UGI 40th Anniversary publication, Nov. 2012

united grocers inc.

40th Anniversary • UGI

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40th Anniversary • UGI

united grocers inc.

oUr MIssIon to be a United national Procurement Organization of Food retailers committed to work together and co-ordinate partnerships that will deliver national and private brand opportunities in all departments.

Generate cost reductions and efficiencies with maximum performance, value, and commitment for mutual benefits of members and suppliers.

WorKing

togetHer

= Winning

togetHer

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H a p p y 4 0 th

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t’s time to celebrate – UGI is 40 years old! During all of these years, the mission has always been the same: to serve our members’ needs the best

we can to generate benefits for all of them.

If today UGI represents over 23% of the food industry in Canada with members and stores in all provinces, it’s not a coincidence. The recipe for this success resides in very simple but essential ingredients: •

Members who are working in co-operation, and with respect and trust for the same objectives.

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Partnerships with suppliers that generate programs, activities, and positive results for all parties.

The market has evolved tremendously in the last 40 years, and the UGI Board Members and Merchandising Committee always took care to make sure UGI’s mandate was evolving at the same pace.

Today, we celebrate the success of these past 40 years, and appreciate the present with all it can offer to each of us.

But more importantly, we look to the future with confidence, with a new and extended mission to make UGI even “Bigger and Better.” We will continue to work closely with our current suppliers and all our new partners who will join us in the coming years.

And we know that by Working Together, we will win together.

Happy Anniversary!

Denis Gendron

President

United Grocers Inc.

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Original United Grocers Wholesalers Ltd. logo and charter document, 1972

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THE FoUnders

Overwaitea, B.C. Consolidated Grocers, B.C. victoria Community Grocers Co-operative Association, B.C. United Grocers Wholesale, B.C. slade & stewart, B.C. Alberta Grocers, Alta.

Associated Grocers, Alta.

Merco Wholesalers, Alta. newhouse Wholesale, Alta. interprovincial Co-operatives, sask. (which included Atlantic Co-op and Federated Co-op) Merchants Consolidated, Man. Weidman Bros., Man. the same decade, Woodward’s (1975), A&P (1978), and sobeys (1979) joined.

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Current Members &

Shareholders Canada Safeway Limited – 2004 Colemans Food Centre (Focenco) – 1999 Co-op Atlantic – 1972 Federated Co-operatives Limited – 1972 London Drugs/H.Y. Louie Co. Limited – 2011 Longo Brothers Fruit Markets Inc. – 1999 Metro Inc. and Metro Ontario Division – 1981 The North West Company – 2010 Overwaitea Food Group – 1972

Representing 34% market share food industry 23% all channel retail/food Over $25 billion annual sales

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the Team Behind the Members

Denis Gendron If UGI is successful today, says Gendron, the staff has played “a huge part” in that accomplishment.

Working alongside president Denis Gendron is a small but enthusiastic team dedicated to working in the best interests of members.

Anna Wickens Administration manager

Shay Baksh Executive secretary

“Anna Wickens and Shay Baksh were with Mike [Marinangeli] 15 years ago at the start of the Toronto operation, where they were and still are an important asset to UGI,” says Gendron.

Rocco Di Mascio Director, business development

Kevin Hayes Director, business development

Anita Young Category analyst

Business development directors Kevin Hayes

Anita Young, he says, has

and Rocco Di Mascio are “always looking at new

worked for UGI for nine years

opportunities to generate benefits for the members.”

“with passion and interest.”

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united grocers inc.

Four Decades o f C o l l a b o r at i o n & C o mmi t m e n t

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ver the past four decades, United Grocers Inc. (UGI) has grown from a small western group of wholesalers

into the largest food buying group in Canada. In the process, it has evolved from a volume-rebate house into a national procurement and marketing organization with representation in every province and the Northwest Territories. • UGI now co-ordinates national brand promotions, preferred supplier arrangements, and private-label and seasonal procurement and promotions, besides managing volume rebates from suppliers.

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1972: The

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Proud Past Birth of a Buying Group

orty years ago, 12 insightful western-based wholesalers banded together to pool their buying and save money through volume rebates. And so was born what was then called

United Grocers Wholesalers Ltd. The group chose George Deegan, formerly manager of food operations for Interprovincial Co-operatives, to lead them as president from their Calgary-based headquarters.

“George Deegan was hired and looking for an office in Calgary, as most of our members at that time were western based,” recalls Steve van der Leest, former president of Overwaitea Food Group, who has been involved with UGI from “the early days,” as a board member, chairman, and member of its merchandising committee. “One of the members was the place where I worked, Associated Grocers. The president offered George the use of an office until he found one for United Grocers – and he never left! George did a wonderful job building relationships and helping our group earn respect in the food industry.”

