2013, ISSUE 2
CALIFORNIA GROCERS ASSOCIATION
CGA Advocacy:
MAKING STRIDES
IN THIS ISSUE Unified’s Guiding Force Retires Changing of the Guard
For the latest industry news visit www.cagrocers.com
The Clock is Ticking Meet Ed Hepler: Illuminator Headlite
September 29 – October 1, 2013 | Palm Springs Convention Center | Palm Springs, California California’s competitive grocery marketplace is experiencing evolutionary changes that are transforming the way the retailing game is played. Robust demographic movements, rapid technology innovations and fragmented shopping options are rewriting the rules of the game. Baby Boomers continue to influence strategies, however the new consumers, Millennials, are dictating different moves for players that want to win. Constantly conversational, loyally agile and lifestyle conscious, this new breed of grocery shoppers requires game changing approaches that are personal, purposeful, transparent and uniquely relevant. Plot your next move. Join grocery retailers from throughout California and discover how to capture this new consumer through breakout strategies and collaborative partnerships that will drive sales growth, add significant value to your business and ultimately reshape the competitive landscape of the grocery industry.
Conference Schedule Overview S U N D AY, S E P T E M B E R 2 9 F Illuminators Golf Tournament F Pre-conference General Session F Opening Reception sponsored by Kraft Foods and E&J Gallo Winery F After-hours Social Event
M O N D AY, S E P T E M B E R 3 0 F Collaborative Share Group Discussions F Opening Remarks and General Session F Pre-scheduled Business Meetings F Reception & Illuminators Special Event
T U E S D AY, O C T O B E R 1 F Multiple Educational Sessions & Retailer Spotlight F Pre-scheduled Business Meetings F Luncheon Keynote Address F Meet with California’s Top Retailers
W W W. C G A S T R AT E G I C C O N F E R E N C E . C O M
Meet with California’s Top Retailers Don’t miss this unique opportunity to meet with California’s top grocery industry decision-makers. All conference sponsors receive customized, pre-scheduled meeting schedules as part of their investment. Whether you represent a new, niche product or an established national supplier, the CGA Strategic Conference provides a highly productive forum to meet one-on-one with buyers from California’s top retail companies.
Last year’s sponsorship opportunities sold out early so call today to secure your spot now for this year’s conference. The 2013 CGA Strategic Conference offers a variety of sponsorship packages and new, customized opportunities to promote your company’s products or services. Sponsor benefits range from dedicated use of Business Conference Suites to 10’ x 10’ floor display spaces, or exclusively-presented social events. Whatever your desired outcomes, the 2013 CGA Strategic Conference offers a variety of opportunities to meet your goals and budget.
“ This conference provides an extremely efficient method for networking with colleagues and service providers. Given the intense level of grocery competition, I wouldn’t miss it.” Richard Draeger, Draeger’s Supermarkets For complete sponsorship information including a list of participating retailers and the sponsorship prospectus, contact:
Beth Wright Director, Events & Sponsorship California Grocers Association
(916) 448-3545 | (800) 794-3545 bwright@cagrocers.com
Many thanks to
The Illuminators for their continued, generous support of the CGA Strategic Conference by providing the outstanding conference meal functions and entertaining social events.
ENJOY RESPONSIBLY
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CONTENTS
F E AT U R ES
COLU M NS
CGA Advocacy: Making Strides
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Advocacy continues to be the Association’s No. 1 priority and great strides continue to be made by CGA’s government relations team. Yet, there is plenty of work to accomplish. With new challenges this legislative session, member involvement is more important then ever.
Unified’s Guiding Force Retires
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It‘s an old saw that you’ve heard in different ways 100 times. But if you look up the word “COMMITMENT” in the dictionary you’d find Al Plamann’s picture next to it.
Changing of the Guard
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There’s an old saying that the more things change, the more they remain the same. That seems to be an apt description for Unified Grocers, Inc., and also its legacy as Bob Ling takes over as President and Chief Executive Officer this May.
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President’s Message It’s All About Relationships................................... 5 From The Chair I Know It’s Important, But..................................... 7 Viewpoint — Kevin Coupe What Retailers Can Learn From Netflix............... 10 Foundation News — Shiloh London Recent College Grads Lack Real-World Fundamentals................................................... 12 Capitol Insider — Louie Brown The Legislature Looking Ahead.......................... 30 Perspective — Chris Micheli Light at the End of the UI Fund Tunnel?............. 34
DEPA RT M EN TS
The Clock is Ticking
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| Issue 2
As the nation counts down to implementation of a massive healthcare reform package, businesses from agriculture to retailing are more concerned than ever about the cost of the new regulations, the impact on hiring and staffing and its potential to derail an already fragile economy.
CGA News........................................................ 14
Meet Ed Hepler: Illuminator Headlite
Washington Report ..................................... 38, 40
Ed Hepler is a 32-year veteran of the grocery industry who now adds The Illuminators Headlite feather to his cap. Find out why every grocery supplier should join this important and worthwhile organization.
Member Profile: WinCo Foods............................ 20 Know the Law................................................... 26 Government Relations...................................... 28 Sunset Fresh Market News ............................... 82 Wealth Management .........................................85 Advertiser Index ............................................... 88
CALIFORNIA GROCERS ASSOCIATION President/CEO Ronald Fong
Vice President, Communications Dave Heylen
Director, CGA Educational Foundation Brianne Page Director, Local Government Relations Sarah Paulson Sheehy California Grocer is the official publication of the California Grocers Association.
For association members, subscription is included in membership dues. Subscription rate for non-members is $100 and does not include CGA Buyers’ Guide. © 2013 California Grocers Association
Publisher Ronald Fong E-mail: rfong@cagrocers.com Editor Dave Heylen E-mail: dheylen@cagrocers.com For advertising information contact: Tony Ortega E-mail: tortega@cagrocers.com
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Vice President, Business Development & Marketing Doug Scholz
Director, Events & Sponsorship Beth Wright
1215 K Street, Suite 700 Sacramento, CA 95814 (916) 448-3545 (916) 448-2793 Fax www.cagrocers.com
C A L I FO RN I A G RO C E R
Senior Vice President, Government Relations and Public Policy Keri Askew Bailey
Executive Director, CGA Educational Foundation Shiloh London
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CGA
| Board of Directors
EXECUTIVE COMMITTEE
Chairman of the Board Kevin Davis Bristol Farms First Vice Chair Mary Kasper Fresh & Easy Neighborhood Market Inc.
CHAIRMAN APPOINTMENTS DIRECTORS
Dora Wong Coca-Cola Refreshments
Raul Aguilar Anheuser-Busch InBev
Chuck Eckman Kraft Foods Group, Inc.
Omar Milbis Rio Ranch Markets
Jon Alden Jelly Belly Candy Co.
Phil Gentile, Jr. K.V. Mart Co.
Phil Miller C&S Wholesale Grocers
Renee Amen Super A Foods, Inc.
Jon Giannini Nutricion Fundamental, Inc. Warehouse
Eric Nadworny Save Mart Supermarkets
Frank Jimenez The Hershey Company Bill Jordan Whole Foods Market
Paul Cooke Nestle Purina PetCare
Eric Lindberg, Jr. Grocery Outlet, Inc.
Kendra Doyel Ralphs Grocery Company
Dave Madden MillerCoors
John Eagan Costco Wholesale
Dan Meyer Stater Bros. Markets
Veronica Rendon, Dave Thatcher Alta Dena Certified Dairy
Damon Franzia Classic Wines of California
Rick Van Nieuwburg Altria Corp. Services
Dan Atkins Berkeley Farms, Inc. Rickey Hamacher Bimbo Bakeries USA Gilbert de Cardenas, Bob Cashen Cacique USA
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Diana Godfrey Smart & Final Stores
Dennis Belcastro Hillshire Brands Company
Raul Aguilar Anheuser-Busch InBev
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Immediate Past Chair Jonathan Mayes Safeway Inc.
Michael Read WinCo Foods, Inc.
Joe Angulo El Super (Bodega Latina Corp.)
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Treasurer Kevin Konkel Raley’s
Secretary Joe Falvey Unified Grocers, Inc.
Dave Jones Kellogg Company
Teresa Anaya Northgate Gonzalez Markets
SUPPLIER EXECUTIVE COUNCIL
Second Vice Chair John Quinn Food 4 Less (Stockton) – Times Supermarkets
Nancy Limon, Dora Wong Coca-Cola Refreshments Vic Chiono Coca-Cola Refreshments Minute Maid Business Unit Stephenie Shah Diageo Andres Jaramillo Don Pedro’s Kitchen Thomas Wilson Flowers Baking of California
Victoria Horton California Beer & Beverage Distributors
Scott Johnson, Shannon Nadasdy Financial Supermarkets, Inc.
Cindy Plummer California Table Grape Commission
Brian Rosen, Ann Wilson Gleason Inc.
Mark Cassanego Carr, McClellan, Ingersoll, Thompson & Horn Pat Huston, Robert Hilliard Cash Register Services
Fernando Gallego Golden Gate Paper Company John Hewitt Grocery Manufacturers Association. Mickie Sharp-Villanueva Hansen Beverage Company
Hee-Sook Nelson Gelson’s Markets John Parke E & J Gallo Winery Vinit Patel Unilever Bob Richardson The Clorox Company Brian Schmidt Acosta Sales & Marketing Harish Solanki Big Saver Foods, Inc.
Naresh Solanki Bestway/Gardena Supermarkets Mike Stamper Nestle DSD Dirk Stump Stump’s Markets John Swindell Food 4 Less/Foods Co. (A Kroger Company) Paul Turcotte Pepsi Beverages Company – WBU Jim Wallace Albertsons/Sav-On Pharmacy Tammy Wilson Jax Markets
Elizabeth Alvarez-Sell, Greg Bailey The Hershey Company
Paul Turcotte Pepsi Beverages Company – WBU
Dennis Belcastro Hillshire Brands Company
Vince Delgado Procter & Gamble
Tim Cohen Hidden Villa Ranch
Melanie Zitting, Sue Sharp Pure Water Technologies
Kristina Crystal-McVay The J.M. Smucker Co.
Renee Wasserman Rogers Joseph O’Donnell
Dave Jones Kellogg Company
Darrell Costello Roplast Industries Inc.
Richard Bell LOC Software
Greg Romero Stericycle ExpertSOLUTIONS
Dave Madden MillerCoors Steven Schultz Moss Adams LLP Paul Cooke, Karen Doggendorf Nestle Purina PetCare Jim Van Gorkom NuCal Foods Laurie Stone PBI Market Equipment, Inc.
Tom H. Daniel Sterilox Food Safety Mike Hinson TC Transcontinental Northern California Phyllis Adkins TruGrocer Federal Credit Union Vinit Patel Unilever
PRESIDENT’S MESSAGE
It’s All About Relationships What’s great about relationship building is that it can occur at anytime and in anyplace. That time and place is now. In May, two key California grocery industry icons, Al Plamann, Unified Grocers, Inc., and Steve Burd, Safeway Inc., retire after decades of service to their respective companies and leave legacies of leadership during some of our industry’s most tumultuous times.
This relationship building has national implications, too. Over a dozen state legislators who our lobbying team and I have built relationships with over the years are now in Congress. These relationships now continue under a new capitol dome.
Both executives leave their companies in very capable hands. Fortunately, over the years CGA has nurtured strong relationships with many associates at both companies which helps ensure a smooth transition and continued Association support.
I share this because this month’s issue examines the Association’s state and local advocacy efforts. To many the information is foreign and distant to the day-to-day operations of selling groceries, and yet what happens in the State Capitol and in city halls statewide has a dramatic financial impact on your company.
Why do I mention this? The California Legislature is in full swing and CGA staff is sifting through hundreds of introduced bills, closely analyzing each one to determine its potential impact on your business. It is a laborious undertaking but critical to the success of our government relations program. Yet, effective advocacy requires much more than scrutinizing bill language and testifying in committee. Similar to our industry, it’s also about relationships. In fact, a meaningful government relations program cannot succeed with out it. When I started lobbying in 1996, one of the first legislators I met and developed a professional relationship with was a freshman, Senator John Burton. Years later Senator Burton became the most powerful and influential leader in the State Legislature and is now chairman of the California Democratic Party.
President/CEO
Our hope is that by understanding how the system works, our members will be more willing to develop these same types of relationships and engage dialogue with their elected officials. Developing relationships at the local level can benefit CGA years down the road. Quite often, state legislators cut their teeth at the local level. The relationship you develop now may one day open an important door in the State Capitol. One of the best ways CGA members can begin building these critical relationships is to attend this year’s Grocers Day at the Capitol on April 30 in Sacramento. This is CGA’s one-day lobby event that allows our members to learn about key legislation facing our industry and then to meet with legislative leaders and staff in the Capitol to discuss the impact of these bills on our industry, and inevitably their constituents. Go online at www.cagrocers.com and sign up today. Help CGA build relationships and strengthen our advocacy efforts. I look forward to seeing you in Sacramento! n
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Similarly, when I first met California Senate pro Tem Darrell Steinberg, he was a city council member. Over the years we have maintained our friendship, meeting more so to listen than to lobby. In both cases, these relationships have helped CGA’s overall lobbying efforts.
RO NALD FONG
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Grocers Day at the Capitol B U I L D I N G R E L AT I O N S H I P S . S T R E N G T H E N I N G F R I E N D S H I P S . For over a decade, CGA Grocers Day at the Capitol has built bridges between the state’s grocers and policy makers. With significant policy issues as well as specific legislation taking center stage and new faces entering the state house, participating in this banner event is more important than ever.
TUESDAY, APRIL 30, 2013 SACRAMENTO, CA For additional information, contact Dane Hutchings, CGA, at (916) 448-3545. Sponsorship opportunities available. Please visit our website at www.cagrocers.com, or contact Beth Wright (916) 448-3545.
FROM THE CHAIR
I Know It’s Important, But...
When people in our industry learn that I am the Chairman of the California Grocers Association, the first comment I get is; “Wow, how can you do that with everything else you have going on?” This question is usually followed with a comment like, “I know it’s important and I wish I had the time to be more involved, but I’m just too busy with business, etc.” Invariably, sometime down the road, these same individuals find themselves faced with a government affairs situation, a lawsuit, a licensing roadblock, a recycling issue, a food safety situation, or a local ordinance, zoning problem, or political campaign that will impact their business in an unexpected way.
Typically as a last resort, they call CGA, or one of our board members, for advice, a referral to the appropriate staffer, or simply because after spending tons of money on attorneys and exhausting all other resources, they have run out of options. Typically as a last resort, they call CGA, or one of our board members, for advice, a referral to the appropriate staffer, or simply because after spending tons of money on attorneys and exhausting all other resources, they have run out of options.
