Progressive Grocer - July 2015 by ensembleiq

Pass the Potatoes, Please Industry aims to increase produce consumption Page 123

First Things First

PG’s Breakfast Handbook surveys sector’s potential Page 97

Profiles in Progress Revamped Food Lion roars back to life Page 24

Charting Grocery’s Vital Signs

Pass the Potatoes, Please Industry aims to increase produce consumption Page 123

First Things First

PG’s Breakfast Handbook surveys sector’s potential Page 97

Profiles in Progress Revamped Food Lion roars back to life Page 24

Charting Grocery’s Vital Signs July 2015 • Volume 94 Number 7 $10 • www.progressivegrocer.com

PAGE 51

. On trend and on top, Pete & Gerry’s Organic Eggs and Nellie’s Free Range eggs lead the super premium egg category in both retail dollar sales and growth. All our products are free range, certiﬁed humane and raised on small family farms. Both brands are running consumer advertising campaigns in varied, mass media.

B��T�� V�� R��E��, ��A��B��T�� G��F�� U.™

PeteAndGerrys.com | NelliesFreeRange.com © Pete and Gerry’s Organics, LLC 2015

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

more shopping responsibilities than previous generations of men. Hispanic men are also over-represented in the aisle. Male primary shoppers have a median household income of $62,500, signifcantly more than the median income for households headed by women or for U.S. households in general (both hover just over $52,000).9 Although price is important to men, male shoppers have more money to spend, and those fatter wallets can translate to less price sensitivity in-store compared with women.

How men grocery shop

Top channels shopped by gender Buying food and beverages was primary reason for visit in past 30 days:

Men

76% 53% 34% 21% 21% 15% 16% 13% 6%

Women Grocery Mass/super Club Specialty/natural Convenience Dollar Drug Local Online

75% 57% 28% 22% 15% 17% 15% 16% 4%

Source: MSLGroup, Hartman Group “Food Shopping in America,” 2014

Gender roles may be blurring in the home, but when it comes to shopping, men and women display distinct diferences along every step of the purchase process. To begin with, men tend to shop more frequently than women. Sixty-fve percent of male shoppers hit the grocery store at least twice a week, compared with 58 percent of women shoppers, providing an increased opportunity for conversion.10 And men are less likely than women to be hitting the grocery store for stock-up trips, or “big shops” encompassing all the necessary staples. Women are also more inclined than men to shop because they need items for a specifc recipe, or because they want to use a coupon, although plenty of men use coupons too.11 By comparison, men are more likely than women to be prompted by TV or online ads, to

buy items they plan to eat the same day,12 and to look for fun, new items when in-store.13 In other words, women tend to be strategic grocery planners while men operate more impulsively in comparison. Tus the female shopper may get everything she needs in one weekly stock-up trip, while the male shopper might well need to pick up a few things he missed during his frst grocery run–or was inspired to try later that week. Indeed, men’s higher trip frequency and greater willingness to buy innovative items on impulse ofen spur incremental sales, ofering retailers a great opportunity to grow their basket.

Tese gender diferences carry over into pre-planning habits. Men are less likely than women to take inventory of their pantry, make a list of items or meals, look for deals, or ask other members of the household what they need. Instead, men are much more inclined to say they “just go to the store.”14 And those men who do arrive at the store with a list are ofen following instructions from their female partner. Men are more likely to say their spouse or signifcant other infuences what store they visit and what they buy than to say they are the sole decision-maker (the opposite is true for women).15 When it’s time to choose a store, both men and women tend toward grocery channels (75 percent of women and 76 percent of men bought food or beverages from a grocery store in the past month), followed by mass

Men’s higher trip frequency and greater willingness to buy innovative items on impulse often spur incremental sales, offering retailers a great opportunity to grow their basket.

July 2015

features

Volume 94, Issue 7

cover story

fresh food

SuStainability

Sustainable Goals Grocery retailers are making strides toward their green business benchmarks.

116 category ManageMent

Fresh Centricity Create solutions for shoppers to extend the perimeter’s pull throughout the store.

97 ProgreSSive grocer’S breakfaSt Handbook

Great Day in the Morning Breakfast ofers opportunities for grocery retailers.

grocery groc y

ProgreSSive grocer’S 68 tH annual conSuMer exPenditureS Study

Holding Firm Fresh is in good shape, but center store is in trouble, as consumers seek solutions in a complicated, competitive grocery world.

123 Produce

features 24

ProfileS in ProgreSS

On the Prowl Food Lion’s new leaders — and new format — are helping the chain retrieve its roar.

112 back-to-ScHool MercHandiSing

Class Acts More retailers and manufacturers are emphasizing nutrition in their back-to-school programs.

| Progressive Grocer | Ahead of What’s Next | July 2015

40 Billion Pounds Served Produce sales and consumption are set to soar with scores of new industry campaigns.

130 Produce category SPotligHt

What’s in a Name? Branded and organic apples are outpacing the competition.

SH ARE YO U R S UM ME R . #ITSMILLERTIME Shoppers purchase more beer in the summer than any other season and premium lights increase basket size and drive total category growth1 Miller Lite®, a real Pilsner with only 96 calories, is the perfect addition to any summer occasion Original light can volume is up 1.3% versus last year and white aluminum pint volume is up 6% versus last year2 Capitalize on summer sales with Miller Lite! 1

Nielsen Household Panel data Summer 2013; Margins and Turns from Willard Bishop Supermarket Study Jan 2013

Margin Minder STR BBL Volume 5/214 – 7/2014

570 Lake Cook Rd, Suite 310, Deerfield, IL 60015 224 632-8200 • www.progressivegrocer.com vP, Brand Director 201-855-7621

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 Technology Editor John karolefski 440-582-1889 jkarolefski@stagnitomail.com Senior Editor katie Martin 224-632-8172 kmartin@stagnitomail.com Senior Editor Anna Wolfe 207-773-1154 awolfe@stagnitomail.com Digital Editor kyle Shamorian 224-632-8252 kshamorian@stagnitomail.com Art Director Bill Antkowiak bantkowiak@stagnitomail.com Contributing Editors Jenny McTaggart, Lynn Petrak, Barbara Sax and Jennifer Strailey

nonfoods 134

HealtH Beauty & Wellness

Packed With Power Grocers should capitalize on the growing sports nutrition category.

139

General MercHandise

Card Sharp Paper greetings aren’t disappearing, manufacturers insist, but innovation in the category is essential to compete with digital and social alternatives.

technology 142

Business intelliGence

Accepting the Big Data Challenge Grocers need to step up to remain competitive.

operations

147 supply cHain

The Weakest Links PG explores fve areas of the supply chain that are causing headaches for retailers, and what may be done to reinforce them.

| Progressive Grocer | July 2015

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 MArkETiNG & ProMoTioN 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

EvEnts • MEdia • REsEaRch • infoRMation uNiTED STATES MArkETS Convenience • Grocery/Drug/Mass Store Brands • Specialty Gourmet Multicultural • Green

departments 10 EDiTor’S NoTE: rEiNvENTiNG CATEGory MANAGEMENT 12 PG PuLSE 14 iN-STorE EvENTS CALENDAr: SEPTEMBEr 2015 16 NiELSEN’S ShELf SToPPErS/SPoTLiGhT: viTAMiNS AND SuPPLEMENTS/ProTEiN SuPPLEMENTS 18 MiNTEL GLoBAL NEW ProDuCTS: CookiNG SAuCES, PASTA SAuCES AND SToCkS 20 ALL’S WELLNESS: GEAriNG uP for BACk-To-SChooL 22 NEW horizoNS: ThE CASE for MAkiNG WoMEN hAPPy 150 WhAT’S NExT: EDiTorS’ PiCkS for iNNovATivE ProDuCTS 152 ThE SuPPLiEr SiDE 154 ThE LAST WorD: So hAPPy ToGEThEr?

Jeff friedman jfriedman@stagnitomail.com

CANADiAN MArkETS • Convenience • Pharmacy • Foodservice

President & CEo harry Stagnito Chief information officer kollin Stagnito SvP, Partner Ned Bardic Chief Brand officer korry Stagnito vP & Cfo kyle Stagnito vP/Custom Media Division Pierce hollingsworth 224-632-8229 phollingsworth@stagnitomail.com Production Manager Anngail Norris human resources Manager Sandy Berndt Corporate Marketing Director Bruce hendrickson 224-632-8214 bhendrickson@stagnitomail.com Promotion Director robert kuwada 201-855-7616 rkuwada@stagnitomail.com vP/Events John failla 201-855-7634 jfailla@stagnitomail.com Director of Digital Media John Callanan 203-295-7058 jcallanan@stagnitomail.com Audience Development Director Cindy Cardinal

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

Men are also more likely to buy on impulse, with men under age 36 an especially important target for indulgent unplanned purchases.34

Because men move faster throughout the store, few will ask for help if they can’t fnd what they’re looking for, so be sure to deliver an easy, trouble-free shopping experience. To help the male shopper fnd his way, consider installing on-shelf navigation that guides him to his go-to product in a given section, or general store navigation via overhead signage or store maps built into the shopping cart. Also think about limiting selection and optimizing the mix. Ofering too many SKUs onshelf could leave male shoppers overwhelmed.

Build more meaningful and less stereotypical connection points with male shoppers. For example, dad shoppers consider fatherhood to be a huge part of their identity. Tap into this emotional connection with in-store imagery, such as signage or videos, celebrating the father-child relationship. And stay far away from the “men are helpless idiots” messaging. Instead, acknowledge the time, energy and consideration modern men put into their shopping decisions. To connect with men on an even deeper level, consider creating weekly fyers or other promotional content dedicated to dads or male shoppers in general.

Cause marketing can be a great way to win with male shoppers–and boost sales. Te majority of men (53 percent) have purchased at least one product or service based on the company’s commitment to a social or environmental cause, and a recent study found that companies that communicate information regarding their sustainability eforts see a 5 percent bump in sales.35 Not every promotion needs to be serious, however. Men may also respond to in-store games or entertainment and video game tie-ins.

Consider how you’re portraying men in marketing eforts. Ditch the male-oriented marketing messages that rely on tired stereotypes, like the clueless dad who eats only microwave burritos. Instead, recognize that men do care about what they put on their plate– they just shy away from foods with labels like “diet” or “light.” A better approach: Position food as fuel, highlighting attributes that appeal to both genders, such as high-protein. As Phil Lempert of SupermarketGuru. com explains, “It’s really more about understanding men’s health and nutritional needs than putting out lighter fuid and beer.” 36

At the end of the day, convenience is king for male shoppers, so help male shoppers fnd what they

ADVERTORIAL

Here’s to your health!

Growth outlook in beverages appears strong for health and natural favors Businesses looking to grow by quenching consumers’

beverages this won’t surprise too many people. For

thirst face a very similar set of challenges to those

example, carbonated soft drinks (CSDs) represent one

seeking to satisfy their urge to snack. In both cases,

of the largest categories in sales volume; however,

the vital insight they need isn’t which categories

Growth Point shows that the category has only small

generate the most sales; it’s which categories offer the

potential for growth. Potential for new offerings in

greatest potential for growth. After all, when you’re

this space will be limited.

looking to grow your bottom line, it’s invaluable to know which areas are worth exploring before you

Why energy drinks may be cooling down

start spending substantial R&D budgets.

Growth Point also shows that categories that seemed sure-fre winners, may have limited growth potential

How Growth Point reveals growth opportunities

going forward. Energy drinks and indulgent, specialty

Last month, we applied Growth Point, TNS’s frst-of-

coffees and milkshakes are notable absentees from

its-kind ranking of growth potential, to the snacks

our Top 20. They can be found in Growth Point’s

category. This month, we are turning our attention

ranking of the 20 beverage categories with least

to beverages. When we look at the ranking of the

growth potential (online at www.TNSGrowthPoint.

top 20 beverage opportunities that Growth Point

com). The number of consumers moving into these

generates, we start to see some intriguing similarities

categories has plateaued quicker than many have

to the most compelling opportunities in snacks.

expected. Energy drinks may have grown quickly out of the gate but the key group of consumers they

Why sales volume and growth potential

attract has proven narrow — coffee drinkers aren’t

aren’t the same

quick to jump into energy drinks for their caffeine

Firstly, we see that sales volume doesn’t automatically

fx. Thus their potential for future growth is small; it

correlate with growth potential. In the case of

would take a lot for new entrants to tempt energy

| Progressive Grocer | Ahead of What’s Next | July 2015

ADVERTORIAL

drinkers away from their favorite existing brands. The key growth opportunities for beverages The limited appeal of energy drinks and indulgent

Top 20 growth potential beverages 1 Juice smoothies - at-home 11 Single-serve, 1-cup coffee 2 Juice from home juicer

12 Fruit smoothies - restaurant

3 Bottled water - fortifed

13 Breakfast beverages

4 Super fruit juices/blends

14 Drinkable yogurt

beverages is in part related to another distinct trend in the rankings: the consumer appetite for beverages that feel noticeably more natural. Health is important, and the more natural ingredients, the better. Consumers are seeking ways to drink their fruits and vegetables through smoothies, yogurts and juices.

5 Orange juice - refrigerated 15 Protein drinks, ready to drink

As with snacks, it’s important to realize that an

iced tea - sweetened, 6 Fruit/vegetable juice blends 16 Bottled unsweetened

appetite for healthier choices doesn’t rule out permissible indulgence — provided those indulgences have a natural favor and / or ingredients. The strong momentum for smoothies and chocolate milk can be traced back to marketing campaigns that have

7 Almond milk

17 Soy milk

fruit 8 Ready-to-drink smoothies

18 Chocolate milk

9 Fruit juice - except orange 19 Sports drinks - regular

deliberately fortifed their unprocessed, healthy image. All those ads featuring athletes drinking their

10 Hot tea - regular

20 Home-brewed decaf coffee

chocolate milk certainly seem to be paying off. Yet health and permissible indulgence aren’t the only

is a large untapped potential to personalizing your

characteristics defning growth potential in beverages.

favorite drink at home. Understanding the benefts

Growth Point also shows strong growth potential for

that this delivers to consumers and their specifc needs

beverages that can be prepared at home. And this

in this area — fresh made taste without the messy

is perhaps the most unexpected development in the

cleanup — and crafting the right propositions to align

Growth Point rankings. Whether it’s juicing oranges,

with those benefts, will give brands some of the most

blending vegetables into a home-made smoothie or

exciting opportunities in beverages.

brewing up a quick, single-serve or decaf coffee, there

Finding the right path to growth Growth Point generates its rankings from the TNS

consumers are walking away from.

Consumption Universe, which consists of more than

And there is limited opportunity in

19,000 consumer interviews and covers 250 food

identifying products that consumers

and beverage products. The analysis combines the

will spend more on, if it’s already

degree of unmet consumer needs with the degree

fairly certain whose products they will buy. Growth

of consumer momentum that each product area

Point doesn’t tell brands and retailers what snack

has. Where you fnd both unmet needs and positive

categories will grow — it tells brands and retailers

momentum, you have better growth potential.

what categories have the greatest potential for them

On the other hand, there is far less opportunity

to drive their own growth. To fnd out more, visit

in meeting unmet needs in a product area that

www.TNSGrowthPoint.com.

July 2015 | progressivegrocer.com |

editor’s note by Jim Dudlicek

Reinventing Category Management

ategory management is yesterday — shopper centricity is tomorrow. Tat was one of the messages coming out of a session I attended at FMI Connect here in Chicago last month, when a panel of experts discussed the results of a Food Marketing Institute/ Deloitte study revealing that the vast majority of retailers are clinging to category management standards at least two decades old. Considering how much the world of retailing has changed in the past fve years, let alone the past 20, I found that revelation to be quite scandalous. Yet 85 percent of retailers have made little or no changes to the standard seven-step category management process, according to the study. All of the retailers and CPG companies surveyed believe change is necessary; most think it should be built upon the existing category management foundation. Tought leaders participating in the study said that most current eforts are “not adequately integrating shopper insights,” and that future endeavors must have “a blend of shopper marketing, digital marketing, shopper insights, promotional performance and loyalty,” as well as “a much deeper degree of collaboration” between retailers and CPGs. Further, merchant trade groups “need to be redesigned around customer centricity.” And therein lies the key to retailing’s future. Industry pundits are preaching solutions like “don’t sell ingredients, sell the meal,” and for good reason: It’s how grocers can establish their relevancy to shoppers who aren’t shy about dividing their grocery dollar among multiple channels. You can buy products anywhere, but where can you fnd the the solutions that will make your life easier? PG’s 68th Annual Consumer Expenditures Study in this issue tells part of the story, which really isn’t a surprise: Center store is dying. After two decades of supposedly cutting-edge category management techniques, the overall grocery-food category hit 0 percent growth in 2014, after a steady decline. Folks are shopping center store because they always have, not because they understand the synergies between multiple categories, and that’s because most retailers and their CPG partners aren’t doing a good enough job to truly sell the whole store. Tere’s a reason industry leaders like Kroger are doubling down on investments in shopper insights. But most retailers rely heavily on business partners and third parties to provide such data, rather than

| Progressive Grocer | Ahead of What’s Next | July 2015

Look beyond your brand. Look beyond the product. Look beyond the aisle.

talking with the consumer, according to the study. Other study revelations: Decision support is still a fragmented, unstandardized function at most companies; retailers lack confdence and ability to discern useful insights from the data they use; retailers feel manufacturers fall short in providing chain-specifc research, especially for smaller chains; and only a small portion of retailers and manufacturers have been applying digital insights to the category management process. Really? In advance of a more comprehensive report of its fndings, expected this fall, FMI advised retailers and suppliers to ramp up their focus on the shopper, establish a relationship more conducive to sharing insights, and concentrate less on the “what” and more on the “why” of shopper decision-making. “Shopper centricity,” the FMI/Deloitte report concluded, “will have as great an impact on the grocery industry going forward as category management did 25 years ago.” So, in the spirit of being “ahead of what’s next,” PG will be keeping shopper centricity top of mind as it reviews the entries in this year’s annual Category Captains Awards, for which we are currently accepting nominations at Progressivegrocer.com. Look beyond your brand. Look beyond the product. Look beyond the aisle. How are you helping to provide solutions that encompass the entire store? Engage the shopper and watch those basket rings climb. PG Jim Dudlicek Editor-in-Chief jdudlicek@stagnitomail.com Twitter @jimdudlicek

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What’s trending on Progressivegrocer.com …

H-E-B’s Charles Butt Ranks Third in Glassdoor Survey

A Texas-size tip of the hat to H-E-B’s Charles Butt, who was ranked as the third highest-rated CEO by Mill Valley, Calif.-based Glassdoor, which for the third year ranked the most respected CEOs across North America and Europe, based solely on employee feedback. Flanked by Google’s Larry Page, Nike’s Mark Parker and Facebook’s Mark Zuckerberg, Butt earned an impressive 96 percent approval rating among large companies of 1,000 or more employees. Glassdoor’s year-round survey encourages employees to offer feedback on how they feel their CEO is leading their company, along with related insights about other aspects of their jobs, work environment and company culture. “Winning a Glassdoor Employees’ Choice Award is a significant achievement for any CEO, regardless of fame, fortune or company size,” notes Robert Hohman, Glassdoor CEO and co-founder, since “gaining the trust and approval of an entire workforce is one of the most difficult yet rewarding responsibilities for any leader.”

Don’t Discount At-home Meal Prep Although foodservice spending increased 3 percent during the 12-month period ending April 2015, visits remained flat, and in-home meals, which have been on the rise for several years, are in the lead. In fact, four out of five meals are prepared and consumed at home, and the gains in foodservice last year were likely due to rising food

57% Shoppers who frequently or almost always buy unplanned items when in-store

—FMI’s “The Power of Produce 2015”

and operational costs, as opposed to consumer preference. According to Bonnie Riggs, restaurant

Touting a ‘Healthy’ Twist

Whether their favored noshes are salty, savory or sweet, consumers are looking for snacks that have a perceived health benefit. High-protein, natural, and no or less sugar are the health call-outs that consumers look for most when they eat a snack, which may include in between meals, at meals or as a meal, according to ongoing food consumption research by The NPD Group, in Port Washington, N.Y. This move toward healthier snacking is driven by the youngest generations — Gen Z, Millennials and Gen X — due to their positive attitudes toward snacking, desire to eat more healthfully, and need for convenience. —The NPD Group

industry analyst at The NPD Group, in Port Washington, N.Y., “It’s a battle for share within the foodservice industry, and a battle for food dollars between inhome and away-from-home dining.” To grow, Riggs says, “Foodservice manufacturers and operators need to have a clear understanding of consumer expectations,” and figure out a way to meet them. “If they don’t, someone else will.”

“The eventual elimination of artificial trans fat from the food supply will mean a healthier food supply, fewer heart attacks and heart disease deaths, and a major victory for public health. The final determination made … by the Food and Drug Administration gives companies more than enough time to eliminate the last of the partially hydrogenated oil that is still used in foods like microwave popcorn, biscuits, baked goods, frostings and margarines.”

—The NPD Group

What’s the Big Idea?

—Michael F. Jacobson, executive director of Center for Science in the Public Interest, a Washington, D.C.-based advocacy group, on the FDA’s recent mandate for food manufacturers to eliminate all trans fat from their products by 2018

| Progressive Grocer | Ahead of What’s Next | July 2015

September 2015 is... No Kid Hungry Month Whole Grains Month National Chicken Month National Rice Month National Mushroom Month

Host a bake sale to benefit No Kid Hungry Month.

National Blueberry Popsicle Day. Show your customers how easy it is to make healthy frozen treats at home.

In celebration of National Rice Month and National Chicken Month, showcase your favorite chickenand-rice combos on your store’s Pinterest board.

National Wildlife Day

National Cheese Pizza Day

Read a Book Day

Salami Day

National Fight Procrastination Day. Review your Q4 checklist.

Rosh Hashanah, Jewish New Year, begins at sundown. Grandparents Day

Break out the punch bowl: It’s National Punch Day.

National Chocolate Milk Day. We’ll drink to that!

Labor Day. Deep-discount any remaining summer items.

Share a YouTube video on how to bake doughnuts for National Creamfilled Doughnut Day.

National Pecan Cookie Day

For National Good Neighbor Day, donate baked goods to a local charity.

International Literacy Day

National Linguine Day

National White Chocolate Day

Black or with milk? Let your customers battle it out on Facebook for National Coffee Day.

Build a display of local produce for Organic Harvest Month.

Demo how to make guacamole in honor of National Guacamole Day and Mexican Independence Day.

Autumnal Equinox

In honor of National Hot Mulled Cider Day, sample hotdrink mixes.

| Progressive Grocer | Ahead of What’s Next | July 2015

National TV Dinner Day. Promote your store’s prepared foods.

Natural Products Expo East begins in Baltimore and continues through the 19th.

Plan a cooking class around mushrooms for National Mushroom Month.

Demo the features of a bread machine for Hot Cross Buns Day.

National Cheeseburger Day

Hold a meeting to discuss the status of holiday orders.

E-mail your calendar submissions to

Teach a whole grains baking class in honor of Whole Grains Month.

Oktoberfest begins in Munich. Celebrate by planning your own 16-day festival with beer tastings, brats and pretzelmaking demos.

Volunteer to clean a local greenspace in honor of National Public Lands Day.

awolfe@stagnitomail.com

40% of shoppers experience problems in their deli

and 53% of them will reduce or eliminate buying prepared foods at that retailer. Work with Tyson Deli/Bakery to identify how to decrease problems and deliver value to your shopper. Get to the Right Place. At the Right Pace.

Source: Tyson Consequences of Failure Study

ÂŠ2015 Tyson Foods, Inc. Tyson is a registered trademark of Tyson Foods, Inc.

Front End

GRoCERY’S ToP 10

Market Intelligence By The Numbers

Shelf Stoppers

Vitamins and Supplements Largest Sales Increases in Supermarkets by The Nielsen Co. (52 Weeks Ending May 9, 2015)

Protein Supplements Nutritional Supplements Vitamins-Remaining Vitamins-Multiple Vitamins/Tonics-Liquid and Powder Complete Nutritional Products Minerals Vitamins-B Complex With C Vitamins-Children-Flavored Chewable

Sales % Change Dollars (Millions) 2015 2014 $196.6 11.5% 15.1% 1,154.4 6.6 5.6 216.5 3.5 4.5 209.6 2.3 0.8 12.5 -0.9 -6.3 454.7 -1.5 1.2 95.1 -3.5 -5.6 11.3 -4.0 1.3 33.2 -8.7 -16.5

Total Category

$2,383.9

We Goofed! in our Top Women Wom in Grocery announcement, we announc inadvertently inadv omitted one of omitt Giant eagle’s store leaders, stor Amy Smolnik, from the list of published winners publish in the JJune issue. We deeply reg regret the error. Here follows her entry in full:

Amy Smolnik

Senior Store leader, Store #4075, Community Center, Boardman, ohio, Giant Eagle

3.9%

3.7%

% Change 2015 16.2% 7.9 2.7 1.7 -2.7 -2.9 -3.4 -3.4 -10.6

As protein gains momentum across categories as a desirable attribute, pockets of increased consumption have emerged in regard to protein supplements, particularly among residents of cosmopolitan centers and affluent suburban spreads, who presumably have the disposable income to spend on these often pricey health-and-wellness products. indexing particularly high in this segment are citydwelling established couples, who, as they enter middle age, may wish to maintain their youthful vitality.

Units 2014 12.9% 5.4 0.9 0.2 -9.4 -0.5 -3.5 0.3 -17.0

4.9%

3.1%

NielseN’s Spotlight Consumption Index: Protein Supplements LIFESTYLE Behavior Stage

Cosmopolitan Affluent Comfortable Struggling Centers Suburban Country Urban Spreads Cores

Modest Working Towns

Plain Rural Living

Total

WITh ChILDREN: startup Families

196

138

small-scale Families

199

125

211

130

Younger Bustling Families

100

114

106

Older Bustling Families

178

234

119

138

HHs with young children only <6 small HHs with older children 6+ large HHs with Children (6+), HOH <40 large HHs with children (6+), HOH 40+

No ChILDREN:

Smolnik topped nearly 225 other stores in her format in five performance categories to win the Giant Eagle Retail Operational Excellence Award.

Young Transitionals

160

196

independent singles

138

She was selected as a Master Trainer and Mentor Trainer for her work in ensuring that upcoming store leaders are thoroughly trained in all processes, and is also a Regional Safety Champion at Giant Eagle.

1-person HHs, no children, 65+

senior singles

established Couples

282

174

127

138

empty-nest Couples

136

171

114

135

100

124

senior Couples

135

114

Total

136

162

100

Smolnik is a volunteer and champion for events at Second Harvest Food Bank.

Any size HHs, no children, <35 1-person HHs, no children, 35-64

2+-person HHs, no children, 35-54 2+-person HHs, no children, 55-64 2+-person HHs, no children, 65+

Very High Consumption (150+)

| Progressive Grocer | Ahead of What’s Next | July 2015

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Market Overview Although Canada is the standout growth market in the North American cooking sauce category, with a predicted average value growth of 3.2 percent over the next five years, the established U.S. market also offers promising growth of 2.7 percent during the same period. key iSSueS Increasing consumer demand for fresh, healthy foods is hurting shelf-stable items such as cooking sauces, as shoppers often perceive shelf-stable foods to be less fresh, more processed and full of artificial ingredients. This rising demand for natural products has motivated brands to add natural credentials to their innovations in a number of ways, including organic certification, ingredient provenance, GMO-free claims and a focus on freshness. A rising interest in “craft” processes has further sparked a movement in the North American cooking sauce market, motivating brands to innovate in regard to taste and production methods. For example, the terms “small-batch” and “slow-cooked” are now being used more widely by brands to create a sense of artisan care in their products. Many brands turn to the restaurant sector for inspiration, as they often gain insight into the popular and upcoming retail flavors of tomorrow.

What Does it Mean? Brands can do more to meet the growing demand for natural foods by highlighting on their packaging ingredient provenance, and the exclusion of additives and genetically modified ingredients. Shelf-stable cooking sauce

brands can improve the appeal of their innovations by communicating the fresh taste of their offerings through the ingredients used. “Craft-style” sauces are likely to be well received by consumers who would like to try more

| Progressive Grocer | Ahead of What’s Next | July 2015

artisan-type products made by smaller brands. References to ingredient sourcing and production techniques are likely to increase in the cooking sauce category as consumers demand more unique, high-quality products with a “human” touch.

VOICE OF THE SHOPPER WHITEPAPER SERIES

Targeting the new male grocery shopper

en are shopping for groceries more than ever before, and this new guy in the store brings a unique set of attitudes, behaviors and purchase drivers to the aisle. Male shoppers also tend to have heavier wallets, larger basket sizes and greater willingness to spend on premium goods than their female counterparts, which means retailers that successfully engage them stand to see sales increases. Letâ&#x20AC;&#x2122;s take a closer look at the new male grocery shopperâ&#x20AC;&#x201C;who he is, how he shops, and how retailers can build a more guy-friendly shopping experience.

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

Though they’re still the minority,

the percentage of households with Dad as the primary caretaker (also known as stay-at-home dads)

has risen during the past few decades. The rise of male shoppers While women are still more likely to be the primary shoppers in most households,1 men are quickly catching up. Tirty percent of men say they are grocery shopping more than they did fve years ago,2 and 41 percent of men currently report doing all or nearly all of the grocery shopping in their household.3 Tat translates to more than 40 million households with a male primary shopper.4 Te rise of the guys can be traced back to several major demographic shifs during the past few decades. Women have been entering the workforce in ever-larger numbers for the past 50 years–more than half of adult women now hold full-time jobs5–leaving them with less time to shop. Male partners have had to pick up the slack, including a small but growing number who have taken the shopping reins completely. Tough they’re still the minority, the percentage of households with Dad as the primary caretaker (also known as stay-at-home dads) has risen during the past few decades.6 Other demographic shifs are having an impact too. Americans are getting married later than ever (or not

getting married at all), leaving a signifcant proportion of adult males without a partner who does the shopping.7 In other words, more single men equals more male shoppers. Finally, the past decade has seen the emergence of a cohort with unique attitudes toward gender roles and parenting. Millennial dads, generally defned as those born between 1980 and 1998, are far more likely than their older counterparts to play a primary role in child rearing.8 Tat means the millennial man may be just as likely as his female partner to pick up a gallon of milk from the store (though as we’ll see, the woman of the house still helps decide what he buys).

Who is the new man in store? Clearly, retailers must speak to and engage with male shoppers. But in order to win with the new man in store, retailers and brands must understand who he is, how he shops and what he looks for on the shelf. While men of all ages, ethnicities and income levels can be found in the grocery aisle, certain demographics do over-index in male shoppers. Millennial men– single or married, with kids or without–are taking on

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

How men grocery shop

Top channels shopped by gender Buying food and beverages was primary reason for visit in past 30 days:

Men

76% 53% 34% 21% 21% 15% 16% 13% 6%

Women Grocery Mass/super Club Specialty/natural Convenience Dollar Drug Local Online

75% 57% 28% 22% 15% 17% 15% 16% 4%

Source: MSLGroup, Hartman Group “Food Shopping in America,” 2014

Men’s higher trip frequency and greater willingness to buy innovative items on impulse often spur incremental sales, offering retailers a great opportunity to grow their basket.

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

(53 percent of men; 57 percent of

women).16 Tough club retailers and convenience stores fall further down the list, both channels are more popular among men than women.17 Men and women also behave diferently once they’re walking down the aisles. To start with, they literally walk down diferent aisles: Men are less likely to shop the perimeter and more likely to shop center store.18 And in keeping with their more impulsive approach to shopping compared with women, men also tend to be triggered more by emotional cues such as innovative products, or by the pull of a familiar brand name.19 For men, these cues can sometimes be even more powerful than price tags. Men are less likely than women to buy an

Fewer men are price- or deal-sensitive Influence on purchase decision

Men

64% 55% 45% 39% 33% 29% 17% 8% 7% 7% 5%

Women Product price Past experience with product Coupon Store circular/flyer Brand name Product ingredients Recommend from friends/family TV advertising Newspaper/magazine advertising Product reviews Store’s website Source: MSLGroup, Hartman Group “Food Shopping in America,” 2014

70% 63% 57% 44% 26% 33% 19% 5% 6% 8% 6%

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

item just because it’s on sale,20 in part because male shoppers typically have higher incomes. Tat said, price is certainly an important part of the equation for male shoppers–they just take a more in-the-moment approach to price comparison than women do. While men typically don’t look for sales before hitting the store, they are more likely than women to compare prices via mobile phone while in the aisle.21 However, men won’t spend too much time digging up digital details. Male shoppers like to get what they came for and get on with their day. When asked what matters most to their shopping experience, 49 percent of men said “completing my shopping as quickly as possible” (just 39 percent of women agreed).22 Accordingly, men are less likely than women to browse the store, instead heading straight for the products they need.23 Te desire for a short and stress-free shopping experience may help explain why men have a higher conversion rate across categories.24 When they fnd what they’re looking for, they usually buy it. Still, there are certain factors that help seal the deal: Te top three conversion drivers for men include price, past experience with a product, and a coupon.25 However, all three of these drivers have a stronger impact on women than on men.26 Male shoppers are more likely than their female counterparts to be swayed by brand names and television ads,27 which means marketers hoping to win men’s wallets should invest in advertising that draws in males through relevant touch points and builds strong brand equity.

Average supermarket spend BUY RATE BUY RATE

$2,615

BUY RATE

$2,765 BUY RATE

$2,294

$2,220 $26.97

$25.25

105 TRIPS PER HOUSEHOLD

$21.05 $ PER TRIP

Male member shops most

104 TRIPS PER HOUSEHOLD

Male member splits shopping

$24.45

$ PER TRIP

103 TRIPS PER HOUSEHOLD

Male member rarely shops

94 TRIPS PER HOUSEHOLD

All households

Source: IRI MarketPulse, Q2 2014; Consumer Panel, L52W Ending Oct. 5, 2014

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

Of course, conversion rates vary by category as men gravitate more toward certain qualities and types of food. Compared with households in which a women is the primary grocery shopper, convenience rules and taste ofen takes precedence over health when the man is in charge of shopping.28 Male primary shoppers purchase prepared foods more frequently and low-calorie foods less frequently than women,29 which plays out clearly at the category level. Men are less likely than women to buy fresh fruit, yogurt or granola,30 and more likely to fll their carts with crackers, cookies and salty snacks.31 Tat doesn’t necessarily mean men are apathetic about nutrition. In fact, most men (65 percent) say a food’s healthfulness impacts their decision to purchase (up from 56 percent in 2013).32 Male shoppers just think about health in a diferent way. Rather than looking for “low” or “no” foods (e.g., low-fat), men seek out positive nutrition attributes like protein or fber. Finally, compared with women, men tend to come to the checkout lane with bigger baskets: Male shoppers spent an average $95.89 on their last grocery trip vs. $91.69 for female shoppers.33

10 ways to drive higher sales with male shoppers Retailers can’t aford to ignore male shoppers anymore, but they also can’t aford to fall back on outdated beliefs about what men want in their grocery carts or in their grocery shopping experience. To successfully engage these shoppers, merchandising and marketing strategies need to refect the modern man’s shopping style, product preferences and emotional touch points.

Men are less price-sensitive and more impulsive than female shoppers, making them more receptive to in-store marketing. Boost sales by putting more impulse products on display, especially fun or novel items likely to capture the male shopper’s eye. Men also look for foods that help them save time (think 15-minute meal solutions), so display on-the-go items prominently too.

Compared with women, male shoppers are less inclined to shop around for deals and less price-sensitive overall. Tat translates to a unique opportunity for grocery retailers to gear premium-priced brands and non-promotional items toward male shoppers.

