Alliance Retail Group 2019 special section by Shelby Publishing

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T O P S ALLIANCE RETAIL GROUP

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S T O R E S

Alliance Retail Group Staff Hendersonville, TN

Left Joe Wolf President Alliance Retail Group

Alliance Retail Group now has over 1,000 partner stores in 30 states doing over $9 billion in retail sales. ARG and its three subsidiary companies, Alliance Data Management, Ipro and A2 Advertising, are poised to meet 2020 with a perfect vision of growing success and industry innovation.

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Alliance Retail Group: Facilitating Retailer-Vendor Relations for 1,000+ Stores—And Growing Joe Wolf spent the early years of his career in the food wholesale business. He joined Fleming Cos. when he got out of college in 1991 and then transferred to the Nashville division in 1994. He worked in advertising sales promotion which included ad writing and vendor negotiation, he said. In 1999, Wolf went to work for Mid-South Retail which was an outside ad group for independent grocers based in Nashville, Tennessee. He was promoted to lead that business a couple of years later, beginning in 2001. In the spring of 2003, Fleming filed for bankruptcy, but the ad group held together, Wolf said. Though some tough months followed—making payroll often was touch-and-go—Wolf and the team of about a half-dozen employees continued their work. And he realized that what they were doing on behalf of independent grocers as an outside ad group was vital to their success. So he and Barry Maddox, who was running an ad group out of Memphis, joined together in January 2004 to form Alliance Retail Group (ARG). The initial customer base was 56 stores supplied by Associated Wholesale Grocers (AWG) from their Nashville and Memphis divisions. Today it serves stores from every division of AWG, which has Joe Wolf

grown steadily over the past few years through acquisitions and member growth. With its growth over the past 15 years, ARG has become “the largest self-negotiating ad group by retail volume in the country by a mile,” Wolf said.

This is the most talented and passionate group of people I’ve ever worked with that all understand that we’ll be successful if our retailers are successful. S E N I O R

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In addition to negotiating the lowest cost of goods for AWG-supplied retailers, ARG provides a wide range of services that include category management, advertising and operation analytics. The primary goal is to give independent grocers access to the lowest possible cost of goods while maintaining their identity and the independence needed to compete in their marketplace. Please see page 4

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From its base in Hendersonville, Tennessee, ARG today serves more than 1,000 stores in 30 states, largely in the middle of the country—Illinois, Ohio and Wisconsin, down to the Southeast and throughout the Gulf Coast region, according to Wolf. ARG also provides advertising services for a Safeway division in Alaska, J.B. Gottstein, and leases its software solutions to other wholesalers. “Our current trade area is everywhere between the Rocky Mountains to the Smoky Mountains and south to the Gulf Coast; that’s the majority of our business,” he said. Wolf explains more about ARG’s services, company culture and mission to boost the success of more and more independent grocers in an interview with Lorrie Griffith, editor-in-chief of The Shelby Report.

“We have had a beneficial relationship with the Alliance Group since joining AWG in 2015. Alliance works hard on procuring the best deals possible for Market Basket, as well as their other clients.” SKYLAR THOMPSON, PRESIDENT, MARKET BASKET FOOD STORES Tell me about your operations. We have an advertising office in Hendersonville, Tennessee, that is focused on ad layout and print services, and an advertising office in Kansas City, Missouri, that focuses on digital marketing. The negotiating company is Alliance Marketing doing business as Alliance Retail Group—and then we have two software companies. The ad agency is A2 Advertising; the software companies are Alliance Data Management and Ipro Systems. In layman’s terms, describe what Alliance does for its clients. Our primary function is to negotiate with consumer packaged goods companies for trade dollars that are primarily cost of goods reductions. We are responsible for writing ads for all our clients, negotiating and publishing 5,000 to 6,000 items for TPR (temporary price reduction), and the circular that you get in the mail from the grocery store; we do that as part of our advertising services. We negotiate all that promotional activity with the CPGs on behalf of our retailers. We also nationally negotiate DSD merchandising and ad activity for most of the larger suppliers excluding soft drinks. We hope to find the right contacts to eventually negotiate soft drink contracts. To what would you attribute your growth? A vendor can come here and execute a merchandising plan for 1,000 stores with one appointment. They can come sell their product, we’ll commit to a price point and promotion, and all our stores execute that promotional activity. We’re known industry wide for following through on our promises. The benefit of that is we have a lot of high-performing retailers, so we get a measurable cost of goods advantage with our scale that benefits our retailers. We are industry leading as far as getting the lowest cost of goods we can for our stores.

