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News & Notes BRIEFS GOURMET NEWS NOVEMBER 2019 www.gourmetnews.com NEWS & NOTES 6 Gillibrand Calls for USDA Study of Produce Industry Market Conditions Registration Open for Winter Fancy Food Show Registration is now open for the Specialty Food Association (SFA)'s return to San Francisco, California, with its 45th Winter Fancy Food Show, to be held January 19-21, 2020. Held at the Moscone Center, the largest specialty food and beverage trade show on the West Coast will feature the latest in innovative specialty food products. UNFI Reports Q4 Results UNFI has reported that its fourth quarter net sales for its fiscal year ended August 3, 2019 increased to $6.41 billion, or 2.8 percent when excluding the contribution from SUPERVALU and the additional week in the quarter compared to last year's fourth quarter. UNFI's fourth quarter net income was $18.9 million, with gross margin for the fourth quarter at 12.83 percent of net sales compared to 14.50 percent of net sales for the fourth quarter of fiscal 2018. The largest driver of the decline in the gross margin rate was the addition of SUPERVALU at a lower gross profit rate. Meijer Promotion Celebrates 85 Years In the midst of the Great Depression in 1934, Hendrik Meijer opened Meijer's North Side Grocery in Greenville, Michigan, after purchasing $338.76 worth of merchandise on credit. It's been 85 years since Hendrik took that risk, and to celebrate its heritage, growth and future, the retailer is offered a two-day 85-cent price point promotion. Thousands of select items went on sale for various prices ending in .85, ranging from 85 cents up to $39.85. Move Opens Online Members-Only Specialty Grocer Move, a digital supermarket, is now selling memberships to the general public. For the first time, customers can buy a membership to Move, locking in the lowest annual membership fee for life. Membership fees start at $95 annually. Move works with America's best artisans to make daily staples and ships them direct-to-consumer. Starting with 100 essential staples at launch, Move will scale to 500 products by the end of 2021. The company will source products from artisans and producers who have been recognized with Michelin stars, James Beard awards and Good Food awards. Move has been backed by industry experts including Y Combinator, the San Francisco 49ers, Joe Montana, the Marzotto family (founders of Caviar and Home24) and hundreds of others. The Save Mart Companies Re-Sign with KeHE Distributors KeHE Distributors (KeHE) announced October 3 that it has renewed and expanded its partnership with The Save Mart Companies (TSMC). Under the terms of the multi-year agreement, KeHE will continue as the 67-year- old retailer's primary distribution partner for natural, organic and specialty products, and will become TSMC's primary distributor for perimeter categories including fresh bakery, deli, specialty cheese and culinary products. U.S. Senator Kirsten Gillibrand, a member of the Senate Agriculture Committee, has called on the U.S. Department of Agricul- ture (USDA) to investigate if fruit and veg- etable farmers in New York and across the country are receiving fair prices for their produce. While the prices of fruits and veg- etables have increased for both consumers at the grocery store and for wholesale buy- ers, the prices that farmers receive for these same products has not kept up with these increases – and even gone down in some cases. "Our New York farmers are facing a produce-pric- ing crisis. Throughout the state, fresh fruit and veg- etable growers are hurting because the prices they get for their produce have stayed flat, and in some cases have even gone down, while the middlemen who move the produce from farmers to gro- cery stores and grocery store shoppers have seen the prices for the same produce increase," said Senator Gillibrand. "De- spite this, the USDA has not reviewed the fruit and vegetable industry in decades. We need to understand what is causing these unfair prices for our farmers, and I am calling on the USDA to complete a top-to-bottom review of the fruit and vegetable industry so that we can help New York's farmers better price their pro- duce and plan for their future." United Fresh Produce Association is tak- ing issue with Gillibrand's position. "The fresh produce industry operates on ex- tremely tight margins, at every stage from grower to wholesaler to retailer. Our indus- try is the ultimate supply-and-demand economy, and our real goal must be to in- crease demand for fresh fruits and vegeta- bles," said Tom Stenzel, President and Chief Executive Officer. "That's the key to raising prices paid to farmers, allowing reinvestment for growth. Transparency in any