Deegan, who remained in that position for the next 25 years, remembers some early growing pains. The biggest challenge in those days, he recalls, is the fact that there were “quite a few volume discount programs in the marketplace, and some of the larger food manufacturers would not recognize buying groups.” One supplier accused the new organization of claiming to represent members in many locations, but not having bank accounts in those places. “Forty-eight hours later, I had set up bank accounts in all our shareholders’ cities,” says Deegan. He notified the supplier, who, he chuckles, “finally ran out of excuses and ended up recognizing us.”

It even took the threat of delisting the products of one major national company for it to recognize the fledgling buying group. But, in a theme that has carried throughout the 40 years, the members stuck together and stood their ground. “We couldn’t have been successful had we not had the complete co-operation of all our shareholders,” says Deegan.

“They all believed in the company, and they knew we had to stand together in order to try to buy competitively with the big guys. So what really gave us credibility and turned it around is when our people started acting as one.”

Success breeds success; just a few years later, the group started getting inquiries from some of the larger food organizations in eastern Canada, says Deegan, with Woodward’s, A&P, and Sobeys joining later that decade.

1972

The way it was

Paul Henderson scored the “goal of the century” to give Canada the win in the first Canada–Soviet Union hockey Summit Series.

Pierre Trudeau’s Liberals won a minority government in the federal election.

Associates of the Nixon administration broke into the Democratic

National Committee headquarters at the Watergate office complex in Washington, D.C., precipitating one of the biggest political scandals of the century.

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A small band of Western Canada wholesalers founded United Grocers Wholesalers Ltd., now United Grocers Inc.

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The 1980s A National Presence

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nited Grocers Wholesalers scored a coup in 1981 with the addition of Metro Inc. In just nine years, it had blossomed into a truly national organization with significant

market share.

Over the decade, membership fluctuated, however, as four of the original members went into receivership. But in a classic case of making lemonade from lemons, the group paid the suppliers in full, and earned a great deal of respect – and new business – as a result. “UGI paid all of our suppliers 100 cents on the dollar within their published terms of sale, whereas non-UGI members got what was left over from the liquidators,” says Deegan. “So that gave us a lot of credibility, and I think that’s what attracted the larger eastern chains.”

“The industry learned UGI was a good place to do business – they could trust us,” adds van der Leest. “And it’s still that way today.”

And so was cemented a mutually beneficial partnership that endures to this day. “We had excellent relations with our suppliers, and they were a big part of our success,” notes Deegan.

The organization also forged a unique relationship among the members, several of whom – in the western provinces particularly – were direct competitors. “UGI deserves credit for creating an organization that is truly national with very little competitive friction among its members,” says John Harvie, retired president of founding member Co-op Atlantic.

Terry Bell, recently retired from several senior executive positions at Federated Cooperatives Limited, cites the harmonious working relationships as one of the greatest accomplishments of UGI. “One of the [most] satisfying things to watch evolve was the working relationships to benefit all members, even though some competed with each other,” says Bell, whose involvement with UGI spanned 1987 to 2011. “This is a tricky thing to do, and at the same time not talk about pricing at a retail level due to competition rules.”

Bell, who served on both the merchandising committee and the board, including two years as chairman, notes that when he became affiliated with the merchandising committee in 1987, its main role was to support those suppliers that recognized UGI. “We would purchase as much product as we could from those suppliers to enhance our volume rebates and improve our buying power in order to be competitive with the larger players in the industry.” That role would expand considerably over the subsequent decades.

A harbinger of this evolution was the organization’s name change in 1987 to United Grocers Inc., to reflect the retail focus of its members and usher in a new era.

1981

The way it was

Terry Fox, humanitarian, athlete and cancer treatment activist, died nine months after ending his historic cross-Canada run outside of Thunder Bay, Ont.

The Canadarm, designed for maneuvering massive payloads in space, was first deployed aboard the Space Shuttle Columbia.

The IBM Personal Computer was introduced.

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Metro Inc. joined UGI, making it a truly national organization.

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The 1990s M o m e n t um a n d C h a l l e n g e s

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he final decade of the 20th century marked a period of growth and innovation, but also turmoil, for UGI. By the mid-’90s, UGI accounted for more than 30% of the supermarket volume

in Canada, with dominant market share in every province. As a group, it ranked number one in volume across the country in many grocery categories, and enjoyed significant buying power.

With UGI on firm footing, George Deegan took a well-earned retirement in 1997, and Michael Marinangeli, who had most recently been vice-president merchandising at Oshawa Foods, stepped in as the second president.

With the change in leadership came a new mandate for the 25-year-old organization. Whereas UGI had been founded to consolidate purchases to earn volume rebates, it now set its sights on becoming a national procurement organization.

In the mid-’90s, recalls Bell, “we started to negotiate specific products to get the best price we could for the group.”

