IGA Coca-Cola Institute Perspective

Retailer and Manufacturer Perspectives on Category Management

A message to IGA Retailers from...
Steve Ruggiero
Client Director - Client Service Training and Development
The Nielsen Company

The IGA Coca-Cola Institute and Nielsen will host an International Category Management workshop in Chicago on July 15 and16. In the coming weeks the workshop speakers will use this column to share their insights on the topics they will cover at the workshop.

Each year, ACNielsen conducts an annual survey of manufacturer and retailer trade promotion practices, the most recent of which was fielded between August and October 2007. While the results show that most manufacturers and retailers have worked together to assign category captains, and most manufacturers perceive a category captain to be a good investment value, there remain differences in the reasons manufacturers and retailers practice category management and what each perceives as the top critical issues to their businesses.

The survey reflected that manufacturers do practice category management to influence category decisions and create positive relationships with retailers, however the goal of optimizing item mix is the most important reason. And although retailers do share the goal with manufacturers of optimizing their item mix, their main reason for practicing category management is to drive sales and increase profitability.

Looking to the future, companies were asked which critical issues will increase in importance in the coming year. Both retailers and manufactures agreed that improving promotion efficiency and effectiveness, and understanding the consumer, are issues that will be vital for future success.

To give you an example of the differences between manufacturer and retailer goals, simply review the list of top five critical issues expected to increase in importance in the next 12 months.

As you can see, retailers will continue to concentrate on Private Label, retaining customer loyalty and utilizing frequent shopper or loyalty programs. These issues do differ from what manufacturers see as being increasingly important to them. To improve collaboration, both groups need to be aware of issues specific to each other's business.

At the International Category Management Workshop this July 15 and 16, participants will have the opportunity to view the category management process from both a retailer and manufacturer perspective.

We hope you'll take the opportunity to join us.

Steve Ruggiero

Retail News

Tesco is revamping its Fresh & Easy stores in the U.S. to create a "warmer" shopping environment as the retailer gears up to resume openings. The 61 Fresh & Easy stores, which launched with a functional design and basic layout, will be given more color and signage. The overhaul is in response to shopper feedback, reported Retail Week. Full Story

Meanwhile, the Fresh & Easy chain is also preparing to grow beyond the West Coast, CEO Tim Mason told The Financial Times, reported CSP Daily News. Full Story

Dollar General plans to open 200 stores this fiscal year and relocate or remodel 400 stores. This comes out even as the company's fiscal first-quarter profit fell 83% amid soaring interest expense related to the company's July $6.9 billion buyout by a Kohlberg Kravis Roberts & Co. unit, reported The Wall Street Journal. Full Story (WSJ Subscription Required)

A&P is expanding its online shopping service to customers in Northern New Jersey's Bergen, Hudson, Passaic, Essex, and Union counties this month, reported Progressive Grocer. Full Story

U.S. consumers are valuing locally grown products over organic, according to the BBMG Conscious Consumer Report. Adults have a strongly favorable response to eco-labels and attributes including biodegradable (48% strongly favorable), cruelty free (46%), and locally grown (45%), a measure that falls dramatically for USDA Organic (26%), noted the study. Full Story

Manufacturer News

The Hershey Co. will design initiatives to deliver its long-term goals for net sales after completing a market structure and category review. The company plans to target key consumers that will drive growth, and expects total advertising to increase by at least 20% in both 2008 and 2009. Hershey expects full-year 2008 net sales growth of 3-4%. Full Story

The board of directors of Kraft Foods Inc. is planning a split-off transaction of all outstanding shares of Cable Holdco, Inc., a wholly owned subsidiary of Kraft that will own certain assets and liabilities of the Post cereals business. The split-off transaction is in connection with the merger of Cable Holdco and Ralcorp Mailman LLC. Full Story

Foodservice News

DineEquity, Inc. completed a sale-leaseback transaction for 181 Applebee's company-owned restaurant locations with an entity majority owned by affiliates of Drawbridge Special Opportunities Fund LP, Drawbridge Real Assets Fund LP and Cardinal Capital Partners. Full Story

In just three years, SheerBliss ice cream found its way onto the shelves of more than 5,000 stores nationwide and now generates sales of $10 million. SheerBliss sells seven ice cream flavors now, including four that contain pomegranate. They also sell "novelty" items such as pomegranate ice cream bars and sandwiches, as well as Bliss Bites. Within months, another seven flavors will be introduced, according to South Florida Sun-Sentinel. Full Story

Yogen Früz signed a master franchise agreement with Frozenguy LLC to open 21 stores in south Florida over the next eight years. Full Story

TableTop Media began promoting its wireless, touch screen kiosk that offers restaurants greater flexibility in displaying menu labeling via digital display, and allows consumers a transparent means of understanding caloric, fat, sugar, sodium, protein and carbohydrate information. Full Story