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

Men are also more likely to buy on impulse, with men under age 36 an especially important target for indulgent unplanned purchases.34

At the end of the day, convenience is king for male shoppers, so help male shoppers fnd what they

VO I C E O F T H E S H O P P E R W H I T E PA P E R S E R I E S

need as quickly and easily as possible. From a health perspective, this could include clear-cut nutritional cues such as fuel-for-the day breakfast pairings. More generally, consider organizing aisles and displays around shopper missions, like “lunchbox essentials” or “tonight’s dinner,” and calling out these sections with clear signage so the male shopper can quickly fnd what he is looking for. Remember: Many male shoppers come to the store without a weekly or even same-day meal plan in mind.

Male shoppers tend to skip the grocery list. To help men stay on top of their pantry stock, take a cue from pharmacies like CVS, which provides text refll alerts, and send men reminders to replenish supplies via text or app. Don’t overlook the opportunity to connect with men through social media either. Particularly with millennial shoppers, sites like Twitter and Facebook can serve as a powerful platform to connect with men. Leverage digital appeal and usage by adding retailer apps that help navigate “his store” with aisle maps and pre-populated shopping lists.

Center-store sales have been sufering as more grocery shoppers opt for fresh options along the perimeter.37 However, retailers may be able to regain some traction in the packaged foods aisle by targeting male shoppers–who already shop center store more ofen than women–with displays, promotions and signage that draw men down the center aisles.

Male shoppers are more inclined to make unplanned purchases, especially when they come across new or exciting products, and these basket-builder items can be a powerful way to fuel incremental sales. Drive conversion by highlighting innovative products, or perhaps even adding a “wall of innovation” flled with unique new items geared toward the impulsive male shopper.

With men representing an ever-larger proportion of the grocery aisle and looking for ways to connect with retailers, now is the time to set your eyes on the guys.

Nielsen, “As More Men Push Shopping Carts,” April, 2014 Kellogg’s Custom Research 3 Food Business News, “Easy Sells,” September, 2014 4 Food Business News, “Easy Sells,” September, 2014 5 NPD’s Eating Patterns in America – 29th Edition 6 SmartyPants Dad Stats, April, 2014 7 U.S. Census Bureau 8 Mintel, “Marketing to Men,” July 2014 9 MSLGroup, Hartman Group “Food Shopping in America,” 2014 10 MSLGroup, Hartman Group “Food Shopping in America,” 2014 11 NPD Bites of Insights, “The New Grocery Shopper,” November, 2014 12 Kellogg’s Custom Research 13 Kellogg’s Custom Research 14-17 MSLGroup, Hartman Group “Food Shopping in America,” 2014 18 Kantar Retail ShopperScape, 2012 19 Kellogg’s Custom Research 20 NPD Bites of Insights, “The New Grocery Shopper,” November, 2014 21 Nielsen, “Does Gender Matter?” March, 2013

Kantar Retail ShopperScape, 2012 MSLGroup, Hartman Group “Food Shopping in America,” 2014 24 Kantar Retail ShopperScape, 2012 25-27 MSLGroup, Hartman Group “Food Shopping in America,” 2014 28 Food Business News, “Easy Sells,” September, 2014 29 Food Business News, “Easy Sells,” September, 2014 30 MSLGroup, Hartman Group “Food Shopping in America,” 2014 31 Kantar Retail ShopperScape, 2012 32 International Food Information Council Foundation, Food & Health Survey, 2014 33 Kantar Retail ShopperScape, 2012 34 Nielsen, “Does Gender Matter?” March, 2013 35 Nielsen, “Socially Minded: The Causes Men and Women Value,” March, 2015 36 St. Louis Post-Dispatch, “Hey guys, the grocery stores are starting to focus on you,” December, 2012 37 New York Times, “In Grocery Stores, the Perimeters Take Center Stage,” August, 2012

About Kellogg Company At Kellogg Company, we are driven to enrich and delight the world through foods and brands that matter. With 2014 sales of approximately $14.6 billion, Kellogg is the world’s leading cereal company; second-largest producer of cookies and crackers; a leading producer of savory snacks; and a leading North American frozen foods company. Every day, our well-loved brands nourish families so they can fourish and thrive.

Contact: Kellogg’s media hotline: 269-961-3799 media.hotline@kellogg.com

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A smart back-to-school retail strategy will involve dietitians for their expertise in food, nutrition, diet, trends, meal preparation and ability to engage and educate shoppers.

All’s Wellness By Molly McBride

Gearing Up for Back-to-school How dietitians can impact your center store.

hether it’s kindergarten or college, heading of to school evokes a sense of routine, yet many retailers must learn to take advantage of the opportunity that the season also ofers. New habits regarding health and product choices can begin now for your customers. Te ideal professional in addressing shoppers’ food, nutrition and wellness needs once school’s in session is the registered dietitian. Nutrition professionals can call attention to better-for-you choices throughout the store, including center store aisles. Some customers may already have a game plan when it comes to packing lunchboxes, making easy after-school snacks and customizing meal solutions, but many don’t. Your store can be business-ready through open communication with dietitians. Tese professionals can compile grocery lists that consider preference, cost, taste and even necessary dietary restrictions, to provide a great navigation tool in making center store selections. Dietitians and store chefs can enlist sampling programs, such as Kroger’s Delightful Discoveries, to provide an easy way for customers to trial-run products prior to purchase. Innovative on-the-go products can be merchandised on the shelf and via digital or paper coupons. Te cross-merchandising approach to boost center store trafc this time of year can result in a synergy between nonperishables and perishables. Encourage customers to pick up bananas as a perfect complement to their next PB&J, grab 100 percent fruit juice along with their favorite frozen entrée, or locate great toppings for their next fresh salad to toss together in a plastic container when heading to class.

| Progressive Grocer | Ahead of What’s Next | July 2015

Appeal to customers buying for bigger households by showing them how to extend use of a product through larger packaging. For instance, a full canister of oats can provide not only hot cereal on Monday mornings, but also cookies, yogurt parfaits, mufns, or four for bread. A 20-ounce can of pineapple can be dished out into single-serve fruit containers, or tossed into smoothies, baked into a pineapple upside-down cake, or grilled to perfection to add to a favorite burger recipe. Tis information can be displayed on pre-printed package labels, shelf tags or even in a centralized area of the store. Easy DIY recipes from staple ingredients can give confdence to many consumer levels of culinary expertise. Signage near raisins with a recipe for homemade trail mix, placards in front of tomato paste for crafting the perfect pasta sauce, or tear pads alongside vegetable broth for a new soup creation all provide convenient go-to recipes for busy weekday homes. Dietitians can think creatively to incorporate private brands to support proft margin while building partnerships with vendors to incorporate trusted products and ingredient decks that enhance the shopping experience. For customers who may not have classic back-to-school concerns, consider merchandising school-oriented initiatives on behalf of the local community. Dietitians can offer shoppers a list of nutrient-dense shelf-stable items to fill shopping bags for a local organization, which can then be dropped off at the front of the store for $5 off a participating customer’s next in-store purchase. Relevant center store merchandising is a pivotal focus of your total store sales. A smart back-to-school retail strategy will involve dietitians for their expertise in food, nutrition, diet, trends, meal preparation, and ability to engage and educate shoppers. PG Molly McBride, RD, LD, is a corporate dietitian for The Kroger Co., based in Cincinnati.

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Millennials — male and female — have the same priorities and aspirations as working women.

NEW

Horizons

By Joan Toth

The Case for Making

Women Happy

Everyone benefits from a female-friendly workplace.

have a friend with this mantra: “When Mama’s happy, everybody’s happy.” Translation: When his spouse is happy, things get done. Life’s challenges are tackled with better results, relationships grow stronger, and everyone in the family has a safe and supportive place to grow, achieve and be the best they can be. It’s not a stretch to say, “When women are happy, everybody’s happy in your workplace, too.” Women, and today’s Millennials in particular, want the same things at work. Both want to make a difference and feel valued. Both groups want greater work-life balance. Both groups are more productive in an inclusive, collaborative workplace. Yes, women want equal pay for equal work; that’s a given. But attracting and keeping talented women and Millennials takes more than money. A 2013 LinkedIn poll of 5,300 professional women found that women prioritize “fexible working arrangements” over “good remuneration/pay” as the most important factor when evaluating a job. Although still concerned by the dearth of investment in their personal development and the lack of a clear career path, they defne “success” as achieving professional and personal balance. Research shows that Millennials — male and female — have the same priorities and aspirations as working women. When a company doesn’t match their values, or accommodate their need for fexibility and desire for meaning, Millennials will look to other options, like starting their own companies, according to a Bentley University study of 1,000 college-educated men and women born since 1980.

A Workplace With No Limits Consider your company’s policies and workplace culture. Are they family-friendly? Are they femalefriendly? If your organization is undervaluing and underusing high-potential female employees, it’s driving away Millennial talent. Tat’s because, as Bentley University found, Millennials, like women, are family-oriented, want a life beyond work and seek a workplace where they can be authentic. Te most successful retail and consumer goods

| Progressive Grocer | Ahead of What’s Next | July 2015

companies are making progress in creating cultures that appeal to women and Millennials — or, to quote the Network of Executive Women’s vision statement, “a workplace with no limits.” But there’s much more work to do. Like their older female peers, Millennial women see themselves as having the experience, skills and desire to advance to leadership positions. Six in 10 of those polled by Bentley University consider themselves “ambitious” (virtually the same share as men). However, more male than female Millennials say their hard work is recognized by promotions, opportunities and compensation, and more women than men say their work is praised, but not rewarded. Te study ofers practical advice for creating a culture that attracts and retains Millennials. Tese are the same changes NEW champions: Let employees know that their work matters. Provide fexible work arrangements so that men and women can spend more time with their families. Ofer parental leave to both parents in a positive and supportive manner. Take an interest in the individual’s career aspirations by hiring, supporting and sponsoring for career success. Create a “work family” that engenders loyalty to the company. Create multiple paths and fexible time frames for individuals to attain leadership positions. When our industry creates a workplace culture that attracts and advances high-potential women, it creates a culture that attracts and keeps the best talent — of both genders and of all ages. PG Joan Toth is president and CEO of the Network of Executive Women, a learning and leadership community representing 9,500 members, 750 companies, 100 corporate partners and 20 regional groups in the United States and Canada.

Profiles in Progress

Food Lion’s new leaders — and new format — are helping the chain retrieve its roar after a prolonged siesta.

Food Lion

On the By Meg Major

ith or without its widely anticipated w merger with Ahold — m a prospective alliance that has been batted about for the h past decade but fnally inked p as we went to press with this issue — Delhaize’s Salisbury, N.C.-based Food Lion banner is on the prowl. And in the hunt-or-be-hunted terrain that epitomizes food retailing today, it’s a prudent — albeit long overdue — strategy for the 1,100-store chain, which has been a fxture in much of its 10-state operating territory for some 50 years — the past 20 of which have engendered a ne new breed of ferocity from existing and new competitors that have skulked around, and subsequently infltrated, Food Lion’s native turf. Meanwhile, the years leading up to the present have also been peppered with ample portions of executive turnover, banner and store closures, reports of disjointed operational decision-making, and territorial retrenchment — all of which kept the regional chain on the run in search of a relevant, resolute path to strengthen its front-line execution and accentuate its indigenous assets. However, instead of further retreating into a defensive crouch after another round of upheaval in 2014, Food Lion awoke from its prolonged siesta to reassert itself as viable, hungry contender, thanks in no

| Progressive Grocer | Ahead of What’s Next | July 2015

Prowl

July 2015 | progressivegrocer.com |

Profiles in Progress

making it easier Helping to bring Food Lion’s new selling platform to life are (left to right) Burt Hall, center store project lead; John Barnette, VP; and karen Fernald, sVP of merchandising.

Food Lion

small part to Frans Muller, who’s been president and CEO of Food Lion’s Brussels-based parent, Delhaize Group, since late 2013. As the driving force of a mission launched last August to convert its stores to a new format focused squarely on an improved customer experience and heightened associate empowerment, Muller reimagined Food Lion — under the guidance of recently appointed leaders Kevin Holt, CEO of Delhaize America, and Meg Ham, division president — to revolve around a comprehensive “Easy, Fresh and Afordable. You Can Count on Food Lion Every Day!” strategy to bolster the banner’s legacy pillars through a cross-functional, collaborative approach. Tis past spring, the trio of execs provided an in-depth overview of Food Lion’s revamped go-to-market diagram, along with a tour of one of the banner’s Wilmington, N.C., stores, at 6932 Market Street, to showcase its key underpinnings, which include:

Being an easy place to shop, with improved checkouts; intuitive merchandising; a relevant assortment; caring, responsive service; and personalized customer loyalty Delivering a signifcantly enhanced fresh statement featuring products that meet or exceed customer expectations with consistent quality, a relevant in-stock assortment, a strengthened selling environment with expanded variety and

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Profiles in Progress

Food Lion

selection, and appealing meal solutions Afordable, budget-saving opportunities in every department, built on pricing equity and brought to life with price investments in key categories; enhanced price and value messaging throughout the store; integrated seasonal event planning and execution; maximized promotional selling space; and an emphasis on its strong stable of private brands

Food Lion’s Meg Ham Named PG/NEW 2015 Trailblazer Meg Ham, president of Salisbury, N.C.based Food Lion, has been selected as the 2015 Top Women in Grocery Trailblazer from Progressive Grocer and the Chicago-based Network of Executive Women (NEW). Ham will be feted at the upcoming Top Women in Grocery gala celebration on Nov. 12, 2015, at the Hyatt Regency Grand Cypress, in Orlando, Fla. “In appreciation and recognition of her talents, tenacity and unflagging efforts to advance women through the ranks at Food Lion, coupled with her commitment to advancing extremely worthwhile causes in the hundreds of local communities that Food Lion proudly serves, we’re truly delighted and very proud to honor Meg Ham as our 2015 Top Woman in Grocery Trailblazer,” says Meg Major, PG’s chief content editor. Kevin Holt, Delhaize America president and CEO, applauds the selection of Ham as this year’s Trailblazer. “Meg has a unique and highly admirable characteristic of being able to bring people together, and develop and coach them into a unified team that works really well together,” says Holt. Evidence of this trait, he continues, “is revealed in the outstanding work that Meg and her entire Food Lion team have done in a relatively short amount of time,” which, according to Holt, epitomizes “true inspirational leadership.” Adds Joan Toth, NEW president and CEO: “Meg Ham exemplifies servant leadership and inclusion. Throughout her career, she has provided great mentorship and partnership with both internal and external associates. We are honored to have Meg serve on the NEW board of directors, and offer our congratulations and warm wishes on her selection as the 2015 Trailblazer.” As president of Food Lion, Ham oversees all aspects of the regional banner’s operations, including financial performance, merchandising, pricing, customer service, marketing and strategy. As a member of the parent company’s corporate leadership team, she offers an extensive background in both retail operations and merchandising,

Supporting a counton-me culture with dedicated training in four key areas, followed by an invigorated sales-focused approach. Talking with Progressive Grocer in Wilmington, Ham refects on the journey that

along with an ability to maintain a strong focus on customer service and the associate experience, all of which are essential to Food Lion’s strategy, Easy, Fresh & Affordable … You Can Count on Food Lion Every Day! For more than 26 years, Ham has built her career as a food retailer, focused on the value of service to customers and associates. Ham joined the Delhaize America family of supermarkets in 1988. Her wide-ranging leadership roles have included leading brand operations for Bottom Dollar Food, Bloom, Food Lion, Harveys and Reid’s, as well as overseeing dry merchandising initiatives, with responsibilities for perishable and nonperishable product procurement and merchandising. She has been active in the banner’s pricing strategies, integrating Food Lion’s supply chain with other Delhaize America supermarkets, and leading efforts to maximize in-store merchandising. She also held a variety of leadership roles at Scarborough, Maine-based Hannaford Supermarkets for more than 10 years. Originally from central New York, Ham, who resides in Concord, N.C., with her husband and two sons, earned a B.S. in business management and marketing from Ithaca, N.Y.-based Cornell University. She currently serves on the national Easter Seals board of directors, the FMI Foundation board of trustees and the NEW national board. In addition, she’s a past member of the board of governors for Saint Joseph’s University’s Food Marketing Educational Foundation. Established in 2012, the PG/NEW Trailblazer Award recognizes a single executive whose leadership, vision and influence have helped break new ground for women in the retail food industry. PG’s 2015 Top Women in Grocery awards program marks the ninth year the national trade publication has recognized the invaluable contributions of women from all walks of the retail food industry in three categories: Senior-level Executives, Rising Stars and Store Managers. Additional details about PG’s Top Women in Grocery gala event, including registration and program information, hotel accommodations, and a complete list of current and past winners, can be found at Topwomeningrocery.progressivegrocer.com.

| Progressive Grocer | Ahead of What’s Next | July 2015

ÂŠ2015 Mizkan Americas, Inc.

Profiles in Progress

Food Lion

led to the creation of the new branding project, in which phase investments in price and labor were the frst steps. Armed with a one-banner/one-strategy game plan, following what Muller describes as “the difcult but necessary decision” to shutter the discount Bottom Dollar division, “we were very focused internally on looking at what our future strategy could be for Food Lion,” she says. “But we also clearly knew that, in order to stabilize our business and diferentiate ourselves in the marketplace,” much more was needed. Accordingly, she notes, “We did a tremendous amount of consumer research and learned what our core strengths were,” which, while not surprising, served to further reinforce the key attributes of “our heritage of low price, convenient locations and easy-to-shop stores.” Ham goes on to discuss “learning more broadly about where we could take our banner,” with the resulting body of research leading to a logical, powerful strategy with which to commence: Easy, Fresh and Afordable ... You Can Count on Food Lion Every Day! “Every single one of those words makes a huge diference to us,” she afrms. “It’s our ambition, it’s how we think about our business, and it serves as our decision-making flter. We use each of those words to not only galvanize our conversations” about goals and priorities, but also as a sieve “to help us to get better and diferent and continue to evolve and to grow our position in the marketplace.”

Taming the Lion Using its 47 Wilmington and 29 Greenville, N.C., stores as the proving ground for the rollout of the fourfold initiative was a natural course of action, according to Ham,

| Progressive Grocer | Ahead of What’s Next | July 2015

July 2015 | progressivegrocer.com |

Profiles in Progress

freSh thinkinG Left to right: Mack Pulliam, field merchandising specialist; Daniel Shronce, fresh strategy coordinator; and kevin holt, CeO, Delhaize America.

Food Lion

since the 76 locations represent “a quintessential market for Food Lion” in terms of market share, size and scale. “It’s a strong market with a fair number of stores, which enabled us to [properly communicate] our message and really reintroduce ourselves to the marketplace.” Launched in Wilmington last August, followed by Greenville in November, the new format refects “our current best thinking across the entire store, along with product development and service oferings that we want for our customers,” she says. “A big part of this, obviously, are the capital investments in the physical plant upgrades,” which average $1.5 million per store across the two markets. Continues Ham, “We literally went store by store” to determine the specifc needs of each site, including careful evaluations of current versus expected store performance, the unique competitive environment, population density and projected population growth. Store clusters were then assembled by groups based on common needs to achieve baseline common standards for each, among them branding, with décor, paint, signage and front end fxtures; merchandising, with shelving, fresh department fxtures and fresh food cases; and storage and aesthetics, with frozen and dairy cases, fooring, and maintenance upgrades.

Lion’s Share To help restore its namesake banner’s roar, Food Lion’s humorous spokes-feline has been offering his “two cents” for the past two years on why shopping at the regional grocery chain is a wise idea. The campaign recently changed its tagline to “Life’s Better With The Lion,” which reminds shoppers that they can count on the grocery store chain every day to make their lives better. Food Lion has unleashed its furry, four-legged pitchman in a variety of creative ways throughout its existence, including as part of its 2014 holiday campaign that invited customers to share holiday greetings via free music e-cards with song downloads, presented in the voice of the big cat. The retailer made 10 original holiday songs available through New Year’s Day, giving customers a choice of fun Yuletide carols “sung” by the lion.

| Progressive Grocer | Ahead of What’s Next | July 2015

“We really made good, thoughtful choices on how to best to bring our Fresh, Easy and Afordable brand to life” at each location, she observes, “to really bring them up to a new standard” across the extended market. As revealed in the Market Street store, changes range from wider aisles — perhaps as wide as PG has ever seen in a traditional grocery store — which vividly open up the line of sight across the whole store, to deeper shelves that house a medley of related product groupings (think peanut butter and jelly next to the bread). A more uniform, compelling approach is also being deployed through seasonal promotions, which, when well executed, are famously reliable magnets for the all-important incremental expenditure spend. Meanwhile, fresh innovations are manifest in new walk-in garden coolers, a self-service express deli, and a sealed fresh-beef program that plays up consistency and enables department staf to be sta-

BeefinG UP freShneSS Peter Vail, VP of fresh foods, describes food Lion’s new sealed fresh-beef program, which enhances freshness, variety and consistency.

mcgladrey.com/retail

Profiles in Progress

addinG value director of Strategy implementation Steve Petty discusses Food lion’s prominent new signage.

HelPinG HandS Food lion communications teammates Rick Ramseyer (left) and Benny Smith disucss the grocer’s antihunger program, which recently celebrated its first annivesary.

Food Lion

tioned at the front of the meat case, where the majority of shoppers can be readily found, as opposed to behind it. With updated everything — from signage, associate uniforms and new private brand packaging to customer messaging, a newly redesigned website and a reinvigorated MVP customer loyalty system, the most signifcant — and admittedly most overdue — in-store addition is a new banner-wide POS system featuring larger terminals and display screens and vast back end upgrades, along with additional associates to man the front end forts. All told, checkout wait times have been dramatically reduced, thereby inspiring allied enhancements through cultural and experiential transformation. “Improving the checkout process is a huge opportunity for us, because it’s very important for our customers,” notes Ham. “We have installed new point-of-sale systems in every single one of our stores that make it easier for our associates to do their job, and in turn, easier for our customers to get in and out.” Overall results of the broad-based campaign have found customers responding positively, she says, particularly in regard to the “four most important attributes that we look at, which [are] overall shopping experience, a likelihood to recommend, checkout time and overall variety of products. We are seeing solid improvements from the customers’ perspective,” as evidenced by a 3.2 percent uptick in U.S. revenues to $4.4 billion in fscal Q1, and a 2.5 percent comp-store sales gain. “But we will continue to measure them over time and will continue to do more consumer research” to probe what’s working and what’s not prior to moving forward with the next and third round of reformats on tap for another 160 stores this year in Raleigh, N.C., which at presstime was on track to take place on a rolling schedule between April and October. “We’re fnding things that are working here [as we study] what we can take across our entire network.

| Progressive Grocer | Ahead of What’s Next | July 2015

We’ll continue to listen to our customers and learn from their feedback,” says Ham, adding that the “the work we have installed behind our one banner/one strategy across the whole organization, as well as the advance of the remodels, is really encouraging and exciting. Customers are giving us credit for the improvements, and refnements are being addressed along the way,” which she afrms is not only energizing, but also “actually what we love to do. Te foundational initiatives across the entire network are really giving us a solid platform to grow and evolve to get better — and then get diferent.” Above all, notes Ham, “We really have a solid foundation to do that, as a result of our associates, who are the keys to success” in delivering on the company’s promise. “We’re moving through a major cultural shift,” observes Ham, referring to Food Lion’s bygone “command-and-control, top-down organizational structure. We are moving to a much greater culture of empowerment, where our associates know what to do and [take] responsibility for doing it. We’ve done a great deal of work in this area, but it really starts with me and my fellow leaders, to set the tone for our belief in how each of our individual roles makes a huge diference.” PG

NavigatiNg the BaBy aisle: how Retailers Can improve Momâ&#x20AC;&#x2122;s shopping experience in Baby

This report shares highlights from original research conducted on behalf of NestlĂŠ Nutrition to better understand the moms that are shopping the baby aisle. This report reveals who they are, where and how they shop and what Retailers need to know to offer them a more satisfying shopping experience in the baby aisle.

Letter from NeStLé NutritioN Aileen Stocks, Chief Marketing Officer, Nestlé Infant Nutrition North America Dear Retail Partner, Approximately 4 million babies are born each year, building a strong and influential market of moms. these new moms are critically important to the retail landscape as they are typically the primary shopper for the family. She represents a great opportunity for retailers to build loyalty and sales with a high-value shopper as she begins a long-term journey with her new family. the question we need to ask as retailers and manufacturers is, are we truly giving mom what she wants and needs? Are we providing a shopping experience that will live up to her expectations, and allow her to fulfill her families’ needs and desires? the retail market has continued to evolve, becoming more fragmented, with the goal of keeping up with consumer needs. in response, retailers and manufacturers have expanded offerings seeking to provide moms more variety, value and convenience. the proliferation of brands, variety and packaging formats has made managing the category more complex and demanding than ever before. our challenge in the coming years will be keeping a category strategy that puts the baby shoppers at the center of our plans. to compete in the future retail landscape, we need to focus on solutions that offer variety and choice to meet mom’s needs, and deliver that solution by removing complexity and hassle. A simple and satisfying shopping experience will fulfill mom’s needs and ultimately help drive store loyalty. for more than 85 years, Gerber ® has been committed to supporting moms in every way with an unwavering commitment to help raise a happier, healthier generation, one baby at a time. our vision is to continue to be the recognized leader in nutrition for the first 1,000 days. to deliver on that commitment, Gerber® continues to invest in the research necessary to build product solutions and merchandising strategies that will satisfy mom’s needs for safe, nutritious, high-quality products that taste great. to further strengthen our knowledge of mom and her experience in retail, Gerber® has partnered with Progressive Grocer to conduct a 360-degree review of her challenges, successes and behaviors in the baby department. inside the pages of this report are some of the results of our in-depth survey of moms and retailers. this research, combined with our years of experience in baby, can help you and Gerber® better connect with moms to provide a more rewarding shopping experience that may help to build loyalty and sales for years to come. After reviewing this report, we invite you to contact your local Nestlé Nutrition Sales or Category representative to find out more about how we can help you build a winning category strategy to improve mom’s shopping experience and build long-term loyalty. Very Best,

Aileen Stocks Chief Marketing Officer, Nestlé infant Nutrition North America

Gerber/Nestlé Nutrition 2015

The pages of this report highlight the findings of original research conducted by Progressive Grocer for Nestlé Nutrition during the first quarter of 2015. An electronic survey was fielded to a sample of female consumers with quotas established among prenatal mothers and mothers with children aged 0-7 months, 8-11 months and 12-24 months. Among these mothers, there was representation among all ethnic, income and educational segments. Moms surveyed met the following criteria: They shopped for baby products in the past two weeks (four weeks for prenatal mothers).

They did all or most of household shopping for baby products, or shared equally in this type of shopping.

They shopped in at least one of the following retail channels: Mass Merchandiser, Grocery Store, Warehouse Club, Specialty Store, Pharmacy/ Drug Store or Value/Dollar Store.

They purchased at least one of the following products for their baby/toddler: baby food, formula, diapers/wipes, clothes, medicine, toys, feeding accessories, bath wash/lotions, equipment, baby water. A total of 593 respondents were included in the study.

Demographics of the moms surveyed are as follows: • 60% of moms surveyed have some college education or less, and 40% are college graduates. • 60% report annual household incomes less than $75,000, and 37% report incomes of $75,000 or more. • 56% of moms surveyed work full- or part-time, and 43% are stay-at-home moms.

• 66% are European/Caucasian, 10% are African-American, 7% are Asian/Pacific Islanders, 18% of moms surveyed say they are Latina or of Hispanic heritage. • 47% live in suburban areas, 37% in urban areas, and 15% live in rural areas. • 34% are from the South, 24% from the Midwest, 23% from the West, and 19% from the Northeast.

• More than one-third of working moms have their children in a daycare situation, either a center (26%) or a homebased program (10%); 27% arrange childcare with family members. • 68% of mom surveyed have one to two children in the household, and 25% have three to five children. • 29% of moms surveyed were currently pregnant. SOURCE: Progressive Grocer/ Nestlé Nutrition Market Research 2015 Gerber/Nestlé Nutrition 2015

Understanding the moms shopping in the baby aisle Understanding the mom who is shopping in the baby aisle is critical to being able to meet her needs. a recent and exclusive survey conducted by Progressive Grocer for nestlé nutrition helps bring to light some fresh perspective on exactly who these moms are and what they are looking for in their baby shopping experience. aside from wanting the best for their baby, no two moms are alike. attributes such as employment, age, marital status, income, and education level drive differences in mom’s shopping behaviors because they can impact the attitude with which she approaches her shopping decisions. Convenience plays an important role in shopping behavior for working moms who have to balance home and work. this mom is most likely to look for shopping options that are quick and easy. younger moms tend to have lower incomes, likely driven by the fact that she has yet to reach her peak earning years and/ or is early in her career. her need to make her dollars stretch further impacts where and how often she decides to shop. older moms, more established in the workforce, tend to have

higher incomes and her shopping behaviors may reflect her larger disposable income. a married mom who benefits from a dual parent (and often dual income) household, typically shares the shopping responsibility with her spouse, thus differing her shopping behavior from that of a single mom. mom’s education level usually has a positive impact on her income as well as her tendency to research her purchases prior to shopping. all moms are interested in getting the best value during their baby shopping experience. it is important for retailers to note, however, that offering mom value is not just about offering her the best price. it’s about offering her a shopping experience that meets her needs and satisfies her expectations. these things are what determines which retailer she chooses most often. evaluating the demographics of the moms who shop their stores, and how shopping dynamics vary for those demographics, will help retailers as they build their strategies to deliver her an in-aisle experience that she will find valuable and enjoyable.

How Age & Income ImpAct SHoppIng HAbItS

Age 41-50

moms purchase baby food more often than younger moms

Income $75K+

moms most likely to purchase baby food > once a week

18-24

moms more likely to feel like the Retailer they recently shopped encouraged them to explore new products

working moms most likely to

SOURCE: progressive grocer/ Nestlé Nutrition Market Research 2015

Gerber/Nestlé Nutrition 2015

“Quick trip”

make for baby, driven by a specific, short-term need

Where MoM is choosing To shop, and Why OuTLET MOST overwhelmingly, moms are looking for the convenience of one-stop shopping. 83% of moms surveyed combine their baby shopping with their family shopping all or most of the time. This desire to make the most of their shopping trip likely drives their decision to shop most often at Mass Merchandisers. although Mass is the preferred retailer of choice for most of moms surveyed, grocery stores still appeal to many moms; 28% of moms surveyed cited this outlet as their top choice for baby shopping. survey results showed moms’ retailer preferences for other outlets significantly lower in comparison to these top two choices. Warehouse clubs appealed to 15%, specialty stores to 13%, pharmacy/ drug stores to 6% and Value/dollar stores to only 3%.

Mass Merchandisers most appealing to younger moms (18-24)

REcENTLy

Warehouse

SHOppEd

Clubs

fOR

15%

GroCery

BABy cARE

stores

speCialty

28%

stores 13%

pharmaCy/ DruG stores 6%

mass merChanDisers 36%

Value/ Dollar stores

SOURCE: progressive grocer/ Nestlé Nutrition Market Research 2015

prenatal moms more likely to shop specialty stores than grocery stores

Moms surveyed shared their perspectives on what retail outlets are doing well in terms of the baby shopping experience. This insight helps shed some

Warehouse clubs attract more older mom shoppers (41-50) than younger moms (18-24)

light on why they choose to shop certain outlets over others when shopping for baby.

WHERE RETAILERS ARE WINNING certainly different retail outlets offer shoppers different attributes — whether they’re advantages or disadvantages. survey results show that moms do call out a number of noted differences by channel shopped.

GROcERy STORES >> aisles and sections arranged to make sense, easy to shop the baby department, and baby items that are conveniently located near one another

MASS MERcHANdISERS ANd pHARMAcy/dRuG >> Baby items conveniently located near one another

SpEcIALTy >> enjoyable baby product shopping, best resources for information, great signage, most merchandise and a ToTal experience that speaks to moms

Gerber/Nestlé Nutrition 2015

SPOTLIGHT ON PRENATAL MOMS Mom isn’t waiting until her baby is born to shop the baby aisle. Prenatal mom is in the aisle perusing, preparing and learning about what she needs to buy for the baby who’s on the way. It’s important for Retailers to understand how her shopping behaviors differ from moms who have already delivered their bundles of joy.

• Prenatal moms are less likely than parents with infants or toddlers to mention Grocery Stores as the channel they most recently shopped for baby products. • Prenatal moms are more likely to mention Specialty Stores as their most recent channel shopped. Prenatal moms are the most likely to feel that the store they most recently shopped for baby products provided an enjoyable shopping experience and is a good resource for information they need about raising their babies. Typically, prenatal moms would welcome information and guidance on baby care as they plan for their child’s arrival. Even if a prenatal mom is not a first-time parent, trends, products and even pediatric guidelines change forcing even secondor third-time parents to reevaluate infant and baby care needs, at least to some extent.

Gerber/Nestlé Nutrition 2015

“The aisles were easy to browse through and there was a huge selection to choose from. And they had everything I would need to support my child.” — Prenatal mom on her most recent shopping trip at Mass Merchandiser

How prenatal moms sHop mothers first shop for many — not all — baby items when they are pregnant. the opportunity to earn their loyalty starts early!

73%

72%

Equipment

Bath Wash/ lotions

77%

Diapers/ Wipes

What prENatal MoMs Buy

77%

55%

Feeding accessories

clothes

58%

SOURCE: progressive Grocer/ Nestlé Nutrition Market Research 2015

toys

retaIler taKeawaYs retailers should: understand the nuances of a prenatal mom.

• she’s captive and has potential to develop loyalty for her baby era and beyond • retailers must optimize assortment on the shelf for her

• she’s in your stores • she’s planning

Win for Retailer = opportunity to win her over before she even gives birth and then as a young mom, long-term customer

• she’s seeking information

MoMs shop Early: First purchasEs When did you make your first shopping trip for each of the folloWing items? During pregnancy

Baby age 3 Months or younger

Baby age 4-5 Months

Formula

37%

29%

Medicine for baby/toddler

36%

32%

10%

Baby or toddler food

31%

17%

18%

Baby water

26%

20%

other baby/toddler products

67%

13%

SOURCE: progressive Grocer/ Nestlé Nutrition Market Research 2015 Gerber/Nestlé Nutrition 2015

WhAT’S MoM BUying in The BABy DepARTMenT? Moms typically plan ahead when purchasing baby products, particularly staples such as diapers/wipes and food. Certain products can drive mom’s trip to the baby aisle. Since 83% of moms are planning to buy their baby products during their household shopping trip, we already know there are baby products on her list. Knowing which baby products is key. According to the moms that were surveyed, diapers and wipes are the items they plan to buy the most (66%). Baby or Toddler Food was the next most planned at 47%, followed by Formula at 39%. As she walks down the baby aisle, especially in Mass Merchandisers, there are some baby items she didn’t plan to purchase that sometimes make it in to her basket. These unplanned purchases tend to be Clothes (23%), Toys (22%) and Feeding Accessories (16%). These items can be leveraged by Mass Merchandisers and Specialty Stores to drive impulse sales in the baby department. Merchandising these items adjacent to diapers and wipes is the best way to get them in to her consideration set, even if they weren’t originally in her purchase plan.