Under Marinangeli’s direction, UGI progressed over time “from a volume rebate house to one of much more partnering with suppliers on new initiatives, targeted growth categories, and looking for new opportunities where there is a win–win between UGI and the supplier,” says Brad Bauml, vice-president consumer products, Federated Co-operatives Limited, who joined the merchandising committee in 1992.

As Marinangeli explains, “we evolved from volume rebates into consolidating our purchases to get better costs on store supplies, meeting with grocery manufacturers and putting together programs to earn more money as we grew our business.”

To facilitate this mandate and gain greater visibility with suppliers, Marinangeli’s first order of business was to transfer UGI headquarters from Calgary to Toronto.

1997

The way it was

The 13-kilometer Confederation Bridge, the world’s longest bridge spanning ice-covered waters, opened between Prince Edward Island and New Brunswick.

Jean Chrétien’s Liberal Party won a second consecutive majority in a federal election; the Reform Party became the official opposition.

40th

The F.W. Woolworth Company closed after 117 years in business.

Anniversary • UGI

Michael Marinangeli became the second president of UGI upon the retirement of George Deegan.

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M e r c h a n d i s i n g C o mm i t t e e S e t s

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the

Pace

t the heart of the evolution was the merchandising committee, which Marinangeli calls “the nuts and bolts of UGI.” Although the committee had been in existence

for many years, it now took on a new significance. From the outset, Marinangeli met with the committee every 90 days, and undertook a series of projects suggested by its members, initially two or three. “It set the stage for me to get things going,” he notes.

Comprising the merchandising representatives from each member company, the committee decides which areas and programs UGI could improve upon by acting as a group, explains van der Leest.

“The role of the merchandising committee is to agree or disagree on the opportunities and on the participation, and then we give the mandate to UGI,” says Pierre Charron, vice-president national procurement, Metro Inc. From there, UGI staff work tirelessly to bring the suggested programs to fruition. “UGI, through the merchandising committee, brings national brand programs and private-label opportunities that we would not have access to without being a member of UGI,” says Al Hollman, food marketing manager, Federated Co-operatives Limited.

“It’s fun to watch [the merchandising committee] meeting in action,” enthuses van der Leest. “You have a group of very smart and savvy grocers, all fiercely competitive – sometimes with other member companies – but trying to see what can be done collectively better. And the bonus is that a great fellowship develops between merchandising group members, making it even more creative.”

Even though several members in the western provinces are direct competitors, they function as a team on the merchandising committee, respecting one another’s differences and leveraging their commonalities. “With the assistance of the UGI team, we are able to set aside our competitive differences and work together on co-ordinated product procurement, private label, store supplies, and co-ordinated merchandising promotions,” says Albert Lum, director of merchandising at Buy-Low Foods.

“It takes an open mind to do what we did,” agrees Marinangeli. “You’re getting, especially in Western Canada, people who basically compete with each other working together, without divulging confidential information. We never talked about pricing; we never talked about margin. When I started my meetings, I always made it clear that we were there to level the playing field in the marketplace so that we can buy better to compete.

Everybody bought into it.”

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C o l l a b o r at i v e E f f o r t P ay s O f f

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ollaboration – with fellow members and suppliers – has long been the watchword of UGI. “Working collaboratively, we can achieve better results than we can individu-

ally,” notes Rob Felix, general manager and business unit manager, general merchandise, at London Drugs.

For suppliers, the merchandising committee provides the opportunity to present their programs in a single meeting where the retailers have coast-to-coast representation – a sort of one-stop sales presentation.

For example, the group buys confectionery together for Halloween. “When the suppliers talk to us, instead of individual members, they talk to the whole country,” says Marinangeli. “So usually, you can get better programs.”

A case in point is Nestlé Canada Inc., which has been working with UGI since its inception. “On Halloween, for instance, we have built a very effective program together over the years,” says Daniel Rhéaume, vice-president customer development, eastern Canada. “Every year, we thoroughly review the trends and results together. And following each season, we review the results to identify the best strategy and packs, and create a compelling program and target for the following year.”

Participation in each program is voluntary for members. “We all respected their individuality,” says Marinangeli. Once making a commitment to participate in a program, however, members honoured that agreement.

“Over the years, the group has done well because we lived up to our commitments,” adds van der Leest. “We did what we said we would do, and acted as one while doing so.”

Bill Sexsmith, vice-president sales and marketing, Canada Safeway, and current chairman of UGI, agrees. “The concept is so successful because of the ability of the group to stay united,” he says. “That’s the heart of it. If the group wasn’t united, and if the group did not perform and execute against the commitments that it made, it wouldn’t be successful. So it’s the unity; it’s the execution; and it’s the delivery of the commitment.”

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P r i vat e -L a b e l P r o c u r e m e n t

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t wasn’t long before UGI extended its procurement mandate to private-label products.

“UGI also began to play a significant role in the co-ordination and procurement of member

private labels, which has been of great value to the members,” says Bauml.