supply chain is a good thing, and we always welcome USDA's analysis of our markets. It's important for each sector in our supply chain not to lose sight of our goal to grow fresh produce consumption while fighting with one another over whose share of a dwindling pie is bigger." There are thousands of farms and or- chards throughout New York State, and New York consistently ranks as one of the top agricultural states in the nation, Gillibrand noted. "However, data from the U.S. Bureau of Labor Statistics and National Agricultural Statistics Service shows that the prices paid to farmers for many of New York's specialty crops – in- cluding apples, snap beans, cabbage, and broccoli – lag behind the terminal prices (the prices that the middle men who move these same crops from farms to grocery stores receive)," she said in a statement. "Furthermore, structural changes to the fruit and vegetable indus- try in recent decades, such as new farming technology, nutrition sci- ence, and consumer behavior, have left farmers facing uncertainty as they feel that the market is not transparent enough to know if the price they are offered for their pro- duce is fair." The persistently low prices that farmers receive for their fruits and vegetables have led to the loss of small family farms, and in the last five years alone, New York lost 11,000 acres of veg- etable production. The USDA hasn't con- ducted a full review of the fresh fruit and vegetable market for decades, and Gilli- brand's push for a new study of this indus- try would help identify which factors contribute to unfair prices for farmers and increase transparency in the market. Gilli- brand is also calling for the USDA to use new technology to improve farm sales re- porting to ensure that data is updated in real time, increasing transparency for farm- ers and allowing them to see if the prices they receive are fair. GN Study Predicts Growth for Specialty Grocers Consumers are increasingly turning to non-traditional channels such as club stores, limited assortment stores, online and specialty stores to satisfy their food and beverage needs, according to Pentallect, a leading food industry strategy firm. These nontraditional channels, which are not sys- tematically measured, have emerged and/or solidified their positions, and are poised for accelerated growth at the expense of tradi- tional channels, most notably retail. Pentallect estimates that the nontradi- tional food channels currently represent $210 billion in consumer expenditures, and projects 7 percent annual growth for the referenced channels over the next five years compared to 3.5 percent for foodser- vice and 1 percent for traditional retail (which includes supermarkets, super- centers, mass/drug, and dollar stores). The referenced channels will account for 30 percent of food industry growth over the next five years. Bob Goldin, a Pentallect Partner and co- author of the study, says, "Nontraditional channels represent a 'sweet spot' in the food and beverage industry. Their growth is based upon strong consumer appeal and generally favorable business models. With- out question, they demand increased atten- tion from suppliers." Pentallect conducted comprehensive re- search and analysis into 10 nontraditional channels, including obtaining insights from over 1,000 consumers and trade sources, and the findings are documented in a com- prehensive new report: "Nontraditional Food Channels: A Key Industry Growth Driver," an update of a major report con- ducted on the topic in 2017. The channels studied are: club stores, community-supported agriculture (CSA), ethnic/neighborhood stores (e.g, bodegas), farmers markets, food trucks, limited as- sortment stores, meal kits/home-delivered meals, online, specialty stores (e.g., bak- eries, butchers, etc.) and Trader Joe's. Pen- tallect's research shows that a sizable number of consumers plan to try or use the channels more often in the future. Many reasons are driving this use, in- cluding convenience, a desire to save money, availability of unique items, sup- port of local businesses and perceptions of better quality (largely in the context of fresher products) than traditional channels. Rob Veidenheimer, Pentallect's President, notes that, "Each of the channels has unique consumer appeal and continues to evolve at a very rapid rate. We have studied these channels closely over the past several years and see them as significant share gainers for the foreseeable future." GN "Our industry is the ultimate supply-and-demand economy, and our real goal must be to increase demand for fresh fruits and vegetables" — TOM STENZ, PRESIDENT AND CHIEF EXECUTIVE OFICER UNITED FRESH PRODUCE ASSOCIATION

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