” notes Melton. “Hallmark Signature products will be highlighted on shelves via newly designed signage made of rich, textured paper stock that is embossed with Hallmark’s logo.”

Cards and More Viabella has also seen growth in the premium tier. “Our Viabella branded handmade card collection has been the most successful launch in the past two years and has opened up a lot of new doors for us,” affirms Leta Areski, VP of marketing at the Wareham, Mass.-based company. “Cards with unique touches, relevant verse and blank-inside cards have been appealing to the premium segment. We’re seeing new generations of consumers embracing a move back towards sending cards and handwritten notes, and Millennials are willing to spend more money on special keepsake-style cards.” According to Areski, journal use is up significantly and personal thank-you notes are making a huge comeback. Focusing on the stationery category, Viabella recently launched a journal line, reintroduced its note card line in two fresh looks and developed a customized photo card line that includes online consumer personalization. “We are developing ways we can offer this to larger grocery chains,” says Areski. “We are continuing to expand beyond the card category to broaden our product offering to include journals, custom photo card programs and specialty stationery products,” she adds. “Our ability to diversify product lines and react quickly to market changes is a key factor in our recent success.” Innovation in the premium segment is also driving gift wrap. Hallmark recently introduced Spiral Tissue, a quick, easy gift-wrapping solution, and has continued to bring to the market gift bags that make sound, light up or are covered in unique materials such as faux fur. American Greetings’ Wish Wonders, a new collection of gift bows that light up and play music, are timed for a holiday 2016 launch. Value Equation Not every manufacturer is chasing the premium consumer, however. MikWright cards priced in the $3.50-$3.95 range are generating strong sales for the brand. “People often grab all six cards in a slot if the sentiment speaks to them and their recipient list,” says Tim Mikkelsen, founder of Charlotte, N.C.-based MikWright, noting that the company is

| Progressive Grocer | Ahead of What’s Next | July 2016

moving to flat $3.95 pricing across the line. And while premium-priced cards are performing well, value offerings are also growing. A recent example is American Greetings’ new P.S. Hello collection, which offers cards to mark getting a driver’s license, celebrating a big accomplishment with coworkers or adopting a pet, all for $2.99 each Value items are also key in the wrap category. “In the value gift wrap category, value gift bags are the most popular item sold,” observes Hallmark’s Melton. “We tend to see stronger tissue and accessories sales when value bags are in the display as well.” Display drives card and wrap purchases, and well-placed secondary displays can lift category sales. Last year, Chicago-based Recycled Paper Greetings launched a line of humorous beverage napkins and beverage bags that did particularly well when merchandised in beer and wine departments. “The impulse nature of our category provides tremendous opportunity for cross-merchandising. Utilizing displays at checkout stands and seasonal displays in high-traffic areas are all excellent cross-merchandising opportunities,” notes Patrice Sadd, director of corporate communications at American Greetings. “Almost half of our cards are purchased on impulse,” says Recycled Paper Greetings General Manager Aaron Siegel. “When people see something funny that is relevant to their relationship with someone, they pick it up, even if it wasn’t planned. This is true of young and older consumers alike. With younger consumers, anytime or blank cards have been rising in popularity because they want the opportunity to personalize it and decide the sending situation for themselves.” This summer, Recycled Paper Greetings is launching Election Collection, a line of funny cards designed to tap into election fever. “We have offered this collection for every election season for years now, and it is always a favorite,” remarks Siegel. PG


There’s a card for that?

A driver’s license, celebrating a big accomplishment with co-workers or getting a new furry friend – yes there is a card for that! P.S. Hello makes it easy for shoppers to find amazing cards to celebrate life’s big, small and in-between moments, at a great $2.99 price. It’s one more way American Greetings is working to make the world a more thoughtful and caring place.


Because it’s a hot-pink-laser-cut-dress kind of day Hallmark Cards is the proud recipient of 17 LOUIE Awards from the Greeting Card Association.

Upscale materials. High-end embellishments. Distinct style. For when it’s no ordinary occasion, celebrate with no ordinary card.