“Mike eventually took it to a new level, starting in the late ’90s when he hired some additional staff to negotiate private-label products for the group, along with national brand labels,” adds Bell. “This took off in the early 2000s.”

Van der Leest recalls that era with some amusement. “The early days of this venture were interesting,” he notes. “Every grocer in the world thinks they are the best buyers around, so agreeing on one standard of private label would come down to deep agreements among members – for example, how many chocolate chips our private-label cookies should have! It’s sort of comical looking back on it now, but as always in UGI, all members would find a way for the greater good.”

In addition to working with the merchandising committee and board members, Marinangeli visited member offices once a year to meet with category managers about past, present, and future programs. “We complimented them on their support because once we agreed on a project, those people had to execute the programs. So we made the category managers part of the process.”

With UGI negotiating national deals, “it allows our category managers to focus on other initiatives,” says Pat Pessotto, vice-president, grocery merchandising, for Longo Brothers Fruit Markets Inc. To cement relationships with its supplier partners, UGI launched the annual supplier appreciation dinner in 1998. “It’s our way of saying thank you,” says Marinangeli.

The tradition has continued over the years, and will be celebrated this year as a special 40th anniversary celebration for valued suppliers. “It brings a group feeling to the industry,” says Scott MacLaughlin, national sales manager, The Clorox Company of Canada Ltd. “There’s a lot of work and effort to bring the entire vendor community together to these meetings. You feel the word ‘United’ in ‘UGI’ is definitely brought forward.”

As the century drew to a close, UGI encountered a major hurdle: industry consolidation took its toll on the organization, resulting in the loss of two major members in 1999. Sobeys bought The Oshawa Group and resigned from UGI to join Oshawa’s buying group, IGA Canada. Meanwhile, A&P decided to ally with its U.S. group, and resigned from UGI shortly thereafter. “In the span of four weeks, we lost 42% of our business,” recalls Marinangeli.

Although he now had a head office in Ontario, he had no members in that province.

But out of the ashes arose a new and revitalized organization.

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are

Memories M a d e o f T h i s ...

(as told by John Harvie, retired president of Co-op Atlantic)

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ne year, at the UGI board and merchandising committee annual dinner, an event always attended by spouses, we were in a hotel

restaurant, and everyone was in a good mood.

It was my first experience with this event, and perhaps I hadn’t learned how to behave yet, or maybe it was the wine, but I like to sing; and so I started singing. To my pleasure, many people at my end of the room joined in.

On the other side of the room, Alex Campbell’s wife, Jo (from Thrifty Foods), started singing in competition with us. They sang a song and then we sang a song. It was quite hilarious, and then Jo delivered the winning tune.

She actually paid a trumpet player from the hotel band to accompany her side in singing When the Saints Go Marching In. We had a great time and it demonstrates the human side of UGI, which I hope is never lost.

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Parmalat, Smuckers, Ralston

UGI R e c o g n i z e s E x c e l l e n c e In 1998, UGI established a vendor awards program to recognize excellence in merchandising and sales performance. The premier awards (presented in 1998 for 1997 achievement) were Scott Paper for “Best Merchandising Support”. Hershey’s Canada for “Best Sales Increase”.

1997 B est M erchandising S upport – S cott P aper (K ruger I nc .)

From left to right: Michael Marinangeli - UGI, John McClelland - Scott Paper Ltd., Gerald Tremblay - Metro Inc., Len Bosgoed - Scott Paper Ltd., David Erskine - Scott Paper Ltd., Joseph Kruger - Chairman and CEO Kruger Inc., Bill Clark - Sobeys

1997 B iggest S ales I ncrease – H ershey C anada

From left to right: Michael Marinangeli - UGI, John Dunne - A&P, Duncan Reith - A&P, Gerard Tremblay - Metro Inc., Richard Meyers - Hershey, Ross Robertson - Hershey, Mike LeBlanc - Hershey, Bill MacIsaac - Hershey

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New

The 2000s Members, More Opportunities

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hanks to the ceaseless efforts of Marinangeli, it didn’t take long for UGI to recoup the losses it had suffered from the resignation of Sobeys and A&P. Even before the dawn

of the 21st century, the organization had recruited independents Longo’s from the Greater Toronto Area, and Newfoundland-based Colemans. The same year, Metro bought Loeb, and Overwaitea acquired Coopers Foods. UGI was once again a powerful national entity!

“The remaining membership stayed strong when the organization was at its lowest ebb, and ended up stronger than ever in the evolving marketplace,” says Harvie.

For Colemans, with a dozen grocery stores across Newfoundland, it gave the smaller independent the chance to be part of a focused purchasing and sourcing group, says Frank Coleman, president and CEO. “It exposed us to the thinking of the bigger players in the field. It allowed us to focus on common problems facing the members and solve them in a unified way.”

