McCormick Buys French’s

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McCormick to acquire French’s, Frank’s for $4.2B

Reckitt sale brings “red hot” condiment position

Jon Springer | Jul 19, 2017

McCormick & Co. said Wednesday that it has agreed to acquire the food division of Reckitt Benckiser for $4.2 billion, the latest in a string of big consumer packaged goods mergers.

The deal will bring iconic brands including Frank’s RedHot and French’s Mustard to McCormick’s stable of condiments, moving it from No. 10 worldwide to a leading position in that category, where Frank’s and French’s are the respective top brands in the U.S. and Canada, Sparks, Md.-based McCormick said.

McCormick CEO Lawrence Kurzius had made little secret of his intention to expand the condiment business, telling analysts earlier this year that category was “core to its business,” although recent reports suggested Unilever and Hormel may have also been suitors.

The agreement also continues a string of high-profile moves among CPG giants as they seek scale, specialization and brand strength to meet ongoing challenges of slowing growth in center store. United Kingdom-based Reckitt was looking to sell its food business in part to fund its own recent acquisition of Mead Johnson Nutrition as Reckitt stakes out a position in health and hygiene, Rakesh Kapoor, CEO, said.

Strategic Resource Group Managing Director Burt P. Flickinger III called the deal a “masterstroke” for McCormick and predicted retailers would also benefit as McCormick capitalizes on its ability to drive condiment growth in association with its stable of spices and seasonings, providing a new challenge to Kraft Heinz.

Investors appeared to be wary of the price in the meantime as McCormick stock was down by more than 5% early Wednesday.

“Everyone’s saying they’re paying a premium price, but Lawrence Kurzius is such a genius at marketing, merchandising, brand-building and developing new categories,” Flickinger said. “He can take a category like French’s mustard that has been under-marketed and undersold for a century and turn it into a brand powerhouse. Instead of a routine category he will make it a destination category across condiments, spices and snacks.

“Instead of making this a Memorial Day to Labor Day, hotdogs and hamburgers story, McCormick will make French’s and Frank’s and the complementary products relevant every week of the year and really dive profitable sales growth for retailers,” Flickinger added.

The deal also brings with it McCormick Cattlemen’s barbeque sauce, a leading foodservice brand that will increase the company’s U.S. and Canada foodservice sales by 50%.

Publix Opens 1st VA store

Publix begins Richmond rally

Market in flux as Lidl also arrives, Martin’s departs

Jon Springer | Jul 18, 2017

Publix Super Markets over the weekend opened its first store in the Richmond, Va., market and will have three stores there by early next month as Virginia’s capital city experiences a high-speed grocery overhaul.

The new store, on Wyndham Forest Drive in Glen Allen, was built from the ground up. Additional Publix stores scheduled to open July 29 (Laburnum Avenue in Richmond) and Aug. 5 (Staples Mill Road in Glen Allen) will be the first of 10 future Publix sites formerly belonging to Ahold’s Martin chain. Publix acquired those stores a year ago when Ahold divested them in advance of its merger with Delhaize. Those sites, including four more Richmond-area stores expected to open this year, have been closed since Publix acquired them.

The Martin’s stores that did not sell in the meantime are on their way out: Two closed this week, and five more will go dark Aug. 2, concluding the brand’s presence in Richmond and throwing thousands of additional customers up for grabs.

Publix has plenty of competition for those shoppers, as Wegmans opened two megastores in Richmond over the last year and Lidl is readying four Richmond-area stores for grand opening July 27.

“We are excited to bring Publix’s premier service, quality and value to customers in greater Richmond and are looking forward to being a part of such a great community,” Kim Reynolds, media and community relations manager for Publix, said in a release detailing last weekend’s opening in Glen Allen.

The 50,000-square-foot store at the newly opened Nuckols Place shopping center is within a three-mile radius of nearly 50,000 shoppers whose average household income is more than $123,000, according to developer Peterson Cos.

The new store resembles the newer units Publix has opened as it expanded from its Florida base into North Carolina in recent years, including a Starbucks counter; an emphasis on deli, bakery and prepared foods; service meat and fish counters; an Aprons Simple Meals cooking demonstration area; and a drive-thru pharmacy. Online ordering and delivery is available through Instacart.

Ahold Delhaize’s Food Lion chain earlier this year said it would commence its Easy Fresh & Affordable renovations throughout its 71 stores in the market.