Our business model is also totally transparent. Not one penny of vendor trade funds is retained by Alliance, so that 100 percent pass through is unique to Alliance. Our retail stores all pay the same weekly fee to fund our cost of operating. So it’s a win-win. Vendors win and the retailers win. Correct. Because the vendors don’t have the people to reach all the independent touch points anymore, but they can come to us as one touchpoint and impact almost half of AWG’s volume. They know their trade funds will actually reach the consumer, which is not the case with many ad groups.

Balls Food Stores Is Newest Member of ARG Kansas City, Kansas-based Ball Food Stores is the newest retailer joining Alliance Retail Group (ARG) as of Sept. 29. With the addition of Balls’ 24 stores that are supplied by Associated Wholesale Grocers’ Kansas City division, ARG will serve 1,017 stores with annual retail volume exceeding $9 billion. The addition of Balls, which includes stores under the Hen House, Price Chopper and Payless Discount Foods banners, “gives ARG a highly visible retailer in the competitive Kansas City metro marketing area,” ARG President Joe Wolf said. Wholesale industry veteran Milton Milam is ARG’s group VP for all Balls stores as well as the Norfolk and Kansas City markets. Wolf said Milam “did a great job explaining the benefits of 1,000 stores acting collectively. It’s an important account for us, and we are excited to have them.” Milam formerly served as a division president for Fleming Cos. and then AWG. At this time, Balls’ Price Chopper stores will follow their current ad format and the Alliance temporary price reduction (TPR) program, Wolf added.

How many employees do you have now? Across the four companies we have roughly 85 employees. That sounds like a lot of work for 85 people. Well, it is. We have a good team, but we run a very efficient, lean system. Our retail board of directors measures us on our company expenses and trade funds paid out. As an example, we had two people in accounting in January 2004 that were responsible for billing the vendors and paying the 56 stores. Today, we still have just two people in accounting with more than 1,000 stores. We’ve invested heavily in technology and automation to help run the business as efficiently as possible. We clear invoices quickly and accurately to ensure retailer cash flow, and the vendors know their liability in real time. It helps us stay lean and be very efficient. Speaking of technology, how are things like online shopping impacting you and the retailers you work with? It hasn’t affected how we particularly perform our business, although I know it’s President Joe Wolf with Michael Donkin, chief operating officer (COO).

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going to become more and more prevalent over the course of time. We’ll continue to negotiate the lowest cost of goods, but we also have to give the stores the analytical tools they need to make better decisions managing their business. Through our software (Ipro) we are pulling back all of the stores’ scan information every night across 1,000 stores and 14 different point-of-sale systems. So, mining that data to help stores know what they should be selling at what price—that’s what our future looks like. Our goal is to continually close the technology gap between the chain stores and our independents. Historically, independents have lagged far behind from a technology standpoint, and it is part of our mission to help close that gap and help retailers make better decisions.

Everything you do is focused on helping retailers improve their operations. That is correct. But we also want to see the vendors succeed. We don’t want to take a vendor’s dollar; we want them to prefer to invest with us. We want to be the most efficient place that they come and spend money because they have choices of where they can go spend their money. We want to be at the top of that list. Alliance is also the first large self-negotiating ad group in the country to have its own Nielsen census read, which improved our ability to work with our manufacturers on what works from a promotion standpoint, and it increased our visibility to the manufacturers. High visibility means high investment. We really view it as a partnership with the vendors that helps them drive their business in our stores we represent.

“Alliance Retail Group has been a great partner with us since we joined in October of 2017. They are aligned with our vision of retail sales growth while delivering the lowest cost of goods possible to the independent grocer.” JEFF STRACK, PRESIDENT AND CEO, S T R A C K & VA N T I L Nielsen also provides us with remaining market data so we know if we’re underperforming against our competition so we can course correct to achieve fair market share.

Around the conference table, from left: David Roberts, Kelly Fields, Michael Donkin, Joe Wolf, Samantha Carlton, Bruce Carnahan and Tatum King.