Anthony Longo, president of 25-store – and counting – Longo Brothers Fruit Markets Inc., cites as one of the informal benefits of UGI membership “just being with other retailers from across the country, and sharing best practices and getting ideas from each other in terms of how we can better serve the community and the Canadian consumer.”

Throughout the first decade of the new century, the rebuilding process continued.

In 2004, Canada Safeway joined, and A&P rejoined, UGI. While Metro’s subsequent purchase of A&P in 2005 had a neutral impact on the organization, the addition of A&P and Safeway increased its size by a whopping 40%. “We rocked the marketplace when we added A&P and Safeway,” Marinangeli recalls. “That was huge.”

In 2010, The Northwest Company joined, giving UGI a presence in northern Canada. Dave Chatyrbok, The Northwest Company’s vice-president, Canadian procurement and marketing, says the retailer benefited from working with UGI on the development of some of its Best Value private-label line. “With the Best Value label, we were able to work with the different members of UGI and with the suppliers, and as a result, we were able to add value into that product for us,” says Chatyrbok. UGI offers The Northwest Company the ability to continue to run separate private-label brands while helping it look at different avenues to meet minimum quantities and ship dates, he adds.

For its part, Canada Safeway has multiple manufacturing plants that give the retailer “an opportunity to share our knowledge and our ability of what we can produce in our different plants that we have available for the membership,” says Hanif Mohamed, director,

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grocery operations. “So if there’s something they’re looking for, they can align with Safeway in our plants. The membership is very open to looking at what Safeway plants manufacture and to seeing if there’s a fit for them.”

UGI members frequently collaborate on private-label products, says Robert Lemoine, vice-president food wholesale, Co-op Atlantic. Previously, he explains, several of the members had their own private-label formula for, say, ketchup, necessitating smaller and more costly production runs. Members were able to agree on a common formula and bottle, so that when the supplier had completed each production run, it needed only to change the label, rather than having to retool. Otherwise, “you could be down for a day or two just gearing up for somebody else’s production,” says Lemoine. By joining forces and working together, members can save large amounts on their private-label products. Lemoine says all of Co-op Atlantic’s organics programs are handled that way.

One of the accomplishments of which Marinangeli is most proud was the launch of a UGI national brand called Simply Kids in 2005. UGI worked with the private-label teams from Metro and A&P – then separate companies – to develop the line, which includes such products as baby food, wipes, baby powder, and diapers. “It was a tremendous success,” he says. “During my tenure, that was a major highlight.”

The year 2011 brought the newest member of UGI: H.Y. Louie Co. Limited/London Drugs Limited. “UGI is an organization that is constantly on the hunt for value to bring to its members,” says Laird Miller, corporate secretary, H.Y. Louie, of the retailer’s decision to join the group.

According to John MacNichol, vice-president merchandising, for H.Y. Louie, UGI has afforded the company many opportunities over the past year around “speed to market.”

For instance, when General Mills came out with some new products, it presented H.Y. Louie incentives to get the products to shelves faster than usual. “This benefits everyone, because when General Mills marketing efforts hit Canadian airwaves and newspapers, we have the product available,” says MacNichol.

2004

The way it was

Mark Zuckerberg and three fellow students launched Facebook as a social networking site open only to Harvard University students.

The Liberal Party, led by Paul Martin, won a minority government – Canada’s first since 1979 – of 135 seats in the federal election. The Conservative Party, led by newly elected leader Stephen Harper,

became the official opposition with 99 seats.

Tommy Douglas was voted “The Greatest Canadian” in a CBC television series poll.

Canada Safeway joined UGI, and A&P rejoined, increasing the group by 40%.

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The General Mills product launches to which MacNichol refers are part of a speedto-market program called “Innovation,” one of two types of campaigns the supplier runs with its UGI partners. “We have a plan with each member of UGI to drive efficiencies and gain speed to market,” explains Pascal Beauchemin, director of sales, General Mills. The program helps members get new products on the shelf quickly, “which is good for both parties,” he adds.

A case in point: the launch of the company’s Chocolate Cheerios, which Canada Safeway’s Mohamed says was particularly successful. “General Mills presented the membership with an opportunity,” he explains. “The membership pulled together, agreed on what we were able to do, and we had a really fantastic promotion. We were first to market on the Chocolate Cheerios, exceeded the sales expectations, and grew share. It was a win–win.

General Mills was extremely pleased with the results. It’s a great example of how UGI works together to deliver bigger results”.

Reflecting on the highlights of his 14-year tenure as president of UGI, Marinangeli cites, in addition to the launch of the Simply Kids line, transforming the organization from a pure buying group into a national procurement organization, as well as recovering the loss of 40% of the business. “I guess for me personally, a highlight was watching the members grow and be successful over the 14 years I was there,” he recalls. “We never had a rift or a fight in the group. Everybody got along, and everybody worked together.”

