The appointment came 28 years after he joined the company as an 18 year-old trainee manager in 1979. This starting position was followed by a steep climb through the ranks of organization to his current position.

Badminton’s calm demeanour has worked well for him in a country that has repeatedly tested the patience of its inhabitants through high interest rates combined with high levels of household debt and a weak currency that is driving up the prices of imported goods. Also, a long series of electrical power cuts coming after a lack of infrastructure investments led to Badminton’s comment while installing his company's own power generators: “You know, it’s something we’ve got to live with, and we’ve got to just get on with it.”

Pick ‘n Pay generates the bulk of its turnover in its South African home market (more than 80 percent of retail banner sales), although there is also a 90-strong supermarket network in Australia (Franklins), as well as small African cross-border operations in Botswana, Namibia, Swaziland and crisis-shaken Zimbabwe.

As the global economic downturn has reached South Africa, Badminton says the company has become “very, very careful” about opening new stores – although opening and refurbishing stores, improving fresh food departments, testing new formats and encouraging black business ownership continue to be part of Pick ‘n Pay’s pro-active strategy.

When Pick ‘n Pay announced its financial results for the six months ending in August 2008, the company reported turnover up by 16.4 percent, with trading profit climbing at roughly the same speed, by 16.7 percent. The increase comes mainly thanks to operations in South Africa, where sales grew by 15.2 percent. While the very biggest part of this achievement was the result of high consumer price inflation, the retailer said he was “pleased with this result considering the current economic climate and the tightening of consumer spending as a result of high food and fuel inflation and high interest rates.”

Throughout 2009, Pick ‘n Pay plans to expand “prudently” as the anticipated interest rate cuts are expected to put more money in consumers’ pockets. Badminton has announced that the company is due to open 20 new stores during the year, ranging from 800 to 5,000 square metres, compared with a current national store count of around 700. In addition, Pick ‘n Pay is planning to refurbish 44 existing outlets during the year.

Apart from new store openings within existing banners, Pick ‘n Pay also has been experimenting with new store formats. Since September 2008, the company has been opening convenience-oriented supermarkets under the new Pick 'n Pay Daily banner. In addition, a test scheme involving stores operated at BP stations, under the Pick 'n Pay Express banner, was started in December 2008.

Despite these forays into new formats, however, Pick ‘n Pay has no intention of making significant moves into non-food retailing or cash and carry operations.

In terms of expansion into further foreign markets, Pick ‘n Pay will look at African markets exclusively. In a recent interview with Planet Retail, Badminton said: “We’ve already set up a master franchise office in Namibia, but we’re also looking at Mozambique, Angola and Zambia. In the long run, we might tackle further African markets, but we’re not going to rush because we want to do our internationalization project properly.”

Pick 'n Pay also is gradually moving into the black townships (such as Soweto) through franchised stores, hoping to battle it out successfully with Shoprite and Spar retailers already established in these areas. In Soweto, the company is currently developing a new 1,950-square-meter store concept that is due to open later this year.

Meanwhile, Pick 'n Pay continues to re-brand its underperforming Score supermarkets, mostly to Pick 'n Pay Family franchised stores, with the scheme thought to involve an investment of ZAR110 million (US$15.4 million) and due to be completed this year. The conversion from Score means that going forward, Pick ‘n Pay will operate all of its stores under the Pick ‘n Pay banner.

The franchise project has been described as a big opportunity by the retailer to “both expand the Pick ‘n Pay brand into new markets and promote black entrepreneurs.”

In January, when Badminton’s Pick ‘n Pay was voted International Retailer of the Year at the U.S. National Retail Federation’s annual convention in New York, Badminton said: “Pick n Pay is making a difference to building black business ownership by converting to black-owned stores. In a few years, this will go down as one of the big things we have done in South Africa.”

The retailer continues to emphasize its fresh food ranges. Reacting to the strained purchasing power of South African consumers, the retailer introduced new private-labels called “PnP no name” and “PnP.” According to early indications, the offers have received a favourable response from customers.

However, in his recent Planet Retail interview, Badminton said he has doubts regarding the rapid rise of private label in South Africa: “Certainly private label is going to be more important in South Africa than it is now. But will it ever take off on a large scale? The problem is that currently, we don’t have the supplier base that you need for efficient private-label strategies. As a result, it is very difficult to achieve that differential in price that the rest of the world is getting. Actually, the leading brands are sometimes cheaper here than private labels. Therefore, I don’t believe that private label will play a dominant role in South Africa in the short to medium term.”

