2013 Marketing & Sales Leaders Forum Summary Presentation

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2013 Marketing & Sales Leaders Forum Summary Presentation

  1. 1. Marketing & Sales Leaders Forum Program Planning Committee Bill McClellan Dawn Foods Chair Connie Fuller B&G Foods Vice Chair Judy Karner Azarta Bryan Koster Barilla Lisa Kermizis-Abraham Bigelow Tea Bill McCullough Bunge Oils Alfredo Ortiz CSM Bakery Products Hugh Sullins Epi Breads Cory Sexson FoodHandler Amy Fattori Grecian Delight Andrew Dun Insight Beverages Jeannine Scherzer International Paper Jeff Pierce Kagome Ben Wexler Kellogg Company Michael Alexander King & Prince Steve Diener Paramount Farms Doug Allison PepsiCo Deborah Jackson PepsiCo Peter Sirgy Reser’s Fine Foods Dinsh Guzdar Rich Products John Zimmerman Rosina Food Products Kristin Bird Sara Lee Chris Travisano Sugar Foods Corp. Mike Cannon Surlean Foods Mike Castagna Ventura Foods Alan Sterling Wayne Farms
  2. 2. State of the Foodservice Industry
  3. 3. DPI is Sluggish % Real Change vs. Prior Year -8% -4% 0% 4% 8% Apr'06 Aug Dec Apr'07 Aug Dec Apr'08 Aug Dec Apr'09 Aug Dec Apr'10 Aug Dec Apr'11 Aug Dec Apr'12 Aug Dec Apr'13 May 2013 1.0% Source: Department of Commerce  Correlates with foodservice spendingKey Insights
  4. 4. Restaurant Employment Has Consistent Growth % Change from Prior Year -4% -2% 0% 2% 4% 6% May… Nov May… Nov May… Nov May… Nov May… Nov May… Nov May… Nov May… Aug 2007 4.1% Dec 2009 -2.9%  But driven by more part timers.Key Insights Source: Bureau of Labor Statistics Jul 2013 3.7%
  5. 5. Small Chains/Independents Outpacing Chains 1.6% 3.5% 4.9% 2.9% -1.5% 4.6% 5.6% 3.0% 2010 2011 2012 2013(F) Top 500 Chains Small chains/Independents Nominal Growth  Indys heavily FSR-orientedKey Insights (F) = Forecast Source: Technomic
  6. 6. Obamacare Has Many Operator Implications Yes 65% No 35% Obamacare to Have a Direct Impact? Reactions* Restaurants Beyond Restaurants FT employee reduction 44% 27% PT employee increase 36 29 Raise menu prices 34 46 Reduce FT employee hrs. 29 22 Cut other costs 29 27 Reduce total employee # 21 14  Schools least likely impacted  Those operators not impacted have <50 employees, or already provide healthcare Key Insights *Base: Operators indicating Obamacare to have an impact Source: Technomic Operator Survey – 3Q-2013
  7. 7. Jack Li Managing Director Datassential
  8. 8. believe LTO’s are MORE INTERESTING more interesting 38% better taste 15% marketing ploy 45% believe LTO’s are BETTER TASTING believe LTO’s are MARKETING PLOYS LTO“This phrase really has no meaning.
  9. 9. Just 16% believe LTO’s to be very unique
  10. 10. menu adoption cycle
  11. 11. INCEPTION Foodservice Fine Dining Ethnic independents Retail Ethnic grocers Largely absent elsewhere ADOPTION Foodservice Chef-casual Food trucks Fast-casual Casual dining Independents Retail Specialty grocers Gourmet food retailers PROLIFERATION Foodservice Casual dining chains QSR Lodging C&U Retail Traditional grocery stores Mass merchandisers Club stores UBIQUITY Foodservice Midscale restaurants B&I K-12 C-Stores prepared foods Grocery deli Retail Frozen foods aisle C-Store shelves Drug & dollar stores MAC menu adoption cycle
  12. 12. ethnic population acculturation urbanization food culture technology TREND ACCELERATION
  13. 13. explore the nuances future predictions
  14. 14. Menu Adoption Cycle accelerates 2010 2015 2020 2030
  15. 15. fine dining continues its democratization FOOD TRUCKS CHEF-CASUAL
  16. 16. FOODWATCH Customized LTO updates
  17. 17. Bill Hale President The Hale Group