AWG Closes Ft Worth Division

AWG to Close Fort Worth Operations

Expects cost savings by merging with Oklahoma City distribution center

July 18, 2017, 06:39 pm

Wholesale grocery cooperative Associated Wholesale Grocers Inc. plans to close its Fort Worth, Texas, facility by the end of October and consolidate its operations with the company’s Oklahoma City distribution center.

Kansas City, Kan.-based AWG opted to consolidate the facilities “to continue to maintain the lowest possible cost of operation … [and] provide synergies for our entire organization,” according to a statement released late Tuesday.

AWG has an agreement to sell the Fort Worth facility to an undisclosed buyer and plans to vacate the premises by Oct. 31.

“Our mission at AWG is to provide our member-retailers all of the tools, products and services they need to compete favorably in all markets served. This includes top-quality supermarket merchandise and support services, all at the lowest possible cost,” said David Smith, AWG’s president and CEO. “To remain the low-cost provider, we must constantly evaluate how we operate and what we can do to improve. This requires us to consider and implement change when necessary to stay true to our mission.”

Smith said he’s “deeply saddened to close our Fort Worth facility, even though we know this is the right thing for us to do. We understand that the positive business implications do not overcome the tremendous impact this will have on our loyal Fort Worth employees and their families. … We hope that many of those affected will be interested in pursuing continued employment with the company in one of our other locations.”

AWG will continue to concentrate on organic and strategic growth across its distribution areas, having recently hired more than 550 new members operating about 1,000 new stores, the company noted.

AWG is the nation’s largest cooperative food wholesaler to independently owned supermarkets, serving more than 1,100 member companies and 3,800 locations throughout 36 states from nine full-line wholesale divisions.

Alibaba online grocery

Online giant blending offline and online grocery — and it’s not Amazon

 

Alibaba Group Holding Ltd. has stepped up its efforts to combine physical retail with online in the supermarket space.

The Chinese e-commerce behemoth has opened three new membership supermarkets, under the Hema banner, in Beijing and Shanghai, that seamlessly blend offline features with physical retail. The shopping experience starts with a download of the Helma mobile app, which links up to a customer’s Taobao or Alipay account. Using the app, customers can shop from the their homes, and also order fresh food to have it prepared by the Hema chefs and delivered within 30 minutes.
Customers who prefer to shop in store can also select items to be cooked for carry-out, delivered to their nearby home or office, or they can eat it on the spot in the store’s dining area. Hema stores look like normal supermarkets, with a selection of packaged foods, produce, seafood, beverages and other goods.  Every item has a scannable bar code, which yields price and product information, including its origin and backstory (if there is one.) Customers scan the code and complete their electronic purchase through Alipay at a checkout register before leaving the store.
The Hema user experience is enhanced through big data, according to Alibaba. Because customers shop through the Hema mobile app, every purchase is logged, and their preferences are saved, giving them a personalized product page.
“We believe the future of New Retail will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that’s taking place,” said Daniel Zhang, CEO of Alibaba Group, said in a statement. “Hema is a showcase of the new business opportunities that emerge from online-offline integration.”
Since 2015, Alibaba has opened 13 Hema markets, with  ten in Shanghai, two in Beijing, and one in Ningbo.

Amazon vs Blue Apron

Amazon Takes On Blue Apron, Consumers To Benefit – What Always Happens In Free Market Capitalism

We have the news that Amazon looks like entering the prepared meal kits business and Blue Apron stock looks like it’s been shot as a result–the people who will benefit here being of course consumers which is what competition always does do in a capitalist free market. That lust for the pelf and lucre that can be made, the profits from selling to consumers can indeed make those who get it right rich. It’s the competition between that capitalists hungry for the loot which benefits consumers–they have to keep making their offer better and better until we bite. It’s hugely important for us to understand this part of the process for it’s this part which makes us all as gargantually rich as we are, hugely, vastly, rich by any global or historical standard. It’s the competition, not the capitalism which is the important part:

Investors’ fears about Amazon Inc. coming after Blue Apron Inc. may be realized.

Shares of Blue Apron APRN, plunged 9% Monday after an Amazon trademark filing surfaced for prepared meal kits.

That a specific supplier might not like this new entry into the market is also part of the story of why we all become better off.

