GMA IAR - January 2009

Find out how the food and grocery industry is working to eliminate the $15 billion that unsaleables cost its companies each year, and what individual companies are doing to cut damages, institute more efficient discontinued and expired products programs, and improve planning and forecasting.

Kicking off the always popular annual meeting is a pre-conference Unsaleables 101 introduction to the subject, plus pre-conference scheduled meetings with retail customers. To schedule meetings with your customers, contact Jonathan Downey at 202.295.3945 or jdowney@gmaonline.org.

Of special interest this year is a general session on vendor-managed inventory and how VMI could impact a company’s unsaleables level. Speakers include Laura Poljanac, senior director of customer service for ConAgra Foods Inc., and Jeff Thune, corporate director of reclamation procurement, SUPERVALU.

Co-chairs of the conference are Ted Lechner, reverse logistics manager, H-E-B, and Carol Snyder, supply chain/BPI manager, Nestlé Purina PetCare Company.

GMA this month issued a statement in support of postponing the implementation of the GS1 DataBar for coupons until January 1, 2011. In supporting the Joint Industry Coupon Committee’s recommendations, GMA said the removal of the current U.P.C.-A coupon barcode beginning January 1, 2010, would create a hardship for the many retailers that are not yet equipped to scan the GS1 DataBar.

The food and consumer packaged goods (CPG) industry outperformed the rest of the market, outstripping both the S&P 500 and the Down Jones Industrial Averages by at least 10 points last year, according to the new GMA and PricewaterhouseCoopers LLP study released this month.

The 2009 annual GMA financial study also noted that median sales for CPG manufacturers grew approximately 10 percent last year, down only slightly from 2007 figures despite the downward spiral of the economy in the fourth quarter.

“It is obvious that our companies are surviving the current economic downturn better than most sectors and that we will emerge from the recession quicker and stronger,” GMA Industry Affairs Senior Vice President Stephen Sibert said. “The report also shows that despite the recession, the CPG companies are pushing forward with their sustainability programs.”

WEBCAST HELD: A successful Webcast on the financial performance report was held July 9 in conjunction with PricewaterhouseCoopers. Almost 120 individuals registered for the Webcast – 70 percent manufacturers, 20 percent associate members and 10 percent analysts.

The new GMA CFO Committee at its most recent meeting discussed the results of the 2009 Commodity Volatility Study with partner Bain & Company and the GMA Financial Performance Report by partner PricewaterhouseCoopers. It also continues to pay close attention to the issues surrounding proposed federal financial regulatory changes – and ways these changes could affect the CPG industry. The committee also heard presentations from Senior Vice President Sibert and Senior Vice President Mary Sophos on GMA board priorities and the issues that will strengthen the organization’s agenda and knowledge base.

Three panel discussions at the GMA Executive Conference August 29-September 1 at the Broadmoor in Colorado Springs will delve into issues of vital importance to the CPG industry.

A CEO roundtable on how companies are delivering innovation in a challenging economy features James Craigie, chairman and CEO, Church & Dwight Company Inc.; Ed Crenshaw, chief executive officer, Publix Super Market Inc. and vice chairman, Food Marketing Institute; and Gary Rodkin, chief executive officer, ConAgra Foods. Bain & Company Partner Darrell Rigby is the moderator.

A panel of manufacturers and retailers also examines the new value consumer and how companies are responding to the changed habits of this new breed of shopper. A partial listing of panelist includes William Coyne, president and CEO, Raley’s Family of Fine Stores; Thom Blischok, president, consulting and innovation, Information Resources Inc. (moderator); C. J. Fraleigh, CEO, North American retail and food service, Sara Lee Corporation; Cathy Green, COO, Food Lion LLC; and Frank Tataseo, executive vice president for strategy and growth, The Clorox Company.

One half of GMA’s CEOs will move out of their current positions within five years, according to Paul Winum, managing director and global practice leader of RHR International Company and moderator of this panel discussion on how to keep great leadership at the top of your company. Panelists include Douglas Conant, GMA chairman and president and CEO of Campbell Soup Company; Nancy Reardon, senior vice president and chief human resources and communications officer, Campbell Soup Company; and Tom Saporito, president and CEO of RHR International.

Attendance at the Executive Conference is by invitation only. For more information, contact Mary Olsen, 202.639.5968 or molsen@gmaonline.org.

The GMA IS Committee has named Kevin Barnes, vice president of business application solutions at E & J Gallo Winery as chairman. CIO of Groupe Danone, North America, Jeff Hutchinson is the new vice chairman. Meeting via Webinar June 22, the committee heard reports on the emerging wireless technology survey, the IT investment and effectiveness survey, the retailer data report and the product lifecycle management report.

The Manufacturers Excellence Share Group held its third meting at GMA headquarters earlier this month with representatives from 14 general membership companies discussing manufacturing dashboards and metrics. The highlight of the meeting was a roundtable discussion by members Lance Inc., General Mills Inc., Coca-Cola Enterprises, Sunny Delight Beverages Company, American Italian Pasta Company, Cadbury Confectionary Company and Bush Brothers & Company.

Quick Insights

Walmart Calls on Partners to Help Improve Customer

Experience in Store

By John Karolefski

Walmart is not satisfied with being the world’s largest retailer. Now it is looking to enhance the shopping experience in its stores.

To accomplish this task, Walmart is relying on market researchers and calling on manufacturer and vendor partners to join in a collaborative effort for improvement. High on its priority list is leveraging shopper insights and segmentation to improve traffic patterns and merchandising tactics, sometimes with the help of virtual shopping testing.