  18. 18. Agenda • The Hale Group has a point of view concerning the evolution of the foodservice landscape and strategic implications for foodservice manufacturers. Specifically, 1. Foodservice 2020: Global, Consolidated, and Structured 2. Consumer Thinking versus Channel Thinking 3. GPO’s as a Segment Opportunity 4. The Distributor of the Future • Let review this outlook and where it takes us. 22
  19. 19. • The dominant forces shaping the foodservice landscape in this decade: Foodservice 2020: Shaping Pressure Point Value & Economics  Consumers will drive for value and not expected to increase greater per capita number of AFH occasions  Operators seeking pricing relief and point of differentiation  This will drive price and margin pressure at all levels  =
  20. 20. Consolidation of Operator Purchasing
  21. 21. • Operator demand will be aggregated. Foodservice 2020: Consolidated Share Controlled by Consolidated Operator Purchasing Source: The Hale Group’s Estimates Segments 2009 2020 (P) Restaurants 58% 72% Lodging 70% 85% Retail Foodservice 80% 90% Recreation 55% 70% Airlines 100% 100% Business & Industry 75% 85% Colleges & Universities 57% 65% K-12 65% 85% Healthcare 80% 95% Others: Government, Agencies, Institutions 70% 80% Total 62% 79% Fewer but bigger buyers
  22. 22. • GPO’s consider their role to be the representative of the operator. • GPO’s aggregate demand and leverage the power of that purchase volume and exploit market discontinuities. GPO’s as the Representation of the Operator Distributor Manufacturer Independent and Self-Op’s Operators GPO Source: The Hale Group estimates
  23. 23. Review of the Foodservice Distributor Segmentation of Distributors Role of the Distributor
  24. 24. Foodservice Distributor Landscape: Segmentation Source: ID Magazine and Newsletters Top 50 , Technomic and The Hale Group estimates (excludes alcohol and non-food equipment)) 1. Alternative formats include Restaurant Depot, Warehouse Clubs and Cash and Carry The distinctions between broadline and system distributors will continue to blur; alternative formats capture independent operators. The structure of the distributor industry will change over the decade… Share of Total Sales (%) Type of Distribution 1995 2000 2005 2010 (F) 2020 (P) Comments Broadline 45% 50% 53% 58% 59% Adding categories & systems business to Increase share System 14% 17% 15% 11% 11% Broadliners are competing for this business Product Specialist 38% 30% 27% 20% 16% Have high service levels and specialty products Alternative Format Specialist 2% 3% 5% 11% 14% Capturing the independent Total Percent 100% 100% 100% 100% 100% Total Sales ($Billion) $103 $132 $159 $175 $203
  25. 25. Forces of Change for Distributors •There are essentially three forces shaping the change in the distributor community 1. Changing customer mix with more multi-unit operators and buying groups that want a low cost high efficiency and reliable supply-chain / logistics partner – extreme margin pressure 2. Trade income under pressure as the manufacturer trade dollars are now shared among distributors, buying groups, operators and soon to be consumers – margin relief is going away 3. Bigger customers with multi-regional footprints want one distribution vender versus a patchwork – streamlined, one touch distribution network •The pressures are economics and changing customer needs and wants
  26. 26. Implications for Foodservice Strategic Imperatives Distributor Strategy Elements
  27. 27. • A key to future success is an organizational culture that embraces a more… Success Factor  Analytical approach to decision-making • Doing the homework  Directed approach to business and customer development • Targeting the segments and customers  Structured value proposition and execution • Explicit solution to the opportunity  Measured results and constant corrections • Open sharing of results and accountability

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