Health News

Eateries in New York City must remove artificial trans fats from all menu items by July 1. When first implemented last year, the Health Department ban applied only to fry oils and spreads, but now will also include baked goods, frozen foods, cannoli and doughnuts. Foods served in original, sealed packaging, such as candy and crackers, are exempt, reported The Associated Press. Full Story

An increased intake of antioxidant flavonols from tea, onions, beans, and apples may slash the risk of colorectal cancer by 76%, according to a study published in Cancer Epidemiology Biomarkers & Prevention, reported Food Production Daily. Full Story

Long-term coffee drinking does not appear to increase a person's risk of early death and may cut a person's chances of dying from heart disease, according to researcher led by Esther Lopez-Garcia of Universidad Autonoma de Madrid in Spain, reported Reuters. Full Story

Washington News

The salmonella outbreak associated with raw tomatoes has now sickened 277 people in 28 states and the District of Columbia. States where new cases were reported are Arkansas, Kentucky, Maryland, North Carolina and Ohio. One case was also reported in Washington, DC. Illnesses began between April 10 and June 5. Full Story

Diageo-Guinness USA and the Flavored Malt Beverage Coalition filed suit against California's Board of Equalization challenging regulations that will reclassify flavored beer, which is malt based, as a distilled spirit, increasing the taxes on these products by more than 1600%. Full Story

Global News

British annual inflation leapt above-target to a 16-year high point of 3.3 % in May on the back of surging food and energy prices, reported AFP. Full Story

CKE Restaurants, Inc. signed development agreements with MDS Foods Pte. Ltd. and Global Food Connection, LLC to open a combined 25 new Hardee's restaurants in Pakistan over the next five years. MDS Foods will open 15 Hardee's units in Lahore over the next five years and Global Food will open 10 Hardee's in Karachi over the next four years. Full Story

Chiquita Brands International Inc. claims its product supply costs increased substantially just as prices have begun to moderate in Europe and reflect normal seasonal trends. Volumes for the past two months have either been flat or down because of bad weather in Central America and Ecuador, which has constrained supply and increased sourcing costs, reported CNN.com. Full Story

A Malaysian palm oil company will begin rice cultivation to tackle growing shortages of the staple crop. The rice will be used for domestic consumption, and to ease worries over food supplies in the country, reported BBC News. Full Story

Market News

Minnesota corn farmers are benefiting from the recent Midwest flooding, their crops have evaded the rain at a time when corn is at its highest price ever. Corn futures for December delivery hit $7.915 a bushel on the Chicago Board of Trade, nearly double the price of a year ago, reported The Star Tribune. Full Story (Free Registration Required)

A delegation of Chinese soybean buyers were in St. Louis, MO to sign an agreement to purchase an estimated $3 billion worth of U.S. soybeans. In addition, the Missouri Department of Agriculture signed a memorandum of understanding with China's Chamber of Commerce of Import/Export of Foodstuffs, Native Produce and Animal By-Products to expand and promote agricultural and food trade, especially in soybeans, reported St. Louis Business Journal. Full Story (Free Registration Required)

A new rust fungus to which very few of the currently grown varieties of wheat are resistant, Ug99, may cause wheat stockpiles to dip even lower. Agricultural Research Service scientists released the first wheat lines pyramiding two or more genes for resistance to Ug99. One of these lines will be released this fall as a specialty wheat for the eastern U.S. The fungus emerged in Uganda and spread to Kenya, Ethiopia, Sudan, Yemen, and Iran. Among the scientists' tasks are determining U.S. wheat and barley vulnerability to Ug99, identifying new sources of genetic resistance, discovering molecular markers to speed up breeding for protection and developing rapid detection methods and surveillance for Ug99 in the U.S. Full Story

Winegrape production may be lower than last year due to the April freeze and short irrigation water supplies. Faced with water availability of two inches per acre in June, July and August, some farmers are opting to provide vines enough water to survive but not produce a crop. This would protect long-term investment, but vines would not produce grapes this season, reported California Farm Bureau.

Artichokes will be available throughout the summer, as growers achieved the goal with annual varieties that are now being picked. The green globe or perennial variety is now dormant until fall. Growing conditions for the annual artichokes have been good and quality is reported as good, reported California Farm Bureau.

Food prices at home and abroad will almost certainly increase amid flooding that inundated large parts of the U.S. corn belt. The rise in corn prices could contribute to substantial price increases in bacon, ham, buffalo wings and other products from corn-fed hogs and chickens. And developing countries where corn is a dietary staple may feel an even greater pinch because they rely so heavily on U.S. imports, reported the St. Petersburg Times. Full Story

USDA adopted amendments to the Dairy Product Mandatory Reporting Program that was established on Aug. 2, 2007 on an interim final basis. Full Notice

USDA is proposing to revise and reorganize the regulations pertaining to the interstate movement of fruits and vegetables from Hawaii. Full Notice

International Trade Administration issued the final results and a partial rescission of the 12th Administrative Review of fresh garlic from China. Full Notice