For the same reasons – as well as the current lack of modern infrastructure and the dominance of traditional shopping habits with few signs of bulk buying – Badminton thinks the time has not come yet for modern discount chains to expand across South Africa on a large scale.

Outside South Africa, Pick ‘n’ Pay’s Australian supermarket subsidiary Franklins has launched an ambitious store refurbishment program aimed at undoing years of neglect. The retailer plans to spend AUD50 million (US$ 33 million) refurbishing 30 supermarkets, and some stores will be handed over to franchisees. As for new store openings, Franklins is planning to expand mainly in New South Wales.

Industry Affairs News

Supply Chain & Technology

Positioning Your Company to Survive Recession

Part of IS/LD Stellar Program

Sign up today for GMA’s outstanding Information Systems/Logistics Distribution (IS/LD) Conference April 5-8 at Miami’s Marriott Doral Golf Resort and Spa.

As the national recession deepens and credit and retail markets are in tailspins, Senior Vice President Al Meyers of TNS Retail Forward tells a joint GMA-FMI session what the economic recovery will look like and how industry executives can position their companies today to take full advantage of the recovery. TNS Retail Forward is a global management consulting and market research firm.

Also part of this year’s stellar IS/LD program lineup is a breakout session on building consumer confidence with “recall done right” featuring Chief Executive Roger Hancock of Recall InfoLink and formerly corporate director for food safety, sanitation and quality at Albertsons Inc. He will take attendees through the preparedness steps necessary to ensure the most speedy, efficient and effective recall, with a special attention to mapping out roles specific to supply chain and information technology personnel.

In another session, two vice presidents of industry companies outline how to tailor distribution strategies to unique products, market and supply chain characteristics. Patrick Plunkett, vice president of supply chain strategy and solutions of Coca-Cola Enterprises, and Sean Monahan, vice president and North America supply chain practice leader for A.T. Kearney, share their case study in aligning distribution strategies to the unique characteristics of the product, channel, market, etc.

Sponsors and exhibitors for this year’s conference are Oracle USA Inc., Seber Logistics Consulting, IBM, Strategic Solutions Inc., Accenture, Terra Technology, IFCO Systems, Forecast Pro, Retail Solutions Inc., Microsoft Corporation, DemandTec Inc., SAP, Manhattan Associates, ORTEC, RMS Incorporated and iGPS Company LLC.

Take advantage of IS/LD’s extensive and diverse 2009 program and its myriad networking opportunities. Sign up today at www.gmaisld.com.

Contact: Michelle Marcoot (Program)

Contact: Jonathan Downey (Sponsorships/Exhibits)

Enhancing Growth Through DSD Topic of

GMA Webinar March 10

Twenty-four percent of all unit sales and 52 percent of all retail profits in the grocery channel come through direct store delivery. Sign up today to be part of a webinar on this vital part of the food and consumer products industry March 10 from 11 a.m. to noon (EST). Contact jfinci@gmaonline.org to register for the free discussion based on a recently released book by GMA’s Direct Store Delivery Committee and AMR Research entitled Powering Growth Through Direct Store Delivery.

Contact : Jennifer Finci

Manufacturing Excellence Share Group Probes Ways KPIs Can Streamline Manufacturing

GMA’s Manufacturing Excellence Share Group plans a meeting of its senior-level CPG executives in late spring to continue its investigation into ways key performance indicators (KPIs) can be used to improve manufacturing processes.

At its second meeting January 27, the group was welcomed by GMA’s new CEO Pam Bailey and heard a recap on the Salmonella outbreak from GMA’s Senior Vice President and COO for Scientific and Regulatory Affairs Dr. Craig Henry. Bridge Strategy Group’s Dave Donnan and Bernardo Silva presented their findings of KPIs based on a survey of the group at its first meeting, showing a strong commonality of metrics across companies. Chuck Metzger, Kraft Foods, shared examples of cost and asset efficiency metrics, and SAP’s Chris Foti spoke about the manufacturing execution systems layer of ERP.

Contact: Jeanne Iglesias

GMA Presents at NGA's Convention

Earlier this month, IA’s Senior Director Jeanne Iglesias spoke at the National Grocer Association’s Joint Wholesale Executive Council and Supplier Advisory Council Meeting at NGA’s annual convention in Las Vegas. She probed emerging trends for cutting logistics costs and creating fuel efficiencies in recessionary times. She also outlined best practices growing out of GMA’s 2008 logistics study, as well as IBM’s supplemental fuel survey, which was presented at GMA’s Fuel Roundtable in October.

Contact: Jeanne Iglesias

Sales & Sales Promotion

New Dates/Venue for GMA's MSM Conference

Mark your calendars now for the 2009 Merchandising, Sales and Marketing (MSM) Conference to be held at the Arizona Biltmore in Phoenix November 2 and 3.