Planned vs. UnPlanned PUrchases Planned

Unplanned

diapers/Wipes

66%

12%

Baby or Toddler Food

47%

14%

Formula

39%

16%

lotions

37%

16%

Medicine

33%

11%

Feeding accessories

32%

16%

clothes

30%

23%

equipment

28%

13%

Baby Water

27%

Toys

27%

22%

SOURCE: progressive grocer/ Nestlé Nutrition Market Research 2015

Understanding which products she’s buying most often and ensuring the right assortment of those items is available on the shelf is the best way for Retailers to keep her coming back. Diapers, wipes and baby food, the items she most often purchases,

Note: Base was the total respondents. Question: “On your most recent shopping trip, how did you shop these sections? Had planned to buy from this section and did so, hadn’t originally planned to buy from this section but did so, browsed but didn’t purchase, did not shop at all, or the store did not have these items.”

are the categories Retailers should focus their category management efforts on to ensure they are carrying the optimal mix of items for their baby department shoppers.

shoPPing essenTials The following product categories are mentioned most often as the sections that were shopped on their last trip:

diapers/Wipes - 88% Baby/Toddler Foods - 77% Bath Wash/lotions, clothes, Feeding accessories, Toys, equipment, Formula & Medicine

60-70%

Baby Water - 48% The following items are mentioned most often as the products that actually were purchased on their last shopping trip:

diapers/Wipes - 78% Baby/Toddler Foods - 61% Bath Wash/lotions - 53% clothes - 53%

Gerber/Nestlé Nutrition 2015

SOURCE: progressive grocer/ Nestlé Nutrition Market Research 2015

What does MoM think about her baby shopping experience? understanding what Mom likes/dislikes about her shopping experience is key to delivering on her expectations at retail. our deep dive into what drives Mom’s baby purchases wouldn’t be complete without offering insight on what she likes best and what she would change about her most recent shopping experience.

What did yOu likE BESt aBOut yOur mOSt rECENt ShOPPiNg ExPEriENCE? overall good experience 8%

Variety 7%

other (net) 22%

g Other

coupons/ sales/deals 8% price/ Value 17%

had What i Wanted/needed 9% Fast/Quick 9% organization Layout of store - 9%

ease of shopping 11%

Store Personnel/ Customer Service (net)

Convenient (net)

One-Stop Shopping (net)

Browse/Explore New Products (net)

Quality (net)

SOURCE: progressive grocer/ Nestlé Nutrition Market Research 2015

While price and value are important factors related to her enjoyable shopping experience (17%), the combination of the layout of the store and ease of shopping are even more important (20%).

on carrying a mix of items that cover Mom’s needs across different sub-segments of the baby category.

Mom remains overall satisfied with her experience. however, when asked what she would change to make her baby shopping experience better, Mom’s top responses were to add more variety/ selection (13%) and to have a better organization/layout (7%).

shelving these items in a way that makes sense to Mom is just as critical as the assortment itself. if Mom can’t find the product she wants on the shelf, she can’t buy it. retailers should lean on Manufacturers’ category management resources to provide them with insights and recommendations around where Mom expects to find certain products. Leveraging this information to design a shelf layout that she understands will aid retailers in improving her overall shopping experience.

these responses from Mom demonstrate that product assortment and merchandising layout should be important considerations for retailers. carrying an assortment that will please Mom does not mean that a retailer has to carry everything from every Manufacturer. retailers should focus

Gerber/Nestlé Nutrition 2015

HOw SaTiSfied iS MOM wiTH HeR baby SHOPPinG exPeRience? “Aisles are incredibly tight, makes shopping with a stroller inconvenient.”

Moms’ satisfaction levels show them otherwise content, but also point to some opportunities to better appeal to them. Some 62% of parents surveyed say that overall they were very satisfied with the Retailer they most recently shopped for baby products; 25% where somewhat satisfied. Those who shopped at a specialty store are the most likely to say they are very satisfied (76%). Of those who shopped at grocery store (51%), value/dollar store (53%) or pharmacy/drug store (56%), more than half say they were satisfied. Overall, about 80% of moms surveyed feel that the Retailer they most recently shopped for baby products is easy to shop (81%), has all the baby items they wanted conveniently located near one another (79%), and has the aisles or sections of the store laid out in a way that made sense to them (78%).

– Mom of 0-7 month-old, most recent purchase was at Mass Merchandiser

about two-thirds feel the store provides an enjoyable baby experience (68%) and that they were encouraged to explore new products (60%). Only 50% feel that the Retailer they most recently shopped is a good resource for information they need about raising their babies, indicating an opportunty for Retailers to provide more education on the shelf.

How SatiSfied are MoMS witH tHe retailer MoSt recently SHopped? Specialty and Mass Merchandise receive highest marks for satisfaction.

76%

62% overall Very Satisfied with retailer Most recently Shopped

Very Satisfied with recent trip to Specialty Store

66% Very Satisfied with recent trip to Mass Merchandiser

SOURCE: Progressive Grocer/ Nestlé Nutrition Market Research 2015

Gerber/Nestlé Nutrition 2015

56% Very Satisfied with recent trip to pharmacy/ drug Store

53%

51%

Very Satisfied with recent trip to Value/dollar Store

Very Satisfied with recent trip to Grocery Store

RETAILER TAKEAWAYS To win at retail, Retailers must understand moms. Moms want:

GREAT SHOPPING EXPERIENCE

MOM

CONVENIENCE

VALUE, PRICE AND QUALITY

SOURCE: Gerber™ Path to Purchase Deep Dive, 2015

MoMS’ IMpRESSIonS of REcEnT BABY ShoppIng ExpERIEncES

81% 79%

It Was Easy to Shop (The Baby Department/ This Store)

68%

This Store provides an Enjoyable Baby Shopping Experience

All of the Baby Items I Wanted to Shop Were conveniently Located near one Another

78%

The Aisles or Sections of this (Baby Department/Store) Were Laid out in a Way that Make Sense To Me

60% 50% I Was Encouraged to Explore new products

Is a good Resource for Information I need About Raising My Baby

SOURCE: Progressive Grocer/ Nestlé Nutrition Market Research 2015

Gerber/Nestlé Nutrition 2015

MeRchAndISInG FOR MOMS According to survey results, most moms feel the store they shopped most recently is easy to shop for baby items (81%). About two-thirds of respondents feel the store provides an enjoyable baby product shopping experience and 60% felt encouraged to explore new products. Only half of moms surveyed feel that the Retailer they most recently shopped is a good resource for information they need about raising their babies. This reveals an opportunity for Retailers to offer more resources for her in aisle, not a surprising request for a category with so many offerings. Mom’s experience in the baby aisle is often impacted by things other than what she finds on the shelf. She is usually shopping with her baby and needs Retailers to consider how their aisle widths and shelf heights can negatively impact her ability to easily navigate the aisle with her cart, or stroller, and find and reach the products she’s looking for. Since they are usually doing their baby shopping while they are shopping for the rest of their family, moms surveyed advised that they typically follow the flow of the store as

they make their way to the baby aisle. Moms appreciate when the aisle is adjacent to other relevant baby items that may be on their shopping list as it makes baby-specific shopping trips easier. Moms surveyed also prefer that the baby aisle is close to the door with easy access to the registers so they can get in and out quickly during their fill-in trips to the baby aisle. For the most part, Retailers have the baby department located in the center of the store, meeting Mom’s desire to have easy access to check out. Those Retailers who place the department in places in the store that are more difficult for her to get to should consider if alternative placement could help improve her shopping experience.

How sHe sHops: Since 83% of moms surveyed are combining baby shopping with household shopping, it’s not surprising that she typically walks through the entire store during her trip. Mom tends to follow the pattern of the store, starting with the section closest to the entrance and working her way through the store in order. This behavior is most prevalent among Grocery and Mass Merchandise store shoppers.

LoCATIoN oF BABY seCTIoNs IN sToRe sIDe oR BACK wALL 9%

sIDe AIsLe 21% eLsewHeRe 5%

CeNTeR sToRe 65%

SOURCE: Progressive Grocer/ Nestlé Nutrition Market Research 2015

Gerber/Nestlé Nutrition 2015

In-store shopping patterns seem to be related to Mom’s frequency of combining shopping trips for household and baby products. 81% of moms who combine trips every time they shop say they follow the store pattern compared to 62% of those who combine trips most times and 53% of those who sometimes/rarely/never combine trips. Grocery Retailers should keep Mom’s typical path to the baby aisle in mind as they consider appropriate category adjacencies. Thoughtful placement of items like feeding accessories and baby toys may inspire unplanned purchases.

How RetaileRs Can impRove mom’s sHopping in BaBy While moms are overall satisfied with the baby shopping experience at retail, there are still some ways that Retailers can improve her experience:| Ensure your shelf layout allows her to easily find and reach the items she wants

Make sure your aisles can comfortably accommodate her and baby as she shops

Retailers should make sure the baby department is close to the main entrance, with easy access to registers, so that moms who are shopping with baby don’t have to travel far to get to the aisle. Retailers should also ensure they lay out their departments with adjacencies that make sense for Mom’s baby needs. Use baby food and diapers as anchors for the department since they are the main trip drivers. Merchandising baby toys and clothes nearby these anchors (especially in Mass Merchandisers and Specialty) may help drive impulse purchases and build her basket. Retailers should play to their strengths. Mom is choosing to shop in Mass Merchandisers for the convenience of one-stop shopping but Grocery and Specialty get high marks in other areas. Reminding Mom of the value that your channel brings her can encourage her loyalty. Remember that Mom’s shopping behavior, and where she chooses to shop, varies by demographic. Even pregnant moms have their shopping nuances. Retailers should tailor their stores

Offer her helpful signage and baby education at the shelf

Create an inviting shopping environment where she is encouraged to explore

to meet their shoppers’ needs. Carrying the right assortment of the baby items she is planning to buy and merchandising them in a way that is easy for her to find is important to her. Though Mom is overall satisfied with her baby shopping experience, there is still opportunity for Retailers to be a better information resource for her. The opportunity also remains for Retailers to better encourage her to explore new products while she’s in the aisle. Exploring different ways to provide her with relevant information about baby and new items is another way that Retailers can work to improve her shopping experience. Ultimately, the key to delivering a delightful baby shopping experience is understanding the moms that are in your store. The more you know about who she is, why she’s shopping in your stores, how she shops and what she wants, the better equipped you will be to satisfy her baby shopping needs and keep her coming back. Gerber/Nestlé Nutrition 2015

Nestlé Nutrition Call to Action Nestlé Nutrition is proud to be committed to understanding Mom and providing her with the products and shopping solutions that are relevant to her. If you would like to learn more about the many insights we can share to address your unique retail concerns, please contact your local Nestlé Nutrition sales representative.

Gerber/Nestlé Nutrition 2015

68th Annual Consumer Expenditures Study

Holding Firm

Fresh is in good shape, but center store is in trouble, as consumers seek solutions in a complicated, competitive grocery world.

Analysis by Joan Driggs, Jim Dudlicek, Bridget Goldschmidt, Meg Major, Katie Martin and Jenny McTaggart / Research by Debra Chanil

he traditional supermarket channel is maintaining its position as the dominant outlet for grocery purchases, according to the results of Progressive Grocer’s latest annual research study of consumer expenditures. While statistically fat in some key categories like fresh meat and produce, bakery, and

service deli, grocery stores show improvement over last year’s study results, according to Schaumburg, Ill.-based Nielsen Co., as well as exclusive PG retailer research. Sales in supermarkets accounted for just shy of a quarter (24.6 percent) of the nearly $2.06 trillion that U.S. consumers spent on all grocery store categories in all retail channels during 2014 — that’s up 0.4 percent July 2015 | progressivegrocer.com |

68th Annual Consumer Expenditures Study over the numbers reported here a year ago. Supercenters boosted their share numbers 0.3 percent, with the combined total up nearly a full percentage point. Traditional grocers should be happy with these results — amid the continued fragmenting of consumers’ dollars across mass, drug, dollar and convenience channels, supermarkets are standing their ground. Even as e-tailers build momentum in the fresh arena, grocers — who are increasingly discovering the benefts of click-and-collect as a strategy against all-online competitors — are getting it right. Of course, it’s no time to relax; there’s still plenty of work to be done. Traditional grocers’ emphasis on the fresh perimeter appears to be successful in protecting those categories from channel erosion, with alcoholic beverages, bakery, dairy, service deli, frozen foods, fresh produce and even general merchandise, and health and beauty care all showing at least some growth. Overall, total supermarket sales topped $485 billion in 2014, up 2.1 percent from a year ago, another sign that retailers are headed in the right direction. Meanwhile, 98.3 percent of all shoppers make purchases at traditional grocery stores across all categories — that’s up from last year. However, in areas where grocers showed im-

PERCENT OF BUYERS IN RETAIL CHANNELS TOTAL GROCERY ALCOHOLIC BEVERAGES GROCERY-FOOD

% BUYERS IN ITEm PENETRATION PERCENT

$2mm+ GROCERY

100.0%

mASS mERCH WITHOUT SUPERCENTERS SUPERCENTERS

DRUG

98.3%

72.2%

53.4%

58.1%

60.8

71.5

30.4

8.3

11.4

100.0

98.0

71.5

52.4

56.3

GROCERYNONFOOD

99.8

89.2

66.1

45.9

41.2

BREAD AND BAKED GOODS-FRESH

98.6

94.3

55.4

21.4

8.0

DAIRY

99.6

96.7

60.3

25.7

19.5

DELI-IN-STORE (SERVICE)

94.5

89.6

43.4

11.6

2.7

FROZEN FOODS

99.3

95.5

55.8

20.4

9.6

MEAT

96.3

92.8

50.0

13.7

4.1

PACKAGED MEAT-DELI

94.5

89.6

43.4

11.6

2.7

FRESH PRODUCE

96.4

93.2

49.1

12.1

1.2

GENERAL MERCHANDISE (TRACKED)

99.0

71.9

66.0

46.3

34.0

HEALTH & BEAUTY CARE

99.7

80.7

66.3

45.4

63.3

Total U.S., 52 weeks ending Dec. 27 2014 Source: The Nielsen Co.

provement — such as deli, bakery, and health and beauty — supercenters are right on their tail. Superstores also boosted their penetration among buyers of meat, produce and general merchandise, the last of which, along with alcohol, is among traditional grocery’s weakest categories.

Breaking it Down In the grocery category (in which supermarkets held nearly 43 percent of all dollars spent, down a point from a year ago), center store (the grocery-food subcategory) continued to bottom out, registering 0 percent growth in 2014. Tis continues the downward spiral of the past several years, with 0.4 percent growth a year ago and 0.3 percent in 2012. Our fndings support the position of many CONvENIENCE/ industry observers: center store is dying as the GAS fresh perimeter continues to shine. Center store’s revival could rest on aggressive cross-merchandis27.1% ing eforts as part of shopper-centric, whole-store solutions that address consumer need states. 7.4 Elsewhere in grocery, alcoholic beverages remained fat, after a promising jump of nearly 23.3 4 percent last year over 2013, and a 4.7 percent 11.2 rise in 2012. Total supermarket sales of alcoholic beverages are nearly $21.3 billion, up about $800 6.8 million year over year. Te overall perishables segment (59.1 percent of 9.2 all sales at supermarkets, down 1.4 percent from a 2.1 year ago) produced a 3.2 percent rise in sales in 2014. Among the standout categories: bakery in-store 4.7 (service), dairy, deli in-store (service), fresh meat/ 1.1 fsh/poultry, packaged meats, fresh produce, and 2.1 foral. Both the service deli, with sales growth of 1.2 4 percent, and produce, with a sales increase of 4.4 percent, show that grocers are delivering on con2.9 sumer demand for fresher, healthier foods, as well as convenience, as the deli grows in importance as a 3.1 meal-solution destination. In response, grocers are upping their game in prepared foods, bringing shop-

| Progressive Grocer | Ahead of What’s Next | July 2015

Methodology Progressive Grocer’s 68th Annual Consumer Expenditures Study (CES) is based on data collected by The Nielsen Co. 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 2014” report. The Nielsen Homescan Panel is made up of 125,000 households nationally dispersed and projectable to the total U.S. population. These households record UPC-coded purchases across all outlets. 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). Sales for U.S. supermarkets for 2014, 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 are

pers restaurant-quality items and giving rise to the hybrid concept “grocerants.” Produce has seen growth over the past few years, up 6.5 percent in 2013 and 1.8 percent in 2012. Enhanced packaging is making fresh produce more conve-

provided by Nielsen Perishables Group. Please note that 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 are provided by IRI, a Chicago-based market research firm. The data encompass total U.S. food sales. In addition, Solon, Ohio-based ECRM Data provided analysis of retailer and brand marketing activities to shed further light on how targeted promotions impact consumer behavior. ECRM charts within this report refer to Effective Ad Block Count, which gives partial credit to any product that shares an ad block with other products to provide more context in promotional analysis, and Feature Ad Count, which gives credit to every unique product in an ad block. An expanded version of PG’s 68th Annual Consumer Expenditures Study, which includes in-depth supermarket category sales results, is available for sale at Progressivegrocer.com.

nient for snacking as well as meal preparation, and grocers are looking to cross-merchandise with other fresh categories to deliver convenient meal solutions along that continuum running from scratch cooking to ready-to-eat items.

american Grown american Grown The California Avocado label Theis California Avocado labela promise a symbol of quality and is aof symbol of quality and a promise the most preferred avocado in of the most preferred avocado in the U.S.A. the U.S.A. Call 1-800-344-4333 or visit CaliforniaAvocado.com/A-Look-Behind-The-Label to learn more. Call 1-800-344-4333 or visit CaliforniaAvocado.com/A-Look-Behind-The-Label to learn more. Produce of U.S.A. Produce of U.S.A. © 2015 California Avocado Commission. All rights reserved. © 2015 California Avocado Commission. All rights reserved.

68th Annual Consumer Expenditures Study Elsewhere in perishables, eggs enjoyed growth of nearly 11 percent, with supermarket sales that topped $3.7 billion in 2014 — a threefold increase since 2012. Tis refects consumer demand for alternative proteins, as more have moved away from meat due to price, dietary or animal welfare concerns.

Tis performance predates this year’s onslaught of bird fu, which has resulted in egg shortages and rising prices that will certainly impact the data we see a year from now. Te dairy snack, spread and dip category of the perishables segment continues to enjoy robust growth in the

Innovation Ranks High for Consumers

innovative. Perhaps unsurprisingly, 83 percent of respondents would pay more for innovation in electronics, with 15 percent of these willing to pay more than 40 percent more. In the automotive industry, 75 percent of respondents would be willing to pay an innovation premium, with 10 percent willing to go higher than 40 percent more. Also, 67 percent of consumers will pay a premium for grocery store items that they consider to be innovative. Further, even in “dull” categories, such as insurance and gas, the data show an innovation premium uplift, with 54 percent and 52 percent, respectively, willing to pay more. The survey results also suggest that inventing, reinventing and listening to the customer are what makes a company innovative. More than two-thirds of those who took part in the survey (67 percent) say they believe companies are more innovative than they were five years ago. Research is seen as making an important contribution to innovation, with 69 percent of respondents agreeing that it’s needed to create innovative products. Consumers were then asked to rank three drivers of innovation in order of importance. Here’s how they stacked up:

A recent survey by Chicago-based research firm Lab42 reveals what innovation means to consumers, which sectors and brands people consider innovative, and whether innovation motivates them to purchase. The survey revealed these key findings: Perception of innovation is hugely important in purchasing decisions. Consumers are willing to pay a premium for innovative goods and services. More than half of consumers say they’ve bought a new product without fully understanding what it did or how it worked, but solely because they thought it was “cool.” Additionally, consumers care that a company is innovative and want to buy from it; 84 percent of respondents say it’s somewhat or very important that the company they buy from is innovative. Innovation is seen as vital in driving purchases and enhancing the customer’s self-image; in addition to the aforementioned 51 percent of respondents who say they’ve bought a product without fully understanding what it did or how it worked, because they felt or heard it was “cool,” 34 percent agree that they like owning products that make them look innovative to others. Nearly two-thirds (62 percent) of respondents have purchased a first-generation product at least once. But while consumers are willing to buy new products, they don’t necessarily want to be guinea pigs for them; just 21 percent of respondents buy new products as soon as they come out, compared with the 63 percent who prefer to buy them once they’ve been out for a while. The study shows clear demographic differences in those consumers who want to be early adopters. For instance, of consumers who purchase products as soon as they come out, 65 percent are men. In contrast, among consumers who are more likely to purchase a product once it’s been out for a long time, 59 percent are women. The allure of innovation wears off with age — only 6 percent of older people (55-plus) buy first-generation products. It’s not just youth that drives the desire for innovation, however — Generation Xers are the most seduced by innovation, with 49 percent of 35-to-54-year-olds buying new products as soon as they come out, compared with 45 percent of Millennials.

Innovation at a Premium

The survey also asked respondents how much more they’d be willing to pay for products from companies that they felt were

Consumers Willing to Pay Up to 10% More

11-20% More

Over 20% More

Total

Electronics

42%

15%

26%

83%

Auto

Restaurants

Clothing/Apparel

Grocery Store Items

Industry

Health & Beauty

Pharma

Gas

coming up with new ideas (48 percent); listening to customers, continuing to improve current products and offering a product that nobody else does (tied at 33 percent); offering excellent customer service and technology (each at 28 percent); and honesty (26 percent). This exercise clearly showed that generating new ideas for products and services is unsurprisingly the most important driver. However, in a digital age, consumers understand that innovation is driven by companies that listen to people; understand, and respond to their needs; and continue to improve their current products. The Lab42 Innovation Survey is based on 1,000 interviews conducted online April 5-9, 2015. The results were obtained using social media-based sampling, in which respondents are reached while they’re engaging on social networks, games or applications, or e-commerce websites.

| Progressive Grocer | Ahead of What’s Next | July 2015

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68th Annual Consumer Expenditures Study Supermarket Category Share of Sales 3.0% 5.6%

3.1% 34.6%

53.7%

Grocery Perishables General Merchandise Healthy & Beauty Care Pharmacy

Source: Progressive Grocer Market Research, 2015

supermarket channel. Tis category, which includes items such as cheese spreads and hummus, grew 9 percent in each of the past two years, to just more than $1.6 billion in sales.

Frozen foods slipped 0.6 percent from a year ago, to just less than $30.2 billion in supermarket sales (61.2 percent of total dollars), in a multiyear downslide that saw the category drop 0.5 percent in 2013 and 0.9 percent in 2012. While breakfast is considered by some industry observers as presenting a great opportunity for grocers, in frozen the daypart produced just 0.3 percent growth. Frozen meal starters provided a shock this year, plummeting more than 44 percent after a promising 63 percent surge a year ago, when a wealth of innovative meal kits crossing several brands and diverse ethnic cuisines hit the market. Tis steep dropof suggests that comparable fresh solutions may be emerging as the next wave, as grocers cross-merchandise proteins with value-added produce items. Pizza, ice cream and frozen novelties all showed tepid growth, with ice emerging as the star — up 5 percent after dropping 7 percent a year earlier. Floral, still a small segment of $864 million at supermarkets (12.4 percent of total sales, fat with last year), continues its modest, steady growth. Tis nonessential category was up 3.1 percent in 2014, 3.6 percent in 2013 and 4 percent in 2012. Health and beauty care (18.5 percent share of $80 million) continues to beneft from consumers’ self-management of health: Cough and cold remedies were up 3.3 percent to $1.43 billion in 2014; vitamins were up 2.3 percent to $2.33 billion.

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Retailer Combo Meals are Key for Families and Sales Growth

“By enhancing their merchandising, operators can capture a greater share in the fresh-prepared foods department,” says Sarah Tabb, brand manager at Coca-Cola North America. “Make the idea of a bundled meal obvious and the purchase of the meal convenient.”

Balancing work and family responsibilities means that cooking from scratch must frequently be supplemented with easy prepared meal solutions. A combination meal purchased from a supermarket ofers an opportunity for a family to spend less time in the kitchen and more time connecting at the dinner table. It is also a big sales growth opportunity for a retailer - driven through smart merchandising and marketing. According to Food Marketing Institute (FMI), children who regularly share family mealtime are likely to do better in school and be more resistant to negative peer pressure. Te importance of shared meals at home is the impetus behind the FMI’s National Meals Month in September to encourage families to add one family meal occasion per week. Te Coca-Cola Company is supporting the initiative with new POS that illustrates a wider range of food choices, merchandising options and ideas for programming. According to research, one hour before mealtime, nearly 60 percent of shoppers do not know what they will have for dinner on any given evening.1

Creating a go-to destination within the store begins with the overall appearance of the area — having a department that is kept clean and conveys an aura of freshness and high quality is paramount, even more important than the price of the ofer. “Tat’s a huge opportunity that retailers should capitalize on – to become a reliable everyday destination for easy prepared meal solutions,” Tabb says. For more insights and helpful information, please visit CokeSolutions.com/retail. 1

Te NPD Group’s National Eating Trends 2012.

time to connect ÂŽ

Bundled meals make your freshly prepared foods section a destination for customers. Connect Coca-Cola with prepared meals to offer a full shopper solution. Our innovative deli options have the potential to increase your basket size and traffc. For more ways to drive traffc and grow your retail business, visit CokeSolutions.com/Retail

ÂŠ 2015 The Coca-Cola Company

68th Annual consumer Expenditures Study SUPERMARKET SHARE Of SAlES

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

TOTAL GROCERY

$392,137.71

ALCOHOLIC BEVERAGES Beer

$51,410.53

42.8% 41.4%

19.6% 9.2

62.4% 50.6%

SUPERMARKET SHARE Of SAlES

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

Soup

5,982.61

63.5

18.8

82.3

Spices, Seasoning, Extracts

4,105.34

58.1

18.9

77.0

Sugar, Sugar Substitutes

2,578.30

54.1

22.2

76.3

922.70

58.0

19.3

77.3

19,093.29

49.9

13.2

63.1

Table Syrups, Molasses

Coolers

1,042.08

51.4

18.7

70.1

Tea

4,777.48

55.4

19.3

74.7

Liquor

14,654.06

25.2

3.8

29.0

5,394.21

66.1

18.2

84.3

Wine

16,621.10

45.4

8.4

53.9

1,869.65

59.5

18.4

77.8

74.1%

Vegetables-Canned Vegetables, Grains-Dried Water-Bottled

10,499.78

47.5

17.4

64.9

GROCERY-NONFOOD

24.0%

20.6%

44.6%

1,877.28

34.4

21.7

56.1

9,526.89 4,589.57 2,518.66 4,321.00 4,976.62

32.5 19.4 22.1 26.0 18.5

21.3 27.6 31.6 26.3 27.3

53.8 46.9 53.7 52.3 45.8

1,745.52

13.5

27.8

41.3

4,546.47 22,820.52

26.2 33.5

28.0 21.9

54.2 55.4

5,015.89

22.4

25.1

47.6

20,723.36 31,866.36

24.8 13.8

26.2 2.8

51.0 16.6

5,783.12

33.5

24.1

57.6

$440,789.16

59.1%

15.1%

74.2%

GROCERY-FOOD Baby Food

$220,415.92

53.4%

20.7%

6,243.27

43.0

28.2

71.2

Baking Flour

921.30

63.7

19.4

83.2

Baking Mixes

2,114.03

60.8

21.4

82.2

Baking Supplies

3,066.64

60.1

22.0

82.1

Breakfast Foods

4,546.26

50.1

21.4

71.5

Candy

16,812.53

30.5

23.0

53.5

Charcoal, Logs, Accessories Detergents Disposable Diapers Fresheners, Deodorizers Household Cleaners Household Supplies Insecticides, Pesticides, Rodenticides Laundry Supplies Paper Products Personal Soap, Bath Additives Pet Food Tobacco and Accessories Wrapping Materials, Bags

$120,311.26

Cereal

10,410.66

59.0

20.7

79.7

Coffee Condiments, Gravies, Sauces

11,304.77

44.0

17.7

61.7

9,392.75

64.8

19.2

84.0

7,386.94

54.8

19.5

74.2

Crackers

5,233.91

61.2

18.7

80.0

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

2,477.46 1,776.29 2,316.05 2,351.27 3,976.35

55.5 63.2 45.9 27.8 55.5

22.6 21.3 17.7 23.5 20.3

78.2 84.5 63.6 51.4 75.8

10,597.59

55.6

19.2

74.8

6,553.38

38.2

15.6

53.8

4,047.64

57.8

22.4

80.2

BAKERY-IN STORE (SERVICE)

$11,734.96

86.4%

13.6%

100.0%

2,201.36 2,428.86

71.5 63.7

15.6 19.2

87.1 82.9

BREAD AND BAKED GOODS-FRESH

$23,574.26

60.7%

20.6%

81.2%

6,317.28

61.4

21.9

83.4

6,066.79

59.6

20.9

80.4

DAIRY

$68,639.82

64.3%

18.7%

82.9%

4,335.50

62.9

19.9

82.8

4,379.97 18,274.93

63.4 62.9

19.0 19.4

82.4 82.3

2,421.02 3,954.57 24,527.41 18,283.13

56.7 56.2 51.7 61.8

16.9 18.0 20.4 16.7

73.6 74.2 72.1 78.5

3,368.67

69.6

19.0

88.6

1,981.22 6,035.08

67.2 61.7

23.7 18.8

90.9 80.6

5,653.36

68.2

16.4

84.6

2,220.84

47.5

25.4

72.9

18,265.43

63.3

18.1

81.5

PERISHABLES

Butter and Margarine Cheese Cottage Cheese, Sour Cream, Toppings Dough Products Eggs Juices, DrinksRefrigerated Milk

| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | July 2015

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68th Annual consumer Expenditures Study SUPERMARKET SHARE Of SAlES Pudding, Desserts

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

424.59

70.7

18.5

89.2

Snacks, Spreads, Dips

2,620.87

61.1

14.9

76.0

Yogurt

7,635.70

66.5

18.6

85.1

DELI-IN-STORE (SERVICE)

$29,963.27

DELI-REFRIGERATED (SELF-SERVICE)

$10,075.00

63.3%

17.4%

80.7%

FROZEN FOODS

$49,005.41

61.2%

20.3%

81.5%

59.8%

18.6%

78.5%

Baked Goods Breakfast Foods Desserts, Fruits, Toppings

2,091.34 3,057.67

68.2 56.6

20.4 24.1

88.7 80.7

2,149.75

56.0

19.2

75.3

Frozen Novelties

3,555.64

66.0

17.2

83.2

799.51

65.0

12.2

77.2

5,413.65

74.6

15.7

90.3

Juices, Drinks

364.62

65.7

20.3

86.0

Meal Starters

30.80

60.1

22.3

82.4

6,025.60

60.8

21.1

81.8

14,107.27

57.4

22.3

79.7

6,105.19

53.9

18.1

72.0

5,304.37

67.9

19.7

87.6

$129,692.33

52.7%

37.5%

90.2%

PACKAGED MEAT-DELI

$19,546.48

62.7%

20.5%

83.2%

FRESH PRODUCE

$91,589.57

61.3%

14.3%

75.5%

$6,968.06

12.4%

4.0%

16.4%

$60,518.55

10.8%

29.3%

40.1%

2,632.49 3,516.53 1,378.50 1,701.58

5.5 15.6 41.3 20.0

46.4 23.8 22.4 22.1

51.9 39.4 63.7 42.1

310.18

27.4

36.7

64.1

2,219.71 9,972.64

22.2 2.7

25.5 29.3

47.7 32.0

Ice Ice Cream

Pizza, Snacks, Hors D'oeuvres Prepared Foods Unprepared Meat, Poultry, Seafood Vegetables MEAT, FISH, POULTRY-FRESH

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

SUPERMARKET SHARE Of SAlES Gloves

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

449.95

15.3

26.2

41.6

Hardware, Homeware

2,308.70

6.1

39.5

45.7

Housewares, Appliances

9,630.93

5.0

31.2

36.1

Kitchen Gadgets

5,492.34

19.8

27.5

47.3

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

1,067.23

3.4

20.4

23.8

5,054.74

6.7

22.7

29.4

6,779.32

8.3

33.1

41.3

Pet Care

7,633.83

17.4

27.4

44.8

Seasonal

369.88

16.5

17.9

34.4

$854,885.00

2.4%

10.6%

13.0%

$79,961.10

18.5%

26.0%

44.5%

9.3

38.4

47.6

GENERAL MERCHANDISE (NONTRACKED) HEALTH & BEAUTY CARE Baby Needs Children's Cologne Cosmetics Cough and Cold Remedies Deodorant Diet Aids Ethnic Hair Preparations Family Planning Feminine Hygiene First Aid Fragrances-Women’s Grooming Aids Hair Care Medications, Remedies Men's Toiletries Oral Hygiene Pain Remedies Sanitary Protection Shaving Needs Skin Care Preparations Vitamins

1,930.06 43.17

6.1

41.0

47.0

4,856.47

11.6

26.1

37.7

6,935.92

20.7

25.0

45.7

2,255.26 576.74 145.83 624.91 552.95 2,609.19 1,273.51 1,852.37 7,425.13 13,536.65 604.91 7,240.37 3,646.60 2,391.77 3,403.02 6,434.44 11,621.83

26.6 30.3 8.3 18.2 17.3 18.5 3.6 13.4 21.9 16.8 8.0 21.4 22.2 24.9 19.9 14.2 20.1

30.5 33.3 25.5 29.7 35.5 28.4 15.5 34.0 28.5 28.7 27.6 26.7 27.0 30.6 29.2 23.1 20.0

57.1 63.5 33.8 47.9 52.9 46.8 19.1 47.4 50.4 45.5 35.7 48.1 49.2 55.5 49.1 37.2 40.1

PHARMACY

$230,656.92

6.5%

4.5%

11.0%

GRAND TOTAL

$2,058,948.44

24.6%

21.4%

46.0%

Source: The Nielsen Co., “Homescan Consumer Facts 2014” report, 52 weeks ending Dec. 27, 2015; Progressive Grocer Market Research, 2015

| Progressive Grocer | Ahead of What’s Next | July 2015

68th Annual Consumer Expenditures Study SUPERMARKET SAlES TOTAL GROCERY ALCOHOLIC BEVERAGES Beer