In 2011, as Marinangeli made way for a new president, UGI, once again with representation in every province, continued to reinvent itself.

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2012 F o cu s

on the

Future

A

fter 40 years of service to its members, UGI today is a national procurement organization that represents key retailers across the country with a combined share of 34% of the

Canadian grocery industry. Now led by president Denis Gendron, the organization is focused on a future that will reap even more benefits for its members.

That optimistic outlook is reflected in a new logo, website, and mission.

Under its new mission, UGI is forging partnerships beyond its existing grocery activities to include suppliers of all business areas, fresh departments, and other store operation services. In other words, “any areas of activities where we can leverage the group volume to generate synergies, like equipment, both purchases and contract services, and operational expenses, such as mobile, courier, freight, and other costs,” says Gendron, a 30-year veteran of the industry.

“In the past, most of the activities were focused on the grocery categories,” explains Gendron, who became president in July 2011. “When I was hired, there was a specific request from the members to expand what we were currently doing. Now we’re looking at other areas of business where we can use the group size and volume, and to make agreements as we’ve done with the grocery products.”

UGI recently welcomed five new suppliers of equipment and services – DIGI Canada Inc., Hewitt Material Handling, Nimbus Water Systems Inc., Plain and Simple uniform program, and Ronco Canada safety equipment and furniture – and continues to negotiate with others.

“We are starting negotiations for courier costs, credit- and debit-card fees, and several other areas of business,” says Gendron. “If we can help the members reduce their operations costs, and at the same time, provide them new benefits on the other side with better costs and rebates on the fresh products, it will be beneficial for them.”

“UGI continues to evolve by broadening the scope of the programs it builds,” notes Canada Safeway’s Sexsmith. “Entering new areas of opportunity – like supplies, and fresh goods and perishables – are two very good examples.”

“Denis and the senior management are always looking for additional ways to add value to the membership,” says H.Y. Louie’s Miller. “This could evidence itself in new programs for products that currently flow through the group, but could also mean entirely new products and services. We see that list, and we encourage him to poke at it all the time.

What else can you do? What else can you add? He is doing great things by reaching out and trying to hit new areas. Denis is a go-getter. He’s a great addition to the team, and he’s a great leader from an organizational perspective. ” “We’re doing a lot more things,” agrees Co-op Atlantic’s Lemoine. “We’re negotiating different programs. We’re negotiating different commodities. We’re into services, where we weren’t two years ago. We’re into private label, which we weren’t four or five years ago. We’re

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th

doing more fresh, which we weren’t doing three years ago. And just by Denis coming in as the new president, that’s an evolution in itself,” as it opens the door for new ideas.

“Mike [Marinangeli] is seen as a leader in the industry,” adds Lemoine. “Mike is very knowledgeable and Denis is proving to follow very much in his footsteps. Denis has some new ideas, and those new ideas are going to take us even further.”

“We have been very fortunate to have found outstanding presidents to lead UGi over the years,” says van der Leest. “Denis Gendron took over when Michael retired, and kept the tradition of operating with a small, efficient team dealing with respect and integrity with the supplier community, while at the same time, he’s been advancing UGi in modern ways and new areas of group buying opportunities.” vendors are also enthusiastic about the prospects for the group. “i’m excited about the new vision of UGi and the new look that Denis has brought to it, not only from a logo change, but trying to take it to the next level,” says Bill Dunne, president of broker Acosta and longtime UGi vendor partner. “Acosta is excited about being part of that future as we continue to work with our current clients who recognize UGi, along with new client opportunities down the road.”

Acosta even hosted a UGi Day in July, so its clients could find out more from UGi executives about the group’s new look and future plans. “We’re committed to working with UGi,” adds Dunne. “We’re excited about what the future holds with UGi, and they obviously occupy a very important position in the Canadian marketplace with the members that they represent.”

Marinangeli is also a solid supporter of UGi’s evolutionary direction under Gendron. “i think Denis was the right choice,” he says. “he seems to ‘get it,’ and he knows the business because he has a very solid background in retail. he knows how to negotiate, and he’s got the right personality.”

But as many will attest, the road ahead will be fraught with pitfalls. “the grocery business is very competitive, and there are now many alternative channels,” says Michael Coleman, vice-president, merchandising, procurement, and distribution, Colemans. “Our challenge is continuing to remain relevant to consumers as they shop these various channels.”

UGi, as always, is up to the task. While the organization may have a new mission, its focus remains unchanged. “the UGi team has a dedicated group of people with one common goal: to generate benefits for its members,” says Gendron. “it has been our goal for the last 40 years, and will remain for the next 40.” he is quick to give full credit to the staff. “some of them have been working since day one with Mike. if things are going well at UGi, they are a huge part of that success.”

Although founding president George Deegan retired in 1997, he watches the continuing success of the organization from his base in Calgary with great interest and satisfaction. “i still feel really close to the company, and i’m just so pleased that it has carried on and been taken to another level.”