HallmarkGreetings.com


Front End

Technology

Focus on

Service

Self-checkout proves a potent resource for independents as much as for big chains. By Marc Millstein

S

ome retailers are still debating the benefits and ultimate return on investment of point-of-sale self-checkout systems. Many others, however, are sold on the stepped-up speed and ease of customer use, as well as the improved service levels and streamlined labor costs offered by the systems. That’s proving true not only for large chains such as Kroger, Ahold and many others, but also — and perhaps more importantly

— for smaller regional chains and independents. According to retailers and industry leaders interviewed by Progressive Grocer, self-checkout rates at some locations are topping 40 percent of transactions while reducing front end and backup staffing requirements by equally impressive numbers. For most retailers, the percentage of transaction won’t reach these levels. But the opportunity to leverage new-generation self-checkout systems with improved attributes helps July 2016 | progressivegrocer.com |

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Technology

Front End

grocery retailers in a number of significant ways. For instance, the need for backup staffing to help out at the POS during sudden spurts of activity and busier periods throughout the day is greatly reduced. As a result, department staffers who before had to perform double duty can instead now stay where they are — behind the higher-margin deli, meat and seafood counters and in other fresh perimeter sections — to engage customers and drive those sales. Cash flow requirements are greatly reduced. With the self-checkout stations now being used, the upfront cash requirement has been reduced to as little as $400, more than four times less than what’s typically required at traditional lanes. Further, the precision of the systems and the

inherent cash-recycling mechanism mean that retailers can reduce the time frame for required manual reconciliation to as little as once a month, retailers tell PG.

Flexibility a Game Changer For independents especially, the ability to keep more lanes open — from early in the morning to late at night — without requiring increased staff, along with reduced cash-on-hand requirements and greater flexibility in staffing, has been a major game changer. “When we first started using self-checkout, we installed them in our Morgantown, W.Va., location, which at the time had the lowest unemployment rate in the state,” says Shila Mason, front end supervisor for Jamieson Family Markets, based in Uniontown, Pa. “We also were on the outskirts of the main part of the city and struggling to get people to apply for jobs and to stay.” The company operates 10 Shop N Save full-line traditional supermarkets, with an 11th scheduled to open this summer, and 10 Save-ALot limited-assortment stores, all in Pennsylvania and West Virginia. “Morgantown is a huge college town, and people were coming and going,” Mason continues. “That was really hurting us. We just couldn’t keep our schedules on target, and our service levels were slipping. We couldn’t keep enough lanes open.” So the company made the decision to invest in selfcheckout with three lanes in one store, “and they took off like wildfire,” she notes. “Literally, it saved us.” Since then, the company has rolled out selfcheckouts to additional stores and is upgrading to the latest Fast Lane models from Duluth, Ga.-based NCR. Shoring Up Staffing Other grocers report similar scenarios. “We have had so much success with the two stores we have them in, that in the new store we are opening this summer, we are going to go with four self-checkout lanes and only three regular registers, which is really sort of a leap of faith,” says Jamie Fincke, Jamieson’s VP of operations. “We are putting a lot of trust in the way these things are operating.”

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“Imagine opening a full-size grocery store with limited upfront staffing,” Fincke adds. “We’ll make sure it works. But it is going to be a real test.” At Stormans, an independent operator in Olympia, Wash., the move to self-checkout came with much excitement — but also apprehension regarding payback time. “I always felt like self-checkout in the right stores would bring some advantages,” notes VP Greg Stormans, whose company operates two Thriftway supermarkets in the Olympia area, “but I have been reading how some retailers are ripping them out, some putting them in. These things are way more expensive than a regular checkout lane. But we installed them, and it was amazing. We opened the units late last year, and people just began using them. “Clearly, there was a large segment of our customer base that was already using them at other stores — whether competitors, Lowes, Home Depot, etc.,” he continues. “We started off with the percentage of transactions conducted through the self-checkout lanes in the low- to mid-40s, and now it runs in the high 40s and sometimes above 50 percent.” Stormans points out that the customer base and the particular location of the store made it ideal for self-checkout based on a high number of small transactions. “We estimated a payback in 15 months, but I am not saying all retailers would achieve 40 or 50 percent transaction levels,” he cautions. “We have a large amount of customers coming in here for a quick snack, for takeout sushi or a sandwich.”