It occurred to me that there are many people at all levels throughout California’s food industry who just don’t understand the underpinnings of CGA and how this great service and advocacy organization works year-round to solve industryrelated problems, not only in Sacramento,
KEVIN DAVIS CGA Chairman of the Board President and CEO Bristol Farms
but locally, and even on the national level when appropriate. Many are unaware of the countless hours CGA staffers spend behind the scenes to resolve potentially harmful issues long before they have the chance to see the light of day. Nor are they aware of the many after hours events staff attend cultivating important relationships. The Association is not a private club, or fraternity of grocers. It is a very open and far-reaching advocacy organization whose primary objective is representing our industry. Whether it’s responding to media inquiries regarding an industry-related issue, or representing us as a united association of companies with a common position in favor of, or against a certain political position or new law, the CGA is our voice. What’s even more important is that due to the in-house expertise and excellent reputation Continued on p. 8
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CGA Chair Kevin Davis (right) discusses grocery issues with Assemblymember Marc Levine.
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FROM THE CHAIR
Continued from p. 7
Meetings, than trying to decipher them myself.
CGA’s staff has earned, our voice, through CGA, is willingly heard by policy makers and regulators for its balanced, honest and well-thought out perspective on the issues that face our companies, our customers, and all Californians.
CGA’s membership dues, the minimal time commitment, and strategic contacts I have developed over the past three years through my CGA Board participation have paid our company back many times over. I view these as being essential to doing business in California.
CGA membership is not an expensive proposition. Participation in the form of time commitment can be as little or as much as you or your company can or want to commit. Membership fees are simply a necessary form of fundraising to provide high quality expertise and representation by CGA’s government relations team where it matters most, in Sacramento, and at the local level.
Membership dues are essential to funding CGA’s advocacy agenda. These dues, along with the Association’s other revenue streams, allow staff to engage in the critical issues that must be addressed so that we can effectively operate our businesses.
Board membership requires a little more participation, but I find it no more time consuming than trying to keep up with the hundreds of new laws affecting our business each year. I would rather spend time having experts explain the ramifications and options to me in CGA’s bi-weekly legislative calls, or quarterly Board
If you are not yet a CGA member, I encourage you to become one. If you are a member and have yet to renew your membership, do so today. Participate in any way possible to help strengthen our advocacy efforts, for our employees and customers as we work with lawmakers toward building our businesses and in turn strengthening our economy and leading us to a better, stronger, and healthier California. n
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C A L I F OR N IA G R OC ER
Products available at your local retailer
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www.sugarbowlbakery.com (888) 688 -1380
VIEWPOINT
What Retailers Can Learn From Netflix KEVIN C OU P E
Over the years that I’ve been doing this, I’ve developed a list of what I self-servingly call “CoupeRules,” or points that I think are critical to business success. Few of “CoupeRules” are engraved into stone, since circumstances can change and (gasp!) I’ve been known to be wrong from time to time. But this one, I think, may have legs: The businesses with the most actionable customer data, and then act on that data most effectively, are most likely to win. I think there is a lot of evidence to support this. Take for example, what has been called “the weaponizing of data,” perhaps best exemplified by Kroger’s use of dunnhumby to generate information that allows it to reportedly send out personalized promotional pieces to 10 million shoppers on a quarterly/seasonal basis, and get a 66 percent response rate. Or, look at what Amazon has been able to do with all the shopping data it is able to compile, targeting people who have demonstrated interest in specific products and categories with relevant sales pitches, building recommendation lists, and then using programs like Amazon Prime and Subscribe-and-Save to develop consistent and sustainable relationships with its best shoppers.
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Most recently, the company that has shown how to use data to redefine the customer relationship is Netflix, which has quickly turned around a messy public relations situation (it tried to raise prices and separate its disc and streaming businesses, only to encounter almost universal pushback, leading it to quickly and smartly reverse course).
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Netflix began as a company that offered DVD-by-mail rental subscriptions to consumers, and in doing so, managed to help undermine Blockbuster’s entire value proposition. Suddenly, those little red envelopes were everywhere, even as Founder/CEO Reed Hastings was saying that Netflix primarily was a content company, not a DVD rental service.
The difference was more than semantic. As a content company, Netflix could be agnostic about how product was delivered and easily shift to new technologies when appropriate. Which it has been doing as video streaming has become more, well, mainstream. These days, though, Netflix has been making more noise as an original content company, as it produced an original 13-episode series, “House of Cards,” which stars Kevin Spacey, is directed by David Fincher (“The Social Network“), and can best be described, I think, as “The Sopranos” meets “The West Wing.” One reason that Netflix chose “House of Cards” as its initial foray into original programming is that it had data to back it up — movies by Spacey and Fincher always had done well as rentals, as had a British version of “House of Cards.” But when it released the series, Netflix decided to make some revolutionary moves. For one thing, the series is only available for streaming. At least for now, it is not available on DVD, nor on any broadcast or cable channel. This is the Netflix version of differentiated product, or a private brand — something you can only get from Netflix. Netflix also did something else that challenged assumptions about how content should be delivered — it decided to make all 13 episodes of “House of Cards” available at the same time. This put the decision about how the series would be consumed entirely in the hands of the viewers. They could watch one a day, one a week, or could binge on the whole thing over a day or weekend. Again, Netflix knew from the data that different people like to experience programming in different ways, and rather than make the decision for the viewers, it simply acknowledged that the balance of power has shifted and allowed consumers to enjoy the show on their own terms.
VIEWPOINT
There are some folks who are not convinced, largely because they think Netflix can make more money by stretching out distribution over weeks and months. And they think that companies ought to resist shifts in the balance of consumer power, ignoring the fact that, to quote the Borg, “resistance is futile.” It seems to me that it is hard to go wrong giving the customer what he or she wants ... and in this case, Netflix isn’t speculating. It had data to go on. The experiment seems to have proven out. Netflix says that the numbers have been terrific for “House of Cards,” though it doesn’t get into specifics. It has several other series ready to stream to consumers, plus it has ordered up a second season of “House of Cards.” And, in what may be the greatest testament that Netflix has hit a home run, Amazon.com is getting into the original context business, with plans to create entertainment programming that it can make available exclusively to its customers.
To succeed in an increasingly crowded marketplace, where there are an enormous number of options for consumers’ time and money, it is critical to find ways to offer them quality, differentiated product and to do so in a way that embraces the fact that shoppers have more power and information than ever before. It is essential that traditional marketers make this leap — that they not practice “epistemic closure,” assuming that their view of the world is absolutely and permanently correct — because there are future competitors out there trying to create new businesses and value propositions that will appeal to the next generation of shoppers. And they are doing it by developing actionable customer data that tells them what shoppers really want, and then offering it. The name of its most recent venture may be “House of Cards,” but the evidence suggests that Netflix may be building something of a far more sustainable nature. Traditional marketers need to beware of the inevitable... that a stiff competitive wind will come along and blow their houses down, leaving them wondering what happened and why, when all along there were signs of what was to come. n
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Of course, on the other side of the coin, the traditional broadcast networks continue to lose market share, with only occasional blips when something unusual (”The Voice,” for example) comes on. They are playing by an old world model, while companies like Netflix and Amazon ... which would not have even been perceived as competitors just a few years ago ... steal viewers with their new world value proposition.
It is not hard to see the broader lesson here, and find the central metaphor in Netflix’s behavior and apply it to traditional forms of retailing.
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EDUC ATIONAL FO UN DAT IO N |
C A L I F OR N IA G R OC ER
Shiloh London Executive Director CGA Educational Foundation
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Recent College Grads Lack Real-World Fundamentals EMPLOYERS RECENTLY SURVEYED BY GLOBAL STRATEGY GROUP AND MACGUIRE ASSOCIATES, INC. SAY THEY ARE HAVING TROUBLE FINDING RECENT COLLEGE GRADUATES QUALIFIED TO FILL POSITIONS AT THEIR COMPANIES. In all, a 65 percent majority of business leaders say young people applying for jobs at their companies right out of college are only “somewhat” prepared for success in business, with 40 percent of C-suite executives saying they are “not prepared at all.” Almost half of C-Suite executives say less than one quarter of recent grads have the right skills to advance past entry-level positions. What skills are these? The most sought-after are problem-solving (ranked No. 1), collaboration (No. 2), and critical thinking (No. 3). Also in demand is the ability to communicate clearly and persuasively in writing. If you have a teenager in your house, this next statistic won’t surprise you: According to the study, new grads fall far short of the mark in every one of these areas — except tech savvy, the least desired. Despite a widespread impression that social media makes people better at communicating and collaborating, that’s apparently not the case. Why not? Social media is a one-way, fragmented communication, with less emphasis on taking a flood of information and turning it into useful knowledge. Companies need people who can synthesize information and apply it to business problems. Instead what employers are getting are people with an inadequate grip on business realities, a narrow worldview, a lack of career focus, and wobbly relational skills. Employers prefer a college degree because, if it does nothing else, it serves as a signal of determination and staying power. While a bachelor’s degree seems to be a prerequisite for getting your resume read — two-thirds of employers say they never waive degree requirements, or do so only for exceptional candidates. Not so long ago, newly minted bachelor’s degree holders joined companies with the understanding that complex skills like problem-solving and critical
thinking were largely to be learned on the job, and would develop over time. Now, companies want young people who walk in the door with these abilities because who knows how long they’ll stick around. With so many people moving from company to company, on the job training no longer makes economic sense. Why train them when they’ll leave you six months later? Sounds like we’re at a bit of a crossroads. How do students get real world experience if it doesn’t happen in the real world? Does the blame fall solely on the educators or should the business community play a bigger role in ensuring students have access to experiential internship opportunities that allow them to hone their real-world professional skills? To effectively bridge the skills gap, businesses and higher education institutions must form partnerships that bolster the currency of education and prepare graduates with the “right” skills. Some of the best lessons are learned outside the classroom. n
C GA N EWS
CGA Members “Hike the Hill” To Meet New Legislators
More than 25 CGA retail and supplier members gathered in Sacramento on February 22, 2013, to meet with California’s recently elected legislators and establish working relationships with the largest “Freshman Class” of lawmakers in recent history.
clinical side of WIC, “they have failed on the administrative side.” Nearly one-sixth of WIC households in the United States reside in California.
The one-day event, dubbed “Hike the Hill,” allowed industry executives to meet with newly elected legislators and their staff and educate them on key grocery related issues prior to bill packages being set.
“The state hasn’t paid close attention and some small stores, just one very small slice of the whole range of vendors, have been grossly overcharging and using all types of gimmicks,” he said. “Unfortunately to deal with this problem a moratorium was placed on any new store coming in.”
“Nearly one-third of the Legislature is brand new,” said CGA President Ron Fong. “CGA believed it was critical these ‘Freshmen’ legislators heard directly from our industry as to the impact our industry has in their districts.”
The Undersecretary was in California meeting with state officials to work on resolving this issue. Other concerns include the state not hiring a WIC director and not hiring additional personnel, despite the funding coming from the federal level. n
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CGA members first met with CGA’s government relations staff and were briefed on key legislation related to the grocery industry and protocol when meeting with legislators. Attendees spent the bulk of the day in the State Capitol meeting either directly with legislators or their staff.
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USDA Undersecretary Addresses Attendees In addition to their visits, attendees heard from U.S. Department of Agriculture Undersecretary Kevin Concannon who provided an update on the current moratorium on the issuance of new Women, Infants and Children (WIC) licenses. The Undersecretary said that while the state does a good job on the
USDA Undersecretary Kevin Concannon was the luncheon keynote speaker.
THE CGA SUPPLIER EXECUTIVE COUNCIL HAS ANNOUNCED ITS SL ATE OF 2013 STORE TOUR SERIES.
On April 2, the CGA Supplier Executive Council (SEC) kicked off its exclusive 2013 Store Tour Series with an in-depth look at Costco Wholesale. The tour was led by John Eagan, Vice President and Senior General Merchandise Manager, at the Costco Culver City location. These exclusive store tours provide SEC members with a unique opportunity to learn about how retailers approach operational strategies and obtain insights on customers while walking the floor with top California retail executives and experiencing their business first-hand. To learn more about the SEC Store Tour Series, or becoming a CGA Supplier Executive Council member, please contact Sunny Chang, Manager, Membership Marketing, at (916) 448-3545. n
C GA N EWS
SEC Store Tours Enters 2nd Year
2013 SEC STORE TOUR SERIES SCHEDULE Costco Wholesale
April 4, 2013 Executive: John Eagan, VP and Senior General Merchandise Manager Nugget Markets
May 2013 Executive: Eric Stille, President/CEO Super King Market
August 2013 Executive: Daniel Barth, General Manager Northgate Gonzalez Markets
October 2013 Executive: Oscar Gonzalez, President/COO
You “Like” Us! CGA Hits 1,000 Milestone
“We launched our Facebook page a year ago to share with everyone the many positive aspects of our great industry,” said Dave Heylen, CGA Communications Vice President. “We encourage
To “Like” CGA’s Facebook page, log on to www.facebook.com and search for California Grocers Association. n
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all CGA members to submit information regarding the many community-based programs they’re engaged in so that we can post these stories on our Facebook page.”
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The California Grocers Association Facebook page passed the 1,000 “like” mark in March! Thank you to all those who have added their “like” to CGA’s Facebook page.
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C GA N EWS
Hutchings Joins CGA Government THE CALIFORNIA GROCERS ASSOCIATION HAS ANNOUNCED THE HIRING OF DANE HUTCHINGS AS GOVERNMENT RELATIONS MANAGER, EFFECTIVE IMMEDIATELY. In this position, Hutchings will be responsible for bill tracking and analysis, regulatory analysis, member relations, and grassroots development. In addition, he will work with CGA members to develop positions and draft advocacy messages and represent the organization before the Legislature. Hutchings began working with Ogilvy Public Relations Worldwide in 2010, serving as the interface between the government affairs and public affairs practice areas. He was responsible for advocacy and support for multiple California legislative and regulatory issue areas including: renewable energy, transportation, toxic substances, small business, revenue & tax and labor while cultivating and maintaining relationships with legislative members, key policy staff, as well as numerous trade associations and contract lobbyists. Most notably, Hutchings was part of the communications and outreach team for the California high-speed rail statewide infrastructure project, as well as overseeing the execution of a high-school
awareness campaign for the California Office of Traffic Safety — highlighting the dangers of texting and driving. Prior to that, Hutchings worked as a legislative aide for Mattos & Associates, a government relations firm specializing in association management.
“ Dane’s government and public affairs knowledge will be of considerable value to CGA as the Association continues to raise the bar in its advocacy efforts.” CGA Senior Vice President, Government Relations & Public Policy Keri Askew Bailey “Dane’s government and public affairs knowledge will be of considerable value to CGA as the Association continues to raise the bar in its advocacy efforts,” said CGA Senior Vice President, Government Relations & Public Policy, Keri Askew Bailey. Hutchings attended California State University, Sacramento, and graduated with a bachelor’s degree in Communications with a Public Relations emphasis. n
CGA Welcomes New Members
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THE CALIFORNIA GROCERS ASSOCIATION WELCOMES THE FOLLOWING NEW MEMBERS:
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WN Pharmaceutical Ltd. 100 80th St SW Ste 100 Everett, WA 98203 Contact: Amanda Hansen, National Acct. Manager Email: ahansen@wnpharmaceuticals.com Long Valley Market, Inc. 44951 Hwy 101 Laytonville, CA 95454 Contact: Michael J. Braught, President Email: Mjb@longvalleymarket.com
S.A. Piazza & Associates, LLC. 15815 SE Piazza Ave. Clackamas, OR 97015 Contact: Stephen A. Piazza II, COO/Retail Sales Email: spiazza2@sapiazza.com Website: www.sapiazza.com
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Turn Strengths Into Competitive Advantage
Food: Seeing 20-20 in 2020
Harold Lloyd
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Grand Slam Deli-Bakery Ideas
Growth Opportunities in Fresh Food
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Congratulates
Al Plamann on his retirement!