Are you increasingly working with smaller vendors as stores are looking to carry more local products? We are. The interesting thing is we work off one national base ad with products that sell everywhere, but we actually have 37 different groups based on geography. We have

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group managers that customize that ad to match local items with the stores in that area. As I said, we are in 30 states, so what sells in Chicago may not be a big item in Texas. We have group managers situated in markets so they know the retailers and their needs. What other trends are you seeing in the marketplace? Well, from the standpoint of Millennials, they like the idea of shopping locally owned businesses. So a good retailer who knows his market and keeps his store conditions up has a very viable future because the younger generation likes to do business with people that are in their local communities. And we are seeing success in that. Fresh produce, fresh meat, fresh deli/bakery also continue to be strong in our stores. Our stores do a great job in the fresh departments, but we are also seeing some growth back to the center store. As we’ve gotten their prices competitive with the chains of the world, there is not quite the price gap there used to be between an independent and a chain retailer, so their consumers see that and it’s benefiting store sales. Technology will continue to grow, and another thing we are working on is how we reach our shoppers one to one. The chains have gotten pretty good at identifying their best shoppers and appealing to those shoppers’ needs. Our future will involve helping our stores do that. So you foresee more targeted messaging in ads, apps, etc., in the future? Absolutely. We’ll apply digital technology to reach our shoppers in the future. The way we are viewing it internally is not 1,000 stores but maybe a million shoppers each week, so how do we reach those shoppers through offers that appeal to them. And, in turn, how do we turn those million shoppers into somebody that a Kraft or Purina or other manufacturer is going to want to reach? Our goal is to bring both the buyers and sellers together to maximize efficiency and deliver greater sales. What else do I need to know about Alliance? We love working for the retailers. They are all great people; we are in a very honorable industry. Everybody needs food on their table, so we are very proud to be able to be part of that process. We still come to work humble and excited every day to serve our customers. We have a great team, a great culture, and we look forward to the future. We’ve grown from 56 stores in 2004 to more than 1,000 in 2019. You can do the math— that’s enormous growth, and almost all of our business comes from word of mouth, retailers talking to other retailers about how much they benefit from being part of a group with over $9 billion in retail sales. You don’t sign any contract to be part of Alliance. As long as we are serving you well, you stay with us. And it’s been a model that has worked. We view ourselves as a partner to the retailer. And our most successful retailers view us in that same way, too.

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“The move to Alliance Retail Group has greatly benefited Food Giant. They do a great job negotiating on our behalf, allowing us to spend more time on merchandising and store conditions. Joe Wolf is a consummate professional and a great person to deal with.” KEVIN LADD, PRESIDENT, FOOD GIANT

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A2 Is a Full-Service Advertising Agency to Handle Independent Retailers’ Advertising Needs Brenda McDaniel has been with Alliance Retail Group from its founding in 2004, beginning as a graphic designer working on grocery ads. “I’ve been here since the very beginning; I was here when we produced our first ad,” she said. Today, she is president of A2 Advertising, ARG’s ad agency. “The goal of the agency is to help the retailer increase sales, increase traffic, retain the customers they have and help them stay competitive and current in an ever-changing marketplace within budget,” McDaniel said. A2 EVP Mary Sherwood, who is based in the company’s digital-advertising-fo-

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The goal of the agency is to help the retailer increase sales, increase traffic, retain the customers they have, and help them stay competitive and current in an everchanging marketplace. P R E S I D E N T, A 2 A DV E R T I S I N G

cused Kansas City office, said, “Our mission is to recommend the right marketing plan for our retailers. That includes technology—making it approachable and affordable and helping them compete with the chains. It’s also understanding what works best in their markets and suggesting the right kind of technology solutions for the retailer and their market to increase sales.” Sam Rhodes, ARG’s chief sales officer, added, “We’re a one-stop solution for any independent’s advertising needs, whether it’s print, TV, radio, website, digital or a specific marketing campaign.”

Account execs have constant contact with retailers

Sherwood oversees the account executives (AEs), “which I call our boots on the ground that talk to our customers every day.” Sherwood has been with A2 for five years. She has a 19-year background in grocery advertising, starting as a graphic designer and working

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We hear it all the time on all sides of the company: “We actually talk to a human being when we call you guys.” We pride ourselves on that. P R E S I D E N T