Shopper Concerns While the potential is proving to meet expectations, Stormans admits that there was quite a bit of resistance initially from many in the community who thought the retailer would be cutting jobs as a result of installing the self-checkouts. “When we first announced we were going to do this and started putting them in, I had people calling me up — people here know who I am — saying they were really disappointed,” he recalls. “[They told me,] ‘I will not go through those checkout lanes. We think it is terrible what you are doing to your people.’” That sentiment passed rather quickly, he notes,

when people realized that no one was being let go, but that instead resources were being reallocated to provide better service in other areas of the store, especially in deli, meat and other fresh food sections. “We often have 50 percent of transactions going through the self-checkout, so clearly customers are telling us that is what they want,” Stormans says, “and we have been able to enhance our image from both a service and convenience standpoint. We have broadened our appeal for customers who want to control the process and use self-checkout, as well as for those who don’t want self-checkout and prefer the interaction with a cashier.” The company is using NCR’s Fast Lane self-checkout solutions. Jamieson’s Mason also points to the systems’ automatic cash reconciliation as providing major savings in labor, time and cash flow. In fact, the systems require manual reconciliation only once each month. “I didn’t have any balancing issue,” Mason says. “The money is completely locked in and it recycles the cash, so you have much less need to restock the machines. You also cut out cashier discrepancies. I do not have cashiers that are over or short.” Plus, she notes, “I have been able to lower cash on hand because of the way the self-checkout machines recycle money. With traditional registers, I had to keep each one stocked with $1,725, and then I would have to fill them two or three times a week. I had to manually count and fill them.” With the new machines, Mason says: “I put in $400, and that is it. In the morning, I might need to drop in a roll of quarters, and that is it. There is a lot of cash flow savings, along with labor and service benefits.” PG

We often have 50 percent of transactions going through the selfcheckout, so clearly customers are telling us that is what they want, and we have been able to enhance our image from both a service and convenience standpoint.” —Greg Stormans, Stormans

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Food, Beverage & Nonfood Products

Blount Organic Soups Go National

Blount Fine Foods is launching a line of premium organic soups nationally and adding two new varieties: vegetarian and gluten-free Coconut Lentil and gluten-free Broccoli Cheddar. Also, existing soups have had their recipes tweaked, and received a package redesign to highlight product features and the Blount brand name. All soups are available in 16-ounce microwaveable containers with Blount’s exclusive Cool Grip Rim that makes picking up hot soup safe. The items will be supported with a comprehensive campaign beginning in the fall, the onset of peak soup season. www.BlountFineFoods.com

Brookside Yogurt-Flavored Fruit & Nut Bars

The Hershey Co. has added to its Brookside Fruit & Nut Bar line with the introduction of yogurt-flavored fruit and nut bars, in which real fruit, natural flavors, nuts and seeds rest atop yogurt-flavored cream. Brookside Yogurt Flavored Fruit & Nut Bars are available in Cranberry Blueberry with Citrus, Vanilla Fig, and Mango Pineapple varieties; all are gluten-free, non-GMO and free of artificial flavors. The SRP for a single bar is $1.59; a 4-pack goes for a suggested $4.99. www.brooksidesnacks.com

Bob’s Red Mill’s Paleo Baking Flour

Looking to meet the increasing demand for grainfree foods, Bob’s Red Mill has launched a grain-free baking flour blend, made with the company’s nut flours. Bob’s Red Mill Paleo Baking Flour is a glutenfree blend of almond flour, arrowroot starch, coconut flour and tapioca flour. A serving offers 4 grams of protein and 10 grams of net carbs. The blend is recommended for such items as pizza crusts, cakes, crackers, pancakes, flatbreads and cookies. The SRPs are $13.99 per 16-ounce bag and $25.99 per 32-ounce bag. www.bobsredmill.com

Organic Matcha Coconut Water Iced Tea

Matcha, or green tea powder, pairs with coconut water to create The Republic of Tea’s Organic Matcha Coconut Water Iced Tea pouches. The tea contains premium green tea leaves, matcha and natural notes of coconut water. A tin contains eight pouches, each of which makes a quart of iced tea. One pouch is steeped in two cups of hot water; then a cup of ice is added to cool the beverage before serving it over additional ice for a refreshing drink. The SRP is $7.99 www.republicoftea.com

