advant winter final - Gaynor Communications

Winter 2002
Volume 6
Number 3
Advantage
Published by Topco
Associates LLC
for member/owner
executives.
The Topco/Shurfine merger:
Smooth transition, increased cost savings
are targeted as immediate priorities
opco and Shurfine joined forces Nov. 1, culminating months of discussions between the two cooperatives. The new entity, Topco Associates LLC, is moving aggressively to blend the operations of Topco
Associates, Inc. and Shurfine International, Inc. and to convert their
combined buying power into increased cost savings for member-owners.
“Beyond the
immediate economic benefits of greater
purchase volumes
and operational efficiencies, the integration of the Shurfine
business into Topco
is an exciting opportunity that also creates a platform for future growth,”
says Steve Lauer, Topco President and Chief Executive Officer.
“Historically, Topco’s focus has been primarily on grocery retailers and,
more recently, foodservice, while Shurfine has extensive experience in servicing grocery wholesalers and foodservice entities. We believe there are significant synergies to be realized from such cross-channel business expansion.”
1
2
3
4
In this Issue
page
T
Post-merger activity has focused on converting those synergies quickly
into tangible benefits for member-owners. Top priorities have included
ensuring a seamless transition for member-owners and renegotiating existing supplier contracts to generate
additional cost savings.
The integration of
Shurfine’s operations and
staff at Topco’s headquarters in Skokie, Ill.,
has progressed rapidly.
More than 30 Shurfine
employees interviewed
for positions with Topco
Associates LLC, and most
have joined the new organization’s staff.
Three members of Shurfine’s senior management team have become
Topco officers. They are John Stanhaus, President of the Wholesale
continued on p. 3
Topco Holdings welcomes Bashas’
oining the ranks of Topco is Bashas’, Inc., whose membership application was recently approved by the full-member owners of Topco
Holdings, Inc.
Bashas’, Inc. joins Topco as an associate member participating
in Topco’s HBC/ GM/Rx program. Headquartered in Chandler, Ariz.,
Bashas’ operates more than 125 stores with annual sales exceeding
$1 billion.
The company’s store formats range from an upscale gourmet foods
operation, AJ’s Fine Foods, to conventional Bashas’ supermarkets, to
Hispanic-oriented Food City stores. The company’s stores are located
primarily in Arizona, with an additional presence in New Mexico and
California.
J
The Topco/
Shurfine
merger
Wayne Manning, Bashas’ President and Chief Operating Officer, will
serve as Member Principal to Topco.
Topco leverages knowledge to generate dairy, meat cost savings
Members
gain access
to discounted
pharmacy
services
Constant
monitoring
leads to cost
savings
Premiering
from Topco
opco routinely produces significant member cost savings
in many categories by aggregating members’ volume and
leveraging their collective purchasing power to win the best possible
price and quality from suppliers.
But how does Topco generate
savings in regional programs, such
as dairy, or highly individualized
programs, such as meat? In these
cases, extensive market knowledge
– not volume – is key.
T
Offering customization –
and competitive pricing
Topco’s meat buyers deal with
major meat packers and processors
across the nation, drawing upon
Topco’s ongoing market analyses
to negotiate and renegotiate on
members’ behalf programs for fresh meats, poultry, processed meats, deli
meats and cheeses, and seafood.
Recognizing that price swings occur daily and even hourly in the meat
market, Topco employs two full-time agricultural economists to analyze daily
market pricing and to funnel price
data to Topco meat buyers.
The fresh meats market is very
volatile, and “it’s volatility that
creates buying opportunities,” says
Dan Unolt, Topco’s Director of
Fresh Meats. “Our market intelligence allows us to identify volatility and opportunity.”
Topco’s agricultural economists, he adds, collect and analyze
“a tremendous amount of data.”
They also maintain a database that
includes the price history of meat
products, as well as other useful
information.
These capabilities – along with
Topco’s ongoing monitoring of
trends and developments in national and regional markets and its
commitment to reviewing and
updating members’ programs to ensure they are priced as competitively
as possible – enable Topco to deliver cost savings while still offering
customized programs for members.
continued on p. 3
2
Revamped Valu Time line targets price-sensitive shoppers
ith low-price store formats growing
aggressively, Topco has revamped,
repackaged and expanded its price-fighter
Valu Time line to help members retain
price-sensitive customers.
Members already participating in the Valu
Time program report consumers are responding
positively to the line, which now includes more
than 200 SKUs across 39 categories, says Linda
Haynie, Topco’s Director of Grocery Non-Foods
and General Merchandise.