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

$392,137.71 $168,018.81 $51,410.53

$21,296.63

19,093.29

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

% Chg vS YR AgO 2012

0.4%

0.7%

1.1%

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

% Chg vS YR AgO 2012

Seafood-Canned

2,421.02

1,373.20

-0.7

-0.5

-0.7

Shortening, Oil

3,954.57

2,222.47

-1.0

-0.2

-0.1

3.6%

4.0%

4.7%

Snacks

24,527.41

12,678.22

2.8

2.7

4.0

9,521.82

2.7

1.3

2.4

Soft Drinks-Carbonated

18,283.13

11,289.83

-1.8

-3.8

-2.4

Soft DrinksNoncarbonated

2,220.84

1,054.23

-1.7

-0.3

2.8

Soup

5,982.61

3,799.55

-1.5

0.8

-1.3

Spices, Seasoning, Extracts

4,105.34

2,385.61

1.5

3.7

2.0

Sugar, Sugar Substitutes

2,578.30

1,395.38

-8.4

-5.9

-2.0

Table Syrups, Molasses

922.70

534.70

-3.4

0.7

-2.6

Tea

4,777.48

2,645.29

2.7

0.0

3.4

Vegetables-Canned

5,394.21

3,564.49

-1.3

-1.4

-2.9

Vegetables, Grains-Dried

1,869.65

1,112.25

2.5

-0.5

-0.1

10,499.78

4,984.25

5.1

3.2

6.2

Coolers

1,042.08

535.42

2.7

14.1

17.8

Liquor

14,654.06

3,688.43

3.7

7.6

10.7

Wine

16,621.10

7,550.97

4.7

5.0

4.4

0.0%

0.4%

0.3%

GROCERY-FOOD

SUPERMARKET SAlES

$220,415.92 $117,798.98

Baby Food

6,243.27

2,686.48

-0.7

-0.4

-0.8

Baking Flour

921.30

586.96

-0.7

1.8

0.8

Baking Mixes

2,114.03

1,284.70

-4.6

-0.6

-1.0

Baking Supplies

3,066.64

1,842.44

-2.4

-0.5

-1.6

Breakfast Foods

4,546.26

2,278.58

-1.3

1.4

-0.3

Candy

16,812.53

5,122.78

2.1

3.8

2.4

Cereal

10,410.66

6,143.33

-4.0

-3.1

-1.9

GROCERY-NONFOOD

Coffee

11,304.77

4,974.10

4.6

5.3

9.3

Condiments, Gravies, Sauces

1,877.28

645.78

0.1

3.0

-5.0

9,392.75

6,087.44

0.9

0.8

-1.2

Charcoal, Logs, Accessories Detergents

9,526.89

3,095.29

-2.6

-2.7

-1.9

7,386.94

4,046.56

0.0

3.0

2.2

Disposable Diapers

4,589.57

888.54

1.1

-3.6

-4.6

Crackers

5,233.91

3,205.24

-1.7

1.0

0.5

Fresheners, Deodorizers

2,518.66

556.88

-0.2

1.3

-0.7

Desserts, Gelatins, Syrup

2,477.46

1,375.24

-1.6

0.2

-1.4

Household Cleaners

4,321.00

1,123.89

-0.3

-0.5

-2.2

Household Supplies

4,976.62

921.17

-1.1

-0.9

-2.6

Fruit-Canned

1,776.29

1,122.79

-3.3

-0.7

-3.2

1,745.52

235.99

-0.9

-2.8

0.9

Fruit-Dried

2,316.05

1,062.60

-1.9

1.0

-0.2

Insecticides, Pesticides, Rodenticides Laundry Supplies

4,546.47

1,188.90

-1.4

1.1

-1.1

Gum

2,351.27

654.59

-3.4

-5.0

-6.7

Paper Products

22,820.52

7,638.03

-0.3

-0.5

-0.7

Jams, Jellies, Spreads

3,976.35

2,208.07

-1.7

1.5

12.0

5,015.89

1,125.56

1.4

1.7

1.3

10,597.59

5,896.50

-3.0

-3.7

-3.5

Personal Soap, Bath Additives Pet Food

20,723.36

5,145.61

-1.7

0.4

-1.3

Nuts

6,553.38

2,500.11

3.8

2.4

8.8

31,866.36

4,400.74

-1.1

-4.2

-5.9

Packaged Milk, Modifiers

4,047.64

2,338.32

1.5

4.8

1.1

Tobacco and Accessories

Pasta

2,201.36

1,574.63

-2.2

-2.6

-0.1

17.14 35.1

192.6

308.8

Pickles, Olives, Relish

2,428.86

1,546.94

0.6

-1.1

-1.8

0.4

-2.0

0.1

Prepared FoodsDry Mixes

6,317.28

3,880.07

-0.1

0.5

-0.2

3.2%

-0.4%

2.0%

Prepared Foods-RTS

6,066.79

3,613.99

1.0

0.1

-0.1

Salad Dressings, Mayo, Toppings

4,335.50

2,727.03

-1.7

-4.0

-0.2

2.3%

1.8%

3.4%

Juices, DrinksShelf-stable

Water-Bottled

| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | July 2015

Tobacco Alternatives Wrapping Materials, Bags PERISHABLES BAKERY-IN-STORE (SERVICE)

$120,311.26

n/a 5,783.12

$28,923.20 -0.7% -0.9% -2.1%

1,939.66

$440,789.16 $260,601.71 $11,734.96

$10,139.00

% Chg vS YR AgO 2012

SUPERMARKET SAlES

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

BREAD AND BAKED GOODS-FRESH

$23,574.26

$14,297.79

0.2%

-0.3% -1.7%

DAIRY

$68,639.82

$44,107.82

3.7%

1.0%

-0.3%

4,379.97

2,777.34

4.9

-1.0

-5.9

18,274.93

11,511.56

4.7

1.0

Cottage Cheese, Sour Cream, Toppings

3,368.67

2,344.93

2.8

Dough Products

1,981.22

1,331.58

Eggs

6,035.08

Juices, DrinksRefrigerated

5,653.36

3,857.29

18,265.43

Butter and Margarine Cheese

Milk Pudding, Desserts Snacks, Spreads, Dips

SUPERMARKET SAlES Yogurt

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

% Chg vS YR AgO 2012

3.5

6.7

5.1

7,635.70

5,080.79

DELI-IN-STORE (SERVICE)

$29,963.27

$17,924.03

4.0%

5.8%

3.8%

1.1

DELI-REFRIGERATED (SELF-SERVICE)

$10,075.00

$6,377.48

1.0%

2.5%

1.4%

-0.7

-1.8

FROZEN FOODS

$49,005.41

$30,180.38 -0.6% -0.5%

-0.9%

-3.7

1.8

-2.3

Baked Goods

2,091.34

1,427.13

-2.1

-0.2

-1.6

3,724.85 10.9

3.3

-0.2

Breakfast Foods

3,057.67

1,730.95

0.3

4.8

2.6

-2.7

1.6

0.2

Desserts, Fruits, Toppings

2,149.75

1,204.72

2.1

5.0

5.2

11,576.99

2.7

-1.9

-2.3

Frozen Novelties

3,555.64

2,347.44

-1.2

-4.5

0.7

424.59

300.35

1.0

-7.7

-10.9

Ice

799.51

519.28

5.2

-6.9

2.8

2,620.87

1,602.14

9.0

8.9

4.7

5,413.65

4,040.75

0.5

-0.3

1.3

Ice Cream

68th Annual Consumer Expenditures Study SUPERMARKET SAlES

TOTAl RETAIl SAlES ($ MIllIONS)

Juices, Drinks

364.62

Meal Starters

30.80

Pizza, Snacks, Hors D'oeuvres

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

% Chg vS YR AgO 2012

-8.8

-13.6

-10.0

18.50 -44.2

63.5

-15.2

2014 SUPERMARKET SAlES ($ MIllIONS)

239.56

6,025.60

3,661.76

0.7

0.6

-2.7

14,107.27

8,101.81

-1.8

-1.3

-1.7

Unprepared Meat, Poultry, Seafood

6,105.19

3,289.48

1.3

0.2

-1.5

Vegetables

5,304.37

3,599.01

-2.4

-0.7

-2.4

$129,692.33

$68,360.83

4.1%

2.6%

3.2%

Prepared Foods

MEAT, FISH AND POULTRY-FRESH PACKAGED MEATS

$19,546.48

$12,251.74

4.9%

1.3%

0.2%

FRESH PRODUCE

$91,589.57

$56,098.61

4.4%

6.5%

1.8%

$6,968.06

$864.04

3.1%

3.6%

4.0%

FLORAL GENERAL MERCHANDISE (TRACKED)

$60,518.55

$6,555.41

0.7%

0.6%

-2.3%

SUPERMARKET SAlES Seasonal

TOTAl RETAIl SAlES ($ MIllIONS)

2014 SUPERMARKET SAlES ($ MIllIONS)

% Chg vS YR AgO 2014

% Chg vS YR AgO 2013

% Chg vS YR AgO 2012

21.4

77.7

-51.7

369.88

61.03

GENERAL MERCHANDISE (NONTRACKED)

$854,885.00

$20,517.24

2.6%

3.2%

2.7%

HEALTH & BEAUTY CARE

$79,961.10

$14,789.54

2.0%

2.4%

1.2%

1,930.06

178.72

0.3

-1.0

-1.7

43.17

2.62

-3.7

-14.2

0.3

Cosmetics

4,856.47

563.84

1.6

4.5

4.3

Cough and Cold Remedies

6,935.92

1,433.65

3.3

6.5

1.2

Deodorants

2,255.26

599.90

3.7

1.9

-1.1

Diet Aids

576.74

174.64

-1.4

-6.9

-0.9

Ethnic Hair Preparations

145.83

12.13

-5.0

-2.4

-1.5

Family Planning

624.91

113.48

-0.2

0.9

Feminine Hygiene

552.95

95.88

0.0

1.4

3.2

First Aid

2,609.19

481.40

1.7

1.5

1.1

Fragrances-Women's

1,273.51

45.34

3.3

8.2

4.2

Baby Needs Children's Cologne

Automotive Supplies

2,632.49

144.79

2.8

3.6

-2.1

Grooming Aids

1,852.37

248.96

0.7

0.5

2.2

Batteries, Flashlights

3,516.53

547.17

-2.0

-4.0

3.6

Hair Care

7,425.13

1,629.07

2.6

0.4

0.1

Books and Magazine

1,378.50

569.46 -10.6

-11.2

-12.4

Medications, Remedies

13,536.65

2,279.57

3.7

2.2

1.2

Candles, Incense

1,701.58

340.32

-1.5

-1.1

0.7

Men's Toiletries

604.91

48.63

3.1

-0.4

-4.1

Canning, Freezing Supplies

310.18

85.05

-1.0

5.3

8.9

Oral Hygiene

7,240.37

1,550.89

2.6

1.2

-1.0

Cookware

2,219.71

492.11

1.5

0.3

Pain Remedies

3,646.60

810.28

0.3

1.4

-7.2

Electronics, CDs, DVDs

9,972.64

273.25 -16.3

-8.7

-11.5

Sanitary Protection

2,391.77

596.27

-0.3

-1.8

-2.2

Shaving Needs

3,403.02

676.52

-3.8

-0.6

0.0

Skin Care Preparations

6,434.44

911.76

1.2

0.7

0.9

11,621.83

2,335.99

2.3

6.9

9.7

PHARMACY

$230,656.92

$14,992.70

3.9%

3.0%

2.7%

Grand ToTal

$2,058,948.44 $ 485,475.40 2.1%

1.8%

1.0%

Gloves

449.95

69.02

0.9

14.3

11.7

Hardware, Homeware

2,308.70

141.29

-0.5

3.8

-1.9

Housewares, Appliances

9,630.93

477.69

-3.4

3.0

4.6

Kitchen Gadgets

5,492.34

1,089.68

2.0

6.3

2.4

Lawn and Garden

1,067.23

36.07

-4.1

-4.8

1.5

Light Bulbs, Electronic Goods

5,054.74

337.15

7.7

1.1

-2.2

Office/School Supplies

6,779.32

559.97

0.5

0.4

-0.2

Note: Supermarkets include food stores with $2 million or more in sales (excluding supercenters).

Pet Care

7,633.83

1,331.34

5.2

6.0

2.0

Source: The Nielsen Co., 52 weeks ending Dec. 27, 2014; Progressive Grocer Market Research, 2015

Vitamins

| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | July 2015

The bold flavor of the Tecate lineup pairs perfectly with bicultural Hispanic males’ passion for Chivas soccer. TECATE’S PARTNERSHIP WITH CHIVAS FC DRIVES OUR DOMINATION IN THE

Chivas FC is the most historic and popular soccer team from Mexico, with a fan base of in the U.S., mostly concentrated in Tecate’s key markets.

32M

$622 MILLION DOLLAR MULTICULTURAL BEER CATEGORY

soccer fans in the U.S., with over HALF being Hispanic1

of Hispanic soccer fans follow Mexican league soccer 1

INCREASE PROFITS IN SUMMER 2015 CAPITALIZE ON THE DOUBLE-DIGIT GROWTH OF TECATE IN THE MEXICAN BEER SEGMENT

TECATE LIGHT IS UP MORE THAN 90%2

+10% MEXICAN BEER IS UP MORE THAN 10.6%2

PROGRAM SUPPORTED BY THEMATIC POS FEATURING CHIVAS FC, SOCIAL MEDIA AMPLIFICATIONS, TICKET GIVEAWAYS, PLAYER APPEARANCES, AND CHIVAS EXPERIENCE SWEEPSTAKES.

CONTACT

YOUR

D I S T R I B U T O R R E P R E S E N T A T I V E.

2. Nielsen, volume growth 52 weeks ending 8/16/14

68th Annual Consumer Expenditures Study

Value-added Growing, Snacking Shows Promise for Produce

ith consumer interest in better dietary choices steadily on the rise, the fresh produce department is increasingly becoming the most infuential destination for shoppers heeding the call to action. Fresh produce has long been the crown jewel of most supermarkets’ overall fresh statement, but it is taking on an even greater role in light of heightened consumer desire for more nutritious, less processed foods. Tough fresh produce purchases continue to reign supreme for main meals, the growing number of consumers who are embracing smaller meals and snacks are turning to a more robust base of conveniently packaged fruits and vegetables to fll the bill. To take full advantage of the ripe opportunities abounding with higher fresh vegetable and fruit consumption, the vast majority of grocers are playing up sensory cues with more impactful displays that accentuate a global and, as often as possible, local bounty. Te recent “Power of Produce 2015” report, commissioned by the Food Marketing Institute (FMI) and conducted by San Antonio-based 210 Analytics LLC, sheds ample light on both of the aforementioned points, as well as other insights pertaining to shoppers’ produce-buying patterns and behaviors: Value-added produce grows ahead of its conventional counterpart: 13 percent over 2014 for value-added, versus 3 percent for unprepared produce.

Produce snacking and juicing show growth potential: 38 percent of households report consuming more produce as snacks, while 27 percent say they’re enjoying more produce as juices/smoothies. In-store execution is key: Price and promotions attract

shoppers to the store, but when they arrive, they want clear signage, clearly marked prices, variety, freshness, good organization and product availability. Appearance trumps price when it comes purchasing:

For both fruit and vegetables, the top purchase considerations are freshness/quality, followed by price. Megatrends infuence the produce purchase: Six in 10 shoppers urge their stores to stock more organic and local items.

Produce is a planned purchase, but a great opportunity for impulse exists: 57 percent of shoppers estimate that they frequently or almost always buy unplanned items when in-store. Of all the categories analyzed, produce is the most steadily promoted year-round, which is consistent with grocers’ leveraging the category to drive store trafc. According to analysis by ECRM Data, the most common types of promotions are those in which no brand is specifed.

Circular Retail Promotions: Produce U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015 U.S. Retailers Running the Most Circular Ads for Produce U.S. Retailer Name

Key Food Safeway Stores Stop & Shop Pavilions Martin’s Foods Carrs Weis Markets Giant Landover Vons Giant Carlisle Randalls Food Markets

Effective Count

Feature Count

716.8 712.5 707.0 698.5 697.1 691.5 687.8 687.0 684.5 674.5 673.5

888 898 1086 868 1037 812 1297 1051 841 1049 807

Ad Support Share for Products Promoted as Produce 51.4%

Source: ECRM®

| Progressive Grocer | Ahead of What’s Next | July 2015

48.6%

Fresh Fruit Fresh Vegetables

68th Annual Consumer Expenditures Study

Pricing, Personal Habits Impacting Sales of Meat and Seafood

rowth in meat and seafood is heavily infuenced by consumers’ changing eating habits, which are being afected by pricing and concerns for nutrition, as well as animal welfare. Dollar sales of overall refrigerated meat, approaching $2 billion, were up nearly 19 percent, primarily due to the higher prices of the past couple of years; unit sales rose just 3.5 percent, according to IRI. Sales leaps from brands like Richards Cajun were ofset by slips in brands like Gwaltney and Torn Apple Valley. Frozen meat sales were up 3.2 percent to just more than $1.4 billion. Growth in packaged red meat, the largest meat segment, is forecasted to be fat, and then drop slightly through 2019, according to Mintel. Since beef supplies are predicted to remain tight for some time, consumers will continue to turn to less-expensive protein sources such as poultry and vegetarian items, according to Mintel. Te pork segment reached $10.8 billion in sales in 2014 and also is forecasted to decrease, reaching $10.9 billion in 2019. A shortage of pork, the result of disease, shrank U.S. supplies, which has driven up prices. “Other meats,” which includes lamb, goat and game meats, is the only segment forecasted to grow, Mintel predicts. “Other meats” 2014 sales of $1.3 billion are expect-

Top 10 Refrigerated Uncooked Meat Brands Brand

Total Private Label Hormel Always Tender IBP Our Certified Laura’s Lean Beef Great Range Laura’s Smithfield National Beef Tyson

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$1,873.8 1211.3 87.5 51.0 49.4 44.5 31.6 28.0 23.5 21.6 21.4

19.2% 25.8 -7.2 15.9 28.1 9.9 5.3 16.5 -10.4 -13.2 16.6

265.0 172.5 11.3 11.2 5.5 6.4 3.3 3.7 3.7 1.9 2.7

3.9% 7.1 -15.0 -2.1 8.9 0.9 3.3 2.7 -20.5 -29.3 23.1

Does not include poultry Ranked by total U.S. food dollar sales for 52 weeks ending April 19, 2015 Source: IRI, a Chicago-based market research firm (@iriworldwide)

ed to reach $1.5 billion by 2019. Category growth is being spurred by Millennials, who are comfortable eating a variety of meats, due to this population’s multicultural makeup. “Consumers are seeking clarity on issues related to origin, naturalness and the humane treatment of animals, in order to gauge the quality of the prod-

Circular Retail Promotions: Meat U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015 Subcategory Share of Promotions

Ad Counts at Key Retailers U.S. Retailer Name

Kroger Safeway Stores Albertsons IM Giant Eagle Hy-Vee Food Stores Publix Super Markets Stater Bros. Winn-Dixie Meijer Buehler’s Brookshire Brothers

Effective Count

Feature Count

1498.7 1350.7 1254.4 1193.6 1144.8 1118.7 1063.2 1033.3 846.4 825.3 782.5

1935 1779 1548 1580 1590 1467 1476 1444 1386 1122 983

1.5% 1.2% 4.8% 2.1% 2.3% 2.5% 3.9%

7.8%

7.8% 14.0% 11.6%

Source: ECRM®

28.7%

| Progressive Grocer | Ahead of What’s Next | July 2015

11.8%

Beef Packaged Lunch Meat Pork Loin Dinner Sausage Packaged Hot Dogs Packaged Bacon Pork-Ham, Leg Breakfast Sausage Pork-Picnic, Shoulder Butt Pork-Side Lamb Pork-Value-added Other

Circular Retail Promotions: Seafood U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015 Ad Counts at Key Retailers U.S. Retailer Name

Kroger Safeway Stores Giant Eagle Albertsons IM Publix Super Markets Winn-Dixie Stater Bros. Hy-Vee Food Stores Buehler’s Meijer H-E-B

Subcategory Share of Promotions

Effective Count

Feature Count

687.3 557.6 499.4 499.0 422.0 373.4 357.7 314.3 255.3 234.7 219.8

783 685 539 677 446 570 432 357 265 302 230

5.1%

2.0% 0.8%

7.5% 35.0%

15.8%

33.7%

Source: ECRM®

Frozen Seafood Fish Shrimp Crab Other Seafood Scallops Lobster

stymied by the higher prices and cooking challenges of fresh ucts they consume,” says Julia Gallo-Torres, Mintel senior product — rose 3.4 percent to just more than $2.5 billion, analyst for food and drink. “Further, because they value with unit sales dropping 2.4 percent. purity so highly, they are willing to pay more for products On the upside, the recent report from the 2015 with claims that speak to these issues, such as all-natural, Dietary Guidelines Advisory Committee strongly reafantibiotic- and hormone-free, and humanely raised.” frming seafood’s position as one of the healthiest opAccording to analysis by ECRM Data, beef ads tions in the American diet bodes well for retail seafood represented just less than one-quarter of all meat circudepartments. lar promotions over the past year — likely in an efort to keep driving sales in the face of increasing beef costs. Along with chicken (13.9 percent) and packaged www.anuga.com lunch meat (11.5 percent), these three subcategories make up about half of TASTE THE FUTURE meat promotions. Interestingly, the largest share of brand promotions comes from the aggregate of smaller, local brands, 10 TRADE SHOWS which are grouped together as IN ONE “other” brands and make up 31.7 percent of all brand promotions. Te next largest share is of promotions that aren’t tied to any brands (30.8 percent), followed by private label meat promotions (15.1 percent of Buy admission tickets online now and meat promotions). Of the national save up to 44%: www.anuga.com/tickets brands, Oscar Mayer had the largest share of meat promotions, with 4.7 percent. While meat promotions Your ticket to the world of food & beverage are fairly steady year-round, there Impressively put together for you: are noticeable spikes just before The latest international innovations and trends of the industry. Tanksgiving and Christmas, with Anuga as the most important and largest food trade fair will delight once again in 2015 sharp declines the week following with a diverse line-up of international exhibitors. The ten Anuga trade fairs will perfectly each, likely because consumers are match the interests of the visitors and the exhibitors. Look forward to high-quality still working through their holiday networking events, an inspiring supporting program and trends that will move leftovers during these periods. the industry. Meanwhile, overall refrigerated seafood rose just less than 0.9 percent Cologne, Oct. 10-14, 2015 to $406 million in dollar sales, with a Koelnmesse Inc. drop in unit sales of nearly 1.5 percent. 8700 West Bryn Mawr Avenue Suite 640 North Sales of frozen seafood — still the Chicago, Illinois, 60631 Phone +1 773 326 9922 overwhelming preference for consumers v.woods@koelnmessenafta.com

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68th Annual Consumer Expenditures Study Smaller portions and pack sizes are increasing in clout as the foremost department drivers, as cited by more than two-thirds of retailer respondents to an exclusive survey for PG’s Retail Seafood Review earlier this year. Also driving growth in the seafood department: U.S. wildcaught seafood, value-added products like marinated oven- and grill-ready products, single-serve portions, and domestic and imported farm-raised seafood. As with other fresh categories, most seafood promotions (69.15 percent) aren’t associated with any brands, with store brands being the next highest in terms of promotions, according to ECRM. Te supermarket channel dominates in seafood promotions, dedicating an average 3.15 percent of circular space to the category, compared with club (1.49 percent) and mass (0.35 percent). Not surprisingly, the 10 retailers with the most promotions are all grocers. Fish and frozen seafood are the most promoted subcategories, with 33.7 percent and 35 percent share of promotions, respectively, followed by shrimp (15.8 percent) and crab.

Top 10 Refrigerated Fish/Herring/Seafood Brands Brand

Total Private Label Trans-Ocean Echo Falls Vita Food Products Acme Smoked Fish Dockside Classics Louis Kemp Seafood Company Los Angeles Smoking and Curing Ducktrap River Chicken of the Sea

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$406.2 73.0 30.8 21.4 18.5 18.4 16.5

0.9% -7.5 1.1 19.6 0.6 9.4 27.0

74.2 14.1 11.5 2.8 3.3 2.2 2.5

-1.5% -11.8 0.4 12.5 0.7 9.2 24.8

12.9

6.3

5.4

2.6

12.1 11.9 8.4

18.5 17.1 15.1

2.1 1.5 0.5

5.6 16.2 2.7

Ranked by Total U.S.food dollar sales for 52 weeks ending April 19, 2015 Source: IRI, a Chicago-based market research firm (@iriworldwide)

Free-from Needs Defining

— focuses on producing products free of common allergens, including wheat/ gluten, dairy, peanuts, tree nuts, egg, soy, fsh and shellfsh. Mintel reports that consumers are onboard with this, but also believe free-from products exclude unnecessary or

hile “free-from” is emerging as a more advanced — and obviously more encompassing — iteration of glutenfree, the industry must come together on a consensus of what the term means, and then work to educate consumers. Enjoy Life Foods, maker of “allergy-friendly” products — and a recent acquisition of Mondelez International

Circular Retail Promotions: Gluten-free U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015 Subcategory Ad Support Share For Gluten-free Products U.S. Retailer Name

Kings Foodtown Giant Eagle Big Y Foods ShopRite Shop ‘n Save (Pittsburgh) Dierbergs Heinen’s King Kullen Strack & Van Til Roche Bros.

Effective Count

Feature Count

451.2 390.0 327.3 314.0 242.6 217.1 148.0 125.3 121.3 120.8 114.5

498 434 520 514 331 378 178 137 203 208 147

U.S. Retailers Running the Most Circular Ads for Gluten-free 1.5% 2.3% 2.3%

1.0% 3.4%

28.8%

5.6%

7.7%

7.9%

9.0%

17.8% 11.7%

Source: ECRM®

| Progressive Grocer | Ahead of What’s Next | July 2015

Snacks Deli Frozen Cereal Grocery Bakery Baking Needs Dry & Boxed Foods Dairy Meat Bakery In-store Poultry Other

68th Annual Consumer Expenditures Study to be a $10.5 billion category, projected to grow to $23.9 billion by 2020, according to Statista. For retailers, the news is even better, with the average free-from basket ringing out at $102, compared with $46 for the average shopping basket, according to Kantar Retail Shopper Genetics. According to analysis by ECRM Data, independent grocers lead in promotions of gluten-free products, with Kings, Foodtown, ShopRite, Dierbergs and Roche Bros. listed among the top 10 retailers ranked by efective ad count. Of the promotions run in this category, those representing private label manufacturers represent the largest share, at 11.5 percent, just more than twice the share of the top manufacturer’s share of 5.5 percent. Te supermarket channel dominates promotions of gluten-free items, with more than a 98 percent share of ad support.

excessive ingredients. Consumers, particularly Millennial parents, are increasingly seeking out products free from trans fat, preservatives, growth hormones, GMOs, sodium, nitrates/ nitrites, lactose and allergens, according to Mintel. Half of Millennial moms, for example, want to avoid unnecessary ingredients, and nearly as many consider free-from foods to be healthier than other foods. Tese sentiments are more in line with broader industry trends of healthier and less processed foods, rather than in response to dietary restrictions caused by intolerance or allergies. About one in 13 children has a food allergy, a 50 percent increase from the late 1990s, according to the Centers for Disease Control and Prevention. An increase in food sensitivities is leading to a boom in freefrom food products. Te free-from market is estimated

Healthy-indulgent Paradox Heats Up Commercial Baked Goods

ealth, indulgence and portion size are not only driving in-store bakery sales, they’re also impacting the commercial bakery categories in center store. Indulgence is certainly behind the 2.63 percent sales lift in pies and cakes, with pies gaining an impressive 4.32 percent. Te pie and cake category now accounts for a whopping $1.05 billion in supermarket sales. At the same time, whole grain and other healthrelated attributes are driving other segments of baked

Circular Retail Promotions: Grocery Bakery U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015

Ad Counts at Key Retailers U.S. Retailer Name

Safeway Stores Winn-Dixie Kroger Albertsons IM Stater Bros Hy-Vee Food Stores Meijer Haggen Giant Eagle Publix Super Markets Brookshire Brothers

Subcategory Share of Promotions

Effective Count

Feature Count

307.5 302.8 247.3 216.8 199.7 193.8 186.4 173.6 163.9 154.2 110.3

376 553 401 251 346 226 434 212 249 206 127

4.8%

8.0% 42.2% 8.4%

9.2%

10.1% Source: ECRM®

0.1%

6.4%

| Progressive Grocer | Ahead of What’s Next | July 2015

10.8%

Shelf-stable Breads Lunchbox Cakes Tortillas/Pitas Pastries, Cakes & Pies Sandwich & Hot Dog Buns Shelf-stable Rolls English Mufns Shelf-stable Bagels Shelf-stable Croissants

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68th Annual Consumer Expenditures Study goods. With a nod toward better-for-you breakfasts as well as the all-day snacking trend, English mufn sales are up 3.72 percent, while bagels and bialys moved up a more modest 1.38 percent. Sales of bakery snacks, meanwhile, increased 2.74 percent, with particularly strong showings from Hostess and Entenmann’s Little Bites. Based on ECRM Data analysis of circular promotions, the greatest thing since sliced bread seems to be sliced-bread promotions, with shelf-stable breads taking the lion’s share (42.2 percent) of center store bakery product ads, almost four times the amount of that of the next highest-promoted item, lunchbox cakes, which represent 10.2 percent. Interestingly, promotions of these items take a noticeable dip around Tanksgiving and Christmas, as consumers tend to purchase fresh-baked bread and pastries for their holiday dinners.

Top 10 Cake Brands Brand

Total Private Label Entenmann’s Café Valley Bakery Cakes Café Valley Cakes CSM Bakery Products Olson Original Cakerie The Muffin Mam Café Valley 7 Up Cakes The Father’s Table

Dollar Sales (in Millions)

Percent Change

$802.5 513.3 80.2 16.1 12.5 9.7 8.5 8.4 7.4 7.0 6.2

2.1% 0.6 -11.5 37.5 38.3 2,046.2 10.4 11.0 -16.2 22.9 4.5

Unit Volume (in Millions)

138.3 74.9 21.6 3.4 2.8 2.5 2.4 0.9 1.6 1.3 1.6

Percent Change

1.0% 1.1 -14.2 34.7 31.9 2,015.2 5.9 9.6 -19.6 21.3 1.3

Does not include snack/coffee cakes Ranked by total U.S. food dollar sales for 52 weeks ending April 19, 2015 Source: IRI, a Chicago-based market research firm (@iriworldwide)

Hot Cereal to Drive Category

eady-to-eat (RTE) breakfast cereal continues its sales decline, with dollar sales down 3.9 percent from a year ago to $5.4 billion, according to IRI data for the 52 weeks ending April 19, 2015. Unit sales were down about the same, 3.5 percent, to 1.7 billion, while the average price of RTE cereal decreased by only a penny. Tis downtick can be attributed to consumers’ growing interest in other breakfast options like biscuits, sandwiches, snack bars and shakes, according to Mintel. Nearly 90 percent of Ameri-

cans who eat cereal do so at breakfast, but the product is gaining traction at other eating occasions, with one-third of Americans claiming they eat it as a snack. Mintel predicts that the breakfast cereal category will increase 4 percent by 2018, boosted mainly by hot-cereal

Circular Retail Promotions: Ready-to-eat Cereal U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015

Ready-to-eat Cereal Ad Counts at Key Retailers U.S. Retailer Name

Safeway Kroger Roche Bros. Bi-Lo Hy-Vee Food Stores Meijer Publix Super Markets CVS Walmart-U.S. Albertsons LLC Corp. Walgreens Target Stores

Ready-to-eat Cereal Share of Cereal Promotions

Effective Count

Feature Count

256.9 170.0 166.0 161.1 152.0 138.4 130.8 126.4 97.0 75.6 70.2 66.8

584 313 359 290 357 455 384 288 151 306 140 104

5.5% 18.0%

Source: ECRM®

1.8%

| Progressive Grocer | Ahead of What’s Next | July 2015

74.7%

Ready-to-eat Cereal Hot Cereal Granola Instant Breakfast

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Top 10 Ready-to-eat Cereal Brands Brand

Total Private Label General Mills Honey Nut Cheerios Post Honey Bunches of Oats Kellogg’s Frosted Flakes General Mills Cheerios Kellogg’s Special K Kellogg’s Frosted Mini Wheats General Mills Cinnamon Toast Crunch General Mills Lucky Charms Kellogg’s Raisin Bran

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$5,470.5 566.0

-3.9% -8.9

1,749.9 225.6

-3.7% -9.2

products such as oatmeal, 301.2 0.5 90.9 4.2 which consum236.3 -1.0 74.2 1.7 ers perceive to 226.4 -3.2 72.7 -4.2 be healthier. 215.1 -8.2 68.2 -6.8 While cold ce185.9 18.0 54.9 15.8 real dominates 161.7 -6.3 49.2 -6.6 the category 160.5 2.5 51.4 6.4 in both sales 143.2 1.4 44.9 3.3 and product 108.4 9.7 33.8 6.1 development, hot-cereal sales Ranked by total U.S. food dollar sales for 52 weeks ending April 20, 2014 Source: IRI, a Chicago-based market research firm (@iriworldwide) grew 7.2 percent between 2011 and 2013, while cold-cereal sales dipped 0.7 percent during the same period. For the 52 weeks ending April 19, 2015, hot-cereal sales increased 1.6 percent to $848 million, according to IRI, and unit sales were up 0.5 percent, accounting for 304 million. Some traditional cold-cereal players also are getting into the game; for example, the Kellogg Co. has launched the Special K Nourish hot-cereal product line. Te attributes consumers are looking for most when shopping cereal categories are health and nutrition claims like high fber, high protein or low sugar, as well as superfood ingredients such as quinoa or chia. General Mills introduced Cheerios + Ancient Grains earlier this year; the cereal contains quinoa, a seed marketed as an ancient grain. According to analysis by ECRM Data, the club store channel has the greatest percentage of ad support dedicated to RTE cereal promotions, with 2.09 percent of its ad mix dedicated to this category. Tat’s almost twice the amount of circular space that grocers have allotted to the category over the past year. In terms of individual retailers, however, Safeway outpromoted them all by a wide margin, with an efective ad count of 256.9, compared with No. 2-ranked Kroger’s 170. Price point and x-for are the most common promotional tactics in this category.

Ethnic Opportunities in Food and Beyond

volving demographics and changing tastes mean that demand for ethnic products continues to grow, not just for specifc ethnic groups, but also for others looking to expand their food horizons. Adventurous eaters — Millennial consumers in particular — are hungry for authentic ethnic experiences, which is driving demand for such products. Accordingly, Mintel reports that sales of ethnic food grew 15 percent from 2008 to 2013. But while the idea of ethnic food consumption is an easy sell, encouraging consumers to use ethnic food products is a slightly tougher challenge, Mintel asserts in a January 2014 executive summary on the category. “Keeping these products top of mind to shoppers, and infusing consumers with the confdence that they can easily and afordably prepare these dishes at home, will be key to maintaining a strong pace of sales growth,” notes Beth Bloom, Mintel food and drink analyst. Mexican/Hispanic oferings make up the largest segment measured here, and posted the strongest growth in the category, due to the afordability and widespread familiarity of these products, as well as an engaged Hispanic consumer base.

68th Annual Consumer Expenditures Study Interestingly, while industry analysts have been preaching the idea of selling solutions rather than components, Mintel reports that complete meals are losing share to ingredients among ethnic products. “Tis points to a focus on preparing scratch and semi-scratch meals at home, rather than relying on heat-and-eat products. Seasoning makers are helping to bridge the gap between scratch cooking and quick-prep oferings by developing spice blends that allow home cooks to duplicate intricate regional favors without purchasing multiple ingredients,” Mintel says. “Packaged food manufacturers in the segment would do well to develop more complex dishes, with more developed favor profles, to allow home cooks to step up their ethnic food game.” PepsiCo boasts the largest share of ethnic food sales, reaching $1.1 billion — 12 percent of all sales — in 2013, with strong brands such as Tostitos in the Mexican/Hispanic segment and Sabra in the Mediterranean/ Middle Eastern segment. Te majority of ethnic food consumers seek spicy favors, highest among those who eat Mexican/Hispanic

and Cajun/Creole cuisine, while vegetable and herb favors rule among those who eat Mediterranean/ Middle Eastern food, meaning the cuisine can be a strong attraction to nonmeat eaters and health-conscious consumers. Meanwhile, there are opportunities for retailers in nonfood categories, too. Supermarkets trail way behind in ethnic hair care promotions (they hold only an 8.3 percent share of this $146 million market, according to IRI), but have an opportunity to easily boost their share, as those manufacturers that run the most ads are those with which the supermarket channel already has strong relationships, such as Procter & Gamble, according to an analysis of national circular ad promotions by ECRM Data. Stronger partnerships might help shore up sliding sales for grocers in this category, which fell 5 percent in 2014 and 2.4 percent a year earlier. Dollar stores devote the most circular space to this category, ECRM reveals, followed by drug and specialty stores. Shampoo, conditioner and gel garner the largest share of category promotions, with each representing approximately one-quarter of all ethnic hair care ads. Te remaining quarter is divided up among more specialty items such as texturizers, relaxers and hairdressing products.

