Those of us in the foodservice industry were originally surprised by the announced acquisition of US Foods by Sysco, however as the year progressed many assumed it was a “done deal.” Not so, says the Federal Trade Commission. Sysco’s promised divesture of 11 distribution facilities to Performance Food Group, as reported earlier in the month, apparently did not alleviate concerns that Sysco would control 75% of broad-line distribution resulting in increased pricing. Sysco argues that due to many localized distribution options, they would only handle 30% of the foodservice distribution volume and efficiencies would be improved resulting in lower pricing. This author does not have a crystal ball regarding pricing to operators, however manufacturers would certainly feel the pressure from a stronger Sysco with limited other national distribution options. Stay Tuned.
Sysco to acquire US Foods and the future implications…
Sysco announced their intent to “merge” with US Foods early this month which is expected to close in the 3rd quarter of 2014. The combined company will represent about 30% of the foodservice distribution market. Who saw that move coming? They’ve created a website bestofbothinfood.com to relay the benefits. Peter Romeo, VP and Editorial Director of Restaurant Business Online suggests in his blog that the merger will speed technological advancements and eliminate distribution redundancies. However operators are concerned that service will suffer, prices will increase, while choice declines. For manufacturers, Bill Hale suggests that the new landscape will require an approach similar to Walmart which includes aligned teams and product development specific to Sysco’s brands. Distribution has always been critical to getting foodservice products to the operator and ultimately the consumer. Though there is a lot of uncertainty moving forward, one thing is clear – Branded manufacturers who deliver value-added products, who offer good price/value, and who build loyal relationships with operators willing to demand their brands will continue to succeed.
SYSCO Central Alabama greatly impressed us by preparing this marketing piece from scratch without our prompting or involvement – using the resources available at foodservicerewards.com/distributor. This clever initiative provided MA’s customized selling collateral making Big Mike’s kickoff meeting there all the more successful. Tip ‘o the hat to Chris Craddock at Complete Foodservice Solutions for [...]
This clever initiative provided MA’s customized selling collateral making Big Mike’s kickoff meeting there all the more successful.
Tip ‘o the hat to Chris Craddock at Complete Foodservice Solutions for the introduction :-)
Are you a DSR All Star? asks Mike Z. in the innovative channel engagement strategy…
Big Mike has launched a clever engagement campaign aimed at our 2,600+ participating DSR’s that highlights a monthy winner for enrolling the most operators, like Jerry Carelly of Sysco Food Services of Houston who enrolled 22 new accounts last month.
As Mike Zoladkiewicz, Distributor Marketing Manager, writes:
In past months, we’d average 10-12 DSRs who enrolled more than one operator in any given month. Since we started the DSR All-Star program, the number of DSRs enrolling multiple operators has averaged 25.
Overall operator enrollments through DSRs have increased 29% over the prior 3 months (from 314 to 407.)”
No Show Food Shows are the latest trend among distributors trying to cut costs. See how SYSCO MN is supporting Foodservice Rewards in this one…
They’re expensive to produce, and lately, because of lack of attendance, more and more suppliers are complaining that they aren’t getting a good return on their investment.
Typically a supplier pays a booth fee, then spends additional funds on allowances on the cases of product which are booked at a show. This allowance is only available to those operators who attend the show and book product.
Typically the allowance will be $0.25 – $1.50 off per case. The funds will be automatically deducted from their invoices. If you don’t go to the show, you don’t get the allowances. While at the show, you book enough product to cover the amount that you’ll buy during the shipping period (this is how long you’ll receive your allowances). The shipping period is typically 6-8 weeks.
An operator can “book” product but then decide not to buy the products in the following weeks. There’s really no way to enforce it. Meanwhile, the distributor tells the manufacturers how successful the show was because they “booked” 200,000 cases of product. In reality, during the next 8 weeks, they might only ship 50% or 60% of those cases. Financially, the supplier is only responsible for allowances on cases actually shipped.
Anyway… many distributors are implementing a “No Show Food Show”. They’ll compile the list of items with allowances that would have been offered at the show. They create a “book” and send it out to the customers. The customers have two weeks to finalize their orders for the next 8 weeks. The operators still take advantage of “deals”, but they don’t have to stop by a booth and talk to a manufacturer or broker. The supplier doesn’t need to spend the time, money, and energy to set up, decorate, staff, and breakdown a booth.
SYSCO MN had always had two food shows per year (Spring and Fall). This Fall was the first time they are attempting the “No Show Food Show” idea. Attached is the “book”. Check out page 24.
How ‘bout them apples?
“…so send me a list of all the items that Sysco carries with FS Rewards points and if I use it, I will buy Hormel!” enthuses this chef…
Sometimes it just takes is a little encouragement from management and a testimonial from the field:
To: Michael E. Snyder/FSSales/Hormel
Re: Foodservice Rewards
I was just in Hillcrest Country Club and I showed them this promotion and they loved it. They use our Layout 18/22 and our Special Recipe Sausage because they have the points. While I was in there they switched to our Old Tyme Buffet and Pit Hams (were using a Farmland for both – about 70 lbs week), they are now going to start serving BBQ because our Austin Blues have them, Hickory Smoked Turkey (3 cs week), Pepperoni (15 to 20 lbs week), Sausage & Beef Topping (20 lbs week) and Roast Beef (2 to 3 cs week).
I was in showcasing our Austin Blues products but they switched to all of these immediately just because they had the points – the Chef said – “I know Hormel has good quality because of the bacon and sausage so send me a list of all the items that Sysco carries with FS Rewards points and if I use it, I will buy Hormel!”
Hormel Foods Sales, LLC
SYSCO Central Florida joined the program yesterday…
Check this out: SYSCO Central Florida joined the program yesterday. I gave them a “welcome call” and discovered that the Program Manager’s job is to meet with customers, overcome past hurdles and sell more products to them.
These Business Review Managers have a standard binder of SYSCO programs that present to customers. Here is a sheet from the Business Review Binder that SYSCO Central Florida created: They’ve been telling their customers about Foodservice Rewards for over a month.
Here’s the kicker… SYSCO had no idea that their MA’s could earn points! Ray told her about the program during his verification call. They looked at our program as a benefit before discovering the DSR program. Now they really love it.
Needless to say, the Business Review Manager is very excited. I’ve already sent her enrollment sheets to replace the attachment, and a roll of dummy labels to show their customers what to look for.
Put that in your blog and smoke it! Z.