Taking Stock

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Local Notes

Campbell Soup has agreed to acquire snack food company Snyder’s-Lance, owner of Cape Cod potato chips and Snyder’s pretzels and Emerald Nuts, for $4.87 billion ($50 per share, all cash). That represents a 27 percent premium from the Charlotte, NC manufacturer’s trading price on December 13, five days before the sale. This deal would be would be Campbell’s largest yet and could provide both a financial and emotional boost for the struggling Camden, NJ-based manufacturer, which despite several acquisitions outside its core center store business, still finds offsetting the declining sales of its staple soup business a tough path to navigate. It’s the same challenge that many large CPG companies – Kellogg’s, General Mills, ConAgra to name a few – face in trying to broaden their portfolios beyond their sluggish primary brands. The explosion of private label has also impacted many large CPG packers. Under the leadership of talented and tenacious CEO Denise Morrison, Campbell’s has attempted to venture outside the box by acquiring emerging brands such as Bolthouse Farms and most recently Pacific. This is a risky maneuver with Campbell’s financing the deal through $6.2 billion of debt, but Morrison explained the rationale behind the purchase, noting it “…will dramatically transform Campbell, shifting our center of gravity and further diversifying our portfolio into the faster growing snacking category.” Interesting to note in the tentative deal is that the Warehime family collectively controls 13.2 percent of Snyder-Lance’s common stock (after the 2010 deal when Snyder’s of Hanover and Lance were merged), giving the family of the late, great Mike Warehime a huge windfall…while it’s not deal related, Nestle, the world’s largest food company with a diverse and international portfolio, joins Campbell’s in announcing that it will be leaving the powerful Grocery Manufacturers Association (GMA) before year’s end. The primary reason: differing views on how to respond to changing consumer tastes, especially nutritional issues. Accurate or not, the GMA has long been perceived by some as a complacent, road-blocking group more interested in protecting its flank rather than engaging into proactive change. Wake up, the world is changing…while the transfer of most of its 1,932 drug stores from Rite Aid to Walgreens until next spring, the Camp Hill, PA-based chain has shifted 97 drug stores in the past six weeks to Walgreens as part of its initial pilot test. Also included in the $4.38 billion all cash deal are three distribution centers…Albertsons, which also has been racing to play catch up in the fast-paced and evolving world of e-commerce, announced that it has signed a deal with Instacart which will provide same-day deliveries to more than 1,800 Albertsons’ stores (including Safeway units) beginning mid-2018. Earlier this year, the Boise, ID-based supermarket chain acquired meal-kit provider Plated, which this month unveiled its first national TV campaign…Whole Foods will open its first “365” market location in our region on January 31 in the Forte Greene section of Brooklyn. The 40,000 square foot unit will be WFM’s seventh overall “365” store. Two weeks earlier, Whole Foods will cut the ribbon on its ninth Delaware Valley unit, a 50,000 square footer in demographically-favorable Exton, PA. And while we’re on the subject of Amazon’s newest offspring, I’d like to give a shout out to Christine Minardi, former WFM Northeast regional president, on her recent promotion to executive VP-operations where she will oversee four regions while also co-leading the integration with Amazon…one more update about the Ahold Delhaize integration (which could affect suppliers and brokers more than any other trade issue next year): according to an announcement from Tonya Herring, Giant/Landover’s new senior VP-merchandising: “First and foremost, Giant will make the assortment and buying decisions for all products that it carries independent of The Stop & Shop Supermarket Company or any other brand of Ahold USA or Delhaize America. Giant will, however, be supported by the Stop & Shop merchandising team, which will issue purchase orders for products on behalf of Giant (excluding beer, wine, ethnic and specialty products, which will be purchased by Giant directly) and provide promotional, display and other related support to Giant. We anticipate that 80 percent of the items, offerings and programs will be consistent between Stop & Shop and Giant. For Giant business, including presentations, proposals and related activities, we are asking that suppliers include both Stop & Shop and Giant merchandising teams together for that work. Giant leadership is working to make this process as convenient as possible for its vendor partners, including by having Giant category teams join via video or personally attend meetings in Quincy whenever possible so your company will only have to make one presentation to the brands. This excludes local programs, as applicable, where it will be important for you to meet separately with the Stop & Shop and Giant category teams.” And remember a few months back when parent company Ahold USA was the target of criticism concerning its “trade equalization” money grab?  “Trade equalization” was part of the continuing overriding issue of drilling deeper into vendor funding, sometimes for no justifiable reasons. A lot of dialogue lately has been devoted to the practices of two of the country’s largest retailers – Walmart and Kroger – who, according to more than a dozen vendors we talked with, claim both big merchants are getting tougher with their vendors, especially around the issue of on-time shipments. Kroger is fining suppliers $500 for every order that is more than two days late to any of its 42 distribution centers and Walmart began fining manufacturers 3 percent in August for deliveries that aren’t exactly on time. Logically, all parties want better efficiency when it comes to selling product and it’s true that vendors who use third parties for drayage lose some control (not to mention there’s a nationwide truck driver shortage), but in this case, let’s examine supply chain issues created by retailers. How many trucks have waited in one of Kroger’s depots unable to unload product because warehouse docks are overloaded? Walmart needs to look no further than its own stores to see how much inventory is sitting in its backrooms, unable to be stocked because of lack of labor on the selling floor. This is one issue where collaboration rather than confrontation would serve both parties better…a tip of the hat to two men – Wendell Hahn and Ray Taglialatela – with among the best work ethics this industry has ever seen. Both executives with Four Seasons Produce, the large produce distributor based in Ephrata, PA, will retire at the end of the year. I’ve known both men for many years and beyond their unparalleled knowledge of the produce industry they are also two of the nicest people in the biz. Wendell and Ray-Tag are incredibly hard working, selfless and loyal to their employer and both display that very rare trait of making you feel better about yourself after you’ve engaged with them. I wish both gentlemen only the best in their future endeavors. I’ll miss their wisdom and kindness…a few obits to report this month. Macon Brock Jr, the founder of Dollar Tree stores and its former CEO from 1993-2003, passed away earlier this month. Brock, along with his father-in-law and brother-in-law, began opening dollar stores as a side venture to their toy store business in Norfolk, VA in 1986. The discount concept began to rapidly accelerate by the end of that decade and Brock and his family rapidly began opening more stores. In 1995, the company went public. Today, Dollar Tree operates more than 14,000 stores in the U.S. and Canada with annual sales of nearly $21 billion. Brock, 75, remained chairman of the Chesapeake, VA-based merchant until this past September…from the land of entertainment, actress and singer Della Reese has died. Born Delloreese Early in Detroit, she began her career as a gospel singer and as a teenager performed with Mahalia Jackson. She later moved on to jazz singing where she released six albums. Reese began acting in the late 1960s and had more than 50 TV and movie credits including her most famous role as “supervising angel” Tess on the hit TV show “Touched By An Angel” (1994-2003). Reese was 86…I’m also sad to report the passing of country singer and songwriter Mel Tillis, 85, who overcame a stutter and recorded more than 60 albums (including three dozen top 10 singles). Tillis, who was inducted in to the country Music Hall of Fame in 2007, also wrote some classic country and pop songs – “Detroit City;” “Mental Revenge;” “I Ain’t Never;” “Ruby (Don’t Take Your Love To Town)” – that he made famous as did other popular artists including Linda Ronstadt, Kenny Rogers and Waylon Jennings. More than 50 years ago, Tillis told the Nashville Tennessean: “It so happened that I found out what I was good for. I’m lucky; a lot of people go through life and never find out.”…Golll-ly, Gomer Pyle is dead, too. Jim Nabors, who parlayed a supporting role as a goofy deputy sheriff on the “Andy Griffith Show” in the early 1960s into a hit series of his own that ran from 1964-1969, passed away late last month at the age of 87. Despite his clumsy antics and over the top southern drawl, Nabors was nothing like the famous character that he portrayed. He displayed an impressive operatic baritone singing voice that belied his TV persona and also appeared in 25 other TV shows and films. Shazam!