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a W i n –W i n p r o p o s i t i o n

t

oday, UGi is responsible for about one-third of the national brand grocery sales in Canada, an accomplishment that wouldn’t have been possible without the co-operation

of retailers and suppliers to the benefit of both parties.

“UGi attempts to create real partnerships in driving the business between retailers and suppliers,” notes Frank Coleman. “Colemans has benefited from that exposure, and especially the thinking that UGi management brings to the process.” vendors are equally enthusiastic about the relationship. “the UGi members represent 34% of the Canadian CPG landscape,” says Matt Blixt, regional vice-president, Kruger Products L.P. “this is significant and beneficial for vendors when presenting and implementing programs. it would be much more challenging to execute the scale of programs we do working with the members individually.” the UGi member–vendor partnership is a powerful concept, says Longo. “Packagedgoods companies, branded, even private label, can come to us and get a significant block of business if they’re successful, with one stop to UGi and working with our merchandising committee, which really sets the agenda for the categories we’re going to focus our efforts on. And then i think the key thing is, when UGi says we’re going to do something and every member signs off saying that they’re going to support certain categories, UGi can go to the packaged-goods companies with full confidence that all of the members that have signed up will execute that program. so if 70% of the members say they’re going to do something, that 70% is committed. the other 30% aren’t committed, and the vendor knows that right up front. so there are no games played.” the relationship is clear-cut and straightforward. “Our goal is to provide service and quality at competitive prices, and we look for customers to commit their volume to us,” says Cary Weiss, sales executive, hymopack (rosenbloom). “And so we work hand in hand as partners.”

“UGi used to be a buying group, but increasingly we are now becoming a marketing group,” says Michael Coleman. “shrewd vendors know they can get national penetration through this group. More vendors are approaching UGi as a way to get speed to market on new product launches.”

Among those vendors is Acosta, which has several clients working with UGi on various programs. “UGi is very collaborative, very engaging, and very open to new ideas on driving profitable business growth, says Dunne. “i think what attracts us to them, obviously, is the breadth and size and scale that they bring in the representation of such strong members to do business with.” “in these times of mega-national and international retailers, sometimes being very demanding of suppliers, it’s healthy for the food industry to have the UGi group as an alternative – a place of integrity where together everyone is trying to grow business in unique and creative ways,” says van der Leest.

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UGI P r o g r a m s

W

and

Promotions

hen UGI works with suppliers, “it really tries to come up with programs that are a win–win,” notes Marinangeli. And there have been many over the years.

Kraft Canada Inc. has been supplying UGI members, and building strong rela-

tionships, since the buying group’s inception. “UGI helps provide scale to the consumer programs that we execute, such as Hockeyville,” says Dino Bianco, president. “UGI provides one voice to the members, helping us gain member support and consistent, solid execution.

We work with UGI each year on mutually beneficial volume-building programs designed to leverage our growth categories and create consumer excitement in-store.” Once members commit to a program, he adds, UGI works with them to achieve results.

Bianco cites the example of a program in which Kraft collaborates with UGI to promote sustainability, either through reusable grocery bags or by highlighting sustainable packaging. The program allows Kraft to promote its sustainability programs and products, while helping drive awareness of UGI and member sustainability initiatives, thereby boosting sales for both parties. Special customer business teams focus on UGI members, exploring opportunities to grow one another’s businesses and develop categories profitably.

Metro’s Charron recalls another promotion with Kraft, for the launch of MiO Liquid Water Enhancer. “There was a price that was available for the group if we put displays in our stores,” he says. “Then we also got a rebate at the end, based on our purchases.”

In general, explains Charron, many of the programs are based on growth. “If we grow the category to the level we agree with the supplier, there’s a payout. And if we go and achieve a different level of volume, then that rebate goes up based on the target we have.”

With Metro being one of the largest members of the group, it sometimes has programs that UGI will try to leverage for the whole group. In that case, says Charron, “I win, too, because the rebate is based on volume, and the more partners we have, the better it is for Metro.” Sometimes the deals involve an additional rebate on some of the supplies, for instance, while others represent a saving on the cost of goods.

Longtime supplier Old Dutch Foods ran a successful promotion with UGI members, whereby customers who purchased four bags of Old Dutch potato chips received a free bag of M&Ms. “This was offered to all the UGI members, and was executed by nearly all the members,” says Steve Maddeaux, national director of key accounts. During the year, he adds, “we present any opportunities for similar extra-value promotions that we can run to bring more value to the UGI members’ customers with no additional cost to the members.”

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One promotion that was particularly memorable for Tom Mainville, director, grocery category management, Co-op Atlantic, was General Mills’ World Junior Hockey program.