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| Progressive Grocer | Ahead of What’s Next | July 2016


Pocoyo’s ‘Wedgie-free’ Diapers

Animated children’s television character Pocoyo, “a curious, fun-loving, friendly toddler” who “learns through laughter,” is lending his fame to a line of disposable infant diapers, training pants and wipes from CaRears Diapers LLC. The line includes wipes and Wide Bottom Fit Diapers, which accommodate a range of baby bottoms and reportedly provide a more comfortable fit, with no diaper “wedgies.” Pocoyo products are hypoallergenic, super-absorbent and leak-proof, and the brand’s diapers are free of latex and chlorine. The SRP for a small pack of diapers is $4.79, a jumbo pack is $7.49; training pants and swimmers are $8.25; an 80-count pack of wipes is $2.39; travel packs are $2.79; and diaper boxes are $17.49. www.carearsdiapers.com

Fruit Refreshers: Fruit Cups for Adults

Del Monte has taken a more mature approach with Fruit Refreshers, slightly larger, lightly sweetened fruit cups that contain no high-fructose corn syrup, artificial flavors or sweeteners. Two-packs of 7-ounce cups are available in 100-calorie Mandarin Oranges in Coconut Water and 90-calorie Pineapple in Passion Fruit Water varieties. The SRP for either is $2. www.delmonte.com

Craft Burgers by Rastelli

Craft Burgers, from Rastelli Foods Group, are made from source-verified premium ground meat and seafood born, raised and processed in the United States with no artificial ingredients or preservatives. Four-ounce patties can be cooked from frozen or thawed. The varieties are All Natural Turkey, Angus Beef, Angus Beef Short Rib, Hand Crafted Salmon and Organic Grass Fed Beef. Fifteen-ounce packages of six to eight patties retail for a suggested $11.99-$19.99. www.rastellimarket.com

SqueeZ-able YogurtZ

GoGo SqueeZ, a brand of Materne North America, is expanding on its success with squeezable, resealable, 100 percent fruit, no-sugar-added pouches with the launch of GoGo SqueeZ YogurtZ, available in Strawberry, Banana and Berry flavors. Made with real yogurt and fruit, GoGo SqueeZ YogurtZ is made from antibiotic- and artificial growth hormone-free milk, as well as being gluten- and nut-free and kosher certified. Requiring no refrigeration, a 4-count package of 3-ounce pouches retails for a suggested $3.29. www.gogosqueez.com

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ECRS Continues National Rollout of Catapult/Worldpay/ Equinox Patch Boone, N.C.-based ECRS is continuing to roll out the Catapult/Worldpay/Equinox patch to sites nationwide after successful field testing, with a zero-failure EMV transaction tender rate. The patch specifically targets all retailers using Equinox L5200/L5300 PIN Pad devices and Worldpay direct-payment processing to accept EMV transactions (chip cards) at the point of sale and grocery self-checkout. The ECRS development team has delivered a simple software patch that will allow Catapult retailers to quickly upgrade, by terminal or by store level, without performing a more complex full-version software upgrade. The patch is deployable via ECRS Stream, embedded within the Catapult platform. ECRS is delivering the EMV patch at no additional charge. Customers that wish to take advantage of this patch update must have a contract with the Worldpay National Sales team (via the ECRS Direct Tunnel), an Equinox L5200 or L5300 device, Catapult v. 5.3.2, and a current support and care package with ECRS. www.ecrs.com

5 Generation Bakers Boosts 3rd-party Audit Ratings McKees Rocks, Pa.-based 5 Generation Bakers, manufacturer of Jenny Lee Swirl Breads, has earned third-party audit ratings even higher than last year’s Superior ranking from the American Institute of Baking (AIB), since moving into its new production and headquarters facility in early May. Its score last year of 905 was eclipsed by a score of 950, believed to be the highest score seen in any inspection by Manhattan, Kansas-based AIB. In another independent third-party audit by a national store chain, 5 Generation achieved a perfect score of 100 percent. Scott Baker, company president and founder, credited the successes to the design and configuration of the new facility, and the training and skill levels of the company’s production team. www.5generationbakers.com