Circular Retail Promotions: Ethnic Hair Care U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015

Ad Counts at Key Retailers U.S. Retailer Name

Family Dollar Walgreens Giant Eagle CVS Publix Super Markets H-E-B Rite Aid Ulta Brookshire Brothers Meijer Target Stores

Subcategory Share of Promotions

Effective Count

Feature Count

43.5 15.3 7.4 6.6 6.0 5.2 4.5 4.1 3.0 2.5 2.5

56 46 8 10 6 8 17 19 6 4 3

5.1% 7.2%

25.7%

11.8%

23.3%

Source: ECRM

2.9%

| Progressive Grocer | Ahead of What’s Next | July 2015

24.1%

Ethnic Conditioner Ethnic Shampoo Ethnic Hair Styling, Gel, Lotion, Mousse Ethnic Relaxers Ethnic Hair Color Ethnic Hairdressing Ethnic Texturizers

68th Annual Consumer Expenditures Study Top 10 Chocolate Candy Box/Bag/Bar < 3.5 oz. Brands

Chocolate Continues to Charm

Brand

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$753.4 81.0 79.8 76.5 70.5 55.2 19.8 17.0 17.0 15.8 15.4

-0.5% -4.6 -2.5 -4.4 3.4 -2.3 5.0 6.3 38.5 -7.5 -11.0

732.5 83.7 75.7 81.5 76.3 53.8 22.8 18.8 6.9 18.3 17.6

-7.8% -9.7 -7.4 -8.9 -2.2 -8.5 -6.0 0.3 48.5 -10.7 -16.0

Total M&M’s Reese’s Snickers Hershey’s Kit Kat Twix Hershey’s Cookies N Crème Endangered Species Three Musketeers York

hocolate candy remains a star performer in supermarkets’ confection aisles, driven by consumers’ love for the treat, combined with an uptick in snacking and an interest in health-related products. Total chocolate candy sales were up 2.77 percent in the past year, and that growth isn’t expected to diminish any time soon. In fact, the National Confectioners Association expects the confection category to add $6 billion in growth over the next fve years, led by chocolate confections. Specialty brands, including Endangered Species and Creative Natural Products (the latter known for its innovative Chocolove brand), are making impressive inroads in the category, while distinguished upscale names, such as Lindt & Sprungli A.G. Chocolate and Ghirardelli, continue to grow. Brookside Foods, the chocolate maker that Hershey acquired in 2011, is also performing well. Te Brookside brand combines dark chocolate with the fruit favors of goji berries, pomegranate and açai. Hershey is getting ready to add a Dark Chocolate Fruit & Nut Bar to the line in August. Meanwhile, the not-so-upscale but health-conscious Atkins brand saw a whopping 71.11 percent lift in bagged chocolate bar sales for the year. Nonchocolate candy is also standing its ground, with sales up just more than 2 percent for the year, driven by breath fresheners and nonchocolate chewy candy. While gum sales were down a slight 1.78 percent, leaders of the category are continuing to experiment with new merchan-

Ranked by Total U.S. Food Dollar Sales for 52 weeks ending April 19, 2015 Source: IRI, a Chicago-based market research firm (@iriworldwide)

dising ideas to bring more innovation and efciency to gum and other confection categories in the front end. Mars Chocolate N.A. and Wrigley, for instance, saw impressive returns after introducing racks illuminated with LED lights last year. While supermarkets dominate candy promotions as a channel, it’s drug chains that make up six of the top 10 retailers in terms of efective ad counts for the candy category, with No. 1 Rite Aid running almost double the amount of candy ads as the top grocer, Acme Markets. According to ECRM Data, promotions are heaviest during the fall and winter, peaking for Halloween, Christmas, Valentine’s Day and Easter, and relatively light and steady during the summer. Packaged chocolate candy sales make up more than one-quarter of all candy promotions, with Hershey the toppromoted brand, with a 14.8 percent share of ad support, double that of the No. 2 brand, M&M’s.

Circular Retail Promotions: Candy U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015 U.S. Retailers Running the Most Circular Ads: Candy U.S. Retailer Name

Rite Aid CVS Longs Drug (Hawaii) Bartell Drug Kinney Drugs Walgreens Acme Markets (NAI) Shopko Stores Pavilions Vons Carrs

Effective Count

Feature Count

892.8 716.1 659.5 648.4 521.5 513.9 484.9 356.8 344.7 344.7 344.0

2048 2686 1206 1018 1574 1502 676 724 578 578 581

Subcategory Ad Support Share for Products Promoted: Candy 3.2% 4.6%

2.7%

1.6% 0.8% 0.2%

27.9%

5.8% 6.0% 6.0% 7.2%

15.3% 8.8%

Source: ECRM®

| Progressive Grocer | Ahead of What’s Next | July 2015

9.8%

Packaged Chocolate Candy Packaged Nonchocolate Candy Premium Candy Snack-size, Fun-size Candy Novelty Candy Single-serve Candy Presentation Boxes-Candy Nonpackaged Chocolate Candy Multipack Candy Theatre Box Candy King-size Candy Large/Giant Candy Seasonal Single-serve Candy Bulk Candy

Bold Flavors Spice Up Seasoning Category

he overall spice, favoring and seasoning category, at $2.2 billion, experienced sales dollar growth of 2.37 percent, IRI data show, and to absolutely no one’s surprise, McCormick is still the leading brand in the category, although its dollar sales have declined by 2.47 percent; the next-largest brand, private label, saw a dollar sales dip of 1.83 percent. Others saw impressive growth, chief among them Frontier Natural Products Co-op, maker of the Simply Natural brand, which logged a 15.45 percent dollar sales uptick. When it comes to the promotion of baking needs — a key usage occasion for the category — ECRM Data fnds that spices, favorings and seasonings took a 17.5 percent share, bested only by oils and shortenings, with a 21.7 percent share. Also according to ECRM, McCormick was the most promoted brand in the category, at 18.9 percent, and the most promoted supplier, at 30 percent; private label came in second in both instances. McCormick earns its top spot through such promotional tools as the eagerly awaited Flavor Forecast, which, when last released, in December 2014, predicted the emergence this year of such trends as zesty Middle Eastern dips and spreads, sour-and-salt combinations, smoked spices, and the addition of fresh purées and juices to sauces and dressings. Further boosting the category is the explosion in popularity of ethnic cuisines ofering a range of exotic favors, spurring adventurous home chefs to purchase the proper ingredients, including spices, favorings and seasonings, to recreate in their own kitchens dishes enjoyed in restaurants or viewed on television cooking shows.

Top 10 Spice/Seasoning Brands Brand

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$762.2 280.1

2.9% 0.9

255.1 75.6

3.5% 0.8

Total McCormick McCormick Gourmet Collection McCormick Grill Mates Sazon Goya McCormick Perfect Pinch Morton Bassett Goya Old Bay Lawry’s Litehouse

98.4 62.1 32.5 24.4 21.7 21.1 19.8 17.9 14.4

1.4 5.5 3.1 1.0 4.8 3.1 5.8 0.2 6.7

18.3 24.7 15.3 8.1 3.0 10.0 5.3 4.6 3.5

4.0 6.4 4.0 -0.9 1.1 3.3 4.1 -2.3 6.6

Does not include salt or pepper Ranked by Total U.S. Food Dollar Sales for 52 weeks ending April 19, 2015 Source: IRI, a Chicago-based market research firm (@iriworldwide)

Circular Retail Promotions: Spices/Flavorings/Seasonings U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015

Spices/Flavorings/Seasonings Ad Counts at Key Retailers U.S. Retailer Name

Roche Bros. Bi-Lo Brookshire Brothers Publix Super Markets Hy-Vee Food Stores Kroger Albertsons LLC Corp. Safeway Meijer Dollar General Corp. Walgreens Walmart-U.S. Source: ECRM®

Effective Count

Feature Count

101.2 61.1 55.4 43.4 43.0 40.0 39.4 27.2 20.2 12.0 7.8 7.3

106 121 61 66 48 60 45 48 34 20 11 8

Spices/Flavorings/Seasonings Share of Baking Needs Promotions 5.8% 7.0%

21.7%

12.2%

17.5% 14.4%

Oils & Shortenings Spices, Flavorings, Seasonings Baking Ingredients Dessert Mixes Sugar & Sugar Substitutes Baking Mixes Flour & Corn Meal

17.2%

July 2015 | progressivegrocer.com |

68th Annual Consumer Expenditures Study

Bottled Water Keeps Flowing

ollar sales are up 5.8 percent in the nearly $5 billion bottled water category, according to IRI, with private label outpacing the rest of the pack in dollar sales growth by a wide margin. Other popular brands include Nestlé and Coca-Cola’s Glaceau Vitaminwater. ECRM Data pegs bottled water’s share of promotions at a healthy 18.7 percent, outdone only by carbonated soft drinks, which boast a 35.7 percent share. As in dollar sales, private brands lead in promotions, capturing 14.9 percent of such occasions, while the next most-promoted brand, Dasani, also from Coca-Cola, sits at just 8.5 percent, ECRM fnds. Recent bottled-water category promotions have often involved partnerships with nonproft organizations to advance a particular cause, as in the case of Midwestern grocer Hy-Vee’s placement of the Drink Up logo on packs and individual bottles of its store-brand spring water as a way to support the initiative through ongoing social media campaigns. Launched by the Partnership for a Healthier America, Drink Up encourages Americans to consume

more water. Similarly, IGA has teamed with Wounded Warrior Project (WWP) for the ffth consecutive year to ofer a number of exclusive co-branded WWP/IGA products from Memorial Day through Labor Day, including bottled water. Among retailers, Safeway and Albertsons LLC, now merged, have the highest bottled-water feature ad counts (433 and 315, respectively), with Kroger, Roche Bros. and Target rounding out the top fve, according to analysis by ECRM. Te aforementioned Hy-Vee shows up at No. 7.

Top 10 Convenience/PET Still Water Brands Brand

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$3,407.3 965.1 273.5 237.0 227.6 214.0 115.0 113.7 109.0 104.7 96.3

4.4% 10.6 5.5 5.6 6.6 -2.0 -13.3 18.6 20.6 -1.2 -1.8

1,348.1 358.7 89.5 70.1 64.3 70.8 95.5 43.9 55.9 31.3 79.0

2.0% 10.9 4.1 8.0 10.3 -2.8 -15.8 20.7 13.2 1.4 -3.8

Total Private Label Dasani Poland Spring Nestlé Pure Life Aquafina Glaceau Vitaminwater Niagara Glaceau Smartwater Deer Park Glaceau Vitaminwater Zero

Ranked by total U.S. food dollar sales for 52 weeks ending April 19, 2015 Source: IRI, a Chicago-based market research firm (@iriworldwide)

Circular Retail Promotions: Bottled Water U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015

Bottled Water Ad Counts at Key Retailers U.S. Retailer Name

Safeway Albertsons LLC Corp. Kroger Roche Bros. Target Stores Rite Aid Hy-Vee Food Stores CVS Bi-Lo Brookshire Brothers Publix Super Markets Meijer

Bottled Water Share of Beverage Promotions

Effective Count

Feature Count

293.5 220.3 184.0 183.7 148.9 105.1 104.1 99.9 99.8 75.7 73.6 64.6

433 315 318 214 205 215 148 179 148 89 89 119

9.3% 4.2%

6.6% 7.3%

12.7%

Source: ECRM

35.7%

5.5%

| Progressive Grocer | Ahead of What’s Next | July 2015

18.7%

Carbonated Soft Drinks Bottled Water Multiserve Juice (Shelf-stable) Ready-to-drink Tea Sports Drinks Drink Mixes Juice Boxes (Shelf-stable) Other

Rising Birth Rate Not Expected to Boost Baby Food Sales Top 10 Baby Food/Snack Brands

n 2014, the U.S. birth rate ticked up 1 percent, the frst increase since 2007, according to a National Center for Health Statistics study, which means the market for baby formula and food also is growing. Baby formula sales increased slightly more than 1 percent in the 52 weeks ending April 10, 2015, according to IRI, to slightly more than $2 billion, but unit sales decreased 2.4 percent to 134 million, with an average decrease of 55 cents per unit from the previous year. Dollar sales for the baby food category were up 3.3 percent during the same period, hitting $877 million, but unit sales saw a slight decrease of 0.1 percent, for a total of $633 million. However, baby food and formula manufacturers are facing changing market trends that seem to indicate that sales won’t follow the birth rate increase. Many mothers are returning to breastfeeding and eschewing baby formula, according to Euromonitor’s “Baby Food in the U.S.” report. And while consumers are reportedly busier than ever, many

Brand

Total Gerber Second Foods Nature Select Gerber Second Foods Gerber Gerber Graduates Stonyfield Organic YoBaby Gerber Third Foods Nature Select Gerber Second Foods Organic Plum Organics Yum Baby Earth’s Best Organic 2 Beechnut Stage 2

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$802.2

3.8%

622.2

0.1%

98.7 79.0 61.1 42.7 30.6

-7.0 7.6 1.3 -2.0 9.6

86.5 99.1 23.7 19.1 9.8

-7.7 3.8 2.0 -2.7 -2.1

28.3 26.6 25.9 25.0 24.6

-5.7 1.6 8.1 8.2 -3.6

35.4 18.6 18.4 22.4 38.2

-5.7 2.9 10.4 4.0 -15.5

Ranked by total U.S. food dollar sales for 52 weeks ending April 19, 2015 Source: IRI, a Chicago-based market research firm (@iriworldwide)

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68th Annual Consumer Expenditures Study Circular Retail Promotions: Baby Food U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015 Baby Food Ad Counts at Key Retailers U.S. Retailer Name

Meijer H-E-B Hy-Vee Food Stores Roche Bros. Safeway Publix Super Markets Walmart-U.S. Target Stores Bi-Lo Albertsons LLC Corp. Kroger Brookshire Brothers

Baby Food Share of Baby & Toddler Food Promotions Effective Count

Feature Count

49.6 42.7 40.0 37.7 36.8 33.5 28.0 23.3 14.1 13.5 9.0 4.0

111 63 42 46 62 69 30 76 16 18 11 4

3.1% 2.8%

4.2% 7.9% 42.9%

Baby Food Baby Formula Toddler Snacks Children’s Nutritional Drinks Baby Cereal Toddler Meals Baby Beverages

18.4%

20.7%

Source: ECRM

A bright spot is organic baby food. Stonyfeld Organic YoBaby saw a nearly 10 percent increase in sales in the 52 weeks ending April 19, 2015, according to IRI — the highest dollar sales gain of any product monitored. Earth’s Best Organic 2 came in second, with an 8.2 percent sales increase, followed closely by Plum Organics Yum, at nearly 8.1 percent. However, unit sales haven’t fared as well, with Stonyfeld seeing a 2.1 percent decline in units, while Earth’s Best increased nearly 4 percent and Plum Organics’ units grew by double digits — a 10.4 percent increase. Brands play a key role when it comes to baby food

promotions, as brand loyalty and trust drive many consumers’ decisions regarding their infants. According to analysis by ECRM Data, Gerber Products Co. represents more than 41 percent of category promotions, more than nine times the share of ads from private label manufacturers. Grocers with strong private-brand programs have an opportunity here to build on customer loyalty to their store brands and extend it into this category. Not surprisingly, with the volume of smaller items typically purchased in this category, x-for promotions are the most popular for baby food.

Liquid Products Juice Up Vitamins and Supplements

he vitamin category, encompassing the liquid vitamin and mineral, mineral supplement, multivitamin, and one- and two-letter vitamin segments, saw a 2.54 percent dollar sales lift, with IRI noting the biggest increase — 5.87 percent — in liquid products, indicating a shift in the way people prefer to ingest their vitamins and minerals. A new single-serve ofering from Wojo Nutrition, designed to be blended with any beverage, is among the most recent innovations in the liquid segment. Further, as discussed in this issue’s Front End section (page 16), protein supplements have grown in popularity, refecting increased consumer in-

Top 10 Liquid Vitamin/Mineral Brands Brand

Total Emergen-C Spectrum Essentials Neuro Bliss Neuro Sonic Nature’s Way Emergen-C Immune Plus Nature’s Bounty Private Label Enafmil Poly Vi Sol Navitas Naturals

Dollar Sales (in Millions)

Percent Change

Unit Volume (in Millions)

Percent Change

$115.3 31.3 6.4 4.7 4.6 3.3 3.1 2.8 2.7 2.1 1.9

5.9% 2.0 2.8 12.1 26.1 22.7 5.8 -9.7 17.7 -5.2 -15.3

19.2 3.6 0.8 2.1 2.0 0.3 0.4 0.4 0.5 0.2 0.1

5.7% -3.7 2.2 11.2 24.9 21.6 -5.4 -10.3 45.5 -6.1 -8.1

Ranked by total U.S. food dollar sales for 52 weeks ending April 19, 2015 Source: IRI, a Chicago-based market research firm (@iriworldwide)

| Progressive Grocer | Ahead of What’s Next | July 2015

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68th Annual Consumer Expenditures Study Circular Retail Promotions: Vitamins U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015 Vitamins Ad Counts at Key Retailers U.S. Retailer Name

Walgreens CVS Rite Aid Walmart-U.S. Meijer Kroger Bi-Lo H-E-B Target Stores Safeway Roche Bros. Publix Super Markets

Vitamin Share of Vitamin Supplement Promotions Effective Count

Feature Count

358.1 322.6 268.3 86.3 83.5 80.6 79.1 61.9 59.4 44.3 35.5 33.8

864 466 819 101 243 150 149 104 79 86 40 53

5.5% 6.1%

16.7%

69.8%

Vitamins Nonherbal Supplements Minerals Herbals

Source: ECRMÂŽ

terest in the health benefts of protein across various categories. Vitamins far and away take the largest share of the catego-

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ryâ&#x20AC;&#x2122;s promotions, at 69.8 percent, ECRM Data fnds. Te most promoted brand is Nature Made, at 17.2 percent, while private label is in second place, at 15.2 percent. Among retailers with the highest vitamin ad counts, the frst retailer not to operate principally in the drug store channel is Wal-Mart Stores Inc., with an efective count of 86.3 and a feature count of 101; Meijer, Kroger and Southeastern Grocers (formerly Bi-Lo Holdings LLC) come next among food retailers in ad counts. Of the various types of vitamin promotions, ECRM notes that BOGO, price point and percentage-of are the most deployed. Interestingly, as PG Editor-in-Chief Jim Dudlicek reported in his coverage of the Natural Products Expo West trade show earlier this year, some vitamin and supplement manufacturers, including Mason Vitamins, are blurring the line between nonfoods HBC and grocery with such products as coconut oil that can be used for cooking and baking as well as on skin and hair.

Pods, Green Products Could Drive Detergent Sales

ods and green ingredients are two of the biggest trends in laundry detergent. While the overall category continues to struggle with a sales decline of 3 percent in the 52 weeks ended April 19, 2015, according to IRI, accounting for $2.2 billion, the packet/bar category, which includes pods, saw a sales increase of nearly 30 percent, with sales hitting $241 million.

Te rising popularity of laundry detergent pods also has led to the introduction of the Detergent Poisoning and Child Safety Act of 2015 to Congress after several hundred children ingested the pods and were subsequently injured or poisoned. If passed, the legislation would require that manufacturers make the pod packaging less appealing to kids (the current argument is that pods are attractive to them because they look too much like candy), add detailed warning labels to packaging, and create gentler detergents that would be less harmful if ingested. Green cleaning products also remain high on the consumer wish list, with 40 percent of U.S. consumers indicating they would pay more for cleaning tools that were more environmentally friendly, according to the Mintel Global New Products Database. But green cleaning is still a niche market, with total retail sales accounting for an estimated $600 million in 2014, according to Packaged Facts’ “Green Household Cleaning and Laundry Products in the U.S., 3rd Edition.” Wegmans Food Markets launched its own private label brand of green cleaning supplies last summer, including a laundry detergent with all active ingredients coming from plant or mineral sources like coconut and palm oils. “While overall sales of home laundry products remain weak, opportunities exist in all segments for brands that tap into the emotional importance that consumers place on getting the job done right,” notes John Owen, senior household analyst at Mintel, in the market researcher’s “Home Laundry Products U.S., August 2014” report. Much of the category’s weakness is attributable to consumers’ use of promotions and discounts to save money. Out of all the laundry supplies in store promotions, detergents were the products highlighted nearly 60 percent of the time. According to analysis by ECRM Data, Procter & Gamble truly cleans up when it comes to laundry detergent promotions, with almost half of all circular ad promotions in the catTop 10 Laundry Care Brands egory from the manufacturer. Dollar Sales Percent Unit Volume Percent Its brands, inBrand (in Millions) Change (in Millions) Change cluding Tide, Total $240.9 30.0% 34.6 24.7% Gain and Era, Tide Pods 138.3 16.3 14.6 24.4 Gain Flings 39.0 513.9 4.8 500.5 are among the All Mighty Pacs 25.4 4.9 4.5 6.0 most promoted Purex Ultrapacks 4.9 -28.3 1.3 -31.8 brands across Private Label 3.6 29.3 0.5 0.0 all channels Oxi Clean 3.5 731.2 0.5 805.9 of trade, with Arm & Hammer Plus club and dollar Oxi Clean 3.3 n/a 1.0 n/a leading the Dryel 3.3 -12.9 0.4 -11.9 way in terms of Arm & Hammer Crystal 3.2 -52.7 0.6 -57.9 Woolite Dry Cleaner’s Secret 2.6 1.0 0.3 -3.4 share of circular voice (2.99 Ranked by total U.S. food dollar sales for 52 weeks ending April 19, 2015 percent and Source: IRI, a Chicago-based market research firm (@iriworldwide)

68th Annual Consumer Expenditures Study Circular Retail Promotions: Detergents U.S. Retailers, Representative Markets / Past 52 Weeks Ending June 6, 2015 Detergent Ad Counts at Key Retailers U.S. Retailer Name

Detergent Share of Laundry Product Promotions 5.5% Effective Count

Feature Count

178.5 173.0 169.9 132.5 131.3 129.4 126.6 126.2 120.2 104.0 94.9 85.3

330 294 327 251 207 238 205 223 276 149 152 137

CVS Family Dollar Safeway Meijer Hy-Vee Food Stores Bi-Lo Dollar General Corp. Walgreens Target Stores H-E-B Kroger Roche Bros.

6.1%

16.7% 69.8%

Detergents Bleach Minerals Stain Removers & Clothing Care

Source: ECRM®

2.65 percent, respectively). Detergents represent just less than 60 percent of laundry product promotions, followed

by fabric softeners (25.5 percent), bleach (10.3 percent) and stain removers (4.9 percent). PG

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Sustainability

Sustainable

Goals

Grocery retailers are making strides toward their green business benchmarks. By Jim Dudlicek

LION’S SHARE A donation program aimed at reducing food waste is among Food Lion’s sustainability initiatives.

ustainability is a key initiative for businesses of all types — green policies are good for the environment, they’re good for the bottom line, and they help companies better connect with the communities in which they operate. Leading sustainability eforts across the nation are retail grocers, which have made signifcant strides toward goals in energy, waste and emissions reduction. Among the leaders in our industry: Delhaize Group, the Brussels-based parent company of

| Progressive Grocer | Ahead of What’s Next | July 2015

Food Lion and Hannaford Supermarkets, which released its 2014 sustainability progress report this past May. Key Food Lion achievements include the piloting of a zero-waste program to accelerate waste reduction, launched in 50 stores last year, with plans to reach almost 200 by the end of 2015. Trough this initiative, waste is diverted from landflls and more materials are recycled, local food donations are increased, and food that isn’t donated is provided for composting or other recycling methods. Other initiatives include improved sustain-

gram manager for commercial properties. “Since becoming an Energy Star partner in 2000, Food Lion has reduced its company-wide energy use by 2.925 trillion British thermal units and its total carbon emissions by 1.9 billion pounds.” Te grocer has achieved Energy Star certifcation for 1,164 stores, more than 85 percent of its portfolio. Delhaize’s Scarborough, Maine-based Hanability of private-brand products; “solid progress” toward using 100 percent traceable, deforestation-free palm oil in private-brand foods; and the unveiling of a sustainable seafood policy encompassing more than 1,000 fresh, frozen, canned and packaged products. “Food Lion has a strong commitment to sustainability in all that we do,” says Meg Ham, president of the Salisbury, N.C.-based banner, which has more than 1,100 stores in 10 Southeastern and Mid-Atlantic states. “As one of the nation’s largest grocers, Food Lion has certifed more stores through Energy Star in its history than any other supermarket retailer. In addition, we have recycled nearly 120,000 tons of plastic, paper and cardboard from our stores, in partnership with our customers, and we took a great step in giving back to our communities through our Food Lion Feeds program, announced last year. While this is great progress toward [Delhaize’s goal of] becoming ‘SuperGood,’ we know there is much more we can do, and we are eager to continue delivering on our Sustainability 2020 goals to help ensure our communities are sustainable for many years to come.” Food Lion has been recognized by Energy Star, the U.S. Environmental Protection Agency’s voluntary program that helps businesses and individuals save money and protect the climate through superior energy efciency. A longtime Energy Star partner, Food Lion won a Partner of the Year Award for Sustained Excellence this year “for its longtime dedication to identifying, developing and investing in new technologies and operational best practices to save energy and money,” according to Stephanie Klein, Energy Star’s national pro-

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July 2015 | progressivegrocer.com |

Sustainability

ACCELERATED IMPROVEMENT “We will achieve or exceed many of our 2015 goals and have begun the process of determining key 2020 goals in many areas,” says Kroger CEO Rodney McMullen.

naford banner, which operates 186 stores in Maine, New York, Massachusetts, New Hampshire and Vermont, was the frst grocery chain to receive Grocery Stewardship Certifcations from the Manomet Center for Conservation Sciences, in Massachusetts, at all of its stores, based on its zero-waste attainments, as well as its energy and water efciency. Hannaford also worked with the Charlottesville, Va.-based Sustainable Packaging Coalition to improve the recyclability of its private-brand packaging, and like Food Lion, is improving the traceability of the palm oil used in its products. To reach this goal, Hannaford is purchasing “Green Palm” certifcates to move toward the company’s 2020 goal of using only traceable and deforestation-free palm oil.

Energy Leader A leader in retailing, Te Kroger Co. is also a leader in sustainability. Te Cincinnati-based grocery giant was a frst-time Energy Star Partner of

Strengthening Sustainability Industry trade groups have stepped up to help guide members on their green missions. The Food Marketing Institute (FMI) has issued the “Sustainable Sourcing Guide for High-impact Commodities,” with the aim of enabling food retailers to move toward sustainable sourcing. Developed by the Arlington, Va.based trade association and its 18 sustainability executive committee members, the guide deals with items like sugarcane, coca, paper/ pulp, coffee, soy, palm oil and beef. “Through collaboration, industries can reduce stress on the environment and volatility in the cost of commodities that businesses depend on for survival,” says FMI Senior Director for Sustainability Jeanne von Zastrow. The guide provides an overview of each high-impact commodity and presents environmental impact facts for each, as well as sustainable sourcing questions to ask suppliers, and product certification opportunities. Meanwhile, the Retail Industry Leaders Association (RILA) earlier this year released the 2015 Retail

| Progressive Grocer | Ahead of What’s Next | July 2015

the Year winner this year, recognized for its wellestablished commitment to investing in energy reduction initiatives. “Since 2000, Kroger has reduced its energy use by 35 percent, or 1.6 billion kilowatt-hours,” Klein says. Additionally, more than two dozen Kroger manufacturing facilities have achieved zero-waste status. Key accomplishments of Kroger’s award-winning energy management program include the extensive use of LED lighting in refrigerated cases; implementation of best practices for refrigeration, lighting and HVAC; and enhanced associate and customer awareness. Trough the Energy Star certifcation process,

Sustainability Management Maturity Matrix, a tool enabling retail sustainability executives to identify ways to strengthen their environmental sustainability programs. The tool comprises seven sections: Strategy & Commitment, People & Tools, Visibility, Retail Operations, Supply Chain, Products, and Environmental Issues. Each section lays out business practices to help retailers determine the effectiveness of their sustainability programs, and provides benchmarks and guidelines for improving performance. “We see this as a great opportunity to help retailers measure the sustainability performance of their operations, products and supply chains, and to tell the industry’s story,” says Adam Siegel, RILA’s VP of sustainability and retail operations. The Arlington-based trade organization will employ the matrix to benchmark the industry in 2015 and beyond through an online survey, the results of which will be used to determine industry priorities. RILA plans to showcase the matrix and other tools, such as its sustainability management resource library, at the Retail Sustainability Conference, scheduled for Sept. 15-18 in Austin, Texas.

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Sustainability

EPA encourages supermarkets to become Energy Star partners and pursue certification for their stores as an easy way to tell stakeholders, from management to facilities staff, associates and customers, that the company is a good steward of resources and an environmental leader.” —Stephanie Klein, Energy Star

Kroger certifed 166 stores in 2014 alone, earning “Elite” status as part of Energy Star’s 2014 Certifcation Nation competition. EPA also named Kroger a leader it its Food Recovery Challenge program, which donates food that’s cosmetically unsellable to those in need, rather than disposing of it. As part of the company’s food recovery strategy, Kroger’s Perishable Donations Partnership contributed the equivalent of 43 million meals of healthy perishable food to local Feeding America food banks last year. Additionally, Kroger’s retail operations team has implemented an organic recycling program in 1,000 stores across the country. Tis program employs composting and animal feed to limit the amount of food going into landflls. Further, Kroger was the frst major retailer in the United States to develop a clean-energy production

Chill Factor What do grocers’ sustainability scorecards look like? PG asks Tom Land, manager of the EPA’s GreenChill Program.

PG: How have grocery retailers progressed in their sustainability efforts? Land: Since the inception of EPA’s GreenChill program in 2008, the supermarket industry has demonstrated a growing interest and focus on reducing the environmental impacts of their refrigeration systems. PG: To what extent are they participating in EPA programs like GreenChill to help reach their goals? Land: GreenChill partners now represent almost 30 percent of the supermarkets in the United States, and the emission of refrigerants from GreenChill partner stores is 12.5 percent, about half of the estimated national average refrigerant leak rate from supermarkets (25 percent). PG: What can grocers do to further ramp up their efforts toward energy savings and other sustainability goals? Land: GreenChill partners and certified stores are demonstrating that through active management, adoption of advanced refrigeration systems, and environmentally friendly refrigerants, they can significantly improve the sustainability of their refrigeration systems and reduce the costs of operation.

| Progressive Grocer | Ahead of What’s Next | July 2015

SUSTAINABILITY ON DISPLAY Giant Eagle explains the green technologies used in some of its stores, such as energy-generating solar roofing.

system that converts food that can’t be sold or donated into clean energy. Te facility provides a quarter of the power needed to run the company’s Ralphs/Food 4 Less distribution center in Compton, Calif. “We are committed to reducing food waste, because it is good for our business, our communities and the environment,” says Suzanne LindsayWalker, Kroger’s director of sustainability. “We also want to make it easy for our customers to take simple steps at home to live greener and reduce household food waste.” Earlier this year, Kroger launched a microsite — Kroger.com/earthday — to inspire customers to live green, save money and reduce waste at home. Te grocer partnered with Seventh Generation and Mrs. Meyer’s Clean Day Products to provide simple tips and money-saving tricks to help fruits and vegetables stay fresh longer, and to use natural cleaning methods to perform household chores.

Water and Power Other retailers have stepped up their eforts to conserve resources like energy and water. For instance, Ahold USA has teamed up with Norwell, Mass.-based Bluestone Energy Services LLC to lower the grocer’s energy consumption across hundreds of Stop & Shop, Giant Landover and Giant/Martin’s supermarkets, resulting in a smaller overall carbon footprint and a considerable reduction in energy costs passed onto customers.

How Energy Star Works The EPA’s Energy Star program works actively with supermarkets to help them meet their energy and carbon reduction goals. “The first step toward saving energy in a supermarket is knowing how much it is using,” explains Stephanie Klein, Energy Star’s national program manager for commercial properties. Using EPA’s free online tool, Energy Star Portfolio Manager, companies can track and manage their energy and water use, as well as greenhouse gas emissions. The 1-100 Energy Star score allows a company to easily see how its stores are performing against their peers nationally. If a store achieves a score of 75 or higher, it’s eligible for Energy Star certification. Energy Star is recognized by 85 percent of consumers, making it the most recognized environmental brand in the United States. According to Klein: “EPA encourages supermarkets to become Energy Star partners and pursue certification for their stores as an easy way to tell stakeholders, from management to facilities staff, associates and customers, that the company is a good steward of resources and an environmental leader.”

