OVERHEARD ON CONFERENCE CALLS

As a free service to our loyal readers, we listen in on conference calls companies have with securities analysts. Here are a couple recent snippets that caught our attention:

Whole Foods
John Mackey, CEO: “We believe that strengthening our price image on commodity type branded products, to broaden our appeal is not only the right long-term strategy, but the right short term strategy, particularly in today’s market. We are fortunate that we continue to find many opportunities to lower our cost of goods sold, to help offset these price investments, and minimize the gross margin impact. In addition, we continue to expand our private label offerings, with SKU count increasing 15% year-over-year, to just over 2,200. Our private label sales continue to increase, currently representing 22% of our total grocery and Whole Body sales, up from 15% three years ago.”

A.C. Gallo, co-president, COO: “On a lot of organic items, we have been actually able to hold our prices pretty steady because of contracts we have in place, and so we haven’t seen a huge increase there. We are trying to make it easier for our customers to find value, by making sure that we have the store’s merchandised in a way to really show people the value items. I haven’t heard from any of the regions where they say they feel like to customers are switching from organic down to conventional products. I think we have made sure that we have a good selection of organic products at good values. That has been our focus both on our specials, our focus with our 365 program, and we are seeing a continued strong demand for organic products in our stores.”

BJ’s Wholesale Club 
Laura Sen, president and COO: “We launched an organic brand last year named Earth Pride and we entered the milk category with a half gallon size and because we’re a wholesale club we offered whole milk and 1% milk versus all four flavors, which would be zero, one, two, and whole… Milk is a very key destination item as we saw huge acceptance of this organic SKU in a very consumer-friendly size. We added the other two flavors, essentially doubling our assortment of organic milk but we think it’s a strategic move to improve frequency and really improve our members’ experience.”

Herb Zarkin, chairman and CEO: “This is particularly important because people have been going to supermarkets to buy the organic milk. Our organic for a half gallon was $2.99. The supermarkets tend to be $3.99 to $4.49, so… it’s a great value to the member, so it’s an important differentiation for us.”

United Natural Foods
Dan Atwood, exec vp, chief marketing officer:
“Fage is a Greek yogurt line… It’s a very different type of a formulation and has had explosive growth. Amy’s Kitchen has amazing market share in the frozen entree category. Rising Moon Organics is notable, both in terms of its percentage growth, which has run about 90% in the first six months of our fiscal year, and by virtue of the fact that it’s a brand that we own… Glutino is a line of gluten-free products. Gluten-free, wheat-free is one of the major trends that we’re seeing, and it is not a fad. It’s something that’s been building for a number of years, as more and more consumers look to go to a gluten-free, wheat-free diet.”

The Hain-Celestial Group
Irwin Simon, president & CEO, The Hain-Celestial Group: “Eating healthy is not a fad, not a trend. It’s a part of our lives. And it’s not like, ‘Oh my God, we’re in tougher times. We’re going to trade down.’ And if anything, what I continuously see is people trading down from eating out and trading down from other things and ensuring they are buying better-for-you foods… Back in 2005 we went into the poultry business because we felt there would be a shortage of antibiotic-free organic chicken. Next year it’s going to be $150 million, $200 million business for us both in chicken and turkey and it’s growing in double-digits. We see great contribution margins and what we see is people trading down from red meat into chicken and turkey.”

FMI OFFERS 'SUSTAINABILITY' HELP

A new Food Marketing Institute (FMI) strategic guide provides a roadmap to implement a wide range of sustainability programs benefiting the environment, employee and customer health and society. The FMI Sustainability Starter Kit focuses on strategies and practices that make a sustainable impact on the bottom line.

The guide leads companies through six phases of program development: 

1. Find the Right Place to Start — Shows companies how to align sustainability efforts with core business goals, name a leader, form a cross-functional team, and identify the opportunities presented in the company’s operating environment, including consumer expectations and the competition.
2. Opportunities and Risks Associated With Sustainability — Describes how to develop the business case based on an assessment of social and environmental trends.  This includes how to use the effective analysis tool AUDIO, a discipline to review an Aspect such as energy, its Upstream source and Downstream use, Issues to resolve such as cost, and Opportunities, for example, how to reduce use, sell energy-efficient products and educate consumers.
3. Sustainability Strategy Development — Shows companies how to integrate sustainability into business strategies and objectives.
4. Establishing Goals and Metrics — Demonstrates how to measure progress in achieving sustainability goals and the associated financial objectives.
5. Implementation of Plans — Covers how to engage senior management and employees companywide, monitor progress and publicly report the results.
6. External Engagement — Illustrates how to partner with suppliers, government agencies, non-governmental organizations (NGOs) such as environmental advocates, investors and customers. Such partnerships help validate the importance of a company’s sustainability strategies. 

The Starter Kit includes an extensive glossary of sustainability terms and list of resources. To purchase a copy ($195 for FMI Retailer/Wholesaler Members, $245 for FMI Associate Members and $395 for nonmembers), contact the FMI Store at 202-220-0723 or www.fmi.org/store/.

In addition to the Starter Kit, FMI has a comprehensive compendium of strategic resources and consumer research available on our website to help the industry implement sustainability programs. To access these resources visit www.fmi.org/sustainability/.

Included are:

• A customizable document on why sustainability is important.
• Research on shopper attitudes about sustainability and recycling.
• Catalina Marketing research performed for FMI, showing how consumers actually practice sustainability in their lifestyles and buying habits. It shows the market basket value of the green consumer. This work complements recent research based on consumer surveys and focus groups done by The Hartman Group for the industry.
• New research by socially responsible branding and marketing firm BBMG uncovers the attitudes and beliefs that are defining conscious consumers, shaping their priorities, and driving their purchase decisions.
• A new report from IRI that finds sustainability is an increasingly important decision factor among American consumers regarding both the products they buy and where they buy them.
• Retail Futures offers a glimpse of what the retail experience of 2022 might involve. Through four radically different and detailed scenarios, Retail Futures 2022 explores many of the issues the retail sector will have to face in the years to come. Taken together, the four scenarios provide valuable tools to help the retail sector develop robust, future-proof strategies that will deliver more sustainable retail in a time of radical change.

MY PYRAMID, MADE EASIER

While USDA’s MyPyramid is widely recognized, few consumers know if the foods they eat provide them with meaningful amounts of the key food groups. So new packaging from Omaha, Neb.-based ConAgra Foods, just rolling out now, has a solution. Packages feature a ConAgra-designed nutrition guide that incorporates MyPyramid. It clearly shows the amount of each key food group found in a serving of the product. “We think the new labels will provide consumers with trustworthy information about how our products fit into their diets,” says company spokesperson Stephanie Childs.