In a July 6 trademark application, Amazon subsidiary Amazon Technologies Inc. revealed it’s planning “prepared food kits composed of meat, poultry, fish, seafood, fruit and/or and [sic] vegetables…ready for cooking and assembly as a meal,” as well as primarily grain-based offerings.

The product’s tagline: “We do the prep. You be the chef.”

I’ll admit that it’s not an offering that’s going to be of much interest to me. My idea of hassle free cooking is a restaurant with a damn good head waiter. But, you know, tastes and habits differ.

Blue Apron, a meal-kit delivery service backed by major investors including Fidelity, Bessemer Venture Partners and First Round Capital, has seen shares fall after hitting the public market in late June. The stock has shed nearly 30 percent month to date.

Well, you know, we’re all going to cry for the capitalists, right? At which point it is now near ritual for me to trot out this paper:

The present study examines the importance of Schumpeterian profits in the United States economy. Schumpeterian profits are defined as those profits that arise when firms are able to appropriate the returns from innovative activity. We first show the underlying equations for Schumpeterian profits. We then estimate the value of these profits for the non-farm business economy. We conclude that only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.

I trot it out so often that what was once a sprightly pony is closer to an old nag now. But the finding of the paper is that the entrepreneurs, those ones who innovate and create these new products–and prepared meal kits are just such–end up with about 3% of the total value they create. Near all of the rest of it comes to us out here, the users, as the consumer surplus.

What this Amazon and Blue Apron story gives us is an opportunity to explain why. So, start with Adam Smith, who didn’t quite put it in these words. Capitalists are greedy and lazy. They want to make profit, the more the better. So, when they see someone doing well in a new field, with a new idea, they all pile in to try and get a bit of that above average profit. That Blue Apron is still losing money doesn’t matter here, the same is true of potential profit. As that capital floods into the scene that increases competition of course. That means prices to us fall, variations of the offer increase, we’re made better off. The competition also lowers those profits from the new idea down to something more like the average across the economy. At which point, rinse and repeat and our lazy and greedy capitalists are off looking for the next excess profit opportunity. Leaving behind that new business area, that new supply to us, with about the best prices that can be achieved consistent with the average return to capital or thereabouts.

So, what has happened? Blue Apron seems to have something which is at least potentially very interesting, those prepared meal kits. What is then happening? Not that I would describe Amazon as lazy but as good capitalists they’re seeing that this is a business they might also enter. What is the result? Likely profit margins from the business slump, that’s why the Blue Apron stock does. How and why would likely profits slump? Because the competition will limit what we the consumers can be charged.

It does all fit together. Amazon challenging Blue Apron will be of benefit to consumers as this free market capitalism always does achieve. The fall in APRN is the very proof we need of this contention.

Amazon is Doing Too Well

Amazon Is Doing Too Well

Jul. 17, 2017 12:59 PM ET

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6 comments

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 About: Amazon.com, Inc. (AMZN)Includes: WFM

David Butler

 Summary

With Amazon’s triumphant run in the retail sector, lawmakers are beginning to question its business practices.

Retail is suffering massive job losses in the wake of Amazon’s automated business model.

If the chatter over regulatory moves comes to fruition, Amazon’s bloated stock price could have some downside ahead.

Overplaying its hand

Amazon’s (AMZN) rise has been prolific. The company did the same thing that every other successful business has done in the past. It just did it online. They made the consumer’s life easier, and sometimes cheaper. By essentially being a “middle man” brokering the sale of goods between producers and consumers (much like Wal-Mart (NYSE:WMT)), Amazon has increased our ability to “shop around.” In five minutes you can look through a whole host of golf shirts, televisions, etc. It also gives access to products you might not ordinarily see.

A small novelty brand that makes customizable t-shirts in Oregon might not have found a lot of customers in say Maine prior to the advent of online shopping. Now, they can get their products on Amazon and gain exposure to anyone with a computer. Cheap knock off brands can get a little slice of Nike’s pie because you see the pricing comparisons right on screen. They also tapped into the simple fact that people are lazy and don’t want to go to the store if they don’t have to. The simplicity of the concept is genius.