“Right now, many consumers are trading
down, presenting an opportunity for members to
introduce a price-fighter or second-label brand –
a brand they own,” says Dan Mazur, Topco
Senior Vice President, Center Store. “As the lowest-price brand alternative, Valu Time can protect
members’ first-label-quality brands from losing
margin to low-price competitors and regional or
secondary-brand value labels.”
Members can generate direct margins equal
to or better than the regional or secondary brands’
direct margins by employing the everyday low
pricing strategy recommended for the Valu Time
line, Mazur says. This strategy, he adds, will
make Valu Time products the lowest-cost products in every category, with
retail prices equal to or lower than those of low-price competitors. With
core items across multiple categories, Valu Time also enables members to
realize marketing efficiencies. “As one brand, Valu Time can be promoted
as a single line with items across many categories,” Haynie says.
Valu Time’s new packaging is attractive, with a brand name that
reflects the value of the line. The new look also addresses consumers’
need to feel good about the products they provide for their families, and
“conveys the idea that Valu Time is the clean, modern, economic and
smart choice,” Haynie says.
In offering shoppers a wide assortment of core items at economy
prices, the Valu Time line provides value through differences in product
content, packaging and size. For example:
W
CHICAGO
Save the dates!
Topco HBC/GM Sales &
Merchandising Conference
Doubletree Guest Suites
Chicago, Ill.
April 14-16, 2002
Topco Grocery/Frozen/Dairy
Sales & Merchandising
Conference
Doubletree Guest Suites
Chicago, Ill.
June 2-4, 2002
➤ Valu Time green beans have the same nutritional content as first-labelquality brands, but might be more irregular in size or have more color
variability.
➤ Valu Time cat litter is packaged in uncoated, two-color kraft bags, as
opposed to varnish-coated, six-color bags for Pet Club, Topco’s firstlabel-quality brand.
➤ Valu Time spices are available in larger-size bottles, offering more
product for greater economy.
The ValuTime line will be featured at Topco’s Annual Membership
Meeting from Feb. 27 to March 1 in Palm Beach, Fla. Topco recently
appointed Kathy Babiarz of Shurfine as ValuTime Brand Manager.
For more information about the Valu Time line, contact Babiarz at
(847) 329-3524 or [email protected].
Members gain access to discounted
pharmacy services at reduced cost
he members of Topco Associates LLC can capitalize on a wide variety of discounted pharmacy services under a new strategic alliance
between Topco and PRS, a Latrobe, Pa. firm dedicated to the development of progressive and profitable pharmacy departments.
The services from PRS provide a strong complement to Topco’s successful Pharmacy Wholesaler Selection Program, which has generated more
than $13 million in member cost savings since its introduction in 1999.
“We do the Wholesaler Selection Program very well. It’s proven to be
a great tool to
solicit bids from
multiple pharmacy wholesalers,
analyze and compare the costs and
services of each,
and to identify
potential cost savings on behalf of
the members,”
says Joe Friedman, Topco Pharmacy Manager.
“But what PRS
additionally offers
is a vast array of
other programs
and services that
range from getting
into the pharmacy
business to
improving and
enhancing a member’s existing pharmacy operations.”
Under the strategic alliance established last October, PRS will make
these services available at discounted rates to Topco members, who will be
eligible for discounts of as much as 25% depending on the number of services each member uses.
For members considering the development or expansion of pharmacy
programs, the availability of high-quality pharmacy services through
T
K-VA-T’s Jessie Lewis, Sr.
VP/COO, and Topco’s Steve
Lauer, President/CEO,
proudly display Food Club
items, the official condiment
of the Bristol Motor Speedway. K-VA-T/Food City has
sponsored NASCAR racing
events for the past 10 years.
Topco’s strategic alliance with PRS will help to level the playing field
with national grocery retailers and pharmacy chains, Friedman says. One
Topco member, he adds, already has enlisted PRS to help determine the
feasibility of developing a pharmacy program.
Specific PRS services now available to all Topco members include:
➤ Site and competition evaluation, a study of competitors and potential
customers in a particular area. The evaluation seeks to determine whether
a pharmacy will thrive or die in a specific location.
➤ Evaluation of acquiring existing competitors. The evaluation can
determine the fair market value for the acquisition of an existing pharmacy.
➤ Trade area evaluation, an expanded look at pharmacy market potential, including demographic trends and revenue projections.
➤ Compliance with state and federal regulations. PRS provides a list of
regulatory requirements and handles all the paperwork to open a pharmacy.
➤ Personnel activation. PRS can help members to search for pharmacy
managers, staff pharmacists and technicians.
➤ Third-party insurance assistance. PRS can ensure that contracts are
in place with necessary third-party insurance providers.