For two years running, the retailer partnered with the supplier to create in-store excitement and generate increased sales. The promotion included many in-store events, product displays, and the chance to send the winning consumers to see the championships, which were held one year in Buffalo and the next in Calgary. “It was regionally set up and account-specific, and each account had its own prizes,” says Mainville, who calls UGI “critical” to Co-op Atlantic. “It gives us a voice that we would not have, whatsoever.”

Meanwhile, on the West coast, Buy Low Foods’ Lum also cites the 2011 IIHF World Junior Hockey Championships, calling it “one of the best merchandising opportunities that was offered exclusive to UGI members.” He says programs were customized and tailored to each member, and had strong consumer impact and excellent feedback. “We repeated the program in 2012, and had even better results, as [the Championships] were held in Alberta.”

Customer marketing events, such as the World Junior Hockey promotion, represent the second type of program – along with speed-to-market support for new product launches – that General Mills runs with UGI members. Last March, in a similar vein, the company partnered with members in a promotion called Free Frenzy Grocery, whereby consumers could win a $50 gift certificate every hour during three weekends. “It was well implemented and accepted by most of the banners,” says General Mills’ Beauchemin. “We try to find ways to have customized promotions that are exclusive to each member across the country.”

In another initiative, UGI developed a pizza program with Nestlé Canada that, according to Charron, “is working very well.” He says UGI members have more than 40 projects on the table there, with most members participating in the various opportunities.

Whereas previously, the programs represented a volume-rebate type of approach, Charron estimates that about 25% of the current projects are what he calls “merchandising opportunities.” He adds that “there is no limitation on the type of category of products, or the size, if the opportunity is a good one for the group.”

“UGI provides suppliers access to a group representing over 34% market share in Canada, and gives the opportunity to develop national partnerships, on branded or private label,” says Josianne Légaré, vice-president sales Western Canada, Lassonde Sales Group. “It supports suppliers by co-ordinating different initiatives and communicating to the members on an ongoing basis.”

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In 2008, Lassonde put together a branded program in collaboration with UGI, “providing an incentive to the members, a solution to grow the category with innovative items and improved profitability,” she says. “This program has been in place for several years, and Lassonde has significantly grown its market share nationally, allowing the members to benefit from incremental sales and revenue.”

Clorox’s MacLaughlin says his company has shifted its efforts this year away from traditional volume targets to focus on execution of merchandising events at the store level.

“What that does is really focus on execution, because execution can drive consumer results and get people into the stores. It’s having the retailer drive key themed events, such as back to school, or cough-and-cold season, or spring cleaning. It’s a totally different twist from just chasing a volume target.”

In April, Clorox ran a successful Earth Month promotion in which UGI members advertised the company’s Green Works line and Brita water-filtration products to tie in with the environmental/sustainability theme. “That’s the kind of thing they all participated in, and we want more of those events to run across the country,” says MacLaughlin. “We like to get that common theme.” Clorox ran a summer hydration program to promote Brita water filters, followed by a cough-and-cold flyer theme in the fall.

Since 2006, Kruger Products L.P. – an original supplier to UGI – has run a variety of merchandising programs with UGI, including its highly successful EnviroCare and Canadian Breast Cancer Foundation promotions. “Both focused on a base volume incentive with additional opportunities to enhance revenue by supporting a specific line of products, in these cases, our line of EnviroCare Environmental products – i.e., Cashmere and Purex bathroom tissue, SpongeTowels paper towels, and Scotties facial tissue – or products in support of the Canadian Breast Cancer Foundation,” says Blixt. “Both of these programs resulted in incremental sales and revenue for UGI members, as well as Kruger Products L.P.” H.Y. Louie’s MacNichol cites the Canadian Breast Cancer Foundation as a particularly notable campaign, because it was in support of such a worthy cause. “Not the runof-the-mill type of thing.” MacNichol says the past year-and-a-half as a member of UGI has been very successful for both his company and the manufacturers overall. “Everybody has to win – manufacturers and retailers – or you don’t want to be playing. And I think it’s been a win–win situation for both sides.”

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Besides providing a forum to communicate and interact with a wide base of independent retailers, UGI enables suppliers to gain valuable feedback on key business initiatives, says Derril Wiebe, of Kimberly-Clark Inc. The company worked with UGI members on a recent program to support the launch of new products.

“I think the following quote by Charles Darwin very much describes and recognizes UGI for its 40 years of success and commitment to growth: ‘It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change,’” says Wiebe. “After all, I believe it is because of UGI’s continued ability to evolve with marketplace dynamics and the changing times that they have continued to grow even stronger than they were 40 years ago.”

Perhaps Jamie Nelson, vice-president operations, Save On Foods, sums up the partnership best when he says: “UGI supplier partners benefit from the relationships they establish with UGI retailers, both in terms of deals we can put together and also because of the strong network that exists for collaboration and idea sharing to grow our businesses together. “It’s truly a win–win for everyone – especially our customers.”

And in the end, that’s what it’s all about.

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