Land O’Frost Food Safety Champion Honored for Lifetime Achievement John N. Butts, Ph.D., VP of research at Munster, Ind.-based lunchmeat producer Land O’Frost Inc., received a 2016 Food Safety Leadership Award for Lifetime Achievement from Ann Arbor, Mich.-based NSF International Inc., the leading global certifier of global food safety schemes among the agriculture, processing, food equipment, restaurant and retail industries for more than 70 years. Butts was recognized for his role as a food safety advocate and foodprocessing scientist with more than 40 years of experience creating innovative food protection solutions. The award recognizes leaders within the food industry who have made significant contributions to advancing food safety. Butts has helped many other food companies integrate scientific principles and food technology in real-world manufacturing settings to enhance food safety, assure product quality and deliver efficient solutions. He and other 2016 NSF Food Safety Leadership Award winners were honored at an awards ceremony during the 2016 Food Safety Summit in May. www.landofrost.com

Deli Star Creates Executive Chef Position Fayetteville, Ill.-based Deli Star Corp. has appointed Jared Case the company’s executive chef. A consultant with Deli Star since 2009, Case will serve as a driving force in product development and custom menu creation with Deli Star’s key customer partners. “Bringing a chef’s perspective to our process reinforces our commitment to deliver the safest and most in-demand proteins to our customers,” says Justin Siegel, Deli Star president. Case will lead culinary support at the St. Louis Innovation Center, managing its kitchen and creating recipes that showcase Deli Star’s products. He will also drive innovation through menu ideation and by serving as the primary research and development lead, collaborating with the production team, and providing sales support with key culinary contacts and customers. A graduate of the Culinary Institute of America, Case has worked for some of the most acclaimed restaurants in Chicago and St. Louis. www.delistarinc.com

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Jared Case


advertiser index 5 Generation Bakers American Greeting Ind. Anheuser-Busch Inc. Barilla North America bazaarvoice

102-103

www.5generationbakers.com

129

www.AmericanGreetings.com

Inside Back

www.anheuser-busch.com

88-89

www.barilla.com

27

www.bazaarvoice.com

Beaver Street Fisheries

109

www.beaverfish.com

Better4ufoods

108

wwww.better4Ufoods.com

10-11

www.blountfinefoods.com

59

www.samueladams.com

118

www.bragafresh.com

114

www.harvestsnaps.com

Blount Fine Foods Boston Beer Braga Organic Farms, Inc. Calbee North America California Avocado Commission Campbell Soup Company

63, 119

www.avocado.org

21

www.campbellsoup.com

Coca Cola NA

49

www.cokesolutions.com

Datepac, LLC

73

www.naturaldelights.com

Distant Lands Coffee

77

www.dlcoffee.com

Dr. Praeger’s Sensible Foods

53

www.drpraegers.com

Emmi Roth USA Farmland Foods Inc. Forte Product Solutions

51

www.rothcheese.com

Inside Front

www.farmlandfoods.com

83

www.forteproductsolutions.com

Hallmark Cards

130

www.hallmark.com

Heineken USA

31

www.heinekenusa.com www.hope-ec.org/mshfi.

Hope Enterprise Corporation

81

IMEX Management Inc.

79

www.sialparis.com

Iovate Health Sciences

23

www.sixstarpro.com

35

www.jacklinks.com

Jack Links Beef Jerky Kelloggs Company Love The Wild Mason Vitamins Inc. MasonWays Indestructible Plastics Massimo Zanetti Beverage USA Milk Pep MIWE Mondelez International Nature Sweet NBT Cooperative NCR

92-93

www.kellogg.com

108

www.lovethewild.com

125

www.masonvitamins.com

74, 126

www.masonways.com

100-101

www.mzb-usa.com

13, 41-44

www.milkpep.org

60

www.miwe.com/bakery-systems

Back Cover

www.mondelezinternational.com

120

www.naturesweet.com

123

www.sweettango.com

Cover Tip

www.ncr.com/retail

New Hope Natural Media

57

www.newhope.com

Organic Valley

32

www.organicvalley.coop

113

www.periandsons.com

Peri & Sons Farms Pfizer Consumer Health Post Consumer Brands Produce for Kids

19

www.pfizer.com

98-99

www.postconsumerbrands.com

121

www.produceforkids.com

Produce Marketing Association

39

www.pma.com

Ruiz Foods Products Inc.