Last year, Bluestone’s supermarket division completed comprehensive energy efciency projects at Ahold USA stores, such as upgrading all of the interior lighting to high-efciency LED lighting with advanced wireless controls, thereby reducing lighting consumption by more than 70 percent. “Part of our Better Neighbor Promise is to care for the environment in the communities we serve,” says Jihad Rizkallah, VP of responsible retailing at the Quincy, Mass.-based grocer. “We strive to minimize our impact on the environment by implementing energy conservation initiatives and deploying innovative, sustainable building technologies that reduce our energy consumption and make our operations more efcient.” Tis year, Ahold USA and Bluestone plan to expand their initiatives to stores in all of the grocer’s regions, increasing the energy savings high-volume, low-speed (HVLS) fans throughout through new undertakings while improving the its grocery distribution center. PG efciency of ongoing projects. Pittsburgh-based Giant Eagle Inc. has committed to reduce its water consumption by 5 percent What grocers have made the most significant by July 2017, which the grocery chain expects will strides in sustainability? Read more at result in conservation of millions of gallons of Progressivegrocer.com/greenchillawards. water. Citing projections from the United Nations that demand for water will rise by an estimated 40 percent by 2050, Giant Eagle executed a fve-month conservation program in eight pilot locations, which collectively exceeded a 5 percent water savings. As a result, all corporately operated Giant Eagle supermarkets have been retroftted with water conservation equipment. Meanwhile, solar roofng technology deployed at select store locations saves an estimated 750,000 kilowattComfort hours per year. In addition to 12 GOES LEED-certifed retail locations and UP the conversion of nearly half of its Energy distribution feet to CNG-powered costs vehicles, the retailer recycles more GO than 700 tons of plastic bags annuDOWN ally. Additionally, its customers have Ductwork helped save more than 50 miles of Required! register paper by selecting eReceipts at > Easily replaces standard 2' x 2' ceiling tile checkout. Since the option launched > Runs independently of other HVAC systems in January, eReceipts have ofset more than 400,000 paper receipts. > Easy to direct, with variable speed control to dial-in comfort New initiatives unveiled this past > Eliminates hot and cold spots spring by San Bernardino, Calif.> Quiet, eﬃcient EnergyStar™ motor based Stater Bros. Markets include installing glass doors and LED lightCall, click or scan today! ing on refrigerated cases, reducing energy by 60 percent per refriger855-ZOO-FANS ated case; installing sales foor LED (855-966-3267) lighting in newly constructed and zoofans.com remodeled stores; and implementing

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2015 Breakfat Handbook

Great Day in the Morning Breakfast offers opportunities for grocery retailers. By Lynn Petrak

s it sunny side up for breakfast foods? Are consumers wafing about eating on the run or making their own breakfasts? Are any products or eating habits considered toast? Morning metaphors aside, there’s a grain of truth to all of those queries. Tere are bright spots for many products consumed for breakfast or, for that matter, breakfast foods that can be consumed at other dayparts. At the same time, consumers are seeking more grab-and-go foods while on other occasions looking to take greater ownership of making their own meals. Tere’s room for both ways of preparing and enjoying breakfast, just as stalwart favorites stand on store shelves alongside new items. In short, there are more options for breakfast meals and breakfast-type foods now than even just a few years ago. Depending on consumers’ moods, schedules, budgets or other considerations, they can heat up a frozen breakfast bowl in the microwave, pop a whole grain English mufn in a toaster, fry up a couple of eggs, toss a nutrition bar into a bag or make a quick stop at the grocery deli on the Continued on page 100 July 2015 | progressivegrocer.com |

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2015 Breakfat Handbook Continued from page 97

Consumers will make more room in the morning to prepare foods. They want ownership, but their mantra is, ‘How do I get out of the kitchen quickly?’” —Darren Seifer, Mintel

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way to work for a hot eggand-cheese burrito. And they can wash it all down with antioxidant-rich juice or a ready-to-drink coldbrew cofee. Recent market research and analysis support the notion that what we eat for breakfast and how we eat it is evolving, with a greater number of choices available. In its 2014 report “Te Cultural Transformation of the American Breakfast,” Te Hartman Group, based in Bellevue, Wash., afrmed: “What we’re seeing today in the feld is actually an ironic, even mystifying, partial return to the demand drivers of the 19th-century farmer, even though today’s consumers don’t require as many calories. Te diference is in the cultural rationale and context behind the change.” Tose demand drivers include interest in traditional, farm-raised morning foods like eggs (about a quarter, or 23 percent, of respondents prepare or eat eggs on their own), and a reinvention of favorites like bacon and eggs via frozen breakfast meals from major brands like Jimmy Dean and Sara Lee. Te busy schedules behind morning meals also exemplify the return to the demand drivers of ex yore: While farmers in the feld just didn’t have time to return to the farmstead for a sit-down

| Progressive Grocer | Ahead of What’s Next | July 2015

breakfast, today’s on-the-go breakfast eaters “are willing to sabotage daily eating routines in favor of an important meeting, a Facebook post that is outrageous and must be answered, a nagging email or SMS message, or simple daydreaming,” according to Hartman Group CEO Laurie Demeritt, who notes that foods that supply a lot of energy, like eggs, nutrition bars and powerful juices, are helping fuel people’s days in a new way. According to Darren Seifer, food and beverage industry analyst for Chicago-based market research frm Mintel, although consumers are busy, they’re also discerning, resulting in some dueling trends in the breakfast sector. “Te morning occasion is becoming more involved before we leave the door,” he asserts. “Cold cereal is No. 1 and still convenient, but it looks as if it’s i falling out of favor. When it comes to eggs, we see more people preparing eggs in the morning now than even a few years ago.” Seifer adds that some of those who prepare eggs include th younger consumers (i.e., Millennials) and yo Hispanics, both groups that are interested in Hi preparing and cooking more meals at home. pre Digging a little deeper, Seifer says that consumers’ parallel interests in high-quality, con better-for-you foods are bumping up against be their need and desire to get moving in the the morning. “Tere will always be times when mo we’re out of time — you slept through your we alarm, your kid was sick in the morning — and ala you take shortcuts,” he observes. “We’re still looking for things that are quick and easy that time of in the day. But it looks as though consumers will make more room in the morning to prepare foods. Tey want ownership, but their mantra is, ‘How do I get out of the kitchen quickly?’ Tat seems to be the changing defnition of convenience — fresh, in a

quicker amount of time.” Tose parallel and shifting habits are also being watched by breakfast food companies. “Consumers continue to value quick, easy-to-prepare, satiating breakfast items that are also convenient to eat on the go,” says Aldo Cabrini, senior director of sales and marketing for Boise, Idaho-based J.R. Simplot Co. Dave Jones, SVP of sales at the Kellogg Co., in Battle Creek, Mich., agrees. “Te way people eat breakfast continues to change,” he notes. “Many people are now eating small meals at home, then a wholesome snack on the go later in the morning.” Jones adds that portable bars and biscuits are a good ft for hectic morning routines, or can be consumed later at work or school after a smaller breakfast at home. To that end, in addition to providing fuel for morning meals, some of those energy-providing morning foods have segued into other parts of the day. For instance, there was a time when yogurt was just for breakfast, but now the item, including its popular Greek-style variety, is consumed at many points in the day. “We don’t see eggs consumed later in the day as much,” observes Seifer, “but we see things like yogurt eaten throughout the day, and we also see some breakfast foods at afternoon snacktime.” According to Simplot’s Cabrini, some breakfast entrées are being prepared beyond the noon hour.

breakfast consumption. Te outbreak of avian fu in some parts of the country, for example, is disrupting the egg supply chain. Tat may prove to be a short-term issue, but in the long term, other infuences, like changing health habits, demographics and cost consciousness, will continue to alter the choice and consumption of breakfastoriented foods and beverages.

Breakfast Bite

86%

of consumers eat breakfast at home, and 14% eat breakfast away from home. Source: The Hartman Group’s Eating Occasion Compass Database 2014

“Customers also enjoy breakfast items like sandwiches or bowls during other meal occasions,” he points out. “Tey can be consumed as snacks, or it’s not uncommon for consumers to eat breakfast items for dinner.” Amid these cultural shifts and emerging trends, there are other factors, including short- and long-term situations, that are afecting current July 2015 | progressivegrocer.com |

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2015 Breakfat Handbook

Breaking Some Eggs Bird flu brings shortages, rationing and price spikes for a breakfast staple, but the worst appears to be over. By Lynn Petrak

Breakfast Bite

53%

of breakfast-eating occasions are alone. Source: The Hartman Group

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s if the general risingg cost of everything isn’t sn’t enough to deal with, th, grocers have been forced to pass along higher er prices and, in some cases, ses, rationing as the nation’s on’s egg producers grapple le with an outbreak of bird fu. Over the past several ral months, an outbreak of highly pathogenic avian infuenza (also known as AI or bird fu), concentrated in Iowa wa and Minnesota, has led to tens of millions of bird deaths, and an additional culling of focks of chickens and turkeys to contain the disease. According to the U.S. Department of Agriculture (USDA), the number of egg-laying hens decreased by 329 million by the beginning of June, while egg production dipped to 8 billion in May. As a result, USDA estimates that egg prices will reach a new high in 2015. According to the department’s projections, the average price of a dozen eggs may reach $1.80 by the end of this year, and higher prices may last into early 2016, depending on the the continuing extent of avian infuenza around the country. While most of the cases have been in the Midwest, the impact of avian fu has been felt elsewhere, given that hard-hit Iowa is a top egg-producing state. Other states are preparing scenarios for a possible spread of the disease, and grocery retailers, restaurant operators and manufacturers in, around and beyond the Midwest have all felt the squeeze of a tighter-than-usual supply. Among grocers, San Antonio-based H-E-B is limiting egg purchases at its supermarkets to three cartons per customer during the shortage, and it’s expected that other retailers may follow suit. Meanwhile, food manufacturers that produce eggbased products have felt the pinch as well. “We have seen the price of egg-based ingredients signifcantly increase over the past six weeks,” afrms Aldo Cabrini, senior director of sales and marketing for Boise, Idaho-based J.R. Simplot Co. “We are monitoring the situation and are working both with suppliers as well

| Progressive Grocer | Ahead of What’s Next | July 2015

as retailers re to mitigate the impact. So far, we have been able to manage without impact to supply and demand.” imp IIndeed, many eforts are in place across the food chain to stem the spread of disease, and some of those eforts have ef already paid alr of, according to of Kevin BurKev kum, SVP of the kum Park Ridge, Ill.-based American Egg E Board (AEB). “Both the World W Organization for Animal Health and Animal and Plant Health Inspection Service have said publicly that the worst of this crisis is behind us, and that the virus will be under control within four months,” he says. Further, Burkum underscores the point that, while challenging, the situation isn’t yet national in scope and efect. “It’s important to note that no one is predicting widespread shortages of shell eggs at supermarkets, and shoppers won’t be faced with empty egg shelves,” he points out. “Te shell egg industry remains largely intact and egg farmers are working hard to service their customers and fll their orders. While prices may have gone up, shoppers are still able to fnd and consume eggs.” Additionally, Burkum asserts that consumers remain confdent in the egg market. “When AI was frst detected in an egg layer fock back in April, the industry was very concerned about potential consumer backlash,” he recounts. “Would egg eaters be worried about getting the fu and reduce their egg consumption or, worse yet, stop eating eggs altogether? We’re relieved to say that hasn’t happened.” According to recent AEB research, nearly 80 percent of Americans say that knowing about avian fu doesn’t afect their egg consumption, and almost 90 percent believe that eggs are safe to eat. As well as communicating with consumers, the board is helping grocers in afected areas as they share news about avian fu, Burkum notes. “We have prepared messaging for egg producers and retailers to help explain the situation,” he says. “Tis messaging could potentially be used at shelf as well.”

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2015 Breakfat Handbook

New and Noteworthy Breakfast launches meet myriad interests. By Lynn Petrak

hey come in formats ranging from boxess to bowls, sticks to bars. Tey run hot, cold ld and somewhere in between. Tey come in n grab-and-go and single-serve formats, as well as family-size. Today’s new breakfast food launches refect consumers’ shifting needs and demands, from better-for-you choices spanning organic, natural,, humanely raised, nutrient-dense, gluten-free and other attributes, to con convenience-oriented breakfast foods that can be opened fas and consumed in a matter of a fe few minutes while dashing out the door. ou Frozen breakfast foods have been a particularly ha bright spot in the overall bri breakfast market, aimed bre at tthe convenienceoriented segment of the ori market. While sales of ma other frozen foods, such ot as entrées, have been rather fat, sales of frozen rat n breakfast entrées and br other breakfast foods ot have increased, accordha ing to sales data from in Chicago-based IRI. Ch Te freezer case features a growing array of fro-tur zen breakfast choices. Battle Creek, Mich.-based Kellogg Co., for example, recently introduced a new line of wafe-based Eggo Breakfast Sandwiches. Te Hot Pockets line of hand-held frozen meals has entered the breakfast

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| Progressive Grocer | Ahead of What’s Next | July 2015

daypart rt in a bold way with new Hot Pock Pockets Breakfast Bites in Bacon, Egg and Cheese; Ham, Egg and Cheese; and Sausage, Egg and Cheese varieties. Packaging in the freezer case has also become more user-friendly. For instance, Aunt Jemima frozen pancakes and wafes, from Chicago-based Quaker Oats Co., are now sold in stand-up, resealable fexible packaging.

Nutrition N i i bars b and d cookies ki are other h hot h spots within the breakfast arena. According to a 2015 report on nutritional and cereal bars from Rockville, Md.-based Packaged Facts, sales of bars Md.should reach $8 billion in 2019. sho Examples of new bars and cookies for breakfast include Nature Valley’s Salted bre Caramel Peanut Crisp Bars, Nabisco’s Ca BelVita Bites mini breakfast biscuits, Be Honey Bunches of Oats Breakfast BisH cuits and Quaker’s Oatmeal Chocolate cu Chip Breakfast Cookies. Ch Speaking of oatmeal, that longtime favorite breakfast food is getting a new fav look and taste, too. Last year, the venerloo able Quaker brand, owned by Purchase, abl

2015 Breakfat Handbook N.Y.-based PepsiCo, added new Quaker Warm & Crunchy Granola hot cereal and Quaker Real Medleys Cereal. Another oatmeal Me innovation comes from inno Te Chia Co., with T U.S. headquarters in U New York: Chia Pod N Oats, a ready-to-eat, O microwaveable breakm ffast made with oats, cchia seeds, fruit and vvirgin coconut oil. Toaster pastries, aanother favorite type oof morning meal, incclude new products as well. Kellogg recently w aadded Gone Nutty vvarieties to its Pop Tarts line, along with T a frosted Blue Raspberry favor. b As for yogurt, it’s hard to keep track of h aall of the new varieties

that have hit the market in recent years, many of them consumed not only as part of morning meals, but as anytime snacks as well. Te latest entry from General Mills’ Yoplait brand, for instance, is Yoplait Plenti, which the Minneapolis-based company describes as “Greek yogurt reinvented and made more plentiful.” Even basic morning cofee has received a jolt, thanks to a variety of new ready-to-drink refrigerated cofee beverages sold under such brands as High Brew, Stumptown and Grady’s.

TW GAR ER FOOD COMPA Y’ AUCE BRI G EW LIFE TO UPERMARKET DELI As wing bars become more and more popular, supermarket delis are taking note.

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Adding a wing bar is an easy way to draw customers to the deli area, and sauces from Texas Pete® make it even easier. Texas Pete® Buffalo-Style Chicken Wing Sauce is a staple with many of the world’s most renowned “wing specialists,” and is available in mild, hot or restaurant-blend.

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.

Beyond just Wing Sauce, however, is a wide variety of hot sauce ﬂavors that bring the best out of any wing. One of the most versatile is Texas Pete® Fiery Sweet Sauce, a mildly spicy sauce with a sweet hint of honey and molasses that is ideal for wings as well as pork, beef or shrimp. It’s also an easy way to create a sweet, slightly spicy ﬂavor for vegetables or as part of a signature salad dressing.

The fresh ﬂavors of TW Garner Food Company’s sauces enhance every supermarket’s deli by offering superior taste at a great price. The company will soon be expanding upon its sauce lineup—so stay tuned.

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Learn how to add TW Garner Food Company’s products to your deli condiment offerings AND to your store shelves today!

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| Progressive Grocer | Ahead of What’s Next | July 2015

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2015 Breakfat Handbook

Getting Real About a Healthy Breakfast Grocers should leverage wellness messages to drive morning daypart sales. By Lynn Petrak

R Consumers are more interested in what a food has, rather than what it does not have, such as protein and whole grain.” —Dave Jones, The Kellogg Co.

108

emember when Mom told you that breakfast was the most important meal of the day? She knew what she was talking about. In addition to providing energy for the day, eating a good breakfast is a way to jump-start one’s daily nutrient intake. Tese days, health is increasingly on the minds of people as they fgure out what they’re going to eat for the day; according to the 2015 Global Health and Wellness Survey from Schaumburg, Ill.-based Nielsen Co., 88 percent of consumers are willing to pay more for healthy foods. When it comes to such foods, the defnition is changing, too. Nielsen’s survey shows that all demographics are interested in foods that are non-GMO, have no artifcial colors or favors, and are deemed all natural; 36 percent of consumers are interested in functional foods that are high in fber; and 32 percent are seeking foods high in protein. Dave Jones, SVP of sales for Battle Creek, Mich.-based Kellogg Co., is monitoring that changing mindset regarding health and nutrition. “Consumers are more interested in what a food has, rather than what it does not have, such as protein and whole grain,” he observes. “Tey also are looking for products that contain ingredients they can easily recognize and they feel good about eating.” Rising demand for better-for-you foods — and the evolving defnition of “better” — is evident in the breakfast sector. According to research from Te Hartman Group, in Bellevue, Wash., 55 percent of consumers focus on eating healthy foods and beverages for breakfast.

| Progressive Grocer | Ahead of What’s Next | July 2015

Many breakfast food companies have responded with new products and promotions geared toward better-for-you breakfast choices. Kellogg, for example, has launched Kellogg’s Origins, a line of cereals, granolas and muesli prepared with no artifcial favors, sweeteners or hydrogenated oils. In addition, the company’s Special K lineup now includes Low Fat Granola with cranberries, Breakfast Medley whole wheat breakfast sandwiches, and Chewy Nut Bars in Cranberry Almond and Dark Chocolate varieties. Some brands are reformulating products to meet new better-for-you expectations and interests. In June, Minneapolis-based General Mills made headlines when it revealed plans to drop artifcial favors and colors from its cereals, beginning withTrix and Reese’s Pufs varieties. Even the most basic breakfast foods are being looked at with a new kind of health halo. “We believe consumers’ insatiable appetite for protein, especially at breakfast, is a key driver for this renewed interest in eggs,” asserts Kevin Burkum, SVP for the American Egg Board, in Park Ridge, Ill. “Typically, most of the protein we consume is eaten at dinner, but that’s beginning to shift, and people are looking for highquality protein options throughout the day, and that includes eggs for breakfast. We expect this protein megatrend to continue for the next fve to 10 years.” Within the protein-rich egg category, there’s also burgeoning interest in organic and cage-free varieties. “I think it’s a permanent change, based on what we saw in Europe in the 1990s, with consumer demand driving the market,” observes Jenni Danby, marketing director for San Francisco-based freerange egg supplier Happy Egg Co., “and it’s only going to get bigger as more people become aware of and want to know where their food is coming from and about how animals are treated.” Beverages typically consumed at breakfast are getting a nutritional boost, too. Campbell Soup Co., based in Camden, N.J., recently introduced V8 Vegetable and Fruit Juice beverages in Healthy Greens, Purple Power, Golden Goodness and Carrot Mango favors. Meanwhile, Chicago-based Tropicana’s Farmstand line has added Tropical Green, a blend of vegetable and fruit juice, to its portfolio. Also, in an indication of the growing strength of cold-pressed super-premium juices, Evolution Fresh, a subsidiary of Seattle-based Starbucks, came out with a new line of cold-pressed fruit and vegetable juices in 11-ounce bottles.

The new Chocolate Craverâ&#x20AC;&#x2122;s Roll . Our brands bring customers back. TM

2015 Breakfat Handbook

Merchandising the Morning Breakfast offers foodservice opportunities for grocers. By Lynn Petrak

aking up is hard enough to do on some days, so fnding time for and choosing a good breakfast aren’t always easy for consumers. Accustomed to cofee drivethroughs and convenience stores on their way to work, most folks don’t think of the grocery store when they think of breakfast on the go. But grocery retailers can garner interest in their breakfast oferings throughout their stores via innovative oferings and merchandising eforts. One way to lure the morning crowd is by using the in-store deli, hot bar or grab-and-go case a bit earlier in the day to sell ready-to-eat breakfast foods. Pleasanton, Calif.-based Safeway, for example, ofers made-to-order breakfast sandwiches in its stores’ cafés, such as egg-and-cheese sandwiches with ham or bacon. Whole Foods Market, the Austin, Texas-based chain known for its hot foods at lunch and dinner, also ofers hot breakfast choices for commuters and other shoppers, from oatmeal to pancakes to breakfast sausages. Standard Market, an upscale fresh-focused grocer with two locations in Chicago’s western suburbs, has its own in-store restaurant, the Standard Market Grill, with a full breakfast menu on weekends. Te store attracts patrons only in search of breakfast, while others use morning at the Grill to kick of their grocery shopping. (Standard operates a Grill-only location in Chicago’s Lincoln Park neighborhood.) In-store dining is a signifcant growth area for grocery retailers. According to Port Washington, N.Y.-based NPD Group’s study, “Te Retail Prepared Foods Market: Assessing the Competition,” lunch trafc at retail grew 29 percent between 2008 and 2013, while breakfast trafc rose from 2 percent to 10 percent. According to Darren Seifer, food and beverage analyst for Chicago-based market research frm Mintel, breakfast can be a sweet spot for retailers’ prepared food departments and in-store foodservice. “Te main draw of it is that the consumer doesn’t have to do any work — breakfast is fast and convenient,” he says. With more consumers looking for fresh, betterfor-you morning meals, including meals with eggs and meats, or oatmeal with grains and berries, gro-

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| Progressive Grocer | Ahead of What’s Next | July 2015

EGGs and Bacon The american Egg Board has joined forces with actor Kevin Bacon to tout the nutritional advantages of eggs.

cers have another way to merchandise hot breakfast foods in-store. “I think retailers are capitalizing on the protein trend as consumers are looking to get more protein in their diets,” Seifer observes. In addition to hot food bars, delis and in-store dining, retailers are fnding other ways to more efectively merchandise breakfast foods. Grand Rapids, Mich.-based Meijer superstore chain created a Ready! For You meal-planning program that provides ideas for breakfast, lunch, dinner and snacks; ingredients and products are sold at a discount when purchased together. Meijer posts breakfast recipes for those meals on its website and on the popular Pinterest recipe-sharing site, with ideas and photos of dishes like Cheesy Baked Egg Toast, Orange ‘n Spice Overnight Oatmeal and Kiwi Banana Smoothie. Using social media to provide ideas for morning meals is an emerging tactic in boosting awareness of, and interest in, breakfast foods. Traditional in-store breakfast promotions, from coupons to POS materials, also help rouse sales of breakfast products. Te American Egg Board, for its part, is continuing its eforts to educate consumers about its target product. Te Park Ridge, Ill.-based trade group recently teamed up with actor Kevin Bacon in a new ad campaign aimed at sharing messages about the nutritional benefts of eggs. “In the four weeks after we launched the Kevin Bacon campaign earlier this year, egg sales in dozens increased a whopping 15 percent versus the same period a year ago,” notes Kevin Burkum, the board’s SVP. PG

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Back-to-school Merchandising

| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | July 2015

Class

Acts

More retailers and manufacturers are emphasizing nutrition in their back-to-school programs. By Bridget Goldschmidt

ast September, Linda Arceo took one of her sons to a free kids’ nutrition education session conducted by Samantha O’Toole, the dietitian at ShopRite of Sewell, in Sewell, N.J., the family’s local supermarket. Te in-store event, which dealt with whole grains, “began with a general education session, and continued with visual learning activities, coloring sheets and a handson, healthy snack-making activity with the kids,” Arceo recounted in a post that appeared on the website for Potluck, ShopRite’s community of bloggers. After the session, Arceo asked O’Toole for some back-to-school nutrition information and received the dietitian’s Top 10 Healthy Back-to-School Food Tips, which included serving kids breakfast for a healthy start to the day, getting them involved in food selection and menu planning, and diluting sugary juices with water.

Personal Touch Such direct involvement is par for the course for dietitians at ShopRite, whose stores are operated by members of the Keasbey, N.J.-based retail cooperative Wakefern Food Corp., but the impetus for such initiatives starts at the top. “From a corporate wellness perspective, we deliver the back-to-school message through global vehicles, such as print advertisement in our circular,” notes Natalie Menza, MS, RD, Wakefern’s manager of health and wellness, who took part in a presentation on the co-op’s health-and-wellness programs at FMI Connect in June. “Tese provide families with ideas for healthy, quick, on-the-go breakfast and lunch options, as well as after-school snacking and easy weeknight meal ideas. We also promote these messages through our digital platforms like ShopRite. com and ShopRite from Home.” At store level, such eforts take on a unique

character. “Our in-store dietitians personalize these recommendations and health messages as a foundation to create back-to-school programs for their stores, and will include specifc product and/or meal recommendations that will resonate with their individual store’s customer base,” continues Menza. “We all know there is no one-size-fts-all model for health; therefore, we work to ensure that we meet consumers where they’re at when it comes to their cultural or economic status.” Asked how ShopRite dietitians are tailoring their back-to-school projects in accordance with customer feedback, Menza responds that any solutions ofered must “be easy — we are all time-starved — and their families have to accept [them], which means [they have] to be healthy and delicious. Our dietitians work with customers one-on-one to ensure they have a plan when it comes to back-to-school nutrition.” (For more on how retail dietitians are infuencing center store back-to-school merchandising and promotions, see the All’s Wellness column on page 20.)

Eating for ‘Peace’ One brand many dietitians would be happy to endorse as part of a school lunch or as an afternoon snack is Coral Gables, Fla.-based Buddy Fruits, which ofers squeezable pouches containing small batches of hand-selected UDSA Grade A fruits — and, in some varieties, vegetables — and no artifcial ingredients. “For back-to-school, we decided to develop a concept that stems directly from our core — parents should not have to sacrifce quality for convenience,” asserts Buddy Fruits Senior Brand Manager Juan

Our in-store dietitians personalize recommendations and health messages as a foundation to create back-toschool programs for their stores, and will include specific product and/or meal recommendations that will resonate with their individual store’s customer base.” —Natalie Menza, Wakefern Food Corp.

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Grocery

Back-to-school Merchandising

Mesa. “Our ‘Pack Teir Lunch with Peace of Mind’ campaign will be available in major retailers in the U.S. and Canada beginning in mid-July [and running] through September.” Te program’s back-to-school dump bins and foor displays will enable the shelf-stable line to be merchandised in the produce section,, while “pallet corners will … bring this campaign to life at our warehouse club customers,” notes Mesa. Te company plans to supplement its POS materials with an IRC and a promotional sweepstakes. “Consumers will be able to enter online for a chance to win a year’s supply of Buddy Fruits for their entire classroom,” notess Mesa of the sweepstakes, which will live in-store as well as on the brand’s digital platforms. In tandem with its back-to-school eforts, the company will begin to roll out the frst new favor in its Originals line since 2008: Blueberry.

Our primary goal is to make it easy for consumers to find our products during back-to-school shopping.” —Emily Harris-Greene, Way Better Snacks

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Sprouting Up Similarly concerned with providing superior nutrition for growing — and learning — bodies is Minneapolis-based Live Better Brands LLC, maker of nonGMO Way Better Snacks. “We know that back-to-school is a very busy time for families, and parents are looking for healthy, convenient foods that can be consumed on the go,” says Emily Harris-Greene, VP of marketing. “Way Better Snacks is a natural ft for this consumer and occasion, given our portfolio of addictively delicious snacks that are convenient and better-for-you, made with premium sprouted seeds, beans and whole grains.” To that end, according to Harris-Greene, “Our primary goal is to make it easy for consumers to fnd our products during back-to-school shopping.” Way Better attains this goal, she continues, “by ofering the consumers a great value and by participating in retailers’ better-for-you-themed back-toschool displays that ofer a wide variety of products to address the needs of consumers during this season. And, of course, we have a keen focus on our consumers that are in-store by educating and sampling them through demo and display programs. Tis combination of tactics has proved to be very impactful for our fast-growing brand.” For this back-to-school season in particular, “Way Better Snacks is rolling out displayready merchandising units to make it turnkey for retailers and easy for shoppers to fnd our products in store,” notes

| Progressive Grocer | Ahead of What’s Next | July 2015

H Harris-Greene. “We will coordinate “W the timing of these th displays around ads, dis coupons and demos co to build awareness with consumers wi and incent trial. We an will also ofer great wi deals for consumde ers who want to er stock up on snacks st in order to minimiz minimize the frequency of their shopping trips during this busy time. Finally, we are launching a multipack with three diferent favors of single-serve packages [that] are perfect for delicious snacking on the go, for parents and kids alike.” Additionally, the snack line is “pursuing crosspromotions across other brands and categories to deliver holistic solutions to the consumer,” she asserts. “By ofering great values on a combination of products such as produce, snack bags and beverages, we can ofer consumers convenient and healthy lunch solutions they can feel good about providing to their children.” Way Better’s recently introduced products include four favors of sprouted barley crackers — Rosemarry Me & Olive Oil, Mustard & Cheddar Way Better, Beyond the Sea Salt & Cracked Pepper, and Back in Black Bean & Salsa — which, Harris-Greene, points out “can be eaten on the go or after school, paired with healthy dips, cheese or veggies. ... Way Better Snacks crackers are made with sprouted barley and other ancient grains such as spelt and farro. Sprouting these awesome whole grains naturally unlocks all the nutrients inside, so your body can use them.” Further, just in time for the start of autumn classes, the brand is rolling out a limited-edition seasonal favor of its sprouted tortilla chips, Oh Snap! Ginger Snap, which Harris-Greene says “will remind you of the aroma of holiday baking coming from your oven.” Te item will be on shelves from September through December, while supplies last. In response to a question about what’s to come in the realm of healthy back-to-school fare, she answers: “I believe we’ll continue to see more gluten-free products and other products formulated to avoid food allergies. … Non-GMO products will continue to be important, as will snacks that are low in sugar or made without high-fructose corn syrup. Products that taste great and that you feel good about eating will always be on trend.” PG For more about back-to-school merchandising, visit Progressivegrocer.com/btsmerch.

Fresh Food

Category Management

Fresh

Centricity Create solutions for shoppers to extend the perimeter’s pull throughout the store. By Jim Dudlicek

We strongly believe that creating solutions for our customers keeps them engaged. We constantly work very closely with other fresh departments, like meat and seafood, to create meal solutions and ease of shop.” —Mimmo Franzone, Longo Brothers Fruit Markets

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s “category management” a thing of the past? If grocers are supposed to be selling whole meals, not just ingredients — solutions, not just products — the concept of categories necessarily has to be expanded beyond its traditional limits. Te future lies with the synergies between fresh perimeter categories and the rest of the store. “We strongly believe that creating solutions for our customers keeps them engaged,” says Mimmo Franzone, director of produce and foral for Vaughan, Ontario-based Longo Brothers Fruit Markets Inc. “We constantly work very closely with other fresh departments, like meat and seafood, to create meal solutions and ease of shop.” Some examples at Longo’s: merchandising lemons in the seafood department, and mushrooms, cut vegetables, baking potatoes and corn lined in or beside the meat cases. “Also, recently, we have merchandised fresh potted herbs in our meat and seafood departments, along with recipes that pair up the herbs with a specifc protein,” Franzone explains. “We also work very closely with the center store team to create customer-centric experiences. In

| Progressive Grocer | Ahead of What’s Next | July 2015

our produce departments, we incorporate dry good items into our displays, which allows our customers to have a meal/recipe solution,” he continues. “For example, you can always fnd Longo’s olive oil and balsamic vinegar adjacent to our packaged salad category, whipped cream and fan cake shells displayed by our entire berry category, and salsa, black beans and tortilla chips merchandised right beside our preripened avocado display.” Granted, cross-promotions can be challenging due to varying temperature demands for products across categories. But portable meat display cases can be moved into other departments, such as produce or even wine and spirits, to display or inspire meal solutions for shoppers, notes Kari Underly, founder of the Chicago-based Muscolo Meat Academy, a retail butcher certifcation program. “Be sure to feature a trafc-generating item or use this space to pick up margin,” advises Underly, author of “Te Art of Beef Cutting” and principal of Chicago-based meat marketing consultancy Range Inc. “But do not be tempted to put an unseasoned meat clerk at the case. Rather, put your store chef or a seasoned staf member with confdence to recom-

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Fresh Food

Category Management

Fresh Food Channel Blurring Most Frequent Channels*

Channel Blurring Consumers no longer confine food shopping to the traditional grocery store. They now selectively pick from a variety of formats and outlets, depending on the occasion, type of food and channel that best meets their needs and expectations.

mend a meat cut and how best 2nd 3rd 1st Food Categories to pair it with other items in the produce department of the store.” Fresh produce Megan O’Connor, Muscolo’s co-founder, adds: “Employees in the meat department need to Refigerated dairy foods be educated and confdent when talking to consumers. Tey must Fresh meats & seafood know the category extremely well and should be able to sell every cut in the counter. If not, the meat Fresh bread buyer may be stuck with product they projected to sell. And consumers aren’t leaving satisfed.” Legend Cross-promotion initiatives work best when meat Grocery Mass/Super Specialty/Natural Local** is marketed with featured or advertised products, or sea* Based on index scores (at least 115) ** Local: farmers’ market, butcher, fish market,community-supported agriculture (CSA), etc. sonal profitable promotions, asserts Underly, who says she’s Source: “Food Shopping in America 2014” report, The Hartman Group disappointed by the “lack of innovation when it comes to new store formats in the meat department.” wire them with refrigeration. New technology allows She elaborates: “Te typical retail format has meat us to bring the meat case to the center of the store. For cases along the back of the store, because we can easily example, put a portable case near the fresh tortillas

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Fresh Food

Category Management

and salsas, and merchandise your ethnic meat cuts accordingly (i.e., arracherra, tampiquena, chorizo).” Or add a 4-foot upright paleo section in the health trend-focused area of the store, Underly suggests, and merchandise grass-fed beef, antibioticfree pork, organics, or fresh house-made sausages, and bacon and jerky, along with fresh-cut poultry.

Understanding Shoppers How can grocers determine what fresh category management initiatives are most efective for them? Todd McCourtie, senior director for solution strategy at Scottsdale, Ariz.-based retail-planning consultancy JDA Software, advises that retailers take the time to understand shopper behavior data in targeting prime opportunities for fresh food, and how demographics unique to their market areas play into

Natural Products Are Driving Fresh Sales By Daniel Lohman Natural products are driving growth in almost every category. Shoppers are looking for healthier alternatives to supplement their diets. They’re reading labels because they want to know what’s in their food and how it was produced. But what about the fresh department? How can retailers capitalize on these important trends in the fresh department to satisfy their shoppers’ needs and attract new loyal customers? First, retailers need to understand what’s driving the trends in natural. Natural or better-for-you products are capitalizing on shoppers’ demand for products that fully meet their nutritional needs. This includes unprocessed or minimally processed products. This also includes the raw ingredients that the products are made from, like grass-fed animals. At the heart of the natural product movement are words like “authenticity” and “transparency.” Many consumers believe that “non-GMO” is “better” than organic, but non-GMO simply means that the seeds used to grow a plant aren’t genetically modified. It doesn’t dictate how the crops are cultivated. Only certified-organic products come with the promise of not containing pesticides and herbicides. Many organic products have “clean labels,” meaning there’s complete transparency and authenticity in every step of how they’re made, from the raw ingredients to the final product. This frequently includes sustainable farming methods and giving back in the form of fair wages to growers. A retailer that wants to be a market leader in betterfor-you products needs to offer a healthy balance of natural/organic products to enhance and augment its current product selections.

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understanding them at a local level. What ingredient staples support meal creation? How price-sensitive is the typical shopper to fresh products? How much trafc will fresh promotions drive? What’s the demand for specialty fresh, like organic, and what’s the demand elasticity for those goods? What are shoppers’ expectations in terms of variety, price, quality and convenience? How do produce and center-ofplate items impact brand image? “You are seeing a trend with the likes of Whole Foods, Meijer and Fry’s to blend in readyto-go options based on time of day, with meal solutions tied around center of the plate,” McCourtie observes. “Tere are also trends around wines being directly incorporated into the fresh areas to not only complement the meal, but drive

The fresh department is the entry point for consumers who want healthier products. This is where they begin to explore nutritional options to decide what products will best meet the needs of their families. For example, several experts recommend that children drink only organic milk produced by cows that aren’t treated with antibiotics and are given GMO-produced feed. Others may want fruits and vegetables free of pesticides and herbicides. The important point here, regardless of retailers’ beliefs regarding organic products, is that consumers want choices. Shoppers want to make choices based on their beliefs, wants and needs. Retailers willing to provide well-merchandised, quality choices will reap the benefits of increased category sales, loyal shoppers and a reputation for being customer-centric. An added benefit of this strategy will be the opportunity for the retailer to help educate shoppers about healthy alternatives. Several retailers have deployed nutritionists throughout their chains; other have adopted product nutrition-grading scales. Some retailers effectively use both. These initiatives enable a retailer to develop a more intimate relationship with its shoppers. This is perhaps the best form of sustainable customer loyalty program. Shoppers want and need to be appreciated and valued. Sometimes, the best way to accomplish that is to partner with them to help them reach their goals for health and vitality — and the happier life that comes with them. PG

| Progressive Grocer | Ahead of What’s Next | July 2015

Daniel Lohman is a strategic adviser in the CPG and organic industry. His company, Category Management Solutions (CMS4CPG), assists companies in expanding their retail distribution and improving their merchandising. Lohman can be reached at dan@cms4cpg. com or 303-748-3273.

natural afnities with fsh, meat and produce. Te physical shopping experience is critical with fresh foods, as consumers normally equate fresh foods with health and expect clean, visible and colorful shopping environments that inspire confdence in the quality of product.” While shoppers are generally trending toward convenience and health, McCourtie says that “the fresh areas aren’t always set up for convenience. Provide more mealready solutions and complementary items — salad dressings, marinades, cheeses and wines, pizza kits, pastas, and breads — that create a more convenient shopping experience for those shoppers looking to quickly assemble that day’s meal. Pre-packaging fresh meals also provides convenience, as do pre-order kiosks for areas in the stores like deli.” McCourtie stresses the idea of selling the meal, not just the ingredients. “You can capture more share of the fresh dollar by having ready-made oferings by time of day, understanding trafc and moving more items closer to the fresh area,” he says, adding that progressive grocers “are building ingredients like spices, broths and other items into their fresh areas to complement the meal solution.”