➤ Pharmacy layout and design. PRS can work with members to develop
pharmacy layouts and designs that maximize efficiency and productivity.
➤ HBC enhancements. PRS can work with members to determine the
size and locations of HBC and Pharmacy departments. Additionally, PRS
can provide support with the strategic positioning and selection of medical product lines as well the inventory management of pharmacist-recommended specialty products.
➤ Assistance with professional, operational and fiscal standards. PRS
can help Topco members meet these standards, which are “a key to the
success and overall performance of a pharmacy,” Friedman says.
➤ Prescription pricing. PRS can establish site-specific, competitive
pricing strategies.
➤ Inventory control. “Prescription inventory represents the single
largest asset in the pharmacy and controlling that asset is imperative to
achieving positive earnings and cash flow,” Friedman says. PRS can provide assistance with everything – from purchasing to returns to maintaining your inventory.
➤ Annual review. PRS can conduct a comprehensive 12-month review
of your pharmacy program, focusing on pricing, marketing and other
aspects of the program.
3
Topco leverages knowledge
to generate dairy, meat cost savings
continued from p. 1
“We don’t take a cookie-cutter approach,” Unolt says. “No two
members are exactly alike. We try to analyze their business and
blend into their routine, instead of forcing our routine on them.”
Topco works with members to customize their programs based on
After
the retailer’s quality standards and item preferences, as well as regional
helping to
tastes, says Marc Kurkiewicz, Topco’s Director of Branded Perishables.
negotiate milk
Topco supports the member’s customization decisions by providing
contracts with
useful information about product trends elsewhere, Kurkiewicz says.
regional dairy processors, Topco regPrice also plays an important role in the customization process. “We
ularly monitors processors’ prices to ensure they are in line
make sure to price it as they need it, whether
with federal milk marketing orders, which set
that’s high-low, dead-net or promotionally
minimum milk prices monthly. “We make sure
driven,” he says.
Constant monitoring
vendors change prices based on the federal milk
leads to cost savings
Topco then negotiates programs with suppliannouncement and not on what they want,” says
ers who can meet the member’s requirements.
Recent examples of cost savings generatLarry Rife, Topco’s Buyer for Fluid Milk.
In the deli meats area, Topco offers a corporateed by Topco’s ongoing monitoring of
Co$trac data and processes provide the safebrand program with a customized selection of
customized meat and seafood programs
guards necessary to sustain negotiated cost savproducts, including unique formulations and flainclude the following cases:
ings. Topco, for example, can use Co$trac data
vor profiles. Instead of finding one supplier to
➤ The Deli Department proposed a supto ensure the validity of any price increase
provide all deli meats for a member, Topco identiplier change on bulk deli cheeses that
requested by a dairy processor after a contract
fies a supplier for each meat, Kurkiewicz says.
saved a member $50,000.
has been negotiated.
Once Topco negotiates and implements a pro➤ The Poultry Department renegotiated
The expertise and intuition of Topco buyers
gram for a member, “we’re constantly looking at
a chill-pack chicken program with a
help Topco negotiate and sustain dairy cost savmember’s existing supplier, saving the
ings. In one case, seven members in Topco’s
the program to make sure it’s aggressively priced
member an additional $850,000.
regional dairy program realized more than
against new programs we’re setting up,”
➤ The Processed Meats team renegotiat$370,000 in annualized savings when a Topco
Kurkiewicz says.
When Topco’s ongoing monitoring and analyed a member’s lunchmeat program, savbuyer used his experience and Co$trac data to
ses show that a member’s program has slipped
ing the member $120,000.
determine that a requested milk price hike was
competitively, Topco moves quickly to review and
➤ The Seafood Department renegotiated
unwarranted because a price increase for resin
to renegotiate the program with the existing supa member’s shrimp-ring program, pro(the primary component of plastic milk jugs) –
plier. This process sometimes leads to the selecviding savings of $30,000 and signifiwhich processors had cited as the reason for the
tion of a new supplier. (See sidebar.)
cantly upgrading packaging.
milk price hike – had not occurred.
“Topco’s goal is to work side by side with
Co$trac provides negotiating edge
each member to achieve the best overall program
Co$trac®, Topco’s proprietary Price Assurance Program, plays an important
for our members and maintain that position over time,” Rife says.
role in Topco buyers’ ability to negotiate dairy cost savings for members.
Using Co$trac data, buyers continuously monitor market benchmarks, compare those benchmarks with
Catching quality seafood
prices paid by Topco memworked as a food and beverage buyer
bers and leverage this
n the seafood business, long-standing in the hotel industry for five years
information to negotiate
business relationships and quality
before focusing on seafood.
the best possible price.
products go hand in hand.