Š2013 Unilever INT 118223
MEM B ER P R O FILE
WinCo Spells Low Prices WASHINGTON, IDAHO, NEVADA, CALIFORNIA, OREGON. PUT THEM TOGETHER AND WHAT DO THEY SPELL? WINCO. This cheer, or one like it, has been echoed many times in these states with the 46-year-old discounter often opening its doors to record crowds in new marketing areas that now include Utah and Arizona.
shortening of the phrase “winning company” not the states in which the company operated.
The Boise-based company, described as a cross between a traditional supermarket and a warehouse store, had annual sales of $5.3 billion in fiscal 2012 from 86 stores in seven Western states, 31 of which are in California.
“The stores are something of a hybrid — not fancy but not a warehouse either,” Read says. “We consider ourselves to be a large discount grocer. But the store has the look and feel of a large traditional supermarket with a couple of exceptions.”
“As we move forward some of our expansion will be in California as well as in the greater Phoenix area,” says Michael Read, vice President, Public and Legal Affairs. “We’re also looking to the Dallas/Fort Worth market over the next year or year-and-a-half. Our economic research indicates this will be a great opportunity for us.”
The most notable exception is when you walk in the store.
WinCo Foods started out under the name Waremart when founders Ralph Ward and Bud Williams opened the first discount warehouse in Boise in 1967. It wasn’t until 1999 that the company changed its name to WinCo Foods to avoid confusion with other large “mart” stores.
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Here’s where the story gets a bit muddied since some company historians will tell you that the name was a
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However, where the name came from is far less important than what it represents.
“You immediately proceed down the wall of values — featuring extra good deals on popular items,” Read explains. “The items are stocked on ‘high steel’ so you’ve got floor level displays and pallets of those same goods on metal racking that can be moved down to floor level.” While the stores have gotten a little bigger over the years, the company is exploring the possibility of smaller formats for markets that might not be able to handle its typical 90,000 to 95,000 squarefoot imprint. Locations for the smaller stores will depend on a number of factors including demographics. But
MEMBER PROFILE
generally, they will be in the 50,000-60,000 squarefoot range, according to Read, noting that it has not yet been determined whether they will be in California.
Read says WinCo has created enough of a brand identity and reached a size where having its own private label makes sense.
“Typically, we first look for the opportunity to build a traditional sized store,” he says. “But if the marketing area’s too small or there’s an opportunity for fill-in we would consider a smaller unit.”
“People recognize that WinCo stands for value,” he says.
However, new formats don’t mean changing a successful in-store formula.
“For example, we don’t do traditional advertising,” he notes. “In fact, we rarely advertise at all, and when we do it’s usually by direct mail in the primary trade area around a particular store. They are either price comparison or coupon ads.”
“The format will remain the same in terms of how we come to market and merchandise,” Read says. “We primarily carry national brands and our focus is still on being the supermarket low-price leader wherever we operate.” Read says it may sound cliche, but WinCo traditionally considers its core customers to be soccer moms and young families with kids that operate on a budget. “Value is the key and we provide that as well or better than other discount operators,” he adds.
“We’ve never taken them,” he says. “Customers understand that’s the way we do business and it’s reasonably well accepted. The interchange fees and backstage costs of carrying credit cards typically mean higher prices for consumers. We do accept debit cards, but even that is a fairly recent change in company operations.” One interesting variation not used by many grocers is a toggled checkstand. “Most grocers don’t operate this way,” Read says. “There are two conveyor belts so you can check out a customer on one side and while they bag their groceries we can start checking out another customer Continued on p. 22
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“We’ve carried some private labels like Federated’s Hy-Top,” Read says. “We are aggressively exploring private label under our own name and within the next couple of years, we expect to have a large private label offering in virtually all grocery categories.”
The chain also keeps prices low by not accepting credit cards.
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However the future also lies in leveraging the WinCo name.
Part of that value proposition means doing things a little differently than your competitors.
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MEMBER PROFILE
Continued from p. 21
on the other side. Then we can interrupt that checkout to take payment from the customer who’s finished bagging. It’s like having one-and-a-half checkstands and enables us to move people through the front end more quickly.” WinCo’s somewhat barebones approach to operations though doesn’t extend to in-store departments and customer service. “We’ve always had serviced perimeter departments,” he says. “Most stores have a bakery, along with service deli, meat and fish. And we’ve always maintained a very large produce department which is critical for any good grocery operator.” Additionally, WinCo has one of the larger bulk food operations of any grocer in the country. “At any given time, we have well over 700 bulk items displayed primarily in gravity feeders. It’s hard to imagine anything we don’t carry,” says Read, noting that selection ranges from whole grains, flours and cereals to snack foods, candy and spices. “It’s almost as large as the produce section and it’s a great opportunity to provide additional value to customers since they are not paying for additional packaging, merchandising or advertising,” he adds. The value proposition also extends to employees thanks to an Employee Stock Ownership Program
that has been in place for more than 25 years. In order to be eligible, employees must be at least 19 years old, work a minimum of 500 hours in the first six months of employment and accumulate 1,000 hours per year.
WinCo’s somewhat barebones approach to operations though doesn’t extend to in-store departments and customer service. Because WinCo is not publicly traded, the value of its stock is appraised annually by an independent valuation firm. Since 1985, the value of ESOP stock has increased by a 20 percent compounded annual rate, the company said. “Unquestionably, our ESOP creates a different company culture because employees share in the success of the company and provide for their own futures,” Read says. “People take pride in that. It increases loyalty and tends to reduce turnover.” In addition, Read says, it also motivates people to be mindful of how effectively they do their job and to find new ways to be more efficient. “They know that what they do contributes to the overall profitability of the company which, in turn, contributes to their retirement security,” he explains. As for WinCo’s overall outlook for 2013, Read says the balance of the year is shaping up well. “Because of our value approach to the market in the early years of the recession we did extraordinarily well,” he says. “We gained a lot of new customers and many of them are sticking with us.”
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The company has opened four to six stores annually, in recent years, and is planning to increase that number over the next few years.
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“We have plans to increase store openings steadily as we move forward,” he says. “Our entry into the Dallas/Ft. Worth market is part of that plan. In fiscal 2013, we’re planning to open five stores and probably seven or eight the following year. We don’t know how many of those stores will be in California at this point.” n By Len Lewis
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KN O W T HE L AW
Mandatory Arbitration of Statutory Claims — Are We There Yet? THE CALIFORNIA GROCER THAT HAS NOT YET HAD TO CONTEND WITH SOME KIND OF WAGE AND HOUR CL ASS ACTION — BE IT A CL AIM THAT EMPLOYEES HAVE BEEN MISCL ASSIFIED AS EXEMPT — OR NOT BEEN GIVEN REQUIRED REST OR MEAL BREAKS — IS THE EXCEPTION RATHER THAN THE RULE. The tidal wave of such litigation that has engulfed businesses and courts in the last decade has been merciless. With no real prospect of relief in the California Legislature, the outlook for employers has been bleak — at least until recently. What has changed? Two words — federal arbitration. The Federal Arbitration Act (FAA) was first passed in 1925. Initially thought only to apply to private controversies governed by federal law, it took almost 60 years for the U.S. Supreme Court to clarify in its landmark 1984 decision Southland Corp. v. Keating that the statute also applied to contract disputes governed by state law.
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John H. Douglas is a partner at Foley & Lardner LLP in San Francisco, Calif. and represents management in labor disputes and collective bargaining. He can be reached at jdouglas@foley.com.
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In the years since deciding Keating, perhaps in an effort to help clear congested federal court dockets, the Supreme Court has taken the ball and run with it, and in the process transformed what was, in 1984, a crack in a dike, into what has now become a flood. In 2001, in the case Circuit City v. Adams, the Supreme Court made clear for the first time that the FAA applied to employment contracts, overruling in the process Craft v. Campbell Soup, a 1999 decision to the contrary of the Ninth Circuit (the federal appeals court with jurisdiction in California). Two year later, in 2003, the Ninth Circuit fell into line with its sister Circuits and found that, as a consequence of the Supreme Court’s 1991 decision in Gilmer v. Interstate / Johnson Lane, employers can require their employees, as a mandatory condition of employment, to bring claims to a private arbitrator rather than in civil court. Six years after that, in 2009, in 14 Penn Plaza v. Pyett, the Supreme Court overruled its 1974 Alexander v. Gardner Denver Co. decision and found that in an unionized context as well, employees can be forced (if their union agrees) to arbitrate statutory claims.
These decisions have had the potential to seriously undermine two principal sources of leverage that plaintiffs’ lawyers have, the ability to embarrass employers by bringing claims as a matter of public record in civil court and the risk of “runaway” jury verdicts. As a result, these decisions favoring mandatory arbitration have been met with howls of criticism from the plaintiffs’ bar, and loud demands for a Congressional fix. Still, not all employers are convinced that mandatory arbitration is the answer. In 2011, however, that may have changed. In the case ATT Mobility v. Concepcion, the Supreme Court found that not only could employees be forced to arbitrate statutory claims, but that they could be made to do so on an individual, as opposed to class, basis. The death knell of employment-related class actions has suddenly been on the wind. Is the battle over yet? Not quite. Though a divided Congress has been unable to stop the mandatory arbitration march, the Obama administration’s Democratically-controlled National Labor Relations Board has been trying to do so. In 2012, in the case D.R. Horton, the Board found that requiring arbitration on an individual rather than class basis violated the National Labor Relations Act. Most federal and state courts have since rejected that conclusion, and a federal Court of Appeal will shortly decide whether or not to overrule that decision. These developments bear close watching in the next few months, however. They embody perhaps the best hope for California grocers, both union and non-union, to drive a stake through the heart of employment-related class action litigation. n
Andrew Demler is the youngest in the group, rd and is a 3 generation egg farmer. His grandfather started farming in 1950 (63 years ago).
Ryan Armstrong is a 3rd generation egg farmer, and his family started farming in 1946 in Los Angeles (67 years ago).
Clint Hickman is a 3rd generation egg farmer, and his family started their egg business in his grandparents’ back yard in Glendale Arizona in 1944 (69 years ago).
Tony McNally has the distinction of being the oldest in the bunch, and is also a 3rd generation egg farmer. His family started farming in 1939 in Yucaipa (74 years ago).
Our families bring together 273 years of combined egg farming tradition and 7 million laying hens. It's not hard to see why everybody at Hickman's Family Farms is more excited about the future than ever before. And we are really proud to say...
“Hickman’s eggs are available now in a store near you!” For more information, call 623-872-1120. Or visit www.hickmanseggs.com.
GOVERNMEN T R EL AT IO N S
Time for Another Round… of Elections! THE GENERAL ELECTION FOR THE CITY OF LOS ANGELES IS MAY 21. While voter turnout was dismal for the City of Los Angeles primary election, most expect a slight uptick in turnout for the general election in May. CGA has partnered with L.A. Jobs PAC through the Los Angeles Area Chamber of Commerce to endorse business-friendly candidates that will pursue a moderate agenda, close the deficit in the L.A. City budget, and foster economic growth and development.
endorsed Wendy Greuel for Mayor. If she succeeds, she’d be the city’s first woman mayor.
Additionally, CGA hosted meet and greets and fundraisers for specific candidates in the City of Los Angeles to inform them of issues particular to the grocery industry and engage in the local political process.
Other races to watch include city attorney. Incumbent Carmen Trutanich had a terrible performance last June when he lost the primary in his bid for Los Angeles County District Attorney. Assemblymember Mike Feuer is challenging Trutanich and this race will come down to the wire.
The City of Los Angeles has three citywide offices to be decided on May 21: mayor, city attorney and city controller. Each official can serve a maximum of two four-year terms. Additionally, the city has a 15-member council and each member can serve a maximum of three four-year terms. The members stagger their election cycles, so odd seats are up for election in 2013, even seats in 2015, etc. Due to all the political shuffling caused by term limits, members moving to the State Legislature, or members moving to Congress, this election cycle in Los Angeles has an unprecedented wide-open mayor’s race, wide-open city attorney and city controller’s race, and a change of seven city council seats, almost a simple majority.
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It has been a long time since Los Angeles, the nation’s second largest city, has seen such a change in political leadership in such a short time span. It’s why the national news media calls the mayor’s race one of the top six to watch in 2013.
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Councilmember Eric Garcetti and City Controller Wendy Greuel are the two candidates that advanced to the runoff for mayor. Each candidate can claim a path victory, and each has the resources to accomplish this. Due to low voter turnout, this race is all about winning over voter blocs throughout the city and ensuring their supporters hit the polls. This race will be close and could go either way. L.A. Jobs PAC
The City of Los Angeles has three citywide offices and all will be decided on May 21: mayor, city attorney, and city controller.
Council District 1 features former State Senator Gil Cedillo against the current Chief of Staff for District 1, Jose Gardea. Council District 9 features State Senator Curren Price against former Chief of Staff Ana Cubas. Council District 13 is a wide open race featuring John Choi (the union backed candidate) against home-grown candidate, Mitch O’Farrell. In these races, L.A. Jobs PAC has endorsed Cedillo and Price and no endorsement for Council District 13. One other note: depending on the winners in May, the new Los Angeles City Council could feature eight former state legislators, a council majority. The implications of new political leadership in Los Angeles are vast, as the city struggles with high budget deficits, high unemployment and a burdensome development process. For CGA members, issues such as living wage, congested roadways, shopping carts, carryout bags, and food deserts continue to be policy discussions among city leaders. This election cycle will decide whether the city can move to a more moderate, even-handed approach to attract and retain local businesses, or whether the current structure will remain with businesses fighting constant regulation. It will certainly make 2013 interesting and another election cycle to enjoy. n
CAPITOL INSIDER
The Legislature Looking Ahead Prior to the bill introduction deadline, there was a lot of talk about legislators taking it slow and not introducing a high number of bills. So much for talk! With the bill introduction deadline passed, more than 2,000 pieces of legislation were introduced — nearly 900 on the last day. While the total number is slightly less than an average year, the range of issues and number of bills that could impact the grocery industry are pretty much on par with what we have seen in past years.
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AB 665 (Alejo) — This bill would extend the date by which a distributor is required to pay the redemption payment to CalRecycle to 60 days following the sale. Over the course of the last few years, budget language has been approved to reduce the number of days distributors had to remit payment. The first change reduced it from 90 to 60 days. Last year, it was reduced to 30 days over the objections of the distributors. CalRecycle sought the change to help address cash flow issues faced by the program. In turn, the distributors claim the change has created cash flow issues of their own. The CGA Government Relations Committee voted to oppose this measure because it is not comprehensive in nature.