Understanding Demographics Tere are also category growth opportunities within key demographics. To diferentiate its produce and attract new retail partners, Coral Gables, Fla.-based Turbana, an importer of bananas, plantains and pineapples, has introduced a new line of tropical fruits and vegetables, called Turbana Tropicals. Te new line targets the “New Mainstream” population, particularly Hispanics and Asians, who often overindex in the fresh produce category because they are shown to consume more fruits and vegetables, cook from scratch more often, and either have larger average households or greater spending power than the general population. By selling new produce that caters to these groups’ heritages and traditions, Turbana aims to help its retailers better serve their multicultural consumer base. Some preliminary education was necessary, however. “Our retailers

understood that these populations are growing, but they do not understand what these groups are looking for,” explains Marion Tabard, Turbana’s marketing director. “When it comes to many of our products, they were literally clueless. With limited time and knowledge, produce managers have too much on their plate. To them, tropical produce is another headache, not an opportunity.”

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Fresh Food

New technology allows us to bring the meat case to the center of the store. Put a portable case near the fresh tortillas and salsas, and merchandise your ethnic meat cuts accordingly.” —Kari Underly, Muscolo Meat Academy

Category Management

To remedy the problem, Turbana moved to demonstrate the revenue that tropicals can bring. Te strategy was anchored by Miami-based Geoscape’s RetailTarget module, which allows produce managers to see the exact ethnic demographic breakdown in their stores’ trade areas, and match their assortments accordingly. “We show our retailers the potential of these markets around their stores, and Geoscape’s relevant data makes this opportunity possible,” Tabard says. Turbana takes the education process one step further, with detailed pages about each product’s usage and characteristics, including potential holidays when certain ethnic groups consume larger amounts of select produce. “Multicultural means that a high degree of customization is necessary,” Tabard notes.

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As a result, Turbana’s tropicals business grew by more than 300 percent in 2014; one of its retailers reportedly increased sales 30 percent in less than six months. PG Read more about fresh category management at Progressivegrocer.com/catmanfresh.

Produce

Fresh Food

40 Billion Pounds

Served

Produce sales and consumption are set to soar with scores of new industry campaigns. By Jennifer Strailey

rowth is good, especially when it comes to the nation’s increased produce consumption. Fruit and vegetable sales are boosting the industry’s bottom line while contributing to a healthier America. It’s the ultimate win-win. Produce now accounts for more than $60 billion in the food retailing industry, according to a recently released report from the Food Marketing Institute (FMI), “Te Power of Produce 2015.” At a time when many categories are struggling to achieve market growth, produce has grown in both dollars and volume, at 4.2 percent and 0.6

Photo courtesy of the Mushroom Council

percent, respectively, the report notes. Much of this growth is attributable to organics, fnds Arlington, Va.-based FMI, observing that fruit and vegetables added $2.4 billion in new dollars for the retailing industry in 2014. While conventional produce represented 92 percent of total produce dollars last year, it accounted for just 72 percent of total new dollars. With unprecedented innovation and promotional prowess, the produce industry is driving consumption like never before. “Te Power of Produce” fnds that consumers purchased a total of 40.4 billion pounds of produce in 2014, 225 million more pounds of fruits and vegetables sold than in 2013. July 2015 | progressivegrocer.com |

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Fresh Food

Grill oF BEAnS Frieda’s suggests grilled fava beans this summer.

The Blend at retail is more than a program for this year or next; it’s really a new way of doing business.” —Steven Muro, The Mushroom Council

Produce

Opportunities abound for increasing produce consumption again this year, as the industry ramps up its marketing and promotional campaigns, and progressive grocers tap into the Millennial shopper and more.

Mushroom Movement Earlier this year, the Mushroom Council launched Te Blend — a program that recommends mixing fnely diced mushrooms with proteins such as beef, turkey, lamb or pork to make hamburgers, meatloaf, tacos and meatballs — at retail. While this is the third year that the San Jose, Calif.-based council has run the campaign in the foodservice channel, it’s the inaugural year for Te Blend at supermarkets. Retailers can use or modify the council’s recipe concepts to introduce healthier versions of a wide variety of meals. What’s more, Te Blend can help reduce shrink in the produce department. “Te Blend at retail is more than a program for this year or next; it’s really a new way of doing business,” says Steven Muro, of Fusion Marketing, for the Mushroom Council. Te program is introduced in supermarket deli, meat and prepared food departments, with the idea that consumers will eventually purchase the ingredients to create Te Blend at home. “Initial testing indicates that the growth rate is phenomenal,” says Muro. “Retailers report increased sales of mushrooms, meats and protein, as well as ancillary products like cheeses and buns.” According to Muro, the smallest increase in mushroom sales at Te Blend-participating retailers was 17 percent, while stores that implemented demos saw an increase in mushroom sales as high as 20 percent. Retailers are using a variety of mushrooms — from button to portabella — to create Te Blend. “In the past, it was an either/or situation — meat or vegetarian. Instead of either/or, Te Blend is a continuum. Mixing mushrooms into a burger isn’t just healthier, the burgers taste better,” he asserts. Te Mushroom Council ofers retail research about Te Blend, as well as strategic planning; promotional support; in-store materials; talking points for deli, meat and prepared food staf; and handouts for demos that explain the health benefts. To learn more about Te Blend demos and displays, visit www.mushroomsatretail.com. Avocados Every Day While produce sales are strong, many consumers con-

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tinue to fall short of flling half of their plates with fruits and vegetables. “In February, a special federal commission that reviews American dietary guidelines every fve years noted that, at most, 2 percent of children in most age groups are consuming the recommended amount of vegetables on a given day,” notes Stephanie Bazan, market development director for Avocados from Mexico (AFM), in Irving, Texas. “Te federal commission’s data was startling, and the Partnership for a Healthier America (PHA), Avocados From Mexico and others took notice.” With the goal of getting more fruits and veggies on Americans’ plates, AFM became a founding member of FNV, a new campaign developed by Washington, D.C.-based PHA to increase produce consumption. “FNV, short for ‘fruits and vegetables,’ brings together celebrities, athletes and produce brands for a marketing blitz to encourage consumption,” explains Bazan, adding, “We hope for more kids to fall in love with avocados!” AFM recently rolled out its 2015-16 marketing program, which will be anchored in a new campaign highlighting the dedication that goes into cultivating avocados, as well as the many ways consumers can enjoy them. “As a market leader, we will kick of the season with a strong program to support Hispanic heritage, tailgating, holidays, Super Bowl, March Madness and Cinco de Mayo,” says Maggie Bezart Hall, AFM VP of retail and promotion, who further notes that AFM broke records earlier this year by shipping more than 50 million pounds of avocados a week prior to the Super Bowl to support the Guac Fiesta promotion. Te California Avocado Commission, in Irvine, Calif., has partnered with chef Charlie Kleinman on recipes featuring avocados. “For me, California avocados are synonymous with summer,” says Kleinman. Recipes are available at www.californiaavocado.com. Te Irvine-based Hass Avocado Board, through its Love One Today initiative, continues to promote avocados through a science-based food and wellness education program that encourages consumers

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Fresh Food

Produce

to include fresh avocados in everyday healthyeating plans. Studies show that We believe avocados’ versatility is the strongest that all the driver of sales, and the board is comjuicing activity mitted to educating consumers on new, interesting ways to use the fruit.

going on now is an ideal way for fruit and vegetable players to get involved.”

—Matt Seeley, The Nunes Co.

Opportunities in Juicing In the “Power of Produce” report, FMI notes that produce snacking and juicing are growing meal occasions, especially popular among Millennials and families with young children. Indeed, the juicing trend is sweeping the nation with the help of Te Nunes Co.’s promotion of its new organic Foxy BroccoLeaf through live in-store demos in more than 100 stores this summer. Last summer, Foxy toured the country teaching consumers that broccoli leaves have a sweet, light favor and are rich in calcium, vitamin C, folate and phytonutrients. Foxy also ran demos of how to “Rejuicinate,” that is, to juice without wasting food. Based on the success of last year’s in-store demos, the company has expanded the program this year. “We’ll probably have led demos in 150 stores by the time we’re done this year,” predicts Matt Seeley, VP of marketing for Te Nunes Co., in Salinas, Calif., adding, “Tere’s been such huge demand, we decided to extend the demos into September.” Te demos are conducted primarily by Corvallis, Ore.-based Turn-Key Marketing, which specializes

A NEW LEAF Food Town of Bay Ridge, in Brooklyn, N.Y., held a Foxy BroccoLeaf demo.

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in the natural and health food store consumer. And while the program focused solely on juicing last year, this year’s demos are also showing consumers how to do a quick and tasty sauté with BroccoLeaf. “We’re all looking for ways to increase produce consumption,” says Seeley. “We believe that all the juicing activity going on now is an ideal way for fruit and vegetable players to get involved.” Among juicers, Seeley has identifed a range of consumer profles that retailers can target. “As we watched the juicing trend take over, we saw that there’s the family who is juicing 2 to 3 pounds of produce a day,” he observes, “and we also saw the other end — the people who use yogurt or milk with produce to make a smoothie.” One of the most exciting opportunities presented by juicing, notes Seeley, is that it gets vegetables into the frst meal of the day, so that vegetable suppliers now have a breakfast product.

Eating by Example Increasing fruit and vegetable consumption is a healthy goal for everyone, including those in the produce industry. After connecting in the Produce Marketing Association (PMA) Foundation for Industry Talent Emerging Leaders program, a number of industry members forged the initiative Eating by Example, the mission of which is to serve and eat more produce, and thereby lead by example. “As future leaders in this industry, we recognized the disconnect that often occurs as we talk about the great benefts of fresh produce and increasing consumption at company and industry events, while eating pastries, cakes or sweets,” points out Cassie Howard, category manager at Sunkist Growers Inc., in Sherman Oaks, Calif. “We felt that as industry members, we had an opportunity to change those habits and set an example for consumers by showing how great and easy it is to consume the healthy products we produce,” she adds. Sunkist has set a goal of ofering fresh oranges, grapefruits and mandarins for ofce staf, while also including a variety of fresh produce oferings at its annual meeting and ofce celebrations. (More about Eating by Example can be found at www.pma.com/eatingbyexample.) To entice consumers to increase their produce consumption, Sunkist recently launched new retail marketing bins. Tese fully customizable secondary-display bins, which can be digitally printed directly on corrugate, hold 60 to 80 pounds of fruit. For this summer, Sunkist has created bins showcasing Valencia oranges and fresh lemons.

Record Mango Season The Orlando, Fla.-based National Mango Board (NMB), whose mission is to increase mango consumption in the United States through its marketing, research and industry relations programs, is encouraging retailers and suppliers to move more mangos, due to higher-than-normal import volume. This year’s mango volume has already seen weekly shipments of more than 4 million boxes, an 18 percent increase compared with the largest week in 2014. NMB recommends offering mangos by the case, creating secondary mango displays in the front of the store or of the produce department, and using POS materials to teach shoppers about mangos, including how to cut and judge ripeness. For more information on the free POS materials available from the NMB, visit mango.org/retail.

Young Guns FMI’s “Power of Produce” report notes, “Children are an important point of entry to increased produce consumption and organic produce purchasing.” But many parents continue to struggle with getting their kids to eat fruits and vegetables. Scores of industry organizations and produce suppliers have launched and continue to launch kidfriendly programs and products designed to increase

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consumption among youngsters. “Eat Brighter!” is one such program, which Newark, Del.-based PMA, Sesame Workshop and PHA recently revealed will continue through 2018. Te groups have been tracking the movement’s early adopters for approximately six months, and say participants are reporting positive sales lifts of 1 percent to 2 percent on Eat Brighter branded items. Nearly 60 companies, representing more than 130 commodities, have signed onto the movement, with more than 30,000 retail stores accepting Eat Brighter branded product. In an efort to educate consumers of all ages about how greenhouse produce is grown, NatureFresh Farms, of Leamington, Ontario, recently unveiled an attention-grabbing use of its Eat Brighter branded greenhouse-grown produce. NatureFresh’s custom-designed mobile Greenhouse Education Center (GEC) has a back door that features a full graphic promoting Eat Brighter with images of Cookie Monster holding bell peppers, Big Bird with tomatoes, and Elmo with cucumbers. Te custom-built, 38-foot mobile micro-greenhouse attraction even ofers a live bumblebee ecosystem. Designed and built by NatureFresh Farms’ sister company, Leamington-based greenhouse builder South Essex Fabricating, the GEC contains a variety of mature, fruit-bearing tomato, bell pepper and cucumber plants. “Our idea of taking a greenhouse into the city, direct to the consumer, is to not only educate, but to help people make informed decisions going forward,” notes Chris Veillon, director of marketing. Te GEC will be on tour throughout North America this year into late fall, with key stops at select retailers, schools and consumer events. Meanwhile, Orlando, Fla.-based Produce for Kids (PFK) is encouraging families to make over their cookouts with plenty of produce this summer. Its new “Simply Summer: 20 Fresh Cookout Favorites” e-cookbook contains 20 healthy summer dishes, including Hidden Veggie Cheeseburgers, and Light & Fresh Potato Salad. All of the recipes featured in the free, downloadable e-cookbook highlight fresh produce as the main ingredients in an efort to help increase families’ consumption of fruits and veggies during this timeframe. In addition, PFK will host the #SimplySummer Pin to Win Sweepstakes all

Produce

summer. Consumers can create their essential summer cookout pinboard for a chance to win a $100 grocery store gift card.

Summer Sells Fresh produce and summertime go hand in hand. Beyond promoting seasonal fruits and vegetables, however, it’s also an opportunity to get shoppers to think of new and exciting ways of cooking and serving produce. “Shoppers are grilling more vegetables in the summer, and now they are starting to grill more fruits as well,” observes Karen Caplan, president and CEO of Frieda’s Specialty Produce, in Los Alamitos, Calif. “One of the food trends this year is making vegetables the main course, and summer grilling season sets the perfect stage for that,” continues Caplan, who adds that recent studies show that 87 percent of American households have outdoor barbecues, and that they believe grilling is a healthier way to prepare meals. In validation of consumer perceptions, shorter cooking times on the grill ensure that much of the nutritional content is retained in vegetables. Frieda’s recommends introducing shoppers to the idea of grilling Shishito peppers, baby bok choy, Belgian endive, eggplant, fava beans, fngerling and baby potatoes, starfruit, and pineapples. A number of suppliers are also making summer vegetable eating more fun with themed packaging. Salinas-based Mann Packing Co., for instance, is shipping an 18-ounce seasonal Summer Fun veggie tray that features an assortment of washed and ready-to-eat fresh vegetables — celery, carrots, sugar snap peas and broccoli forets — as well as a 3-ounce container of ranch dip. Te summer-themed trays are available through September. Duda Farm Fresh Foods, of Oviedo, Fla., hopes its newest promotion will be a home run with shoppers. Tree of the company’s top-selling fresh-cut celery bags will feature baseball packaging through October. Te theme is “An All American Snack.” Duda is also working with top

Fresh Food

national brands on in-store and on-pack cross-promotions in tandem with the baseballthemed bags. spreading the word by engaging with followers on all of its social media channels (Facebook, Twitter, Instagram and Pinterest) during baseball season. PG

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Category Spotlight

What’s in a

Name? Branded and organic apples are outpacing the competition. By Jennifer Strailey

The big trend is that the branded apples are driving category growth.” —Steve Lutz, Columbia Marketing International

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hile the apple category overall is essentially fat, branded and organic apples are driving fresh excitement and sales of this iconic fruit synonymous with good health. New varieties, along with value-add introductions and products that speak to kid-friendliness, convenience, and the popularity of juicing, are further fueling consumer interest. “Te big trend is that the branded apples are driving category growth,” asserts Steve Lutz, VP of marketing for Columbia Marketing International (CMI), in Wenatchee, Wash., one of Washington state’s largest growers, packers and shippers of premium apples, pears and cherries. Despite a record harvest this past season, apple volume sold at retail is up only 1.3 percent, according to Schaumburg, Ill.-based Nielsen. “Te branded apples and Honeycrisps are delivering nearly all of the category growth,” Lutz says, citing Nielsen scan data for the total U.S. apple category for the season running from September 2014 through April 2015. Only three apple varieties (Honeycrisp, Jazz and Ambrosia) among the top 10 varieties grown in Washington showed dollar growth, and only four apples (Honeycrisp, Jazz, Ambrosia and Gala) showed volume growth. In terms of dollar percent change

| Progressive Grocer | Ahead of What’s Next | July 2015

from a year ago, Ambrosia led the pack, with 23.7 percent. Honeycrisp and Jazz showed dollar percent changes of 17.5 percent and 9.3 percent, respectively. Currently, CMI’s big push is on three relatively new varieties: Ambrosia, Kiku and Kanzi. “Ambrosia has been around the longest and is really getting traction nationally at the retail level,” notes Lutz. “Kiku and Kanzi are terrifc new varieties that are already setting records with retailers.” Kiku, Kanzi and Ambrosia are part of CMI’s major import program for apples from New Zealand and Chile. “Tese are great programs because they give us freshly harvested product to sell during the summer months, until the new-crop apples from Washington are picked,” he explains. According to Nielsen data, Kanzi apples, which are up 38 percent, showed the largest dollar percent change versus a year ago. In terms of volume percent change, Kanzi is up 15.9 percent. Meanwhile, Kiku apples sparked a 12.9 dollar percent change versus a year ago, and a 24.1 percent volume change. Further, as is the case with much fresh produce today, sales of organics are up in the apple category. CMI’s Daisy Girl is the No. 1-selling branded organic apple in the United States. “Te increase in organics is signifcantly stronger than the overall category,” Lutz says. “Organic apples for the season to date are up 17 percent in volume, while conventional are fat. Te growth of

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Juicing and smoothies are hugely popular.” —Brianna Shales, Stemilt Growers

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organics continues to be terrifc. “I think the apple category will grow,” he continues. “Right now, consumers are not eating more apples, but as they experience what we’re growing I think that will change. Certainly, the focus on health will play a factor. However, the health focus is likely to have a more immediate impact on organic apples. Consumers that are health-focused also tend to have increased concerns about pesticides, which pushes them toward organic produce.”

From Juicing to Junior Two of Stemilt Growers’ most recent apple introductions align perfectly with two of today’s hottest trends in produce. For example, the family-owned company, based in Wenatchee, Wash., released its Fresh Blenders earlier this year. Te 5-pound pouch bag features value-grade apples for juicing. “Juicing and smoothies are hugely popular,” explains Brianna Shales, Stemilt communications manager, who notes the rise of supermarkets with in-store juicing bars across the country. Of course, consumers are also juicing and making smoothies at home, and Stemilt’s Fresh Blenders make it easier to do both.

Make the Most of Apple Merchandising While apples are the second-most consumed fresh fruit in the United States (bananas are No. 1), shoppers will be inclined to purchase more if they’re aware of certain factors, including apples’ different flavor profiles and uses, whether an apple is local or organic, and whether the variety is new. Clear signage is essential to sealing the deal. What are the merchandising strategies that win sales and repeat customers? We asked Steve Lutz, VP of marketing at Wenatchee, Wash.-based Columbia Marketing International, to share his top tips for merchandising that moves apples:

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“New markets are picking up the Fresh Blenders every month,” observes Shales. “It’s really exceeded our expectations. Tey are a convenient option for consumers to just grab and go, and there are so many cross-promotional opportunities to merchandise these apples with everything from kale to berries.” Another Stemilt product that, according to Shales, has met with tremendous success is the Lil Snappers line, aimed at kids, which includes 3-pound bags of smaller apples, pears and citrus, or a combination of fruit. “It opened up a new item in the mind of the consumer,” afrms Shales. “Lil Snapper Apples are modern varieties of apples, and they’re favorful fruit of premium quality.” Te apple varieties include Braeburn, Fuji, Gala, Granny Smith, Honeycrisp, Pinata and Pink Lady. “We’ve also found the package to be really popular among older adults who like that smaller-apple profle,” Shales adds. PG To learn about efforts in the value-added apple segment, visit Progressivegrocer.com/valueaddedapples.

Consistent promotion: Apple

consumers are highly responsive to retail promotions, often switching their choice of which apple to buy based on retail promotions/discounts. With as many apple varieties and brands as there are, retailers should look to promote at least one apple nearly every week. Promote traditional varieties, but also the new branded items as well. Obviously the promoted prices vary, based on the specific product, but the key factor is using price discounts to encourage consumer trial. This practice helps convert shoppers into buyers and builds long-term category strength.

Use POS and/or varietal iinformation: Consumers crave

in information. Unfortunately, most retail displays tell consumers only the name d of the apple and the price. Boost trial o and sales by using POS cards or other a information tools on the shelf to explain in apple variety attributes. Even better, a ttell the story of the grower. Consumers love to know the origins of their fruit. lo

| Progressive Grocer | Ahead of W What’s Next | July 2015

Build secondary displays:

Many apple shippers offer custom freestanding displays, which offer retailers an opportunity to create incremental selling space within the produce department or even on the perimeter. Better still, freestanding displays can provide consumers with information ranging from usage tips to the story of the apple orchard.

Extend supplies of niche apples: Many retailers want to bring

in a new apple brand or variety every 30 days. This is a losing strategy because the purchase cycle on apples is approximately 21 days. So, if a consumer tries a new apple and loves it, chances are by the time they are ready to purchase apples again, that variety is gone. This dooms the retailer to an endless cycle of product introduction, never leveraging the sales-building power of repeat purchasers. If distribution is an issue, it is a far better retail strategy to put the niche apple in fewer stores, to allow the product to stay in certain stores for 90 to 120 days. Consumers then have multiple opportunities to identify, try and purchase these new apples.

Nonfoods

Health, Beauty & Wellness

Packed With

Power

Grocers should capitalize on the growing sports nutrition category. By Barbara Sax

C Sports nutrition and protein products have gained mainstream popularity as consumers have begun to understand the benefits these products can have as part of their everyday lifestyle.” —Nikki Brown, Cytosport

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onsumers are increasingly embracing sports nutrition products for ftness as well as weight-loss aids. Global market intelligence frm Euromonitor expects sports nutrition products, which include protein powders, ready-to-drink supplements and hydration products, and bars, to reach $8.8 million in sales in 2019. “Retailers are showing robust growth in the sports nutrition category, especially in the liquid segment,” says Kurt Jetta, president and founder of TABS Group, a Shelton, Conn.-based technology-enabled analytics frm. According to Jetta, the charge was led by Cytosport’s Muscle Milk, which was recently purchased by Austin, Minn.-based Hormel. “Pure Protein, Premier Protein and EAS have all done well, and Muscle Milk continues to show double-digit growth,” he adds. A recent survey from TABS Group revealed that 37 percent of adults 18 years of age and older have purchased sports nutrition products in the past year. Adults in the 25-to-29-yearold age group account for the highest category penetration rate, at 63 percent, with a sharp drop of of heavy buyers at age 40. Fifty percent of all purchases occur in mass-market outlets. “Te results from the survey highlight that sports nutrition is a category deserving of more space and support in mass-market outlets,” notes Jetta. “With half of all sales already occurring there, that number has considerable upside, particularly given retailers’ focus on Millennials.” Jetta continues that sports nutrition products also represent an efcient way for retailers to appeal to Hispanic consumers, since Hispanics are two times more likely to be heavy buyers

| Progressive Grocer | Ahead of What’s Next | July 2015

of sports nutrition products than non-Hispanics. Among adults in the core 18-44 -year-old age group, 74 percent of Hispanics have purchased a sports nutrition product in the past year, compared with 50 percent of non-Hispanics. Manufacturers and retailers are seeing big growth potential in the category. “We’re listening to what our consumers want,” afrms Pam Nisevich Bede, manager of professional partnerships and education for Abbott’s EAS Sports Nutrition brand. High-quality protein sources and electrolyte-heavy favored hydrating drinks are two segments garnering attention.

Not Just for Kids “Drinks, which are a nice blend of electrolytes but don’t have a lot of calories, are playing well in that space,” adds Bede. Clevelandbased Abbott has seen a big spike in adult use of its Pedialyte electrolyte drink, which fts the high-electrolyte, lowcalorie profle. Adult usage of the brand has grown by almost 60 percent since 2012, according to the company, and adults now make up more than one-third of Pedialyte’s sales, up from a historical average of 10 percent to 15 percent. Social media coverage of the brand, as well as its use by celebrities such as Pharrell Williams, has contributed to the brand’s increased popularity with adults. Protein supplements are also a growth area in the sports nutrition category. “Public perceptions of sports nutrition products vary by niche,” observes Ashley Sellers, a spokeswoman for Euromonitor, “but the average American views protein products more favorably today than a decade ago.” Nikki Brown, chief marketing ofcer for CytoSport Inc., maker of Muscle Milk, agrees. “Sports

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nutrition and protein products have gained mainstream popularity as consumers have begun to understand the benefts these products can have as part of their everyday lifestyle,” she says. “We help provide as much information as possible on the benefts of protein for recovery, lean muscle growth, and to support a healthy, active lifestyle.” One tool the Benicia, Calif.-based company uses to communicate this message is its Protein Calculator, which shows how much protein a person’s body needs every day.

Take a Powder TABS Group’s Jetta notes that protein powders and liquids are reaching a much broader audience and that, while sales of powders remain strong, ready-to-drink liquids are showing consistent growth and could outpace powders as consumers migrate to the more convenient form. “Brand assortment is really what’s driving the powder segment; it’s not really based on brand depth,” says Jetta. “Powder sales are growing at 10 percent to 15 percent, but the item count has grown by 50 percent.”

Nonfoods

Liquid’s dollar sales are up 20 percent, while SKU count in the segment is up only 10 percent, according to Jetta. “Te average item is selling better, suggesting that the products are gaining a wider audience. Powders are never going to generate mass appeal, because they’re just not convenient enough,” he says. Euromonitor’s Sellers notes that readyto-drink protein allows consumers to dabble in protein products without fully committing themselves to a tub of powder. “Tey are a convenient, on-the-go protein option,” she points out. Muscle Milk experienced a 4 percent jump in dollar sales to $52 million in the supermarket channel for the 52-week period ending April 19, 2015, according to Chicago-based IRI. Te brand began as a protein powder and has since expanded into other categories, among them protein bars, oatmeal and ready-to-drink products. Brown says that Cytosport has increased resources to the Muscle Milk brand, which will get a refresh this year focused on product innovation. “Our team is fnalizing exciting programming ideas, with

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It can be hard for consumers to find protein powder next to the pharmacy, since people who are healthy aren’t always shopping there.” —Pam Nisevich Bede, Abbott

Health, Beauty & Wellness

limited-edition bottles to highlight and activate our partnerships with elite athletes, college athletic departments and local communities,” she notes. “Innovation will also allow us to expand our bar business and enter new categories like smoothies in 2015.” Abbott’s EAS carb-control product saw a 5 percent increase to $15 million in the supermarket channel, while its weight-control product jumped nearly 30 percent to $11 million, according to IRI. To make powder products more convenient for users, Abbott has introduced a circular tub for its EAS powders. “Te scoop is built into the lid so it’s easy to open the lid and fnd the scoop with a sweaty hand,” says Bede. Te EAS brand, she adds, is growing “by leaps and bounds,” noting, “Across the aisle, everything seems to have a little more protein.” In fact, Abbott recently launched a Do More With Protein program with Minneapolis-based Target, which “includes recipes that give consumers new ways to use protein beyond a protein shake made with milk and protein powder,” notes Bede, adding that Abbott is working with other retail partners on value-added programs.

Learning Curve In-store merchandising hasn’t helped the category gain traction, however. Tis might have something to do with their typical placement in stores. Bede notes, “It can be hard for consumers to fnd protein powder next to the pharmacy, since people who are healthy aren’t always shopping there.” Also, since endurance athletes tend to have a high economic profle, she continues, stores that aren’t courting this consumer’s needs could be missing a key opportunity. Abbott is developing displays with an educational component that explain what specifc products are for and when they should be used. “Kroger is using the new display,” says Bede. “It can be used near the pharmacy, in the dairy aisle where users are also buying milk to make protein shakes, or in the hydration aisle, near water and sports drinks.” TABS Group research, meanwhile, showed a strong correlation between purchases of sports nutrition products and men’s shaving and grooming. “Proximity to men’s grooming,” Jetta suggests, “might facilitate a boost in sales.” PG

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Card Sharp

Paper greetings aren’t disappearing, manufacturers insist, but innovation in the category is essential to compete with digital and social alternatives. By Barbara Sax

aperless substitutes and higher postage stamp rates have taken a toll on the greeting card category. But even as more consumers migrate to e-cards, card manufacturers say that occasions remain when only a traditional paper greeting card will do, and cards and wrap continue to see strong sales at retail. According to Jeanne Sheehy, executive director of the Washington, D.C.-based Greeting Card Association, it’s a myth that people are sending fewer cards. “While more people may be acknowledging birthdays with the availability of social media, they are not sending fewer cards as a result,” she asserts. “In fact, with the emergence of digital and social greetings, the term ‘card-worthy’ has emerged for people to whom one sends a paper card. Te term captures the emotional connection of sending and receiving a greeting card.”

New and Improved Cleveland-based American Greetings sees consumers turning to digital greetings as a complement to paper greeting cards,

not a replacement, according to a company representative, who adds that American Greetings paper cards consistently outperform the general merchandise category in the grocery channel. “We are seeing growth in both cards and gift packaging as a result of our focus on innovation,” stresses the rep. “Tese new products ofer a great value at a slightly higher price and have put the excitement back in greeting card departments.” Sheehy agrees that innovation is the key to capturing sales and the premium end of the card market, with items featuring interactive sound, LED lights and other customized enhancements as one driver of category growth. “Te growth of social media and frequent communication has made consumers willing to spend more for special-occasion card-sending occasions like weddings, births [and] milestone birthdays, to name a few,” she says. “Cards featuring special techniques, intricate designs and new technologies are at the top of the price scale for paper cards, but they remain popular as consumers look to send cards to ‘card-worthy’ people in their lives.” Designer Greetings, a company that’s strong in the value segment, has expanded its premium oferings. “We’re seeing July 2015 | progressivegrocer.com |

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Nonfoods

General Merchandise

embellishments growing, from jewel gems and tipons to stamping and embossing,” afrms Michelle Madonia, art director at Edison, N.J.-based Designer Greetings. “Tese products can retail for up to two times the price of traditional greeting cards.” Designer Greetings’ newest line, Designer Boutique, will feature hand-painted scenes enhanced with graphic-art elements, and its new premium Around the Corner line features die-cut scenes. Tis spring, American Greetings launched Automotions, a line of humorous birthday cards with full-motion 3D lenticulars mounted to small motors and synced to music. When a card is opened, the recipient is greeted with an animated, continuous-loop punchline. Additionally, the company included audio chips in its Yakety Plaques Father’s Day collection, featuring a singing trophy with eyes that bounce. Boulder, Colo.-based Leanin’ Tree has increased the number of cards it ofers that include embellishments, such as thermal inks, foils and glitter, but marketing director Pat Wallace admits that consumers still show some resistance to cards costing more than $5.

Two ways we are helping retailers better serve shoppers [are] an expanded greetings portfolio and localization.” —James Melton, Hallmark

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Finding the Right Niche On the other end of the price spectrum, the value card segment is also strong. “Te value-priced arena has a lot of competition,” notes Designer Greetings CFO Dawn Garvey. “Tis segment is a real presence in the market, and it’s not going away.” Designer Greetings focuses on value cards that ofer boutique-like elements and retail for $2.99 to $3.49. Niche collections are also an important part of the category. Designer Greetings’ Home of the Brave line of cards for people in military service has experienced strong sales, while Exposé, a humorous line with photographic elements, has been particularly popular in the supermarket channel. Leanin’ Tree’s cards featuring Western art continue to be popular, inspiring the company’s recent launch of a niche line of humorous cards featuring “redneck” jokes from comic Jef Foxworthy. Hallmark recently expanded its greetings portfolio with collections that meet the needs of distinct shopper segments, such as Millennial and multicultural consumers. Te Kansas City, Mo.-based company last year revitalized its Mahogany brand, targeting African-American consumers, and will give its Spanish-language ofering, Sinceramente, a reboot this summer with increased cultural specifcity that refects a broader range of Hispanic lifestyle needs, preferences and voices. Millennial consumers are the intended target of Hallmark’s Studio Ink line, featuring nine distinct collections, and content, size and price points (starting at $2.49) that make the line more accessible to younger consumers. New postcard packs (starting at $4.99) introduced as part of the line are positioned as a way for younger consumers to

| Progressive Grocer | Ahead of What’s Next | July 2015

“create new ways to connect and share.” According to James Melton, VP/general manager of national accounts at Hallmark, “Two ways we are helping retailers better serve shoppers [are] an expanded greetings portfolio and localization.”

Mix and Match Convenience is key for shoppers, so it’s important that greeting card companies and retailers ofer the right mix of greeting cards, gift wrap, stationery and gifts to ensure products in each store meet the specifc needs of local shoppers. “Using merchandising elements such as end caps and of-shelf displays work well to keep these products top of mind and front and center,” advises Sheehy. “It’s also important to partner with retailers to increase marketing eforts, through mailings to loyal shoppers to increase their purchases with special ofers. Together, these steps can lead to incremental growth of a very proftable category.” “Te more you can add height to the aisle with balloons or gifts at the end of the aisle, the way that Wegmans merchandises the department, the more impact the department has,” points out Designer Greetings Marketing Manager Liz Maciorowski. Te company has seen strong sales in regional supermarket chain King Kullen, based in Bethpage, N.Y. Designer Greetings ofers retailers an array of spinner and rolling racks to maximize consumer exposure to the category. “Retailers get more fexibility with spinner racks, since they can place them near foral, the bakery or even use them to close of checkout lanes,” explains Maciorowski, adding that all of those options lead to sales lifts. Leanin’ Tree’s Wallace says that end cap displays get a lot of attention in high-trafc areas. “Cards are an impulse purchase, so displays really generate sales,” he says. Leanin’ Tree ofers a full-face spinner rack that takes up only 27 inches of space. “Full facings allow the cards to have more impact,” he observes. “It’s also crucial that displays are kept neat. It’s really easy to lose consumers, so a wellkept department is really important.” “New product layouts and navigation tools will help each shopper fnd the perfect card,” notes Melton. “Te new Hallmark brand experience will help simplify a shopper’s trip while encouraging multiple card purchases and, most importantly, improve the overall experience.” PG

We donâ&#x20AC;&#x2122;t translate language, we speak culture.

No one does more to bring you the very best. ÂŠ Hallmark Licensing, LLC

Technology

Business Intelligence

Accepting the

Challenge

Grocers need to step up to remain competitive.