“Walmart is working continuously to improve the customer experience in store,” said Candace Adams, PhD (pictured left), former senior director of insights and consumer strategy for the Bentonville retailer. “This includes understanding its shoppers, how they shop its stores, and the underlying purchase dynamics of shoppers.”

This month, Adams left Walmart to accept a new position as president of global retail strategy at SmartRevenue.

Adams called on manufacturers to help Walmart and other retailers to improve their shopping experience by leveraging category and customer expertise to drive category growth.

“Manufacturers can help retailers be more successful by helping to drive category growth and not focusing on the brands so much,” she said. “There is an opportunity to work together to drive the category.”

Since nearly nine out of 10 Americans already shop at Walmart, she said the company’s new strategy is to encourage people to shop there more often and to buy more while there. “That’s why they rely on shopper insights, segmentation and a host of other research tools,” she said.

She added segmentation research has found several types of Walmart shoppers, including price-value shopper, brand aspirational and price-sensitive affluent. “What they all have in common is that they are all looking for value,” she said. “For example, the price-sensitive affluent refuse to pay a higher price just because they can.”

But the segmentation research has also shown that Walmart needs to stock the right products in the right place at the right time, she added. It is not just about low prices. “Doing the segmentation has helped differentiate Walmart as a brand so that it is not just a warehouse that has products in it,” she said.

Adams said Wal-Mart is using a virtual shopping platform to understand its shoppers better. The work essentially involves building a store on a computer screen. Shopper feedback on proposed changes in store is possible without showing the competition those changes in actual pilot stores. Such changes might include different shelf alignments, on-shelf positioning and end-caps.

She said virtual retailing also helps Wal-Mart enhance the shopping experience by studying various traffic patterns and different department configurations and décor. Breaking down aisles and turning them in different directions has been tested with more tinkering planned this year. Adding more colors to the grocery department will serve to make food shopping more appealing.

“Walmart has to engage the customer in its stores,” she stressed. “It’s not only about providing the products; it’s about providing an experience.”

(Excerpted from CPGMatters.com and used with permission.)

Became president and CEO, Acosta Sales and Marketing Company, on January 1 of this year, after serving 15 years with Acosta, a leading sales and marketing agency in North America with 65 offices and more than 13,000 associates.

Following a brief stint in the banking industry, Hill joined Siler Brokerage Company, a company his grandfather began in 1927. He served as president of Siler when it was acquired by Acosta in 1994. At the time, Acosta was doing business in seven states and had 1,200 associates. Ten years later, after a series of positions of increasing responsibility, Hill was appointed Acosta president and COO and led the company in significant growth from 2004-2008. During this time, Acosta was serving more than 1,000 CPG companies across North America and acquired 14 companies to increase its size, sales and service offerings.

“I was born in Knoxville and spent my entire life there until I attended Furman University in Greenville, SC. I have been married to my wife, Margaret, for 23 years, and we have two children – a son, Marshall, a freshman in college at Furman, and a daughter, Katherine, a sophomore in high school. When I’m not working, I’m likely engaged in church, community and family activities. I serve as chairman of the board of Baptist Medical Center and work with the Boys and Girls Clubs of America. I also serve on the Furman University board of trustees.”

“In high school, I worked as a paperboy and in a grocery store bagging groceries. During the summers when I was home from college, my father put me to work doing retailer sets and projects.

“First of all, I have been incredibly blessed over the years. I had a great family growing up and have a wonderful family support system today.

“I really do enjoy what I do and learned a lot from my father. He gave me incredible freedom to learn, along with plenty of opportunities to falter, fail and grow. I am so grateful for that experience and – just as important – that time with him. He taught me the importance of hard work, persistence, accountability, vision, and to always be the best you can be.

“You have to know the industry and the people in it, but you also have to have integrity and values, and that was reinforced for me with a wonderful upbringing. I have always had a real passion for what I do, and, at Acosta, I have had the opportunity to work with terrific folks who have the same vision.

“I also believe that taking full accountability and having a sense of urgency make a big difference. I believe that nothing pays off like hard work and preparation. I believe in focusing on things that really matter to our associates, clients, and customers.

“I have also had the opportunity to work with a wonderful mentor in Gary Chartrand over the last 14 years. How Gary built Acosta and his leadership in the industry are well documented and could not easily be duplicated. His tenacity, commitment to quality and uncompromising values have set a great example for me.

What key factors should CPG manufacturers focus on during the economic downturn?

“With the current economy it is easy to feel you should hunker down and simply try to survive. The companies that will come out winning are the ones that use this as an opportunity to assess how they can get better and compete more effectively. There are a few fundamental principles that I believe winning companies should follow. Regardless of the environment, it is always important to focus on your associates. Acosta is using this time to recruit some very talented individuals, and we will spend more on training in 2009 than we ever have. Regardless of the company or time period, quality people make a difference.

“Innovation will help all companies in our industry weather these times. Innovative products will help keep shoppers purchasing branded products and maximizing in-home consumption.

“It is also a wonderful time to focus on differentiation and use technology and insights to understand the shopper better than ever. Shopper insights are critical to building a strong marketing strategy behind any brand. The data is richer than ever, and how one uses it makes a difference.

“Collaboration with the retailers is also critical. Sharing insights and understanding how to apply them to the retailers’ needs are the essential parts of the sales process. Acosta is positioned with vertical retailer teams that allow us to collaborate at all levels.”