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AB 744 (Gordon) — This bill would delete the provisions that require the department to establish the reporting periods for the redemption rates and to determine the redemption rates for specified types of beverage containers. This bill is a placeholder for the larger discussion of comprehensive reform to the program. CGA is actively working with Assembly Member Gordon and CalRecycle to identify changes that not only make the program financially stable but also address issues impacting our member companies.
A recurring theme for many years in the Legislature has been the Beverage Container Recycling Act — affectionately known as the Bottle Bill. The Beverage Container Recycling Fund has met with a variety of challenges in recent years. Even with that being the case, we usually do not see many bills introduced on the topic at the beginning of the session.
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Most of us working on this issue have come to expect deals to be resolved late in the session that usually end with a “gut and amend.” This year is an anomaly because a number of bills were actually introduced on the subject!
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Additionally, there are a handful of bills that also amend the Bottle Bill, but are not substantive at this time. They include AB 1023 (Eggman); AB 1142 (Bloom); AB 1370 (Patterson); and SB 791 (Wyland). Another hot and recurring topic for the past few years has been single-use carryout bags. Four bills have been introduced on the topic, signaling it will be another busy year for this issue.
CAPITOL INSIDER
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AB 158 (Levine) is a reintroduction of AB 298 (Brownley) from 2012. Assembly Member Levine worked closely with CGA on this issue when he was a San Rafael City Council Member. Even though the bill does not address some of our platform issues, the Assembly Member has agreed to work with us as the bill moves through the process.
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AB 1337 (Allen) is a spot bill. Rumor has it that the bill may turn into language focusing on incentivizing programs that promote the recycling of single-use plastic bags.
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SB 405 (Padilla) is also a reintroduction of AB 298 (Brownley). The Senate is where our efforts on this issue have stopped in past years. With Senator Padilla taking the lead, we believe its chances for success are much greater. The Senator has also committed to work with us to resolve our issues with the previous bill.
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SB 700 (Wolk) is a modified version of the Washington DC model. This bill will create a tax on
all single-use carry out bags with a small percentage retained by the grocer. The remaining money would be used by the state to fund parks and other environmental programs. There is no preemption language in this bill and the author has spoken in the past about her dislike of such language. Additionally, we will be working on scanner accuracy, WIC, CalFresh, soda taxes, food waste and more. Of course, there are always bills that impact the grocery industry, as well as other businesses generally. Some of those include a minimum wage proposal to adjust annually (AB 10), workers’ compensation changes for independent contractors (AB 360), and more. Despite the excitement over a smaller number of total bills introduced (which it technically has been, but not by much), this is going to be a very busy legislative session. n This article was authored by Louie Brown, a partner in the Sacramento office of Kahn, Soares and Conway, LLP.
C A L I FO RN I A G RO C E R
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PERSPECTIVE
Light at the End of the UI Fund Tunnel? CHRI S M IC HE LI Legislative Advocate Aprea & Micheli, Inc.
As CGA members are aware, California’s Unemployment Insurance (UI) Fund has been under siege for many years. This year may finally result in significant legislation as discussed below. Governor’s Budget Proposals
California Labor Fed Proposals
Governor Jerry Brown’s proposed budget, released January 10, 2013, uses $291 million from the General Fund to pay the third interest payment due to the federal government for the quarterly loans that the Employment Development Department (EDD) has been obtaining from the federal government since January 2009 to cover the UI Fund deficit and make payments to UI claimants without interruption.
The California Labor Federation (CLF) released a report identifying structural flaws in the Unemployment Insurance Fund that the CLF claims “will put at risk a lifeline for laid-off workers.” The report, entitled “Unemployment Insurance: Underfunded and Undervalued,” calls for immediate action to put the UI Fund.
The UI Fund deficit was $9.9 billion at the end of 2012 and it is projected to be $10.2 billion at the end of this year. Interest will continue to accrue and be payable annually, until the principal on the UI Fund loan is repaid. Federal law requires that the interest payment come from state funds.
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In both 2011-12 and 2012-13 fiscal years, the state borrowed from the UI Disability Fund (DI Fund) to make the required interest payments to the federal government. These loans against the DI Fund total $612 million. The Governor’s budget does not include a proposal to repay these loans.
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The Governor’s budget is also silent on how to make future interest payments for funds borrowed from the federal government to pay UI benefits and a proposed solution to the insolvency of the UI Fund. The Administration indicates that proposals will be developed to address all three of these problems during a series of stakeholder meetings convened by the Secretary of the Labor Agency. The Governor’s budget also increases total benefit payments to $13 billion in 2012-13 and $9.5 billion in 2013-14 to reflect the recent extension of federal extended benefits through December 2013 and a reduction in the unemployment rate.
“Workers who have experienced the trauma of losing a job through no fault of their own understand how vital unemployment insurance is to their families,” said CLF Executive SecretaryTreasurer Art Pulaski. “We can’t allow our state’s Unemployment Insurance Fund to slide into an abyss of debt that threatens laid-off workers’ unemployment checks. It’s time for sensible solutions that create a solvent fund that workers can rely upon in a time of need.”
According to the CLF, California’s worker benefits are well below the national average. The CLF claims, “California lags far behind neighboring states in terms of benefits paid to unemployed workers and contributions required by employers.” Since 1983, California businesses have been paying UI taxes on the first $7,000 of each worker’s earnings. This wage base is the minimum allowed by federal law and ties California for last in the nation with Arizona. According to the CLF, California’s worker benefits are well below the national average. States try to achieve benefit levels that offer a 50 percent wage replacement rate. California’s 29 percent weekly wage replacement rate is 7th lowest in the nation.
PERSPECTIVE
The CLF report calls for the following fixes to the UI System: n
Increase and index the taxable wage base. To bring the UI fund into balance and keep up with rising inflation and wages, the taxable wage base must be adjusted upward now and should be indexed to automatically rise over time. Expand the tax rate schedule. Without changes to the UI tax rates, especially the top tax rates, the value of an experience-rated system will be lost, along with the incentive to keep workers working.
n
Move to a forward-funded system. Rather than waiting for an economic downturn to replenish the fund, California should use economic booms to grow the balance of the UI fund when it is financially easiest for employers to pay more.
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Establish an employer surcharge to repay federal loans. California should join the 20 other states that levy a special assessment on employers to cover the cost of federal loans.
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Index benefits to account for rising wages and inflation. By pegging benefits to a percentage of the state’s average weekly wage, California can ensure that benefits will track wages and provide a similar value to workers over time.
n
1. Change the minimum monetary qualification to better reflect a reasonable attachment to the workforce. The current minimum qualification is just $900 (which is 2.8 weeks working full time at minimum wage), in the high quarter and $1,125 in the Base Period. This is far below the average in other states and does not reflect a sufficient attachment to the workforce. The average is between $2500, and $3000, with a number of weeks of work also required. 2. Change the Weekly Benefit Amount determination formula from a high quarter formula to 50% of the individual’s average weekly wage during the base period. This sets the WBA at an appropriate replacement rate in reference to the base period earnings, avoiding spikes in temporary wages that can push WBAs too close to and, in some cases, above the average wages earned by the individual during the base period. 3. Require claimants serve a waiting week at the beginning of the claim. The current provision permits the waiting week to be served at the end of the benefit payout. Most states require a nonContinued on p. 36
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Create a dependents’ allowance. Adding a dependents’ allowance helps the unemployment insurance system keep families out of poverty during periods of job loss.
Initial Eligibility (Unemployment Insurance Code sections 1280 and 1281).
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n
Suggested Reforms Under Discussion CGA staff is a part of a work group examining UI system reforms. Suggested reforms include:
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PERSPECTIVE
CHRIS MICHELI
Continued from p. 35
compensated waiting week before an individual may be paid as an incentive to the unemployed worker to seek new employment as soon as possible. Changes to benefit calculation and benefit reductions. 1. Change the partial earnings disregard to encourage claimants to be available for and accept work. (Unemployment Insurance Code section 1279) The current earnings disregard provision is among the highest of any state in the country. At the higher of $25 or 25% of wages, this provision discourages claimants from being available and accepting full time work during their claims series. 2. Reduce the weekly benefit amount for disability payments with respect to the same week claimed. (Unemployment Insurance Code section 1255) A claimant should not receive UI weekly benefits and workers’ compensation disability payments (of any kind), or social security disability payments, or any other cash payments with respect to the same week. 3. Reduce the weekly benefit amount for pension payments attributable to the same week and require allocation of monthly and lump sum amounts to weeks. Federal law requires the reduction of benefits for certain pensions that provide regular payments and many states require the reduction of unemployment compensation for pension payments. 4. Reduce the weekly benefit amount for vacation pay or any other payments attributable to a week claimed and require allocation of monthly and lump sum amounts to weeks. Many states require reductions for such payments. Requirements to maintain eligibility (22 CCR
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Section 1253 (b) 1. Registration for work).
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1. Eliminate work search waiver and exception provisions unless required by federal law and require that the claimant document active work search efforts with two or more employers each week in order to be eligible to be paid unemployment compensation, and require that such contacts be verifiable as a condition of payment. The regulations include many exceptions.
2. Require that all claimants be able to work, available to work and actively seeking work as a condition of being paid a week of unemployment compensation with no exceptions, except those required by federal law. 3. Require all claimants to register for work upon filing a claim. Current law requires registration for work within 21 days of filing. Ineligibility: 1. Increase the duration suspension penalty for claimants quitting work to require 10 weeks of subsequent work and 10 times the weekly benefit amount to be earned in subsequent work. This is more consistent with other state practices and will reduce the number of claimants who quit employment and subsequently qualify for unemployment compensation without significant work after separation. 2. Increase the period of ineligibility for fraud to 52 weeks. An administrative determination of fraud or a conviction in any court of law, whether referred for prosecution or not, should carry the full penalty. Other states do not have a “conviction” requirement, such as existing in California. 3. Increase the disqualification for misconduct to 15 weeks of work and 15 times WBA duration. 4. Impose enhanced penalty of 52 weeks for gross misconduct or gross negligence that caused the termination from employment. 5. Increase the disqualification for a refusal of suitable work to a 10 week and 10 times WBA duration, consistent with the penalty for quitting and discharge for misconduct. Overpayments: 1. Require that EDD produce a monthly statement of benefit charges for each employer and provide a period (perhaps 30 days) in which an employer may request an adjustment to charges, with appeal rights for denials of requests for adjustments. 2. Eliminate “waivers” of overpayments, but permit payment plans for repayment of overpayments. 3. Require 100% offset of overpayments against benefits claimed.
PERSPECTIVE
4. Increase the number of years of active recovery to 10 years from 6 years. 5. Never write-off overpayments unless determined uncollectible. System Efficiencies 1. Streamline first level UI Appeals to require the use of telephone or teleconference hearings, unless all parties to the appeal agree to an inperson hearing. Current law requires employers to attend hearings in person if they are within 50 miles of the hearing location. 2. Two-thirds vote and solvency trigger required for benefit increase. New Legislation May Drive Up Costs Also of interest to CGA members is Assembly Bill 152 (Yamada). The Association signed a coalition letter in opposition to the measure because, if enacted, this bill would divert employer paid Unemployment Insurance taxes to a new program to provide income to individuals seeking to start their own business.
Essentially, AB 152 seeks to resurrect the Self Employment Assistance (SEA) Program to allow unemployed individuals to collect benefits from the Unemployment Trust Fund for engaging in undefined “self employment assistance activities” in order to start their own business. In 1994 (the only year in which California operated a SEA Program), California’s program did not yield any participants who were successful in starting their own business, but this program required a significant investment of resources. Moreover, the bill lacks necessary controls to prevent fraud and abuse. For example, self-employment assistance activities are not defined nor are these activities required to be designed to help lead to a successful business. n
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C A L I FO RN I A G RO C E R
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WASHIN GT O N R EP O RT
Toward a More Perfect Union IN THE CURRENT POLITICAL CLIMATE, THERE HAS PERHAPS NEVER BEEN A MORE CHALLENGING AND COMPLEX SET OF ISSUES. IT HAS ALSO NEVER BEEN MORE IMPORTANT TO DEVELOP GOOD RELATIONSHIPS WITH YOUR ELECTED OFFICIALS TO HELP THEM UNDERSTAND HOW THESE ISSUES IMPACT YOU AND YOUR COMMUNITY. This is why we have our industry Day in Washington each April. We join with the National Grocers Association and the Food Industry Association Executives so that we have a unified voice on four of our most critical industry issues. This year those issues include tax reform, in a year that the most comprehensive rewrite of our nation’s tax laws in 25 years will be attempted; menu labeling, in the month that a final rule is expected that could add another $1 billion in costs for the industry with minimal, if any, benefit; health care implementation and revisions as the employer mandates and related rules kick in; and swipe fee reform — an issue that has been at the top of the worry meter for our members for more than a decade.
With 97 newly elected Senators and Representatives, there are a lot of new people in Washington to get to know. We are finding almost as much change at the state and municipal levels of government, as well.
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Jennifer Hatcher Senior Vice President Government and Public Affairs, Food Marketing Institute
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In order to develop productive and helpful relationships with these new officials, the Food Marketing Institute has joined with the Congressional Management Foundation as a premiere partner in a project to enrich the relationship between citizens and Congress by comprehensively addressing the communications challenges faced by both sides. The Congressional Management Foundation is the same group that trains newly elected members of Congress and their senior staff about how to be most effective in their new jobs. The information we are learning from the Congressional Management Foundation research is very helpful, but much is also confirming information we already believed to be true. Members of Congress believe constituents are the most important factor in swaying undecided lawmakers.
We understand that it is never easy to get away from the businesses you run to come to Washington, but there honestly may never be a more important time.
With 97 newly elected Senators and Representatives, there are a lot of new people in Washington to get to know. A quote from our third President, Thomas Jefferson, sums it up best, “We in America do not have government by the majority. We have government by the majority who participate.” For those attending FMI’s Future Connect leadership forum in Orlando, Fla. on April 30, you will get to hear an impressive presentation by Congressional Management Foundation Executive Director Brad Fitch, and two strong industry voices, Delegate Israel O’Quinn from Food City, and Teross Young, Vice President of Government Relations from Delhaize, all three with more than a decade of experience in the government relations arena. n
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Congratulations Al Plamann for your contributions to our industry and on your retirement! For more information contact:
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WASHIN GT O N R EP O RT
Sequestration, Continuing Resolution, and the Budget Process ALTHOUGH THE NATION AVOIDED A GOVERNMENT SHUTDOWN, THERE ARE STILL QUESTIONS THAT NEED TO BE ANSWERED. THE GROCERY INDUSTRY MUST REMAIN DILIGENT IN MONITORING CONGRESS AND ADMINISTRATION. While the 112th Congress left a legacy of dysfunction on Capitol Hill, passing only 219 bills (the least amount of legislation since the 1940s), the 113th Congress provided Americans with a glimmer of hope in late March that perhaps — just maybe — bipartisan deals can be made in the current polarizing political climate. On March 21, Congress avoided a government shutdown and cleared a bill which not only ensured the government would continue operating beyond March 27, when continuing resolution (CR) was projected to expire, but provided funding for all agencies through fiscal year 2013, allocating funding through five appropriations measures (Agriculture, Commerce/Justice/Science, Defense, Homeland Security, and Military Construction/Veterans Affairs). The other seven appropriations measures are funded based on fiscal year 2012 levels, with minor adjustments. However, the CR deal does virtually nothing to prevent $85 billion in across-the-board spending cuts (the sequester) from happening, but does provide a modest cushion for some agencies.