17

www.ruizfoodservice.com

Save-A-Lot

3

www.save-a-lot.com

Sealed Air

96-97

www.sealedair.com

40, 69, 84

www.stagnito-edgell.com

121

www.stemilt.com

Stagnito-Edgell Stemilt Growers, Inc. Stonefire Authentic Flatbreads

61

www.stonefire.com

70-71

www.thehumanesociety.org

Trion Industries Inc.

9

www.triononline.com

TW Garner Food Co.

94-95

www.texaspete.com

15

www.tyson.com

The Humane Society

Tyson Foods Wholesum Family Farms

111

wh.farm

Wisdom Natural Brands

54-55

www.sweetleaf.com

Yankee Candle Company

47

www.yankeecandle.com

Progressive Grocer (ISSN 0033-0787, USPS 920-600) is published monthly by Stagnito Business Information, 570 Lake Cook Rd. Deerfield IL 60015. Single copy price $10, except selected special issues. Subscription: $135 a year; Canada $164 (Canada Post Publications Mail Agreement No. 40031729. Foreign $270 (call for air mail rates). Periodicals postage paid at Deerfield, IL 60015 and additional mailing offices. Printed in USA. POSTMASTER: Send all address changes to Progressive Grocer, P.O. Box 1842 Lowell, MA 01853. Copyright ©2016 Stagnito Business Information All rights reserved, including the rights to reproduce in whole or in part. All letters to the editors of this magazine will be treated as having been submitted for publication. The magazine reserves the right to edit and abridge them. The publication is available in microform from University Microfilms International, 300 North Zeeb Road, Ann Arbor, MI 48106. The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

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ADVERTISING SALES & BUSINESS STAFF Kollin Stagnito President & CEO 224-632-8226 kollinstagnito@stagnitomail.com Ned Bardic Chief Revenue Officer 224-632-8224 nbardic@stagnitomail.com Korry Stagnito Chief Brand Officer 224-632-8171 korrystagnito@stagnitomail.com Jeff Friedman Senior Vice President/Brand Director 201-855-7621 jfriedman@stagnitomail.com John Huff Midwest Regional Sales Manager 224-632-8174 jhuff@stagnitomail.com Elizabeth Cherry Western Regional Sales Manager 310-546-3815 • Cell 310-990-9597 echerry@stagnitomail.com Maggie Kaeppel Eastern Marketing Manager 630-364-2150 • Cell 708-565-5350 mkaeppel@stagnitomail.com Mike Shaw Northeast, Marketing Manager 201-855-7631 • Cell 201-281-9100 mshaw@stagnitomail.com Janet Blaney Marketing Manager (AZ, CO, ID, MD, MN, MT, NM, NV, OH, TX, UT, WY) 630-364-1601 jblaney@stagnitomail.com Jackie Batson Advertising Manager 224-632-8183 jbatson@stagnitomail.com UNITED STATES MARKETS Convenience • Grocery/Drug/Mass Store Brands • Specialty Gourmet Multicultural • Green • Technology Hospitality • Apparel

CANADIAN MARKETS • Convenience • Pharmacy • Foodservice

July 2016 | progressivegrocer.com |

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the last word

F

Connect and Reflect

rom omnichannel marketing and empowered associates, to virtual reality, fresh produce “megatrends” and more, enlightenment from all walks of the food industry flowed freely from the podiums and in the aisles of last month’s co-located FMI Connect and United Fresh confabs in Chicago. Indeed, the post-show contents of our reporters’ notebooks contain a cache of new story ideas, angles and sources that promise to keep us energized and occupied for the foreseeable future. In the interim, I’m compelled to borrow a page from the trade show exhibitor’s playbook by sampling some of the most noteworthy nuggets we overheard while fanning out across McCormick Place. Among the most impactful aspects of the annual industry event was the tech-centric “show-within-a-show” Pulse, which pinpointed the critically important omnichannel aspects of food retailing. Presented collaboratively by Progressive Grocer, our sister publication Retail Leader and FMI, the first-ever Pulse ignited an electrifying spark on the show floor with a two-day lineup of retailer panels, keynote presentations, and one-to-one and group business meetings in an intimate, interactive environment that set the stage perfectly for learning and discovery. As one of several thought-leader presentations, tech expert and Fox TV host Shelly Palmer urged Pulse cohorts to resist the notion of drilling down to single shoppers, and instead focus on clusters of shoppers who act similarly, to help guide store-level decisions by finding the patterns and common elements of what’s most interesting. “Yes, we have a lot of data and tools, but humans still interact with each other … and with stores. Adjust your thinking.” —Shelly Palmer, host, Fox TV’s “Shelly Palmer Digital Living”