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her way into all facets of advertising for grocery retail, from overseeing TV commercials to online shopping to social media, as well as some print advertising. “We have dedicated people for each of our retailers on the Alliance side and on the A2 side,” Rhodes said. “They can pick up the phone and know they’re going to get the same person to talk to that is going to be able to answer their questions.” And “they’re getting experienced people on staff to take care of them,” McDaniel said. “We’ve got a team of about 38 people in A2, and we have all kinds of backgrounds—marketing, advertising, graphic design, etc.—and we’re well equipped to handle everything they need, from TV to radio advertising to billboards to store signage to store décor. If it’s something they need to promote their store, we can do it for them.” “There are probably several hundred years’ worth of grocery advertising experience that works for this company,” President Joe Wolf added. And customers know they can actually talk to one of these experienced people when they need to. “That’s one of the things we hear from the retailers when they join Alliance—the fact that they can pick up the phone and call somebody, and somebody is there to help them with whatever they need,” McDaniel said. Wolf said, “As people in the industry—whether it’s at wholesale or a wholesaler-owned ad department—have cut back, we have placed more emphasis on customer service, having a voice to talk to. Brenda is exactly right; we hear it all the time on all sides of the company: ‘We actually talk to a human being when we call you guys.’ We pride ourselves on that.” A2 has 10 base ads for grocers that morph into about 350 unique ads each week. The AEs are “talking with retailers daily about their ads, getting their changes,” Wolf said. He’s proud of the fact that his company is able to maintain “a very high accuracy rate, a very high retention rate of customers. We rate highly from a customer satisfaction standpoint. We take care of the basic blocking and tackling you need to run a weekly print ad that the stores publish.”

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Our mission is to recommend the right marketing plan for our retailers. That includes technology—making it approachable and affordable and helping them compete with the chains. E V P ,

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Country Bob’s Proudly Congratulates

Alliance Retail Group and their sucess of serving over 1,000 stores!

An eye on the future…which means digital

“But we also have an eye on the future,” Wolf continued. “As the world becomes more digital and less print reliant, we are evaluating technology suppliers to be best in class in that side of the business, as we have been on the print side for a number of years.” Sherwood noted that A2 has digital coordinators in-house that handle social media for retailers. That doesn’t mean the retailers are discouraged from getting in there and interacting themselves. “We have retailers that post photos and information—and we encourage that, the more interaction the better—but we really take care of everything for them so they can run their stores,” she said. In Sherwood’s experience, “Facebook is still king with the demographics of most of our shoppers in our stores, so we do a lot on Facebook. We do some

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with Instagram as well, which is a different voice. We make sure we speak correctly to that crowd vs. the Facebook crowd.” Sometimes Twitter is the platform that

works best; it just depends on the market, she said. “We advise them on what to concentrate on, so they don’t confuse their consumers.” A2 also has its own Facebook representative who keeps the agency apprised of the changing laws linked to social media. A2, in turn, makes any adjustments on the retailer’s behalf.

The goal of the agency is to help the retailer increase sales, increase traffic, retain the customers they have, and help them stay competitive and current in an everchanging marketplace.

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“When the law came out that platforms had to be ADA-compliant, we did all the programming and adjusted for the retailers so they didn’t miss a beat,” Sherwood noted. “We are constantly making sure we are following all those regulations.” Wolf added, “That goes back to the whole theme of our customer service—it’s our biggest point of differentiation, in my mind, from our competitors.” While digital is, by nature, not face to face, A2 account execs often go to the stores for meetings with store owners and managers. “When it comes to technology and explaining things to retailers, our staff is still going out and seeing the stores, walking the aisles, still seeing them face-to-face as much as they can, and I think that’s just really important when you’re explaining how you want to go to market in the environment that we’re in,” Sherwood said. “They (AEs) spend a lot of time connecting with their clients and being in the store and seeing what really is going on. That’s important to us.” A2’s digital coordinators formulate plans for social media ad spend based on the zip codes around the store to make sure the grocer’s dollars go as far as they can.

Staying on top of technology

“Technology changes so fast these days that what is working today and is successful today may be totally out of the picture a year from now,” Wolf noted. “We are working very hard to identify the things that are going to be here long term and make sure we adapt properly to that and make the right recommendations to our customers. It’s hard enough running a grocery store daily without having to sort through a million technology vendors and decide who to do business with before signing a long-term contract.” He said ARG very carefully vets all technology or marketing solutions before recommending them to grocers. “We’re not just going to come in, set you up with a technical solution and then leave you to fend for yourself. It’s truly a hand-holding approach that we do with our business,” Wolf said. “We have to go into everything digital; we have to be ready and willing to take them into everything new that’s coming down the pike,” McDaniel added. However, she and her staff only want to sell grocers the services they need. “If a retailer says, ‘I think I need all this stuff,’ we don’t just sign them up to use everything just because it’s out there. We start them out where they need to be instead of trying to go in there and spend money on things that are not going to benefit them,” she said. “We want to spend their advertising dollars wisely and put them where they need it most and let them grow into other areas. It’s like going from print to digital. They can’t just go into everything digital; they have to build that up and they have to build an audience. The staff is very good about helping them build that audience. “Without the retailers, we wouldn’t be here,” McDaniel said, explaining why A2 is careful to cement those relationships with