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Peter Larkin President/CEO National Grocers Association
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The measure extended authorization for the Temporary Assistance for Needy Families (TANF) program and shifted $55 million in funds back to
meat inspectors who faced furloughs that could have impacted the supermarket industry in a drastic way in the form of meat shortages, or increased prices. The bill also provided around $250 million in funding for the Women, Infants, and Children program (WIC) which initially received cuts of around $350 million in the sequester. The final CR bill did not allocate additional funding for the Affordable Care Act (ACA), or the Dodd-Frank Wall Street Reform and Consumer Protection Act.
While Congress did reach agreement on government funding, the budget process may not be so easy. President Obama has already missed his budget deadline of early February, and likely won’t produce a budget until mid-April. While Congress did reach agreement on government funding, the budget process may not be so easy. President Obama has already missed his budget deadline of early February, and likely won’t produce a budget until mid-April.
WA S H I N G T O N R E P O R T
The House and Senate majority budget blueprints have been released with very broad differences in how to handle policy issues such as: the deficit, raising new revenue, and the ACA. Such differences will make a compromise incredibly hard. The House has already passed Committee Chairman Paul Ryan’s (R-WI) budget and it did not receive a single Democratic vote.
online sales taxes, all issues in which impact the supermarket industry.
Five other House budget alternatives were offered from the Democratic Caucus, the Republican Study Committee, the Congressional Black Caucus, Congressional Progressive Caucus, and the Senate Budget Proposal, all of which were swiftly rejected.
Among everything else, Congress has many other issues to consider that can have a tremendous impact on our industry. From comprehensive tax reform, to overhauling the immigration system, to passing a 5-year Farm bill before the fiscal year concludes, much uncertainty still remains.
The Chambers are not bound to their budgets, unless a highly unlikely compromise is made between them. More likely than not, the differing budgets will act more as a guide of principles until the President releases his budget proposal.
The Senate has already rejected the House-passed Ryan budget and, as of this writing, the Senate is The National Grocers Association has and will projected to pass Budget Committee Chairman Patty continue to work with Congress and the administration Murray’s (D-WA) budget, or one very similar, after a on these important issues that impact the independent 50-hour “vote-a-rama” of back to back votes on various grocery industry, but we cannot do it without the help amendments stemming from employer mandates and support of California grocers. n in the health care law to Supplemental Nutrition Assistance (SNAP) funding and choice issues, to 1098 CA GrocersAd_CH FC_1673:718 4/8/13 10:12 AM Page 1
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You are a leader. You dare to lead when others follow. You make a true difference in the lives of those you touch. You light the way by your shining example. For your steady guidance, we salute you.
It has been an honor to have worked with you over the years supporting Unified and the grocery industry. Al, congratulations on your retirement and your accomplishments.
LA Commercial Banking Group Scott Connella, Market President, 213-236-7851 Everett Orrick, Senior Vice President & Manager, 213-236-5870 Robert Petersen, Senior Vice President, 213-236-4182
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C A L I FO RN I A G RO C E R
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BY KER I ASK E W B AILE Y
ADVOCACY
CGA Advocacy:
M AKING STRIDES In 2009, California Grocer reported extensively about advocacy, the California Grocers Association’s No. 1 priority on behalf of its members.
— Assemblymembers and Senators with no prior experience under the Capitol’s dome. That number represents fully one-third of State lawmakers.
The article highlighted several challenges faced by our industry specifically, and the business community generally, when navigating California’s political and policy processes on both the State and local levels.
In addition to the unprecedented turnover in Legislative seats, changes to California’s term limits law have brought a different career path for those arriving in Sacramento for the first time in 2013.
It also discussed the three components of the government relations program CGA wanted to develop and improve. Looking back, it is incredible to note the progress CGA has made. Looking forward, it is a bit daunting to see how much farther we could go.
The Legiboomer class is eligible to serve a total of 12 (down from 14) years in the statehouse but, importantly, they can serve that entire time in one house. It is expected that amid all the change, opportunity for longevity could actually create more stability. That concept is a good thing when applied to our allies, but can be a significant challenge when applied to individual lawmakers who do not share the world view of our industry.
The challenges in many ways have become more, well, challenging. CGA again faces an onslaught of more than 2,500 bill proposals in Sacramento in a single year and will again be working to address proposed ordinances in California’s 478 cities and 58 counties. Redistricting combined with California’s original term limits law ushered more than 40 freshmen “Legiboomers”
Possibly the biggest change, and most significant challenge CGA faces today that it didn’t anticipate in 2009 is the complete dominance of Democrats in the state power infrastructure. Continued on p. 46
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Continued from p. 45
California has long been a “blue” State and Democrats have commanded majorities in both wings of the statehouse for decades. However, the 2010 elections saw them make gains by winning every Statewide office and they expanded influence in 2012 by adding a two-thirds supermajority in both houses of the Legislature.
E N G AG E: T H E I M P O R TA N C E O F L O C A L G OV E R N M E N T PA R T I C I PAT I O N The grocery industry prides itself on being the soul of the community, hiring local employees, and focusing on products that best serve the community’s needs. Grocers are in a unique position because they offer a center to the community — a place where families shop, eat, and often, see their neighbors. There are very few other businesses in a community that can be defined as “local.” While politically, the conversation often focuses on federal and state regulation and the big picture of its effects on our industry, arguably a more important and potent factor of government relations comes in the form of local government initiatives. Local governments have the power to levy fees, taxes, assessments, strengthen or weaken labor laws, restrict or relax zoning regulations, and generally, control the day-to-day aspects of running a grocery store within a specific community. From delivery hours, to where trucks can unload, to alcohol sales — all are a factor of local government regulation.
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The most obvious example of local government trend setting is carryout bag ordinances.
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California recently hit its 70th carryout bag ordinance, with local municipalities leading the charge because the State was unwilling to do so. It has been the sheer will of CGA member companies to be active participants in the bag conversation locally that has allowed us to establish the ban/charge model and avoid a patchwork system as much as possible. Continued on p. 47
Despite those challenges, there is much opportunity and CGA’s government relations program has made significant progress over the past few years. We set out in 2009 to ensure our lobbying program was top notch, to grow our grassroots participation, and to increase our participation in the political side of politics. In each area we have made great strides and have even more improvement on the way. Top-Notch Lobbying There is no doubt that CGA has taken a good lobbying program and made it better. The Association has become a key player in significant policy battles including attempts to reform California’s Beverage Container Recycling Program, efforts to regulate single-use carryout bags, and programs to increase access to healthy foods. CGA can’t say it wins every battle, in a state like California that isn’t possible for business, but the Association is now a part of the conversation and works to positively impact the outcomes. CGA’s successes can be credited to the efforts of its staff, who are in the trenches on a daily basis, and to engagement on the part of the Association’s membership. The government relations staff works hard to help find solutions when they exist and to choose carefully the battles we prioritize. Rather than joining the chorus of business interests, CGA has worked to help distinguish the grocery industry and the industry’s voice. While the Association is on the same page as its colleagues on many issues, if we have a unique story to tell we take the time to tell it and personalize issues. On occasion, that means parting ways with our colleagues and charting our own course. Fortunately, the results of our efforts are paying off. CGA has gained significant credibility through work on single-use carryout bag regulation and is widely
ADVOCACY
CGA’s success in large part comes from member involvement in events like “Hike the Hill.” seen as the experts on the subject. The Association’s sincere effort to find middle ground on this issue has helped forge new partnerships with some interest groups. Those relationships give CGA an opportunity to work with these groups in additional policy areas like Beverage Container Recycling Program reform. The same is true in the arena of SNAP and WIC — the public-private partnerships that help get healthy food into the homes of lower income Californians. CGA’s work to identify solutions and find common ground in areas that ultimately assist recipients has enabled the Association to work in partnership on issues relating to vendor management and oversight, and food choice. There is work yet to be done in the lobbying arena in helping CGA become a true thought leader for state and local policymakers. That will take additional efforts to help generate policy papers and become more pro-active on emerging issues.
Growing the Grassroots
Continued on p. 48 LO C A L G O V E R N M E N T PA R T I C I PAT I O N C O N T I N U E D
This illustrates the power of participation in local government and what CGA’s membership can do to move a sometimes unmovable State in the direction it needs to go. Keeping up with the hundreds of jurisdictions, often with less than 24 hours notice, is a real challenge for the Association’s local government relations team. It’s why the team counts on its membership, particularly district managers, store managers and store employees, to keep CGA informed on what’s happening locally; to let us know if a local city council is considering action on any industry issues — shopping carts, plastic bags, alcohol/tobacco sales, zoning changes, waste haul changes, minimum wage requirements. It’s also why your participation is critical — attending hearings, writing letters, or testifying during public comment periods. Sometimes it takes a village to educate local governments on how their actions can have such astounding effects on store operations. It’s why participation in the local government scene has become paramount to the success of the grocery industry as a whole.
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When CGA evaluated its successes and struggles in 2009, it identified grassroots as an area needing improvement. Not only did the Association’s lobbying team need to become more known, it needed CGA
It was clear that while everyone was familiar with their local grocers, most policy officials knew little about how grocery stores operate, or what it takes
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CGA has improved its reaction to issues, but the ultimate goal is to also be pro-active and address issues before they enter the arena of policy mandates. In short, given the improvements on the lobbying side, CGA is now able to focus on shaping policy development and implementation.
members to develop deeper relationships with elected officials at all levels. And to do so before having to make “the ask” on policy issues.
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to be successful. And frankly, when California’s grocers run stores as well as they do, it can look easy from the outside.
Continued from p. 47
Our government relations team set about encouraging the building of relationships between state and local officials and member companies. We coordinated several “Groceries and Government” days and “Issues Forums” to bring local elected officials together with the industry to talk about issues.
FA S T A N D F U R I O U S — L O C A L G OV E R N M E N T P R O C E S S Local governments in California can pass new laws, called ordinances, in an incredibly short amount of time — as quick as 10 days. In contrast to the State Legislature or Congress, local governments meet year round and generally convene every week. The manner in which they meet is also dramatically different. Members of the public are not only invited, but encouraged, to play an active role in the deliberations. These rules apply universally to a city, county or special district. Here is how it works: Passing an Ordinance:
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Local governments release an agenda a minimum of 72 hours before the meeting, and most provide just the minimum notice required. If an ordinance is not listed on the agenda in advance, it cannot be considered at the meeting.
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When an ordinance is initially addressed by the elected body it is called a first reading. The elected officials may amend or vote on the ordinance with a simple majority vote required for approval in most cases.
n
If an ordinance passes on first reading, it is then scheduled for second reading at a subsequent meeting where it must again receive a simple majority vote. Often, ordinances up for second reading are placed on a Consent Calendar, where they are not discussed and passed with other second reading ordinances as a package.
n
If passed on second reading the ordinance becomes law. In a few large jurisdictions, including the cities of San Francisco and Los Angeles, the mayor may have veto power similar to the governor. Continued on p. 49
Events in San Jose and Los Angeles saw policymakers discuss their perspectives and priorities and allowed member companies to interact without an agenda. CGA worked to encourage individual companies to host store tours with local officials to explain the challenges grocers and food manufacturers face in providing consumers with high quality, low cost product. On a State level, CGA strengthened its Grocers Day programming to ensure participants heard from key policymakers and met with legislators representing districts where they operate stores, distribution centers and manufacturing facilities. CGA created a “Hike the Hill” program to bring member companies to Sacramento for specific issue lobbying. In addition, CGA encourages member companies to host state lawmakers on store tours, similar to the Association’s local elected officials program. Those efforts have definitely shown success. CGA is known in Sacramento and in cities and counties statewide in ways never before imagined. Companies large and small are developing lasting connections to lawmakers, which is even more important as their tenure is expanded through recent changes to term limits. All politics are local, after all, and CGA has made great strides in localizing our industry for policymakers at all levels. In 2013, CGA is looking to enhance its grassroots programs even more. This year, in an effort to simply meet the 40 new “Legiboomers” before policy issues arose, the Association used the “Hike the Hill” format to bring member companies to Sacramento and meet with 20 separate legislators. Companies had an opportunity to highlight their contributions to the community in terms of
ADVOCACY
employment and charitable efforts. Lawmakers had an opportunity to share their own history and outline what priorities they would pursue in the coming legislative session.
has labored to increase the power of its Political Action Committee (GROPAC) and Independent Expenditure Committee (IEC). And we’ve seen some modest success.
In addition, we are working to host a dinner for Freshman legislators the evening before Grocers Day at the Capitol. The event will offer participating companies the opportunity to dine with two different lawmakers during a seven-course demonstration dinner at one of Sacramento’s most exclusive restaurants. Breaking bread is a traditional way of building bonds. It will be a tremendous event.
CGA has significantly raised the profile of both GROPAC and the IEC through increased participation in key races. The Association has made it onto the call list of lawmakers up and down California and for the first time has begun participating in selected local races, particularly in the Los Angeles area.
Plans are under way to find new and creative ways to reach state and local officials with similar programs, and with enhancements to our prior efforts around the store tours concept. CGA is looking to engage lawmakers for longer periods of time and provide a more holistic view of the retail food industry — from farm to store. This will be accomplished through partnerships with others in the industry and increased participation from CGA member companies. Participating in the Politics of Politics
Continued on p. 50
LO C A L G O V E R N M E N T P R O C E S S C O N T I N U E D
Local Meeting Process:
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Then elected officials are then allowed to ask questions of staff, but cannot make a motion to pass or suggest amendments.
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The elected body is then mandated to hear comments from the public regarding the ordinance. As many people can speak as they want, but they are usually limited to no more than 3 minutes. At the state and federal level, the public often does not have the privilege to address elected officials directly as they are deliberating.
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When public comment is complete, the elected officials then discuss the issue amongst themselves since they can’t discuss the issue with each other in private.
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Finally, it takes one member to “Move” the ordinance and another to “Second” it. Then they vote.
Let’s face it, the politics of politics is key to success in the policy arena. The best opportunity for common ground on specific policy issues is beginning with lawmakers that share our industry’s world view. Lawmakers rarely go against their core values in crafting policy. It’s incumbent upon our industry to work hard to make sure we participate in the election process. We want like-minded individuals elected to office and want to see them have long careers. CGA
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When an ordinance is taken up at a meeting it begins with staff making a presentation on the ordinance and its purpose.
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Continued from p. 49
CGA lobbyist Louie Brown discusses carryout bag legislation with Keri Askew Bailey, CGA.