Sullivan enjoys the challenges of
When one member
“Trusting your vendors and their
buying seafood, including dealing with
decided recently to
product is very important,” says Mike
suppliers from around the world,
rebid its milk proSullivan, Senior Buyer, Seafood, at
weighing the impact of variables such
gram, Topco
Topco. “There’s a lot of potential for
as weather and economic conditions,
invited seven
fraud in the seafood industry, so I stick
and leveraging members’ collective
vendors to parwith suppliers with a good history.”
tonnage to capture cost savings. “It’s
ticipate in the
Fortunately for Topco members,
new every day,” he says.
process and led
Sullivan has worked for more than 20
But the most satisfying part of
negotiations for five
years as a seafood buyer, including
his job, he says, is “helping members
months. Topco used
more than five years in his current posiknow they’re buying quality products
Co$trac data to analyze and
tion and 15 years at a wholesale
and increasing their sales because of
compare the competing bids. These efforts led to cost savings of $1.9 milseafood distributor in Chicago.
the quality of those products. Pricing
lion, or 3.8%, for the member, which opted to remain with its existing
“I have people I’ve been buying
is one issue, but in the seafood area,
vendor but switched from a promotional to a dead-net program in its new
from for 20 years,” says Sullivan, who
customers will come back for quality.”
three-year contract.
2003
Save the date!
Topco LLC Annual
Membership Meeting
The Phoenician
Scottsdale, Arizona
March 5-March 7, 2004
I
Smooth transition, increased cost savings
are targeted as immediate priorities
continued from p. 1
Channel and Senior Vice President of Topco Associates LLC; Dennis
Dangerfield, Vice President of Grocery; and Mike Nugent, Vice President – Sales and Marketing of the Wholesale Channel.
A transition steering committee composed of top management personnel is overseeing the efforts of various departmental transition teams to
blend Shurfine’s operations with Topco’s. “It is our goal during the transition phase to provide continuity of service to both Topco and Shurfine
members, without any disruption,” Stanhaus says.
Plans have been implemented to align Shurfine member-owners’
electronic transaction sets with Topco’s computer systems to ensure that
Shurfine member-owners experience a trouble-free technology transition.
(The merger did not affect Topco members-owners’ transaction sets.)
Efforts also are under way to introduce Shurfine member-owners to
Topco programs not previously offered by Shurfine, such as the Regional
Dairy/Bakery programs, the Equipment/Supplies/Business Services
programs, the World Brands national brands procurement program and
the General Merchandise program.
“We are communicating with Shurfine’s members about these additional offerings and the benefits of integrating the members’ volume into
these programs,” Stanhaus says. “These benefits include cost savings for
individual members, as well as increased volume and greater buying
power for both Topco and Shurfine members alike.”
Immediately after the merger, discussions began in earnest with
suppliers that served both cooperatives to renegotiate existing contracts,
leveraging the combined volume of Topco and Shurfine to generate additional cost savings. Those negotiations are producing new arrangements
with volume incentives retroactive to November 2001. Negotiations with
suppliers unique to Topco or Shurfine are beginning in February/March.
“We are pleased with initial results and are tracking cost savings, to
report back to the membership upon completion of the process,” says Jeff
Posner, Topco’s Chief Procurement Officer. “Overall, we expect these
efforts to produce significant benefits for our member-owners.”
Mike Sullivan
TOPCO
KNOW-HOW
4
Premiering
from Topco
E
ach year, Topco introduces a wide variety of new
products, reflecting our commitment to innovation.
The following items are a recent sampling.
Big Chips Chocolate Chip Cookies
Frozen Pizza
Bigger chips and
richer flavor characterize the new Big Chips Chocolate
Chip Cookies from Food Club.
Available in three varieties: Chewy
Double Chocolate, in 16-oz. size;
Macadamia, in 15-oz. size; and
Pecan, in 15-oz. size. Contact
Ken Kornita, (847) 329-3482;
[email protected].
Shurfine is expanding its frozen
pizza offerings with the introduction of two new lines to join its
successful economy line. The new
lines are Deluxe pizzas, available
in Cheese, Pepperoni, Supreme and
Combination; and Self-Rising
Crust pizzas, available in Supreme,
Pepperoni, 3-Meat and 4-Cheese.
Contact Greg Lenski, (847) 3293464; [email protected].
able in five flavors: Garlic Italian,
Portabella with Roasted Red Peppers, Old World Style, Teriyaki and
Sweet Italian. All in 8-oz. glass
jars. Contact Dean Tielbur, (847)
329-3428; [email protected].
flavors available in shipper case.