Recently, there has been much more chatter about the monopolistic potential of Amazon’s format. It has bothered me for years. I buy very little from Amazon because it hurts jobs. The company has been making acquisitions/corporate moves that are scaring competitors. Its bid for Whole Foods (WFM) has lawmakers questioning whether the company’s rising dominance is healthy for the consumer. House Rep. David Cicilline has requested a hearing on the merger and the economic consequences for the grocer industry. This seems to be the first of many discussions on Amazon’s antitrust potential.

Prices vs. Jobs

The case is there for federal moves on Amazon. When you look at what it has done to apparel stores in such a short period of time, it can absolutely be argued that the company’s dealings could get out of control if acquisitions are allowed. There is a question pervading in economics right now that must be addressed. Which is more important, achieving the lowest prices possible for consumers or ensuring industries can provide ample employment for the labor force? Currently emphasis is not on a balanced front as corporations like Amazon threaten multiple employers in multiple industries. I love finding a good deal, but if you cut too many people out of the game, how will everyone be able to afford to buy anything?

And no, Amazon doesn’t replace the jobs it destroys. To sell $100 worth of items, Amazon needs half the labor force of Macy’s (NYSE:M). That sounds great if you own Amazon, but it wrecks our labor markets. This narrative is something that the federal government can definitely employ in regards to Amazon’s tendencies to cut out employment in favor of automated efficiencies.

Universal income is a farce dreamed up by billionaires who want their businesses fully automated. It will never happen, nor should it. Therefore, good paying jobs are a necessity. Henry Ford understood the importance of workers making a living. He increased wages multiple times during his time at Ford in order to ensure that people could afford to buy his cars. It’s simple logic, but sound logic. This is why Amazon’s model will not hold up.

There comes a point where the stock price cannot justify the job losses. Amazon’s approach is more damaging than Wal-Mart 10 years ago.

The move on Whole Foods was a foolish one from Jeff Bezos. The $13 billion bid announced to everyone their plans for conquest. It confirmed that Amazon wants to control everything we buy. It also expands Amazon’s model to a new level. The acquisition would thrust Amazon into the brick and mortar business, something that until recently it hasn’t had much involvement with.

The conversation on Amazon needs to be monitored very closely. A federal case for antitrust moves against Amazon would mean devastating effects on its $1,000 share price. The company’s valuation is extremely high with a P/E of 187. The market has factored in a lot in terms of future gains. Any impediment of those future values could send the stock crashing down. Even Goldman Sachs is beginning to question whether regulatory risks have been ignored.

Harveys to Florida

First Harveys Supermarket coming to Tampa, thanks to conversion of Winn-Dixie site

TAMPA — Some Winn-Dixie stores in Florida are being converted into Harveys Supermarkets, including one store in Tampa.

RELATED NEWS/ARCHIVE

Jacksonville-based Southeastern Grocers, the parent company of Winn-Dixie, Harveys, Bi-Lo and Fresco y Más grocery stores, is converting seven Winn-Dixie stores in Florida into Harveys Supermarkets this year in an effort to expand the Harveys brand in the state, according to a press release. The Winn-Dixie store at 2525 E. Hillsborough Ave., is the only one in the Tampa Bay area being converted. It will be the first Harveys Supermarket to open in the region. Others are opening in the Ocala, Orlando, Jacksonville, Cocoa and Winter Haven markets. The Winn-Dixie stores will remain open during the conversions.

Harveys is a grocery brand well known in Georgia. Last year, Southeastern Grocers began renovating many Harveys stores and expanding the chain into new states like Florida, South Carolina and North Carolina. The first Harveys Supermarket opened in Nashville, Ga., in 1924. The chain has 70 locations in Florida, Georgia, South Carolina and North Carolina. Most stores in Florida are located in the Panhandle and around Jacksonville.

Harveys Supermarkets offer a similar shopping experience to Winn-Dixie, in that consumers can shop in produce, meats, deli, seafood, bakery and pharmacy departments and prices are value focused. Stores tend to range in size from 18,000 and 35,000 square feet.

Contact Justine Griffin at jgriffin@tampabay.com or (727) 893-8467. Follow @SunBizGriffin.

The new Harveys Supermarket locations include:

• 2525 E. Hillsborough Avenue, Tampa

• 2722 N. Pine Hills Road, Orlando

• 49 Arlington Road South, Jacksonville

• 1066 Clearlake Road, Cocoa

• 2640 NE 14th Street, Ocala

• 3435 N. Pine Avenue, Ocala

• 2700 Recker Highway, Winter Haven