CGA opened an Issues PAC to weigh in on state propositions with a major victory in the defeat of Proposition 37 in November, 2012. The Association wasn’t satisfied to just contribute to the effort—it decided to take a leadership role and speak for retail grocers so their perspective wasn’t lost in the debate. We contracted with a renowned public affairs firm to create educational material that avoided direct advocacy. Looking forward, CGA plans to redouble its efforts in terms of generating member support for its political accounts. The government relations team will keep much of our participation within our industry, working to coordinate private events for CGA and participating member companies, rather than attending large receptions or sporting events that provide little opportunity for dialogue with candidates. CGA has already conducted several with great success and have more in the planning stages. n
C G A’ S G OV E R N M E N T R E L AT I O N S L I N E - U P Keri Askew Bailey Senior Vice President, Government Relations and Public Policy Keri Askew Bailey joined CGA in 2009, after 15 years in the public policy arena. She started with the California Legislature, working in the office of a Central Valley representative. She joined the staff of a newly-elected Assemblymember as a legislative Aide and later was named Chief of Staff. She then joined the California and Nevada Credit Union Leagues as lobbyist and later Manager of the Government Affairs department.
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Sarah Paulson Sheehy Director, Local Government Relations, Southern California
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Sarah Paulson Sheehy joined CGA in 2011, after three plus years at Cerrell Associates, a Los Angeles-based lobbying and consulting firm, where she was responsible for media relations and communications, advocacy, and grassroots development for a variety of clients. She has worked for public and private entities including Miramax Films, the Los Angeles Unified School District and Shallman Communications.
Tim James Manager, Local Government Relations, Northern California Tim James is entering his eighth year as CGA’s Northern California Local Government representative. Prior to joining the team, he served as a Chief of Staff for a Sacramento County Supervisor and has worked for a California State Senator. Tim has also lobbied local, state and federal elected officials on behalf of a statewide industry association and regional chamber of commerce. Dane Hutchings Manager, Government Relations Dane Hutchings joined CGA in March 2013. He began working with Ogilvy Public Relations Worldwide in 2010, serving as the interface between the Government Affairs and Public Affairs practice areas. Prior to that, he was a legislative aide for Mattos & Associates, a government relations firm specializing in association management, PAC fund contribution strategy and direct advocacy to the California Legislature.
AL PL AMANN
BY LEN LE W IS
AL PLAMANN LEAVES 25 YEAR LEGACY IT’S AN OLD SAW THAT YOU’VE HEARD IN DIFFERENT WAYS 100 TIMES. BUT IF YOU LOOK UP THE WORD “COMMITMENT” IN THE DICTIONARY YOU’D FIND AL PLAMANN’S PICTURE NEXT TO IT.
For nearly 25 years, Al Plamann, who is retiring in May as CEO of Unified Grocers, Inc., has been a guiding force, not only to the company but to the industry through his expertise, judgment and dedication to a wide array of business projects, education, community outreach programs, and a focus on creative thinking and strategic planning that has made Unified one of the pre-eminent wholesalers in the industry. “I’ve worked with Al for 17 years,” says incoming Chairman and CEO Bob Ling. “When he became CEO we were a California company with $1.8 billion in sales. But his vision was to grow the company and
make it not only a significant regional player but nationally acknowledged for our expertise. I’d say the mission is accomplished.” Plamann’s significant industry knowledge was tapped by California Grocers Association President Ron Fong when he took the reigns of the statewide trade group five years ago. “When I came on board in 2008, I wanted an honest assessment of the grocery industry and the issues we face,” Fong recalls. “Al was one of the first individuals I met with. His insight was invaluable in understanding the lay of the land.” Continued on p. 54
AL PL AMANN
AL PL AMANN
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Continued from p. 52
“Much of our growth has been spurred by a focus on areas of consumer growth such as perishables, natural and organic products. During Al’s tenure, we really reinvented our specialty business and it’s been a significant part of our growth. Just look at the numbers. We’ve doubled perishables sales in the past five years and, thanks to Al’s dedication, have passed the $1 billion market in that category alone,” Ling said. As Leslie Sarasin, President and CEO of the Food Marketing Institute, stated when presenting him with the coveted Herbert Hoover Award for humanitarian business efforts: “Al Plamann is legendary among wholesalers and his abiding commitment to serving independent retailers mirrors his altruistic regard for the individual.” During his career in the grocery industry, Plamann has been deeply involved in a number of organizations. In addition being on the CGA Board of Directors, he has served on FMI’s Industry Relations Committee; as director of the National Consumer Cooperative Bank; vice chair of the economic advisory council at the Federal Reserve Bank of San Francisco; on the board of the Los Angeles Area Chamber of F O U N DAT I O N H O N O R S P L A M A N N In 2004, Al Plamann was recognized by the CGA Educational Foundation for his dedication and commitment to California’s grocery industry by inducting him into its Hall of Achievement. This prestigious award honors individuals who have contributed substantially to the benefit and advancement of the food industry.
Commerce; and a member of the board of visitors at the George L. Graziado School of Business at Pepperdine University.
“ Al Plamann is legendary among wholesalers and his abiding commitment to serving independent retailers mirrors his altruistic regard for the individual.” Bill Cole, professional speaker He has also supported many community-based groups including the Boy Scouts of America, City of Hope and the Weingart Center Association, which provides assistance to the homeless in the Los Angeles area. After receiving his B.S. in accounting and real estate from the University of Colorado, and an M.B.A from the Wharton School at the University of Pennsylvania, Plamann went to work for Atlantic Richfield Company, where he held various executive posts in different divisions for about 13 years — including California. He turned down a promotion at ARCO in Dallas, preferring to keep his family together in Southern California. “I decided it was time to try something different and that’s when I got an opportunity to change careers,” he said. So, in 1989, he became senior vice president and chief financial officer for Certified Grocers of California, Ltd., and took over as president and CEO in 1994. The move was a positive one for Plamann and his family.
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“My son was going into high school at the time and my daughter was in junior high,” Plamann recalls. “We had made a lot of friends at ARCO in Los Angeles. We had been moving every two or three years, but families typically don’t think in terms of career paths and this was a chance to settle down.”
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Plamann said the move from the oil industry to grocery distribution was significant.
In 2009, Al was privileged to present the CGAEF Hall of Achievement Award to Darioush Khaledi, K.V. Mart Co.
“It was a huge change,” he said. “In the oil business I was looking at financial situations through the lens Continued on p. 56
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Continued from p. 54
monitor shopper behavior on a real time basis, both had a big impact on the business. “These efficiencies have been able to successfully offset the inflationary issues that have put intense pressure on other industries,” he said. Asked about other changes at Unified during his tenure, Plamann remarked: “I think we’ve really improved transparency — the ability of our retailers to see product availability, price and deals on a real time basis. We’ve continually invested in this area in order to upgrade our services to retailers.” But it’s not all about technology. It’s about connecting with retailers.
of five and 10-year projects. When I got to wholesale grocery, I had to look at weekly and daily sales. It was startlingly different and a big learning curve for me.” Plamann said he made the assumption grocery was a simple business, but quickly discovered the complexity of logistics, warehousing and financing. Of course, he also had some great teachers. “So many people have been my mentors like Lou Amen, Darioush Khaldedi, Jack Brown, Dick Goodspeed, Larry Del Santo, Roger Hughes, Paul Gerard, the list goes on and on and they were all important influences,” he said.
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However, he echoed the sentiments of many of his contemporaries noting that the business was still far simpler years ago.
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“We’ve seen the migration to dramatically different formats, changes in consumer demographics and varying buying patterns in areas our retailers operate in,” he said. “We’ve been able to consolidate wholesaling operations so we can be considerably more efficient up and down the West Coast.” Much of that has involved new technologies for retailers, warehouses and transportation systems. “For instance, we know exactly where our trucks are all the time and it’s dramatically changed our business,” Plamann said. “Of course the ability to do transactions electronically instead of on paper, and to
“I’ve tried to instill the notion that we must understand our member owners and their customers as well as they do in order to be an effective wholesaler,” he said. “Additionally, we’ve been able to facilitate purchases of stores for our retailers by either financing, or guaranteeing a lease.”
While Plamann has seen numerous retailers come and go over the past 25 years — some falling by the wayside and others swallowed by bigger chains — he believes there’s still plenty of room for growth. While Plamann has seen numerous retailers come and go over the past 25 years — some falling by the wayside and others swallowed by bigger chains — he believes there’s still plenty of room for growth. “In the time I’ve been here I’ve seen Superior grow from two stores to 30 and similar growth for companies like Northgate Gonzalez, El Super and a raft of other independents in Southern California,” Plamann said. “I think they would tell you it’s because Unified has been very supportive.” Through it all, Unified has become a better company because it has quickly adjusted to changes in the marketplace, said Plamann, who has a positive attitude about the future of the company and for business in California. “It’s going to be a difficult environment,” he admits. “We have to continually adapt to changes in Continued on p. 58
u t a l a r t g i o n n o s C on your retirement Al!
Best Wishes from,
Š2013 General Mills
Your friends at
AL PL AMANN
C O N TI NU E D
Continued from p. 56
California, and on the national scene. There will be a continuing focus on food safety and on reporting requirements that weren’t here 20 years ago, like country of origin and front of package labeling.” He believes the industry is going to need more certified food safety handlers in stores and more reporting on how food is processed. “The food industry must react to all of it,” he said, “But as long as we demonstrate that the food system is safe and healthy, and that our retailers are concerned about those issues, we’ll be in a good place,” he said. CGA’s Fong agrees, adding that Plamann leaves the industry at a key transitional time. “Millennials have shown that they shop different than Baby Boomers,” Fong said. “In California, our population demographics have changed dramatically since 1989. The playing field is significantly different. To succeed, retailers are going to have to adapt quickly.” Some of this will depend on relationships between wholesalers, retailers and manufacturers, according to Plamann. “Some manufacturers are focusing on the growth in Internet shopping, and I can see a growing trend for them to go direct to consumers,” he said. “This puts a strain on three-way participation.” Plamann said getting products through the checkstand must be a partnership, not a war. That requires strong relations with the vendor community, a concept that must constantly be cultivated. Although it can be fun to look back, the future of the business is more important. In this regard, Plamann believes in focusing on the next generation of retail operators.
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“They are the ones that will steer the business as we move forward,” he counsels. “I have to say that their thinking is quite different than past generations.”
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To address this trend, Unified has established a council of younger owners to ensure the sharing of ideas regarding the direction of the business. “For the most part, we’re just listening and gathering information on what they see as major changes in their shoppers’ habits and how we at Unified can support that,” he said. “We can assist them with the
technology to talk to shoppers, monitor their behavior patterns through the use of shopper panels, or work with the vendor community to learn what data they are capturing.” Plamann said Unified wants to enhance its retailers’ ability to be competitive within their neighborhoods by recognizing that each store has its own personality, culture and needs. “The days when you could create one cookie cutter store for the Western U.S. are over,” he said. One of the things he will always cherish is his relationship with CGA over the years. “It’s been a warm and positive relationship,” Plamann said. “The organization has done such a great job over the years. Other state associations have come and gone, but the commitment of both independents and chains to support CGA has made it stronger and a highly effective voice in regulatory and legislative affairs.” So, what’s next for Al Plamann? “I’m looking forward to continuing to serve on several boards,” he said. “I need a little bit of running room to think about what I’d like to do. I don’t want to lose touch with the industry. I put blood, sweat and tears into it and I think of myself basically as a grocer. I love wandering through stores to see what’s being done.” Asked if he’s considered buying a couple of stores, he mused: “One of my friends suggested that, but that would be like going from the frying pan into the fire.” n Len Lewis is editorial director of Lewis Communications, Inc., a New York-based editorial planning, research and consulting firm. He is a contributor to several retail publications and trade groups in the United States and Europe and has been a speaker and moderator at numerous industry events. He can be reached at lenlewis@optonline.net or via his website www.lenlewiscommunications.com.
Al Plamann A Unifying Force Since 1989 Compassionate Dedicated
Innovative Insightful
Respected
Congratulations on your retirement! The Unified Team
Ph: 800-724-7762 | unifiedgrocers.com
Congratulations Al!
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Thank you for being a great partner. Enjoy your retirement!
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t a s d n e i r f r u o y From
Bristol Farms
C A L I FO RN I A G RO C E R
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A CHANGING OF THE GUARD
BY LEN LE W IS
A CHANGING OF THE GUARD THERE’S AN OLD SAYING THAT THE MORE THINGS CHANGE, THE MORE THEY REMAIN THE SAME. That seems to be an apt description for Unified Grocers, Inc., and also its legacy. What changes are the challenges facing its members. What remains the same is an ever-strengthening wholesaler and a consistently creative and diligent management. The latter is headed for another change when Bob Ling takes over as President and Chief Executive Officer this May following Al Plamann’s retirement. After 16 years in executive posts at Unified and many more in the retail supermarket and drug store industry, Ling is well suited to take over the reigns. California Grocer got the opportunity to sit down with him to talk about Unified’s future. Continued on p. 64
A CHANGING OF THE GUARD
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Continued from p. 62
certain health concerns. Healthy eating seems to be the overriding trend among all consumers. We have expanded our natural product offerings starting in the Pacific Northwest, and it’s being rolled out throughout our marketing area as we speak.” CG: What does that consist of? LING: “Well, natural is an imprecise and somewhat undefined description. It all goes to the notion of healthy eating whether focusing on whether a product is locally grown, or what is in a manufactured product. At the same time, we have to retain a value proposition for our members and consumers.” CG: How?
In 2009, Bob Ling served as CGA Chairman of the Board.
California Grocer: We’ve talked quite a bit about Unified’s growth in the past few years, but where does the company go from here?
LING: “We’re looking in a number of different directions. First of all, it’s important to understand we’re a reflection of our membership. Their success is our success and vice versa. “Everyone in the industry, including independents, has been navigating challenging economic times. Hopefully we’re approaching the end. Through it all though, our core membership group has constantly readjusted itself. That’s made us stronger and well positioned to take advantage of opportunities out there today.”
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CG: It’s nice to be dealing from a position of strength.
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LING: “Yes, but let’s not forget the recession really isn’t over. We still have work to do with respect to taking advantage of competitive opportunities and making sure we remain responsive to consumer needs and trends.” CG: What’s Unified focusing on in terms of trends? LING: “We’re continuing to expand through our Market Centre subsidiary, by reaching out to emerging demographics who might be underserved — whether it’s consumers of a certain age, ethnicity or with
LING: “We have to be agile enough to serve various formats that are addressing different components of the market. Just because a store is focused on value doesn’t mean their customers aren’t concerned about healthy eating. So we’re looking for ideas, concepts and trends across all formats.” CG: Are independents in a good place to take advantage of these trends?
“ We have to be agile enough to serve various formats that are addressing different components of the market. Just because a store is focused on value doesn’t mean their customers aren’t concerned about healthy eating. So we’re looking for ideas, concepts and trends across all formats.” LING: “Absolutely. One of the greatest advantages independents have is the ability to micro-market in individual neighborhoods as consumers there identify their wants and needs. “Independents have been doing this for years. It’s their major strength. We are also getting smarter about it by using information technology to identify consumer needs and coordinate with our friends in the vendor community to make sure products are going to the right shoppers.” CG: What do members tell you they’re looking for? Continued on p. 66
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Continued from p. 64
CG: Are you doing it in-house or utilizing outside
LING: “They want us to be as efficient and cost effective as possible. They also need our assistance in providing information that helps them make store level decisions. They want Unified to remain strong so they have a solid partner and supplier that can help them expand their businesses.”
partners?