Beef Jerky is high in protein, 97%
fat-free and has an 18-month shelf
life. Contact Dave Mueller, (847)
329-3506; [email protected].
Refrigerated Fat-Free Puddings
and Sugar-Free Gelatin
Refrigerated Pudding Tubs
Grill Seasonings
Food Club introduces two new
Grill Seasonings, for steak or
chicken. Available in 3-oz. size
(steak)/2-oz. size (chicken). Contact Karen Grossmann, (847) 3293463, [email protected].
New 22-oz. Refrigerated Pudding
Tubs from Food Club are available
in three flavors: Chocolate, Rice
and Tapioca. Contact Brian
Flanagan, (847) 329-3437;
[email protected].
Food Club introduces Fat-Free
Puddings and Sugar-Free Gelatins
in convenient six-packs. Available
in three varieties: Fat-Free Chocolate/Vanilla Swirl, Fat-Free Chocolate; and Sugar-Free Strawberry
Gelatin. Contact Brian Flanagan;
(847) 329-3437;
[email protected].
Frozen Breaded Chicken
Food Club introduces three varieties
of Frozen Breaded Chicken: Tenders, Nuggets and Patties. Each in a
24-oz., zip-lock footed polybag.
This is a very fast-growing category, posting 20.7% growth in sales
dollars for the 12-week period ending 7/12/01, over the previous year.
Contact Adam Brogowski, (847)
329-3594; [email protected].
Slider Storage Bags
Sloppy Joe Sauce
Nail Polish Remover
New Slider Storage Bags from Top
Crest are convenient and easy to
use. One-gallon bags in 15-bag box;
Freezer Bags in 1-gal. size, with 10
bags, and 1-qt. size, with 15 bags.
All have slider close top and writeon label. Contact Paul Sowa,
(847) 329-3617; [email protected].
Food Club is offering its Sloppy
Joe Sauce in a new 26.5-oz. can
that more closely matches the
brand standard. Contact Walt
Cichon, (847) 329-3467;
[email protected]
Top Care’s new Nail Polish
Remover is available in five varieties: Regular, Non-Acetone, Moisturizing, Cucumber Melon and
Vanilla Pear. All in 8.5-oz., no-spill
bottles. Contact Carol Suchy, (847)
329-3415; [email protected].
Chocolate Cups
Topco Advantage
is a quarterly newsletter published by
Topco Associates LLC for executives of
its member companies. The publication’s mission is to update members
on new developments, provide a forum
for member sharing, and communicate
cost savings generated by the collective volume, knowledge and commitment of Topco’s members.
New Chocolate Cups from Food
Club are available in three delicious flavors: Chocolate Mint,
Peanut Butter and Caramel. In
resealable 12-oz. gusset bags. Contact Alan Moskovitz, (847) 3293422; [email protected].
Project Directors:
Ken Guy
Sr. Vice PresidentMember Development
Dried Fruit
Food Club offers three new varieties of Dried Fruit: Cranberries,
Cherries and Mixed Berries. Fruits
are all-natural and fat-free. Available in 5-oz. resealable gusset bags
offering consumer convenience and
easy in-store merchandising. Contact Walt Cichon, (847) 329-3467;
[email protected].
Melissa Hilston
Project Manager
© Copyright 2002
Topco Associates LLC
Printed in the U.S.A. All rights reserved.
Winter 2002.
Cups to Go
Top Crest introduces Cups to Go,
12-oz. cups with drink-through
lids. These insulated cups are the
first corporate-brand offering of
this type in the U.S. Contact
Norm Spencer, (847) 329-3580;
[email protected].
Beef Jerky
Karen Vorwald
Director-Member Development
Linda Sanduski
Sr. Manager-Member Development
Mexican Foods
Flavored Peanuts
Food Club introduces two new
varieties of Flavored Peanuts: Hot
& Spicy and Butter Toffee. Hot &
Spicy is available in 10-oz. size,
and Butter Toffee in 12-oz. Contact
Karen Grossmann, (847) 329-3463;
[email protected].
Marinated Mushrooms
World Classics expands its line
with Marinated Mushrooms, avail-
Food Club introduces a
new line of Beef Jerky
products. Four flavors are
available in 4-oz. packages: Original, Honey
BBQ, Teriyaki and Peppered. Original and
Teriyaki also available
in 8-oz. packages. All
Shurfine introduces an extensive
selection of Mexican foods,
including taco shells and dinners,
salsa and picante sauce, enchilada
sauce, bean dip, refried beans,
jalapenos, chili peppers and
nacho cheese dip. Contact Clyde
Hermanson, (847) 329-3673;
[email protected].