Another highlight I found intriguing was the general session featuring celebrity chefs/restaurateurs Mario Batali and Robert Irvine, who discussed a range of hot topics. Both Irvine and Batali — who were as authentic and engaging as they were approachable and astute — urged grocers to make better use of social media to connect with consumers. “You want to tell people what you’re doing and what you’re not doing,” said Irvine. “It’s a great way to drive people into your stores.” He also challenged his grocery trading-partner audience to embrace and champion their roles as purpose-driven merchants. “Food changes people’s lives. You are part of that. Food is not handcuffs.” —Chef Robert Irvine

Straight from the practice-what-he-preaches playbook, Batali, co-owner of Chicago’s and New York’s Eataly dining/retail hybrid, implored attendees “to constantly hit [shoppers] with tastes and samples” as part of an ongoing culinary learning experience. “Show me five steps to make something in eight minutes, and I’ll be your customer for life.” —Chef Mario Batali

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Fresh from his keynote address to the United Fresh 2016 delegation, Craig Boyan, partner-inchief of San Antonio-based H-E-B, was also spied absorbing — and, likely, silently applauding — Batali’s mandate to grocers to be fearless and “let the people who work in your stores be the stars.” Evidence that Boyan and Batali are of one mind can be traced to the former’s remarks a day earlier about the industry’s 30-year pattern of “underinvestment” in its people. “How do you show your people that you care about them? That you are investing in them? The way out, we think, is by investing in our people. The most important thing is great partners and greater leadership in every store.” —Craig Boyan, president/COO, H-E-B

Batali’s suggestion for grocers to add “vegetable butchers” to encourage exploration, impart education, and foster interaction between store associates and produce shoppers, also reinforced a defining point made by Anne-Marie Roerink, principal of San Antonio-based 210 Analytics, during her presentation of FMI’s Power of Produce “megatrends” study. “As a mature category, driving growth in fresh produce requires innovation, including more dedicated customer service/outreach, greater staff accessibility and more knowledgeable produce department staff.” —Anne-Marie Roerink, 210 Analytics

Meanwhile back on the show floor, PG Managing Editor Bridget Goldschmidt captured the following memorable gems that further depict the industry’s changing times: “Virtual reality will play a big role in times to come.”

—Bharat Rupani, Interactions, on the future of experiential marketing

“It’s about getting customers to change their mindset, to scan products first instead of looking them up on Google.” —Mike Briggs, Qliktag, which is working with GMA on the SmartLabel initiative

“It’s a focused artificial intelligence platform — not generalized AI, like killer robots.”—Gary Saarenvirta, Daisy Intelligence, explaining how his solution helps retailers determine how to promote and price products

Finally, while it’s no secret that FMI’s annual industry gathering has taken its share of jabs in recent years for lighter crowds, fewer food-focused exhibits and, in consequence, decelerated dynamism, evolutionary changes to the annual show format are also afoot. “As our industry continues to morph and adapt … we are taking steps to change the event to increasingly reflect the food retail industry of today, which is why we’re committing to boldness and agility.” —FMI President/CEO Leslie Sarasin

There’s no question that the diversification of shoppers and proliferation of channels present real challenges for the industry. It’s therefore a must for allied partners to absorb expertise — and respond accordingly — to impel continued evolution. PG

| Progressive Grocer | Ahead of What’s Next | July 2016

Meg Major mmajor@stagnitomail.com Twitter @Meg_Major/@pgrocer


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Progressive Grocer - July 2016  

Progressive Grocer - July 2016