CG: What does that partnership mean these days?
LING: “It’s not only about individual members, but also to identify trends within specific markets. It will help our members communicate better with their customers.”
More than just supplying product?
LING: “Yes. We have a major initiative underway involving the accumulation and analysis of sales data within stores. Increasingly, retailers are sharing scan data that is helping us build an infrastructure capable of bringing them information about how to make better decisions — how to better organize and run their stores. It will also allow us to communicate what’s going in our stores to the vendor community.”
LING: “We are working with third-parties who are experts in the field. We have experts on staff as well.” CG: So, you’ll have detailed data on every store when it’s up and running completely.
CG: And identify which formats work better in particular areas?
CG: Does this mean Unified is becoming a data
LING: “That’s part of it. But it really gets down to which products and brands fit best in a particular aisle or store — which SKUs should be on the shelf to fit in with the community and to make sure we’re responding to emerging trends.”
warehouse?
CG: Is there a target date for completion?
LING: “Well, this is not just accumulating data, but analyzing it to drive sales.”
LING: “We’re in the implementation process now. Some of the benefits will be seen this year. The project will continue to evolve over the next couple of years. As the information changes we’ll get better at analyzing it. We’ll be sharing the benefits with our members as we continue to build this tool.”
CG: How far along is this project? LING: “We’ve been at it for a while. It’s a major initiative for this year and we are signing up more members every day.”
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Continued on p. 68
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Bob Ling (center) with Mike Read (left) WinCo Foods, Inc. and Ron Fong (right) CGA.
NORTH STATE GROCERY, INC. www.ShopHolidayMarket.com www.facebook.com/holidaymarkets
www.ShopSAVMOR.com www.facebook.com/SAVMORFOODS
Thank you for all you’ve done Al! Best wishes to your continued success! From your friends up north, North State Grocery
CAGrocersAd2013_Layout 1 3/22/13 3:58 PM Page 1
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A CHANGING OF THE GUARD
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Continued from p. 66
CG: What’s Unified doing to facilitate those
CG: Does Unified have other priorities over the next
opportunities for independents?
year or so?
LING: “We’re helping organize those opportunities by approaching sellers and working closely with our retailers.”
LING: “We have a focus on customer satisfaction and that’s in large part a function of our warehouse operations. We will continue to invest in the best management systems to become more efficient. We are also constantly engaging employees to make sure everything from the ordering process to final delivery is done efficiently. Our goal is to be as accurate and timely as possible.” CG: Is there an opportunity for Unified to increase its member base?
LING: “There’s a lot going on in our Western marketing area. Several companies have already announced they will be divesting stores and that’s always a great opportunity for our members. We’ll see that in all of our trading areas.”
CG: Are you exploring new types of members? LING: “There are opportunities to expand in certain areas. One we are looking at carefully is to expand our Asian product offering. It is clearly a demographic of significant growth and complexity. We’re getting better at understanding it and bringing in some different offerings.” CG: As you look at the West Coast markets, what do you see as the biggest challenges for Unified and its members?
LING: “Well, the retailer who’s in the middle has always been at risk and that’s truer now than ever. The retailer who is only selling price is probably limiting their opportunities. The key to growth of the independent is differentiation, not a mass-market approach. I think our members have been pretty good at doing that. But it’s something that’s on-going.” CG: Basically, are you positive about the economic environment in the West? Are we going to see improvements as the year goes on?
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LING: “Despite limited evidence I’d say we’re cautiously optimistic. I don’t think we’re going to wake up one day and all of California, Arizona, Washington and Oregon will have turned the corner on economic growth.
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“I think everyone agrees it will start with pockets of growth in different areas and from there we’ll gain some momentum. Hopefully, that will translate into a broader economic recovery later this year. One thing we look at very closely is the housing market — particularly in California. Housing drives the economy here and there are early signs of a recovery. It’s too early to say whether it’s a bump or a trend, but I’m an optimist at heart.” n Len Lewis is editorial director of Lewis Communications, Inc., a New York-based editorial planning, research and consulting firm. He is a contributor to several retail publications and trade groups in the United States and Europe and has been a speaker and moderator at numerous industry events. He can be reached at lenlewis@optonline.net or via his website www.lenlewiscommunications.com.
Congratulations Al Plamann and Bob Ling
From your good friends at
Smart & Final Holdings, Inc.
c
ngratulations Dear Al, Congratulations from your friends at fresh&easy on your retirement. Your contributions to the grocery industry and the communities you serve are immeasurable. We wish you the best as you embark on your next exciting endeavor. TM
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Neighborhood Market
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04.12.13
F&E_Retirement_CG_HfPg_
California Grocer
fresh&easy
FNE-PRNT-PP1
v3
7.375" x 4.875" "x "
04.xx.13 xx.xx.13
would like to thank Al Plamann for his years of service to Unified Grocers and our great industry.
C A L I FO RN I A G RO C E R
Congratulations Al Plamann on your retirement. We have enjoyed working with you over the years.
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THE CLOCK IS TICKING
BY LEN LEW IS
THE CLOCK
IS TICKING As the nation counts down to implementation of a massive healthcare reform package, businesses from agriculture to retailing are more concerned than ever about the cost of the new regulations, the impact on hiring and staffing, and its potential to derail an already fragile economy. This is the scenario surrounding the Patient Protection and Affordable Care Act (ACA), derisively referred to as “Obamacare,” which is slated to go into full effect in 2014. At present, actions to repeal or amend more onerous parts of the law or overturn the legislation completely have failed. As such, retailers, consultants and legal observers worry that the Administration’s attempt to short circuit steadily rising healthcare costs will simply result in complex and unclear provisions, job limits and even higher costs for employers and workers.
For example, the 2012 Independent Grocers Financial Survey, published by the National Grocers Association, reported the financial impact of changes to health insurance through ACA is ranked as the No. 1 concern.
This will provide insurance for an estimated 27 million more people, CBO estimated. But 7 million others may lose employer-based insurance as more companies cut staff, or opt to pay the fine for non-compliance. The Kaiser Family Foundation, a non-profit organization focusing on health care issues, has estimated that the price of covering a minimum wage worker under ACA could rise by $3,000. Nationwide, it’s been estimated that minimum labor costs will rise to $10.03 per hour for a full time employee and $13.75 per hour for family coverage. Mercer Consulting, in its National Survey of EmployerSponsored Health Plans, has calculated that the average cost of health insurance per employee will increase about 6.5 percent this year, and that 58 percent of employers surveyed plan to shift costs to employees to offset the increase. One of the biggest issues is that employers with 50 or more full-time equivalent employees must offer a “minimum essential benefits package” insurance to those working 30 hours or more, or pay a $2,000 fine for each uninsured worker. In fact, some employers are capping employment at 49 people and have acquired the name “49ers.” Continued on p. 74
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“The shared responsibility rules could affect retailers in different ways,” said Adam Solander, an attorney for the Washington law firm of Epstein, Becker and Green, which also represents the health council at the National Grocers Association (NGA). “It’s a mixed bag. In certain situations, the rules provide some helpful guidance. In others, the industry will be adversely affected by virtue of our size.”
Overall, expansion of health insurance coverage under ACA will cost about $1.2 trillion over the next 10 years, according to figures from the Congressional Budget Office (CBO).
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The irony is that it is cheaper in most cases to pay the penalty then provide insurance coverage. However, Solander warned that this could be a dangerous strategy. “A local store’s standing in the community could take a hit if you’re seen as not caring about employees,” he said. “Additionally, the penalties are not tax deductible so you’d lose your tax preferred status and you might make yourself more susceptible to unions.”
Peter Lee, Executive Director of Covered California noted that several hundred thousand state residents might forgo employer-sponsored plans to sign up for insurance through the exchange.
Not everyone believes that cost is a major issue.
The Health Policy Center at the Urban Institute, a Washington, D.C.-based think tank, believes that price hikes for large and small firms would be negligible. In fact, small businesses with fewer than 50 workers would be exempt from penalties. “Our analysis shows that, on average, employers (with fewer than 100 employees) will find average costs per person insured reduced by 7.3 percent,” the Institute noted. This is when it becomes cheaper for firms to pay the penalty for non-compliance, observers said. It also provides an incentive to hire part-timers instead of full-time employees to avoid penalties, thereby discouraging job creation and pricing many unskilled workers out of full-time employment.
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Conceivably, this could push workers toward state- or federally-run insurance exchanges, most of which have not yet materialized. Some believe they will function like Amazon and Expedia, enabling people to choose between various health plans. But no one knows for sure.
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Peter Lee, Executive Director of Covered California, the first state-run healthcare marketplace, noted that several hundred thousand state residents might forgo employer-sponsored plans to sign up for insurance through the exchange. Meanwhile Walmart, which has already launched clinics, Medicare drug coverage plans and corporate wellness programs, is exploring the possibility of establishing a private health insurance exchange
for small businesses that could leverage the chain’s buying and marketing power. Walmart’s exchange would compete with government-run marketplaces, but would not be eligible to offer tax credits. However, there is evidence that exchange-based insurance will be little help for employers, or individuals that might be forced to buy into because they will only provide basic services and give people a very narrow network of providers to choose from, sources noted. In addition to coverage quality, concern is high that these plans will still be expensive because the insurance companies believe low-priced insurance from the exchanges will be an incentive for employers to “dump” more employees onto the exchange, according to comments by Scott Gottlieb, a physician and member of the American Enterprise Institute. “We’ll have exchanges in 2014, but I don’t know how they will work so it’s hard to predict whether they will be good or bad,” said Solander. “At the core level this is a good idea for smaller employers because it allows them to buy insurance like a large company. Having employees choose their plan through an exchange could be a valuable option.” Assessing the rest of ACA as it stands now, Solander noted that the mandate which specifies 50 full-time, or Continued on p. 76
THE CLOCK IS TICKING
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Continued from p. 74
Given the current political climate on Capitol Hill, and the scant likelihood of amending ACA, Solander said many companies are engaged in what he calls “population management” under which workers’ hours are being cut to a maximum of 28 per week. “That’s going to hinder our ability to recruit and retain people,” he said. “We have good employees, but if they can’t get extra hours they won’t be very happy and that’s not what an employer wants.”
Solander urges employers to get their employee population healthier. full-time equivalent employees could favor an industry using so many seasonal and part-time workers. “There is an exception that allows us to take seasonal workers out of the equation when determining whether we actually have 50 employees that are subject to ACA mandates,” he said. There are specific definitions, though. Part time is defined as those working less than 30 hours per week and seasonal less than 120 days per year. “If stores hire extra clerks around Thanksgiving and they work 40 hours, but there is no intention to continue their employment, then that person does not have to be included in the employee count,” he said. “This break in service rule is also helpful if an individual hasn’t worked for 26 consecutive weeks. That person can be treated as a new employee to determine whether they have to be provided with coverage,” he added.
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Another potentially big issue is the Look Back Stability Safe Harbor Period.
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“It allows us to choose a look back period of time between three months and a year for ongoing employees,” Solander said. “If they started on January 1, 2013, you calculate all the hours they work until January 1, 2014. If that person averaged 30 hours per week, you have to treat them as full time going forward. If not, you can treat them as part time and would not have to provide coverage, or be subject to penalties.”
Solander says his clients feel terrible, but “we can only do what our bottom line justifies and the rules are forcing us to make those determinations.” He says if a company uses a year of Safe Harbor, it needs to manage its employees’ hours to make sure that those it can’t afford to pay benefits for are not working over 30 hours per week. Tools published by the Employee Benefits Security Administration (under the Department of Labor) can give retailers a baseline for how they are doing in terms of compliance. Solander recommends all employers review it immediately and meet with their human resource departments. Meanwhile, wellness rules are also a key part of the upcoming reform. “One of the real benefits of healthcare reform is that it allows us to provide employees with an incentive of up to 30 percent of the premium for participation in a wellness program,” he said. “It’s important because this is the only lever that employers have to bend the cost curves.” Solander urges employers to get their employee population healthier. “We have to change the way we pay for healthcare and this will lower costs,” he added. “We can no longer justify paying on a procedure basis. We must make sure employees are getting high quality procedures that keep them out of the hospital.” n Len Lewis is editorial director of Lewis Communications, Inc., a New York-based editorial planning, research and consulting firm. He is a contributor to several retail publications and trade groups in the United States and Europe and has been a speaker and moderator at numerous industry events. He can be reached at lenlewis@optonline.net or via his website www.lenlewiscommunications.com.
Proud to be a partner with Unified Grocers
CONGRATULATIONS AL PLAMANN ON YOUR RETIREMENT.
BEN STEIN ONCE SAID, “PERSONAL RELATIONSHIPS ARE THE FERTILE SOIL FROM WHICH ALL ADVANCEMENT…ALL SUCCESS…ALL ACHIEVEMENT IN REAL LIFE GROWS.” If Ben Stein is right, one couldn’t find a better medium in which to grow lasting and meaningful relationships than The Illuminators, an organization that dedicates itself to building relationships and scholarship opportunities throughout the grocery industry. “The personal relationships formed in this business are very important,” says Ed Hepler, Western Sales Director for Hain-Celestial and incoming Illuminator Headlite.
“Our efforts to facilitate events such as supplying greeting bags filled with member-donated products, hospitality, golf tournaments, meals and special events at the CGA and WAFC conventions are unsurpassed by any other club.” “Even during difficult times, people still make the decisions and those involved with The Illuminators not only support this organization, but also the California Grocers Association and the Western Association of Food Chains,” he says. “There is a symbiotic relationship that develops between members of these organizations and everyone feels a real obligation to help each other build a solid business. It’s hard, but fun work and everyone is passionate about it.”
He attributes The Illuminators successes to its involved members. The Illuminators is a voluntary organization whose active members have a real passion for supporting the industry’s future. “Our efforts to facilitate events such as supplying greeting bags filled with member-donated products, hospitality, golf tournaments, meals and special events at the CGA and WAFC conventions are unsurpassed by any other club,” he says. “By enhancing the convention-going experience for attendees, we’ve helped create a better convention for everyone.” Moreover, he believes The Illuminators are not only a valuable asset for people in the industry, but for those just entering the grocery business as well.
T HE ILLUM IN ATORS
Meet Ed Hepler: Illuminator Headlite
“Part of our future marketing effort is to attract new members — especially people who want to do more than their regular eight-to-five jobs and go home,” Hepler says. “If you want to step it up, really get engaged in the industry and rise above the crowd, then you should become an active Illuminator.” “In fact, you should aspire to become a board member and ultimately an officer,” he recommends. “The more engaged you are in the organization, the more you will benefit from your membership.” Continued on p. 81
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Hepler, a 32-year veteran of the grocery business who has been with companies like Georgia Pacific, Nestle, Sara Lee and now Hain for the past five years, believes relationships forged through associations like The Illuminators have helped a lot of companies deal with the enormous changes taking place in the industry, including consolidations and the movement of people that come with the changing tides. “The Illuminators has been one of the few constants,” he says. “We’ve been around almost 90 years and we’re one of the most relevant, admired and impactful sales trade associations in the entire grocery industry.”
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Ed Hepler with Larree Renda, Safeway Inc.