Contact: Brian Lynch

Association Leadership

June 1 Is Deadline for CPG Award Competition

The deadline for submissions in the competition for GMA’s 2009 CPG Award for Innovation and Creativity is June 1, according to Jill Johnson, director of industry affairs and associate membership.

The award is sponsored by GMA’s Associate Member Council and has been presented annually since 2004 in recognition of industry companies who demonstrate superior product innovation, creativity and industry collaboration.

Judging will be on creativity, willingness to take risks, achieving measurable results and establishing valuable learnings for the entire industry.

This year the awards will honor two manufacturing members – those with total sales below $1 billion in Division A, and those with sales of more than $1 billion in Division B.

Winners will be announced at the GMA Executive Conference in late August in Colorado Springs. Past year winners include Kraft Foods Inc., 2004; Campbell Soup Company, 2005; Time Warner Retail Sales and Marketing, 2006; Unilever, 2007; and The Clorox Company and Kettle Foods Inc., 2008.

For more information or to view the award-winning presentations form prior years. click here to visit the Web site.

Contact: Jill Johnson

NEW Features Spring Conference for Industry Women

The Network of Executive Women (NEW) is hosting its spring meeting April 1 at the University of Maryland’s Inn and Conference Center from 9 a.m. to 3 p.m. for women in the retail and consumer products industry in the middle-Atlantic region.

President and General Manager of Corporate Lifestyles at Safeway Inc. Rojon Hasker will keynote the conference on how to thrive in challenging times.

Contact: www.newonline.org.

Quick Insights

Solutions Without Walls: A New Paradigm For Collaboration, Integration and Alignment

By John Dranow

Many opportunities exist to influence the purchase decision pre-store and in-store. Leveraging these opportunities requires knowledge of the shopper’s journey and its continuum from pre-store brand consideration to in-store purchase. CPG companies need to break down the walls that divide what is understood about the consumer, the shopper and the retailer to optimize marketing and merchandising efforts.

Understanding the purchase decision requires integration of consumer segments, shopper types and the retail environment. This knowledge of the purchase decision drives a new model that is simultaneously consumer- and shopper-centric and internally and externally collaborative. SmartRevenue has dubbed this transformational model Solutions Without Walls. It requires breaking down the walls internally across functions for the manufacturer and working externally with retailers and solution-providers to rally around both the voice of the consumer and shopper.

The Solutions Without Walls model allows key partners to understand more completely how to convert shoppers into buyers in the retail environment. Ultimately, winning at retail requires listening to both the voice of the consumer and the shopper and then developing actionable solutions that build loyalty, drive traffic and enhance the retail shopping environment.

Much more on this concept will follow in future issues of Industry Affairs Review.

Contact: SmartRevenue

GMA Leadership Profile

Kraft's Dennis (Denny) Belcastro

Current Position:

Currently serves as Kraft’s vice president customer development and industry affairs. He has spent the past 32-plus years in the food industry with Standard Brands, Nabisco and Kraft Foods.

Industry Leadership:

GMA: Sales Committee, Industry Development and Advisory Committee; co-chair for MSM Conferences 2006-08; GMA/NEW Sales Force Talent Management Project Team. FMI: Industry Advisory Council. NGA: Member - Board of Directors. NACDS: Retail Advisory Board. CIES: U.S. Advisory Council.

Career Highlights:

“Throughout my career, I have been extremely fortunate to work with some of the best of people and be surrounded by incredible support teams, creating unique opportunities that led to some personal accomplishments. Starting at Standard Brands, I earned three consecutive years of ‘Highest Achievement Award’ at three different position levels. At Nabisco, I earned ‘Region of Year’ and ‘Top Area’ awards three times and was recognized as the youngest person to be named regional vice president at age 32. Received Nabisco’s highest honor as ‘2000 President’s Club Award’ winner for my leadership role in developing and executing the highly successful Merchants Consortium event (HEB, Meijer, Wegmans) featuring 'N'Sync in a fully integrated consumer in-store marketing promotion. Now at Kraft, a terrific company with great people and iconic brands, I have the opportunity to engage collaboratively with our customers in building our mutual business while playing a significant leadership role within our industry.

Personal:

“I was born in Sewickley, PA and was raised in a small steel mill town of West Aliquippa. The youngest of three children, I learned at a very young age how to work hard, respect others and learn something from the people I meet along the way. The three biggest influences on my life were working in the steel industry (which showed me how business and process worked), the game of baseball (a great metaphor on how life works) and the discipline of the Marine Corp (which teaches you how to stay focused on what’s important and how to handle yourself). My dad was a former Marine DI. I think you get the picture!