By John Karolefski

he Kroger Co. recently purchased much of DunnhumbyUSA, founded 12 years ago as a joint venture between the Cincinnati-based retailer and U.K. company Dunnhumby Ltd. Over the years, the countryâ&#x20AC;&#x2122;s largest traditional grocer meticulously analyzed POS transactions and loyalty card histories to develop insights to personalize the shopping experience and gain an enormous advantage in the marketplace. Tat ability remains crucial, because retail grocery

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is a competitive business that will intensify in coming years. Small, midsize and regional grocers also need to leverage the power that Big Data provides to stay relevant and gain an edge. But can they? Few companies have the resources and scale of Kroger. Maybe the question should be, will they? Opinions vary. Te kinds of Big Data that small and midsize grocers have are exactly the kinds of Big Data that large grocers have available, Janet Dorenkott, co-founder and COO of Cleveland-based Relational Solutions Inc., points out. Te

| Progressive Grocer | Ahead of Whatâ&#x20AC;&#x2122;s Next | July 2015

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Technology Business Intelligence

Grocers that deploy enterprise marketing and promotions management software will benefit from fact-based, market-specific data to inform campaigns and communications plans.” —Tom O’Reilly, Aptaris

volume might be smaller, but the variety, velocity and veracity are the same. “Most people think of social media data as Big Data, and that is true,” she says. “But it’s much, much more than that. Big Data is unstructured data that includes social, video, QR codes, geospacial information, etc. It also requires integration with other data sources in order to get value out of the data. For grocers, that means point-of-sale data, syndicated data, internal shipments, internal cost of goods sold, etc.” Alan Lipson, global retail industry marketing manager at Cary, N.C.-based SAS, agrees that small and midsize grocers have essentially the same data available as larger grocery retailers. “In some cases, though, smaller grocers have the opportunity to be more nimble and do more with the data they already have. It’s easier for a smaller organization to identify the questions they can answer with existing data and determine what additional data they need to continue to make good decisions and remain competitive,” he explains. According to Jef Campbell, VP at Arlington, Va.-based APT, merely having large data sets doesn’t necessarily mean that the organization is using them efectively. Turning data into a competitive advantage requires using them to answer complex questions: Which tactics are most efective in driving store trafc? How to drive efective customer engagement? Which innovations should be introduced next? How to best design the store?

Closing the Gap It’s true that regional grocers can view comprehensive sales data, CRM and case movement, and scanned data, but they lack the internal and external resources that national retail chains can access to data-mine metrics, according to Tom O’Reilly, CEO of Tampa, Fla.-based Aptaris. “Te gap in business intelligence leads small to midsize grocers to rely solely on past performance and their intuition to make decisions,” he explains. “Grocers that deploy enterprise marketing and promotions management software will beneft from fact-based, market-specifc data to inform campaigns and communications plans.” Grocers have been leveraging transaction and customer data to some degree for years. But Brent Buttolph, of Dayton, Ohio-based Teradata, says many have yet to fully exploit all that can be accomplished. Many small to midsize grocers have turned to outsourced point solutions, due to a lack of available analytics resources, and potential infrastructure investments that are needed. “Te problem with point solutions is they individually solve for a specifc business area and the analysis is cookie-cutter,” says Buttolph, Teradata’s principal consultant for retail business analytics. “Terefore, the ‘data’ is not integrated and it’s diffcult — if not impossible — to provide a holistic picture of customer behavior across all touchpoints, for example, nor is the analysis providing a crossfunctional view that is relevant to all business stakeholders in terms of driving diferentiation in the marketplace in merchandising, marketing, supply chain and store operations.” Leveraging Insights Aptaris’ O’Reilly says resources need to be freed up from day-to-day data entry and tedious tasks for retailers to be able to use their data and be marketers. Te good news is that there are grocery retailers doing just that. For example, Raley’s, in northern

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| Progressive Grocer | Ahead of What’s Next | July 2015

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Talking with…

Pete Catoe Founder and CEO ECR Software Corporation ECRS automates the complex science of retail, enabling customers to focus on the art that catapults them above competitors. From front-store systems including point-of-sale and self-checkout, to comprehensive back ofce, warehouse, inventory and extensive supply chain automation, ECRS products solve challenging loss points with innovative technology. Progressive Grocer: What is “technical debt” and its bottom-line impact on a grocery enterprise? Pete Catoe: Technical debt is a term used to describe systems that are poorly designed or cobbled together over time, which places headwinds in the form of ongoing hidden costs to daily operations and strategic infexibility. Tere are examples of technical debt in today’s grocery store systems, like how POS and self-checkout are really diferent systems and how backroom or enterprise systems are decoupled from the POS. In many cases the grocery is stuck customizing various elements within many components to accomplish the new task, but that actually adds more technical debt. In the end, all debt must be paid; in many cases, that payment comes in the form of lost opportunity because the grocer’s system is simply too infexible or too costly to change. Technical debt has a way of compounding, too. PG: How do older models of retail systems compare to modern systems? PC: Te predominant older systems are based on a best-ofbreed customization methodology, which essentially means cobbled-together sofware solutions comprised of many vendors. In some cases, the same vendor may have provided disparate sofware components, not necessarily designed from the ground-up to work together, but instead added to the vendor sofware stack through acquisitions over time. Modern systems, on the other hand, use best practices and are data driven with a unifed synchronized DBMS and business logic. Te HQ and Store Maintenance UI and reporting fts with the POS and self-checkout business logic, allowing for a more capable and or complex transaction execution set. PG: Why should grocery retailers look towards a modern, best practices-based system?

PC: Te more organized your system is, the more time you have to make it better and or react to rapidly changing market conditions. When all of the sofware components are designed to work together from the ground up, it can take you to a lower cost and higher performance capability, which is very difcult using the previous methodologies. Both large national and regional grocers are better of quickly deploying cutting-edge features that are baked into a modern best practices system. PG: How can cutting-edge technical architecture redefne the boundaries of point of sale? PC: As consumers, we are busy and ofen don’t have the energy to have a close relationship with our favorite grocery store. With this in mind, the point of sale should make the consumer’s life easier -- not more complex. It’s not enough to just mail or email a coupon to a consumer: the POS needs to execute the coupon during the customer’s next visit, without the customer having to hassle with paper coupons or smartphones. In addition, the system should execute the coupon only when all restrictions are met, regardless to how complex, and do all of this without the cashier having to do anything. Another example is web-based store pickup and/or delivery. When a customer orders of your web site, they expect to have the same transactional experience as when shopping at your store, including rewards, loyalty points, circular ofers and special pricing. Tis can only be done with a modern POS that can serve up the transaction no matter where it occurs. PG: What technology does ECRS currently ofer to grocery retailers? PC: Our long-term philosophy and vision has guided us to build a system that unifes and reuses data and business logic to create systems with far less technical debt. From this perspective, we’ve built Catapult, an enterprise class vertical system that has built-in plug-and-play best practice business logic from HQ and to the store. Catapult also has POS and self-checkout capability that is completely integrated. Catapult’s modern architecture and best practices approach provide the strategic fexibility to compete cost efectively. For more information, visit http://ecrsof.com. July 2015 | progressivegrocer.com |

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Technology Business Intelligence

The industry is at an exciting turning point, as the winners will be those who embrace and implement contextual goals around data gathering and usage, allowing them to more effectively leverage analytics to garner the most meaningful insights.” —Lynn Lang, Capgemini North America

California, is focused on creating a world-class customer experience. “Tey have started this journey by understanding their customers better than anyone, using their own transactional and shopper card data, and by connecting this with customer comments, and even by listening to their customers on a social media platform,” observes David Ciancio, senior customer strategist at Dunnhumby. “Raley’s uses Big Data insights to make customer-led decisions in marketing and category management,” he adds, “and to inform and help their Great People Who Care,” which the retailer touts as one of its specialties. Teradata works closely with leading retailers in providing advanced analytics and data science services. Many of them — Wal-Mart Stores Inc., Whole Foods Market, H.E. Butt Grocery Co. and Publix Super Markets in the United States, and Metro Group, Tesco and Sainsbury’s in Europe — are “actively involved in Big Data transformation,” according to Buttolph, who declines to give specifics, citing confdentiality agreements. Lipson, of SAS, also declines to give specifics about retailers advancing via Big Data, but he explains some of the work: A small, U.S.-based specialty grocer with a popular home delivery business analyzes demographic Big Data about current locations and shoppers to identify potential expansion locations and reduce new store-opening costs. Te grocer also has used analytics to increase the efectiveness of new promotions. Using POS data combined with customer information, a midsize European grocer has better segmented its customers; created tailored, more appealing ofers; and customized coupons in its monthly mailer down to an individual shopper level. Business results include increased response rates to ofers and decreased mailing costs. A small-to-midsize European grocer analyzes its mountains of customer loyalty data to fully understand shopping patterns and develop better marketing campaigns that infuence shoppers’ basket size. Results from its use of analytics include increased basket size, reduced loyalty program membership churn and an overall increase in loyalty program enrollment.

High Stakes “Te industry is at an exciting turning point, as the winners will be those who embrace and implement contextual goals around data gathering and usage, allowing them to more efectively leverage analytics to garner the most meaningful insights,” says Lynn

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Lang, consumer products, retail and distribution leader for New York-based Capgemini North America. Te stakes are certainly high today as supermarket retailers face competition on all sides: other grocers, online operators, dollar stores, and other retailers selling a good amount of food. Retail analysts agree that Big Data can give grocers the edge they need — if they step up and take action. “Shoppers expect grocers to provide a better customer experience with more personalized communications and relevant ofers,” says O’Reilly, of Aptaris. “Tey don’t want a special on cat food if they own a dog. Powerful marketing automation and promotions management solutions are now available for retailers. Armed with advanced software, grocers can make the Big Data in their loyalty programs visible, manageable and actionable, so they can be responsive to consumers’ buying behavior and vendor partners’ ofers.” APT’s Campbell calls for bold action on the part of grocers and for them to rely on their wellhoned instincts. “Facts and data are a necessary component of decision-making,” he asserts. “Getting real and reliable information about program performance in a very noisy and rapidly changing environment is extremely difcult, and obtaining it next month or next quarter is often too late. Better, faster, more accurate insight into store performance and consumer behavior is needed today to maximize the success of tomorrow’s actions for all grocers — large and small.” PG

Supply Chain

Operations

The Weakest

Links

PG explores five areas of the supply chain that are causing headaches for retailers and what may be done to reinforce them. By Jenny McTaggart

hroughout history, circus and carnival strongmen have broken chains in their shows as an ultimate demonstration of power. Indeed, chains are strong devices that aren’t broken easily, and certainly not without a lot of efort. Yet there’s also a famous proverb: “A chain is only as strong as its weakest link.” In the food retailing industry, retailers and manufacturers alike have been challenged recently with their own weak links — areas that threaten to bring dissatisfaction, or, at the worst, harm, to consumers, and also directly block their paths to proftability and growth. Factors such as food safety, competition, the growth of online retailing, and headaches in transportation and logistics are perplexing supply chain executives more than ever before. Luckily, the industry’s leading trade groups are keeping these issues top of mind to help the industry manage confict as best it can. Yet CEOs and other leading executives have a major role to play in pinpointing their weakest links and managing risk before their supply chains experience major disruptions. In fact, sometimes the most vulnerable areas reveal themselves in the forms of poor communication and execution, or inexperienced management. Progressive Grocer spoke with several executives in the trenches of the grocery supply chain, while also examining the new “State of the Retail Supply Chain” report published by the Arlington, Va.-based Retail Industry Leaders Association (RILA), to get a better sense of the weakest links. Here are the fve that came up time and time again.

Transportation: A Perfect Storm? In the past year, transportation issues have taken center stage among the supply chain challenges faced by retail executives, according to “State of the Retail Supply Chain,” published by RILA in conjunction with Auburn University, in Alabama, and sponsored by Torofare, N.J.-based Checkpoint Systems. Te report, which surveyed executives from a wide array of retail channels, including grocers such as Food Lion, H-E-B, Meijer and Wal-Mart Stores Inc., pointed specifcally to protracted congestion at West Coast ports, which was obviously an unavoidable problem. Other major concerns included trucking capacity and driver shortages, hourof-service regulations, intermodal chassis headaches, and rail delays. Essentially, it’s a “transportation perfect storm,” as one retail executive commented in the survey. Dan Elrod, VP of sales, mass market for Temple, Texas-based supply chain services provider McLane Co. Inc., is particularly concerned about the shortage of licensed commercial drivers. From his perch, working with 21 grocery distribution centers (DC) for the McLane Grocery Supply Chain Solutions division, the problem is already bad, and it’s going to get a lot worse. “Te nation is over 50,000 drivers short right now, and is expected to be literally a couple of hundred thousand drivers short within the next 35 years,” he says. “If

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Operations

Suppy Chain

you’re a manufacturer that relies on LTL [less than truckload] carriers to get your goods from your plant to a DC, whether it’s a McLane DC or directly to a retailer, then you have to depend on a less reliable transportation network today.” Adding to that challenge is the fact that many grocers are establishing stricter delivery regimens with tighter delivery windows and penalties, in an efort to maintain more efcient operations, according to Frank McGuigan, president of transportation management at Transplace, a third-party logistics provider based in Frisco, Texas. “Trucks arriving outside the scheduled delivery window are forced to wait behind any other trucks onsite, which can be hours or days,” he says. “Monetary penalties for late arrivals are charged to the shipper, who then passes them along to the carriers in the form of a deduction from line-haul and freight charges. To help speed up the unloading process, many retailers have begun utilizing nonemployee loading services that are “The nation is over dedicated to unload all inbound trucks 50,000 drivers short and are paid for by the carriers.” right now, and is Meanwhile, the new Federal expected to be Motor Carrier Safety Administraliterally a couple of tion regulations for hours of service hundred thousand (HOS), along with compliance, safety, drivers short within accountability (CSA) standards, are the next 35 years.” expected to decrease driver utilization by 3 percent to 5 percent, adds —Dan Elrod, McGuigan. McLane Co. Inc. “As a result of increased regulation and industry capacity challenges, grocery retailers and CPG companies are experiencing some of the highest freight costs they’ve sseen in recent history,” he notes. McGuigan’s advice to grocers? ““It’s critical to strategically plan ffor this challenge to ensure acccess to truck capacity and avoid disruptions in the transportation d oof goods. Tis includes optimiziing transportation management by consolidating shipments when b possible, expanding your carrier base, p oor establishing carrier-friendly practices that improve efciency and driver productivth ity.” Intermodal transportation, he adds, is another area with “enormous growth opportunities.”

Product Shortages and Out-of-stocks Directly related to the transportation challenges are product shortages — after all, if a product doesn’t arrive on time, it isn’t on the shelf in time for purchase. However, there’s more to the out-of-stock issue than late deliveries, according to McLane’s Elrod.

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“As retail becomes more and more competitive, you’re seeing retailers become more reactive in their pricing and promotion strategies,” he notes. “Everybody wants to be the cheapest. And if those promotions and events aren’t planned ahead of time, manufacturers aren’t prepared. Even if the manufacturer has production ramped up to support it, the product still has to get through the network into the store. So if you’re not planning your replenishment through the supply chain of goods for a promotional event, then you’re going to have product shortages.” In some cases, Elrod has seen retail merchandising executives make decisions about new promotions on the fy during weekly meetings, with the expectation that the changes will immediately take place — and without communicating those changes to their vendors. While there may have been extensive amounts of joint business planning that already took place between the retailer and the customer, these types of short-term tactical decisions can create all kinds of inefciencies, according to Elrod. “Tree-way collaboration through joint business planning is the answer,” he advises, “because ideally, if you start with the premise that the manufacturer wants to sell as much as possible, if they have any sense as to how much the retailer is going to buy, they’re going to produce to that number — barring labor disputes, factory tragedies, etc.”

Food Safety/Security Plenty has been written in PG’s pages about the industry’s food safety and security challenges, and nowhere does this issue come more into play than the supply chain. Tankfully, some of the country’s largest fresh food suppliers have taken signifcant steps to implement safer measures in the felds, to improve product tracing, and even to enhance packaging, to ensure safer food for consumers. Meanwhile, everyone’s waiting to see how the implementation of the U.S. Food and Drug Administration’s proposed Food Safety Modernization Act will pan out, with one of the latest reactions being the Newark, Del.-based Produce Marketing Association’s call for increased funding of the food safety budget, as well as a national integrated food safety system. At least one industry player is calling on CEOs of food companies to step up in a major way. In a recent piece published in Forbes magazine, Bill Marler, often described as the most prominent, powerful and infuential food-safety attorney in the country, makes the case that CEOs need to engage with food safety issues at the highest level. “It is one thing to read or view media reports on the latest foodborne illness outbreaks and branddamaging product recalls; it is quite another to really understand the widespread, adverse impact these incidents have on your consumer base, on your

“As a result of increased regulation, and industry capacity challenges, grocery retailers and CPG companies are experiencing some of the highest freight costs they’ve seen in recent history.”

employees, on the efciencies of your operations and, ultimately, on your bottom line,” he writes. “To be successful, food companies are now in the business of managing risk,” asserts Marler. “Tis means garnering a good understanding of why food safety is important to your business, what risks there are to the business, how you can mitigate or eliminate those risks, and how in doing so, the food safety program will provide a return on your investment.” Tis is certainly one area of the supply chain that will continue to warrant attention among food companies, and will no doubt remain top of mind for consumers as well.

professionals could materialize into actual barriers to success, particularly as companies try to evolve their supply chains through new technologies and operating model changes. Approaches to talent management must evolve with supply chains to ensure today’s workers can meet tomorrow’s challenges. Tat can only occur if executives at every level are informed and in agreement when it comes to their talent needs.”

Human Resources No matter how fancy retailers’ and suppliers’ supply chain solutions may become, there will always be a need for human talent to keep the supply chain strong. Good people are not only key to keeping the overall retail operation running smoothly, they’re also needed to fll special roles that require talent outside of the traditional grocery arena, specifcally in the area of technology. In RILA’s “State of the Supply Chain” report, talent development ranked second among areas of planned supply chain investment, coming behind omni-channel fulfllment and before technology. “People and technology will be prime areas of investment in 2015, as retailers need top-tier talent and omni-channel-capable tools to manage the growing complexity of the retail environment,” the report suggests. Of course, omni-channel isn’t the only area where talent will be required. Many retail organizations still lack the human capital to efectively manage their transportation in-house, according to Transplace’s McGuigan. Of those companies that decide to control their own supply chain, many understaf and underinvest in the critical areas that make up a company’s transportation and logistics function, he says. Tis leaves companies in a position in which they often miss critical order and delivery data, and ultimately lack visibility or expertise to develop and quickly execute strategies. Even talent to fll supply chain roles is lacking. According to Deloitte Consulting’s 2015 Supply Chain Survey, only 45 percent of supply chain and 40 percent of procurement executives at U.S.-based global companies say they’re extremely or very confdent that their supply chain organizations have the competencies they need. Te survey found that CEOs and presidents were much more confdent in their company’s talent, suggesting a wide disparity in how leaders view the organization versus how supply chain professionals see it. “Today’s global economy demands a networked and efcient supply chain,” says Kelly Marchese, principal at New York-based Deloitte Consulting LLP, and supply chain strategy leader. “Te disparities in viewpoints that exist between company leaders and supply chain

The Omni-channel Challenge Te last weak link in the retail supply change is a big one — fguring out the best ways to ensure ordering, fulfllment and last-mile delivery to the growing number of consumers who want to order groceries via the internet, on their mobile phones or even with their watches. Indeed, the desire for anytime, anywhere grocery shopping isn’t going away, as evidenced by Amazon’s growing investment in the food sector. In the past several years, retailers have quickly realized that to serve customers proftably across channels, separation isn’t the solution, according to RILA’s “State of the Supply Chain” report. Rather, “integrated systems, shared inventory and fexible facilities will drive greater customer engagement and company profts,” the report notes. Establishing omni-channel growth was the No. 1 strategic priority among retail supply chain executives who were interviewed for the study. Of course, the growth in online retailing has been much more rapid among nonfood retailers, but that doesn’t mean that grocery is of the table. A key takeaway from the study puts the current reality of omni-channel growth in perspective: “Although a few major retailers have the demand volume to fully segment their fulfllment channels, most retailers in our study are strategically pursuing alignment between online and in-store inventories, balance between service and cost, and collaboration between functions. Tey are also investing heavily in processes, people and technology to ensure that dynamic fulfllment capabilities are established. Teir goal? Supply chain executives want to build fexible networks that can efectively and proftably serve demand from anywhere in the supply chain.” If retail companies can do that, it seems likely that their supply chains will stay strong for years to come. PG

—Frank McGuigan, Transplace

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Food, Beverage & Nonfood Products

Take and Bake

In response to research revealing that 25 percent of consumers buy less bread because it goes stale too quickly, La Brea Bakery’s new Take & Bake Frozen Breads come in resealable packaging, allowing consumers to bake and eat only what they need at a given time. Available in Demi Baguettes and French Dinner Rolls varieties, the new offerings use the same recipe as two of La Brea Bakery’s all-time best-selling fresh breads, and are made using only high-quality ingredients. The SRP is $3.99 for eight French Dinner Rolls and $3.99 for four Demi Baguettes. www.labreabakery.com

Keen on Quinoa

Boasting 12 grams of protein, 7 grams of fiber and 340 calories per serving, CedarLane Natural Foods’ new Quinoa & Vegetable Enchiladas are a “wholesome and delicious” addition to the brand’s line of frozen meals. Each enchilada features a mix of quinoa, black beans, and Monterey Jack and Cheddar cheeses, as well as roasted Anaheim peppers, tomatillos, corn, bell peppers, onions, mushrooms, yellow squash, black olives and zucchini, all topped with a poblano crema sauce. Suggested retail price is $5.49 per 9-ounce box of two enchiladas. www.cedarlanefoods.com

Take a Dip

Farmer’s Ranch, the newest addition to Sabra Dipping Co.’s Greek Yogurt Dip product portfolio, blends “the delicious taste of small-batch Greek yogurt with healthier ingredients like our farm market-fresh chopped vegetables,” says Senior Brand Manager Joe Franzino. Great for dipping chips or veggies, adding to salads, or as an ingredient in a variety of recipes, Sabra’s Farmer’s Ranch Greek Yogurt Dip will hit retailers’ deli sections nationwide in August. A 10-ounce tub retails for a suggested $3.99. www.sabra.com

seasonal spotlight Striking the Right Gourd

As consumers ready their costumes and candy for the approaching Halloween season, Chicago Vegan Foods is getting in the spooky spirit with the introduction of a pumpkin variety of its Dandies marshmallow line. Made with natural pumpkin flavor and all-natural ingredients, Dandies Pumpkin Marshmallows are air-puffed, which gives them the traditional light and fluffy texture and flavor consumers crave. Best used in a holiday dessert recipe, or for adding the finishing touch to a cup of hot chocolate, the offering will be available from October to December. A 10-ounce package has an SRP of $5.29. www.chicagoveganfoods.com

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West Coast Sangria

Radiant Colors

The All brand has unveiled its latest liquid detergent, All Radiant, which aims to restore whites and protect colors over time, at 30 percent less cost than the leading brand. Leveraging its patented Fiber Shield Technology, All Radiant was developed “through a deep understanding of the needs of busy families,” says Lora Van Velsor, VP of marketing for All, adding that the brand’s 365-day consumer survey revealed a need to extend the overall life of clothes, especially for households with multiple kids. All Radiant is available in the laundry aisle at retail outlets nationwide, in sizes ranging from 46.5 to 141 ounces, for an SRP of $4.25-$8.50. www.all-laundry.com

“With the increasing popularity of sangria, the timing is perfectly aligned for the brand to introduce our own version,” Wendy Nyberg, VP of marketing for Sutter Home Family Vineyards, says of the brand’s new Californiastyle sangria. Inspired by traditional Spanish sangria, Sutter Home’s new variety is lighter, with subtle hints of citrus and spice, bringing together the flavors of fresh oranges, berries, lemons, limes and premium California red wine. Sutter Home Sangria is available for an SRP of $5.99 for a 750-milliliter bottle, and $5.99 for a single-serve 4-pack. www.sutterhome.com

Global Ingredients

Single-serve Supplements

Wojo Nutrition has designed a line of six liquid single-serving supplements that can be added to any hot or cold beverage, and are each formulated to address a distinct consumer need. Each formula includes six B vitamins enhanced with a blend of herbal extracts and naturally derived amino acids — all of which are free of sugar, artificial sweeteners and flavorings. Currently available for purchase, WojoEnergy aims to provide balanced, feel-good energy and support throughout the day, while WojoCalm is designed to remove stress. This summer, the company will also release WojoFocus, WojoSun, WojoWell and WojoMood. A 30-pack retails for a suggested $35, while a 5-pack goes for $6.49. www.wojonutrition.com

Following the sale of its bakery in 2002, the Sadler family is reintroducing its iconic Crumbzz Cakes to the U.S. market. Made with a slate of the world’s most unique ingredients — Bourbon vanilla from Madagascar, Saigon cinnamon from Vietnam, dark Muscovado brown sugar from the Mauritius Islands, European low-gluten flour, and Origine chocolates from Tanzania, among others — these 10-inch round cakes come in several varieties, including Old World Cinnamon Streusel, Fruit Of The Seasons, Chocolate De La Terre and Caramel Sea Salt. www.crumbzz.com

Shelf Score™ — May 2015 Purchase INteNt score

New Product

1 2 2 4 5 5 7 8 9 10

Goldfish Puffs: Twisted Grilled Cheese Rold Gold Fudge Brownie Flavored Pretzel Dippers Ghirardelli Chocolate Vanilla Premium Flavored Powder Base Honey Bunches of Oats Breakfast Biscuits: Chocolate Chip Doritos Roulette Chips Campbell’s Soups for Easy Cooking: Sweet Onion Mountain Dew DEWshine Starbucks Doubleshot Coffee & Protein Pepperidge Farm Chocolate Chili Milano Cookies Clif Organic Energy Food: Pizza Margherita

67% 66 66 64 62 62 58 52 46 30

source: Instantly Shelf Score

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DecoPac Acquires Bakery Crafts Anoka, Minn.-based: DecoPac Inc., supplier of cake decorations to professional cake decorators and bakeries, has completed the acquisition of West Chester, Ohio-based Bakery Crafts, a privately held manufacturer of high-quality cake decorations. Financial terms of the deal were not disclosed. “As a combined organization, we bring more than 150 years of bakery and cake-decorating heritage,” says Mike McGlynn, DecoPac’s CEO. “This move provides additional scale and product lines, and even greater creativity, marketing, design and development capabilities, to enhance product offerings and capabilities for customers and consumers.” DecoPac has no current plans for facility consolidation or leadership changes at either organization. The companies will continue to operate as they have previously, with DecoPac as the sole owner of both entities. www.decopac.com; www.bakerycrafts.com

Strategic Renaming Positions Company for Wonderful Things Los Angeles-based Roll Global — marketer of such brands as Wonderful Pistachios and Almonds, Pom Wonderful pomegranate products, Fiji Water, and Telefora — has ofcially changed its name to Te Wonderful Co. Tis strategic move will align the company’s long-standing passion for harvesting healthy and nutritious foods with the consumers it serves around the world. “Consumers know us from our iconic Super Bowl commercials and viral marketing campaigns,” says Lynda Resnick, co-owner and vice chair. “Now we want the world to know the company behind some of America’s healthiest and most popular brands.” Te company’s following operating units also have new names: Wonderful Pistachios & Almonds (formerly Paramount Farms); Wonderful Citrus (formerly Paramount Citrus); and Wonderful Orchards (formerly Paramount Farming). www.wonderful.com

Kellogg’s Rides High Among Most Reputable Companies Battle Creek, Mich.-based Kellogg Co. has ranked second on the Reputation Institute’s (RI) list of America’s 25 most reputable companies for 2015, second only to online retail giant Amazon. Te RI survey asked more than 23,000 U.S. consumers which companies (among some 600 large national businesses) have their trust, respect and admiration. Survey respondents said they trust Kellogg, appreciate the company’s innovation, and like how it has improved the nutritional value of its foods, such as boosting fber and reducing sugar. www.kelloggcompany.com

Del Monte Fresh’s Pure Earth Juice Wins Taste Award Coral Gables, Fla.-based Del Monte Fresh Produce N.A. Inc. has received the Superior Taste Award from the International Taste and Quality Institute (iTQi) for its Pure Earth juices, including 100 percent Pineapple, Pineapple Lime, Pineapple Banana Coconut and Pineapple Blueberry Blackberry juice varieties. Te product’s favor, visual appeal and texture ranked above 90 percent for almost

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all of the blends on the sensory evaluation charts. Pure Earth SKUs are 100 percent juice with zero fllers, additives, added sugar, preservatives or concentrates. Every year, Brussels-based iTQi gathers a jury composed of members from prestigious culinary institutions throughout Europe to test food and beverage products and reward them on their own merits. www.fruits.com/

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products/pureearth

advertiser index Anthony International 85 Barnie’s CoffeeKitchen 55 Beaver Street Fisheries 117 Blount Fine Foods Inside Back Boston Beer 63 California Avocado Commission 53 Campbell Soup Company 23 Carrs Foods International 87 Chep USA 71 CMI 133 Coca Cola NA 56, 57 ECR Software 143, 145 Enjoy Life Natural Brands 67 Fresh DelMonte Inc. 125 General Mills Inc 98-99 Good2Grow 115 Hallmark Cards 141 Heineken USA Inc. 17, 65 Regional, 89 Regional House-Autry Mills, Inc. 77 Incomm Cover Tip Iovate Health Sciences 137 J&C Tropicals 127 J. Skinner Baking Company 109 JTM Foods 88 Kelloggs Company Insert 103 Koelnmesse GMBH/Anuga 69 Limoneira 129 Mason Vitamins Inc. 135 Mason Ways Indestruble PL 86 McGladrey 33 MillerCoors LLC 5 MIWE 122 Mizkan 29 Musco Family Olive Co. 75 MyWebGrocer 118 National Raisin Company 105 NBT Cooperative 131 New Hope Natural Media 59 New Pig 26, 27 Old Orchard Juice Co. 96 Pete & Gerry’s Organics, LLC Inside Front- 3 Pfizer Consumer Health 21 Pharmavite LLC 7 Robbies Flexibles 121 Ruiz Foods Products Inc 61 Sanders & Morley Candy 83 Save-A-Lot 13 Sealed Air 119 Stagnito Business Information 76, 111, 136 Stemilt Growers, Inc. 128 Stonefire Authentic Flatbreads 79 Tabletops Unlimited Back Cover The Happy Egg Company 101 TNS / Kantar 8, 9 Tosca Ltd. 93 Trimino 138 Trion Industries Inc. 11 TW Garner Food Co 106-107 Tyson Foods 15 Unilever Foods NA 19 Wisdom Natural Brands 73 Zoo Fans 95

www.anthonyintl.com www.barniescoffeekitchen.com www.grillmansfranks.com www.blountfinefoods.com www.samueladams.com www.avocado.org www.campbellsoup.com www.stpierrebakery.com www.chep.com www.cmiapples.com www.coke.com www.ecrsoft.com www.enjoylifefoods.com www.freshdelmonte.com www.generalmills.com www.good2grow.com www.hallmark.com www.heinekenusa.com www.house-autry.com/hushpuppy www.incomm.com www.SixStarPro.com www.jandcenterprises.com www.skinnerbaking.com www.jtmfoods.net www.kelloggs.com www.anuga.com www.limoneira.com www.masonvitamins.com www.masonways.com www.mcgladrey.com www.millercoors.com www.miwe.com/roll-in www.mizkan.com www.olives.com www.mywebgrocer.com www.nationalraisin.com www.SweeTango.com www.newhope.com www.newpig.com www.oldorchard.com www.PeteAndGerrys.com www.centrum.com www.pharmavite.com www.RobbieFlexibles.com www.ruizfoodservice.com www.sanderscandy.com www.save-a-lot.com www.cryovac.com www.stagnitomail.com www.stemilt.com www.stonefire.com www.ttucorp.com www.thehappyeggco.com www.TNSGrowthPoint.com www.toscaltd.com www.drinktrimino.com www.triononline.com www.texaspetefoodservice.com www.tyson.com www.unilever.com www.sweetleaf.com www.zoofans.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 ©2015 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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the last word

So Happy Together?

s we ponder the fate of yet another signifcant merger to be added to the books in 2015, the timing of the deal between Ahold and Delhaize was more than a bit interesting for us, given that we’d been planning for several months to run the frst installment of our new Profles in Progress series, on Food Lion, in this issue. Te Food Lion profle — which begins on page 24 and probes the regional chain’s aim to reclaim its roar — came to pass after I attended an analyst and media day hosted by Delhaize Group in March primarily targeting reporters from the company’s native Belgium. While I’d been adequately versed on the more aggressive stance Delhaize was taking to improve its American stores prior to my visit, I walked away feeling quite impressed by both the vision and vigor the company’s new leaders were applying to the Food Lion and Hannaford divisions. Yet while those big plans are now obviously subject to change after the widely anticipated $28 billion deal — which is set for a mid-2016 wrap-up and has seemed all but inevitable dating back to 2006, when both companies were close to combining before Delhaize walked away after its demand for a merger of equals was denied — it would seem more than a little silly to scrap the transformative strides that Food Lion and Hannaford are making in the customary merger mandates of maximizing synergies and efciencies of scale. Unlike some of the more complex and precarious deals that have gone down in the past year, the Ahold-Delhaize alliance was not only likely, but also logical. Te tricky part, of course, is the success with which the parties will put the pieces in place over the course of years, some of which are bound to be difcult fts. But there’s always a promise that something good will ultimately come from it, and so it goes with the pending nuptials of Delhaize and Ahold. From a geographic standpoint, while antitrust issues tend to loom large with mergers of this magnitude, only a handful of key markets along the prospective partners’ expansive East Coast footprint are facing anticompetitive issues. Other big pluses are Ahold’s market-leading position in the Netherlands and Delhaize’s second-ranked standing in Belgium (where Ahold also has a modest 30 stores). “Consumers will likely beneft from more competitive prices and improved selection over time,” notes Keith Anderson, VP of strategy and insights for Boston-based Proftero.

If all goes well, “Ahold’s expertise and capability in e-commerce, applied to Delhaize’s footprint,” can also accelerate the combined entity’s growth online in both Europe and North America, adds Anderson, in light of Ahold’s ownership of Peapod, the longest continuously operating online grocer in the United States, and Bol.com, a leading online retailer in the Netherlands. While many analysts are rightly skeptical about various aspects of the forthcoming fused international entity (Ahaize or Delhold, anyone?), I foresee ample opportunities for this marriage to be both durable and productive. Interestingly, while the all-stock deal is prominently positioned this time around as an ofcial “merger of equals,” Te Wall Street Journal begged to difer, cautioning that it doesn’t look “terribly equitable” in view of Ahold’s taking on more debt to fund the transaction, alongside a reverse stock split that will return $1.1 billion to its shareholders. WSJ further critiqued the “notably top-heavy” leadership structure consisting “of a chief executive, a deputy CEO, a chief fnancial ofcer and no less than three chief operating ofcers, including two in the U.S. alone.” Although those points are indeed valid, there are integral advantages embedded in the combined company’s newly assembled executive team, including Kevin Holt and James McCann, current chief execs at Delhaize America and Ahold USA, respectively, both of whom have been efective, stabilizing leaders. But perhaps the single biggest advantage the merger has going for it is Frans Muller, Delhaize Group CEO, who’ll take on dual duties as deputy CEO and, more importantly, chief integration ofcer. To be sure, after spending several hours and a shared bus ride with the whip-smart, multilingual native Netherlander in March, I believe the most complex part of the integration process is in extraordinarily good hands with Muller, who will be charged with determining if these two companies can fgure out together what they’ve each struggled with separately. Only time will tell, and there’s clearly much more to deliberate as this latest food industry mega-pact plays out. But in the midst of one of history’s most pronounced periods of merger mania, I just can’t help but wonder, who’s next? PG Meg Major mmajor@stagnitomail.com Twitter @Meg_Major/@pgrocer

While many are skeptical about various aspects of the forthcoming fused international entity, I foresee ample opportunities for this marriage to be both durable and productive. But only time will tell.

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| Progressive Grocer | Ahead of What’s Next | July 2015

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