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T H E I L L U M I N AT O R S
Continued from p. 79
Given the group’s highly successful membership drives, people are taking notice. “The Illuminators thrive by improving what we deliver to existing and new members,” he says. “For instance, we’ve greatly enhanced our website, added online registration for events, added local Illuminator Retailer Exclusive Dinners, improved the process of new member involvement, and improved the quality of our roster. ” Additionally, The Illuminators have a very strong financial position that pays for an active scholarship fund. “All the money raised over and above what we need for operations goes to the Illuminators Educational Foundation,” says Hepler, noting the organization awarded over $1 million since the inception of the foundation. The funds channel through the Illuminators Scholarship Program, CGA and WAFC programs.
“Many of our goals are geared toward increasing our membership and getting people more involved as active members,” he says. At present, The Illuminators have about 250 members, with a goal of reaching 350. “We are considering hiring a marketing company to assist us,” he says. “This may include advertising in various trade journals and utilizing other media support outlets.” “We recently secured a treasure trove of spectacular testimonials about The Illuminators from some of the biggest grocery retailer names in the industry. We are extremely grateful for these tributes and are using them in an effort to attract new members.” “Our focus over the next year involves building active membership, perfecting the execution of Illuminator events, and expanding leadership, partnering, and educational opportunities amid the grocery industry. All while maintaining our stance as the most admired sales trade association in the industry. “How could anyone not want to be part of The Illuminators?” he asked. n
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“The scholarship program is very valuable because the food industry tends to be one you grow up in,” Hepler says. “There aren’t a lot of people coming from other industries into middle management. When
Looking ahead to the balance of 2013 and beyond, Hepler said the group, which created a new mission statement at its last strategic planning meeting, is in the process of fine tuning its plans.
C A L I FO RN I A G RO C E R
“If someone is looking for a way to support the industry’s future, we’re the organization that makes it happen,” he adds, noting the organization completed this year’s scholarship application process on February 15. Consequently, The Illuminators will grant eleven scholarships to deserving, food industry affiliated students this May.
you come in from the beginning, you build personal relationships that stay with you over the course of your entire career.”
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EXPERT TIPS ON HOW TO LAUNCH A SUCCESSFUL FOOD CONTEST—AND WHY IT COULD BE A MAGIC BULLET FOR YOUR BRAND. Expert tips on how to launch a successful food contest—and why it could be a magic bullet for your brand. Engagement: it’s one of those words that 20 years ago meant an entirely different thing than it does now. Forget the marriage vows; today’s engagement is all about nabbing consumers in creative ways, and keeping them. One clever way to “engage” consumers is with a contest. To find the magic ingredients for a successful, food-related contest, we turned to two experts: Wendy Nyberg, Senior Director of Trinchero Family Estates, parent company of Sutter Home and the 22-year-old “Build A Better Burger” Contest; and Brian Peters, Director of Integrated Marketing Communications for General Mills, home of the iconic Pillsbury Bake-Off.
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Same goes for the Bake-Off, notes Peters. “In the contest’s 64-year history, consumers have created timeless recipes using Pillsbury products. The contest has been a vital part of establishing Pillsbury as a trusted brand that helps people make food their families will love.” n
Stay Current.
That’s especially true for Pillsbury Bake-Off, which has been celebrating home cooks for nearly a halfcentury. “During the ‘60s,” notes Peters, “convenience cooking played a prominent role in the Bake-Off.” Now? Not so much, says Peters, noting that this year, the contest has been revamped to mirror today’s lighter, fresher style of home cooking.* Consumers can engage more with the contest, with three chances each to enter recipes and vote, a format that Peters says “gives retailers multiple opportunities to activate in-store.” 2. Go Telegenic. The advent of food as a TV star has been a boon to contests. In 2005, the Food Network first broadcast the Build A Better Burger cook-off. “We have had four cook-offs covered to date, exposing the content to a significant new consumer base,” notes Nyberg.
Harriot Manley Custom Content Editor Sunset Publishing/ Time Inc.
Thinking up a contest isn’t the hard part; creating a contest that trumpets your brand and makes it top of mind for consumers is the key. Take Build a Better Burger: “It was Sutter Home’s goal to have consumers enjoy wine with any meal, not just for special occasions,” says Nyberg. “Today, wine has become part of the everyday lifestyle and less ‘celebratory,’”—e.g., people see nothing odd about sipping wine with a burger.
Pillsbury has also benefitted from televison. Martha Stewart broadcast of her show live from the 45th Pillsbury Bake-Off Contest. “The contest before that,” adds Peters, “we flew category winners to Chicago to appear on Oprah, and Oprah announced the $1 million winner live.”
PICK THE WINNERS Which of these real submissions were winners? (Answers below.) 1. Peanut Butter & Jelly Burgers 2. Buffalo Chicken Crescent Puffs 3. Black Forest Burgers 4. Pumpkin Ravioli with Salted Caramel Whipped Cream 5. My Big Fat Greco-Inspired Burger
(4) Grand Prize, 45th Annual Pillsbury Bake-Off
1.
3. Create A Contest With Legs.
(5) Grand Prize, 2003 Sutter Home Build a Better Burger Contest
FRESH MARKE T N E W S
Winning Contests
* Does not include water, salt, or pepper; 30 minutes does not include baking time.
for leaving a really big impression. A lot of hard work. And a lot of respect. PNC believes in and honors doers, like Al Plamann. Congratulations.
Š2013 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association. Member FDIC
C A L I FO RN I A G RO C E R
To find out more about what PNC can do for you, call Holly Hays. 626-432-6149. pnc.com
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NOW THAT THE ELECTIONS HAVE CONCLUDED, AND WE ARE “MUDDLING THROUGH” THE “SEQUESTER” WE CAN CYCLE DOWN A BIT AND FREE OURSELVES OF THE ADS, CAMPAIGNING AND BACK BITING. WELL, TO A LESSER DEGREE HOPEFULLY. NOT SURE ABOUT YOU, BUT I AM SWEARING OFF THE NEWSCASTS! Along with the selection of a new Pope, spring is here and the “market” seems robust.
n
n encouraging housing market will be A impacted by employment issues.
Going forward, many have shared a variety of concerns over the last few months that may be a source of insight for others.
n
dditional adjustments include the expiration A of payroll tax cuts.
Having averted the “fiscal cliff,” are we in danger of another downturn? Without a crystal ball none of the pundits have a clear answer. Somehow we need to get good at tuning out current events. Sounds crazy, but, the history of the market has shown that a properly diversified portfolio tuned to your comfort zone, does more to grow your assets than all the jumping around over the latest newscast. Caution and diversification still reign strongly as a strategy. The first few months of the year seem to prove this out, in spite of Congress and its inability to compromise on broader issues. A continued crisis management approach seems to be the strategy of the day.
“ A pessimist is one who thinks ‘0 ‘is at the end of zero while an optimist thinks it is the first letter of opportunity” Bill Cole, professional speaker
Consider the following challenges: he new health care tax on unearned income T takes effect at 3.8 percent.
n
xpenditure issues still loom as a difficult issue E for our economy.
Those companies that benefit from sponsorship and participation in 401k plans should have clarity regarding fees and fiduciary requirements. This remains a solid strategy for retirement savings. Efforts to provide transparency and understanding should benefit both employees and employers. The Investor’s Caddie stands ready to address your personal and company concerns as part of our educational/community outreach. In planning for retirement, the following factors must be considered: 1. How dependent is the business on the owner/ retiree? What are the provisions for income replacement should there be a disability, or premature death. Is your company able to fund or address this occurrence? What is your clearly defined succession plan? 2. Don’t ignore the tax benefits of planning ahead. Qualified counsel can address corporate and estate planning issues in a fashion that creates a win-win for the retiree’s family and business. 3. Don’t incorrectly value the business. Getting this right is a vital part of the entire process. Don’t make the mistake of thinking this can be completed later, that it will never happen to you or that you’re too busy running the business. Continued on p. 87
John B. Kelly
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n
Remain engaged in CGA. Your Association is doing an excellent job helping protect the grocery industry’s interests. The more I travel, the more I appreciate the service, quality and freshness I find in the markets I visit.
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We can only impact issues under our control. The outcome of the election provides the option to reframe our thinking and take advantage of opportunities in the market place.
How might this reshape our marketing strategies in the near and long term?
WEA LT H M A N AGEMENT
Going Forward?
85
W E A LT H M A N A G E M E N T
Continued from p. 85
4. Don’t rush to accept a rich number. Understand the terms and conditions. Remember that the devil is in the details. 5. Don’t hire a close relative to do the deal. Don’t put that kind of risk and stress on the relationship. Find a pro you can trust. 6. Don’t fail to consider the emotional impact of the transition. This is probably the most difficult part of the process and it is vital to engage professional guidance. Finally, just a mention of the work we have done with your families regarding college application, admittance and funding. While our core program addresses students during their freshman through junior high school years, we now have a program just for seniors.
helped dozens of families reach their goals for college attendance and funding. Additionally, the CGA Educational Foundation, in partnership with The Illuminators, is providing the needed investment for our youth headed to colleges and universities nationwide. Don’t waste time wishing things were different and regretting your past. Moving forward requires work, planning and input from those who matter and those with the experience, skills and background to help you reach your goals. Move forward, make the conditions right, and manifest your dreams. n John B. Kelly, MPA, CFP is a friend of the grocer’s industry with decades of service dedicated to the business and its members. He speaks and consults on a variety of financial and succession issues. John can be reached at investorscaddie@gmail.com or 916-296-9019
I am happy to share a short outline with you upon request, visit www.mycollegeinfo.com. We have
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ADVE RTIS E R INDE X
PAGE COMPANY
PHONE
FAX
WEBSITE
43
Advantage Sales & Marketing
714-780-3000
858-652-5166
stu.victor@asmnet.com
www.asmnet.com
13
al fresco all natural (Kayem Foods)
800-426-6100
617-889-5478
chris.reisner@kayem.com
www.alfrescoallnatural.com
2
Anheuser-Busch InBev
909-597-0460
909-597-0460
raul.aguilar@anheuser-busch.com
www.anheuser-busch.com
65
Boy Scouts of America San Gabriel Valley Council
626-351-8815
626-351-9149
matt.bear@scouting.org
www.sgvcbsa.org
60
Bristol Farms
310-233-4700
310-233-4701
www.bristolfarms.com
41
C&H Sugar Company, Inc. (a member of ASR Group) 510-787-4416
510-787-4205
kent.kunsman@asr-group.com
www.chsugar.com
39
C&S Wholesale Grocers, Inc.
916-373-4396
916-373-4296
pmiller@cswg.com
www.cswg.com
24 California Shopping Cart Retrieval Corp.
818-563-3070 800-252-4613
818-563-3041
www.cartretrieval.net
71
Cardenas Markets, Inc.
909-923-7426
909-923-4665
tguoz@cmkts.com
www.cardenasmarkets.com
80
Celestial Seasonings
209-835-1346
209-835-9964
ed.hepler@hain-celestial.com
www.Celestialseasonings.com
51,BC
Coca-Cola Refreshments
213-746-5555
213-744-8765
mikanderson@coca-cola.com
www.cokecce.com
55
Co-Sales Southern California
818-382-3100
818-728-0922
shorowitz@co-sales.com
www.co-sales.com
61
DEL REY MARKETING
323-201-0888
323-201-0890
cdelrey@delreymarketing.com
www.delreymarketing.com
70
Fresh & Easy Neighborhood Market Inc.
310-341-1501
310-341-1201
www.freshandeasy.com
83
Frito-Lay, Inc. (No. Calif. Div)
209-824-3753
925-734-3199
www.fritolay.com
84
Gelson’s Markets
818-906-5709
818-990-7877
www.gelsons.com
57
General Mills
480-281-6700
480-281-6702
meghan.riley@genmills.com
www.generalmills.com
9
Green Smoke Inc.
888-636-2618
866-214-3154
info@greensmoke.com
www.greensmoke.com
27
Hickman’s Family Farms
623-872-1120
623-872-9220
customerservice@hickmanseggs.com
www.hickmanseggs.com
78 Illuminators
209-254-2206
209-254-2255 jvangorkom@nucalfoods.com
www.illuminators.org
17
International Dairy Deli Bakery Association
608-310-5000
608-238-6330
www.iddba.org
71
Jons Marketplace
323-460-4646
323-962-2754
www.JONSMarketplace.com
23
Kraft Foods Group, Inc.
847-646-2000
847-646-2800
www.kraftfoods.com
IBC MillerCoors
916-786-2666
916-786-9396 chris.mathews@millercoors.com www.millercoors.com
68
703-302-8876
703-647-3478
mblanton@ncb.coop
www.ncb.coop
800-421-1721 x9 314-982-4876
314-982-2860
paul.cooke@nestle.purina.com
www.purina.com
National Cooperative Bank
iddba@iddba.org
tiernan.summins@kraftfoods.com
North State Grocery, Inc. dba Holiday/Sav-Mor Foods
530-347-4621
www.shopsavmor.com
86
NuCal Foods
209-254-2200
209-254-2255
www.nucalfoods.com
29
Pepsi Beverages Company - WBU
925-416-2573
925-416-2600
paul.turcotte@pepsico.com
www.pepsi.com
43
Pinnacle Foods
310-386-2992
ken.merriam@pinnaclefoods.com
www.pinnaclefoodscorp.com
83
PNC Business Credit
626-432-6149
626-432-4589
holly.hays@pnc.com
www.pnc.com
33
Procter & Gamble
925-867-4900
513-277-7964
www.pg.com
75
Safeway Inc.
925-467-3000
925-467-3323
www.safeway.com
69
Smart & Final Stores
323-869-7500
323-869-7862
www.smartandfinal.com
67
Stater Bros. Markets
909-783-5000
www.staterbros.com
8
Sugar Bowl Bakery
888-688-1380
510-782-2119
sales@sugarbowlbakery.com
www.sugarbowlbakery.com
77
Sun Products Corporation
949-733-0263
949-266-8857
kent.mclain@sunproductscorp.com
www.sunproductscorp.com
71
Super King Market
714-527-5809
714-527-5784
superking10@hotmail.com
www.superkingmarket.com
70
Superior Grocers
562-345-9000
562-345-9054
www.superiorgrocers.com
37
Tyson Fresh Meats, Inc. - Dan Peed
605-235-3215
479-757-6720
dan.peed@tyson.com
Open-Prairie.TysonFoods.com
25,59
Unified Grocers, Inc.
323-264-5200
323-262-0658
customercare@unifiedgrocers.com
www.unifiedgrocers.com
19 Unilever
630-955-5425
630-955-5479 Vinit.Patel@unilever.com
www.unilever.com
32
United Fresh Produce Association
831-600-8922
831-480-5880
joberman@unitedfresh.org
www.unitedfreshshow.org
42
Union Bank
213-236-4182
213-236-7558
robert.petersen@unionbank.com
www.unionbank.com
88
60
Wells Fargo & Company
213-253-6121
866-359-8187
stender.e.sweeney@wellsfargo.com
www.wellsfargo.com
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18 Nestle Purina PetCare
bob.humphrey@pepsico.com