“I have been married for 32 years to my high school sweetheart, Marsha, and we are very fortunate to have raised three terrific young adults Chris (30), Craig (25) and Courtney (19). My personal hobbies include playing ‘my’ baby grand piano, playing baseball, and being enlightened by movies and the on-going challenge of golf. Over the years, I enjoyed coaching many of my children’s teams and watching them develop and mature.

“I have been fortunate to meet some terrific people and participated in some great experiences that have provided me with very memorable personal thrills in the business world, on the baseball field, in the classroom, and on the golf course.“

Education:

College: BA Journalism/Communications, Edinboro University of Pennsylvania, 1976

Graduate: SMEI Syracuse University, 1988

Masters: Executive MSC, Northwestern University, 1994

First Job:

“My real first job was in a neighborhood small mom-and-pop grocery store at age 7. I sorted empty returnable pop bottles into the proper cases for the bottlers to pick up. I made 25 cents an hour in 1961.

How’d You Get Where You Are Today?

“I feel very fortunate to be where I am today. Having been raised in a humble background by two blue-collar parents with a terrific work ethic, I believe I am truly a product of my environment. I was provided opportunities to advance within my career by working hard, earning the trust and respect of my colleagues, and having very good mentors and role models along the way. Having virtually worked for the same company, I have experienced every possible organizational transformation, many re-engineered processes, a few mergers and group integrations, several acquisitions and even a historic LBO, living through the ‘Barbarians at the Gate’ period at RJR/Nabisco.

“As with most people who have been in our industry as long as I have, I started as a retail sales representative calling on all types of formats and learning the basic fundamentals of store operations, merchandising, and the sweat-equity that comes with the territory. I have held various field and HQ leadership positions in both retail and foodservice. While most of my career has been focused on the customer and sales function, I have had career experiences in various disciplines – marketing, finance, and overall corporate business development – that have provided me terrific opportunities to work with and learn from some of the great leaders in our industry.

“I love my job and the opportunity that Kraft provides me to work within our industry. I am very fortunate that I have a terrific support team – both at work and at home – that gives me the energy to make a difference.

Views On Partnerships/Collaboration:

“Our industry is at an interesting point in time. We are looking at new exciting leadership at FMI and GMA, very good consistent leadership at NGA, IGA and other industry associations, and the whole concept of ‘new ways of working together’ is starting to take hold. The industry buzz words are around collaboration and creating value-added partnerships with our customers with laser focus on the consumer. Consumers will continue to look for those companies that provide the best value proposition, and the best way to achieve this is for manufacturers and retailers to work together toward truly valuating the economics of their partnership and relationship.

“Many of us are so busy that we tend to forget to take time to build and nurture the key relationships that lead to long-term success. Investing in people and building new skills and capabilities will be much more critical in the future. Customer team leaders need to be well versed in all aspects of running a collaborative business relationship, not just in selling and merchandising.”

Datebook

April 5 - 8

Aug. 30 - Sept. 1

Nov. 2 - 3

Information Systems/Logistics Distribution Conference

Marriott Doral Golf Resort and Spa

Miami, FL

Contact: Jennifer Finci

2009 GMA Executive Conference

(By invitation only)

The Broadmoor

Colorado Springs, CO

Contact: Mary Olsen

Merchandising, Sales & Marketing (MSM) Conference

The Arizona Biltmore

Phoenix, AZ

Contact: Brian Lynch

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Industry Affairs Review is produced by the Grocery Manufacturers Association in cooperation with Planet Retail. Current and past issues may be found at www.gmaonline.com/publications/index.cfm. If you wish to add colleagues’ names to the mailing list or if you wish to unsubscribe, please click here, or write to jdowney@gmaonline.org.

@ Copyright 2009 by GMA, 1350 I Street N.W. #300, Washington, D.C. 20005. All rights reserved. The content and copyright for the lead profile is owned by Planet Retail, a leading provider of grocery retail intelligence— www.planetretail.net.

The Grocery Manufacturers Association (GMA) represents the world’s leading food, beverage and consumer products companies. The Association promotes sound public policy, champions initiatives that increase productivity and growth and helps to protect the safety and security of the food supply through scientific excellence. The GMA board of directors is comprised of chief executive officers from the association’s member companies. The $2.1 trillion food, beverage and consumer packaged goods industry employs 14 million workers, and contributes more than $1 trillion in added value to the nation’s economy. For more information, visit the GMA Web site at www.gmaonline.org