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grocers by selling them only what they need. Rhodes said e-commerce is one of the biggest trends that will continue to impact all grocers. “Six percent of all sales now are online; it’s going to be 20-25 percent in six years,” he said. “We have identified that most of our retailers aren’t equipped for this, so the team went out and interviewed different online companies and came through with a partner. Now we can offer our retailers another one-stop solution for their online needs.”

Integrity’s role in growth

Rhodes, who joined ARG last November, handles retail sales for the 1,000-plus stores the company serves as well as sales for A2. He came into the company with a CPG background. He started his career with The Pillsbury Co. in the early ’90s, followed by a stint at Coca-Cola. He went back to Pillsbury, and the division he worked for later was acquired by J.M. Smucker Co. “When Alliance started, Joe Wolf and Barry Maddox were customers of mine, and one thing that always stood out to me about those guys is they were men of their word. If they said they were going to do something, they did it. If, for whatever reason they didn’t, they made it right. That’s really unusual in this day and time. They were all about growing sales, doing what was right for the retailer and making their retailers stronger and more profitable,” he said. “You can see the domino effect from 2004, when it was 56 stores, to today—over 1,000. That’s doing things the right way.” Rhodes added that the company’s culture has been established through relationships, not email or memos or other impersonal means. “Relationship is one thing that we as a total entity—Alliance, A2, all of us—we are best-inclass at,” he said. Wolf added, “Integrity is important, even more so than people with talent. Culture overrides everything—culture eats talent for breakfast. You can have the most talented people in the world, but if they don’t fit your culture, then it doesn’t work. We very much pride ourselves within all of our companies of creating a culture of support, success, service. It’s very important to me that we maintain that.” The leadership team at ARG is willing to take the blame when things go wrong, but when things go right, team members are the ones who should be applauded, he said. “We don’t want a culture where everybody is trying to take credit; we just want to do what’s right and for everybody to pitch in,” he said. “It doesn’t matter who gets credit to the leadership team; we accept responsibility for failure, but we

CONGRATULATIONS

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ALLIANCE RETAIL GROUP

on 1,000 independent retail stores! From Your Friends At:

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would rather give our employees the credit for success. That’s how we run the business.”

More growth anticipated

Alliance Retail Group and all its branches will continue to look for ways to help grocers finetune their operations, including advertising in a cost-effective way. “They’re looking at a bottom line and sometimes their numbers are tight. They want to spend their dollars wisely to make them go the furthest,” Rhodes said. Wolf said they are always looking to find “that happy medium of satisfying what the customer’s needs are while also making independent grocers aware of what’s available and making recommendations on how to continue to move forward. And being mindful of their budget, because that is an important thing. We are very mindful of the limited dollars that these guys have to spend on advertising. We have to be very wise and judicious in how we spend those dollars. “We have been growing constantly for years, both on the Alliance side and the advertising side. Again, it’s a credit to all these wonderful people that work in this building,” he added.

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Proprietary iPro Software Turns Scan Data into Actionable Insights Alliance Retail Group (ARG) President Joe Wolf describes iPro as the leading scan The software can be integrated into promotional management tool in the country. a wholesaler’s existing system, and it’s J O E W O L F Developed in-house by ARG, iPro’s primary function is that it “allows us to automate collecting scanned unit sales for incremental trade funds tied to performance from manufacturers,” Wolf said. “It’s state of the art; it’s deployable in 13 different point-of-sale systems; and it’s universally accepted by the vendor community as an accurate billing tool.”

PCI compliant because no credit card information is captured. POS scan data is collected from all of ARG’s retailer customers on a nightly basis, and it’s used for several purposes. The data allows ARG to ensure the vendors that retailers are in SRP compliance with certain vendor promotions tied to a specific SRP. “The store doesn’t have to do anything but run the right retail; iPro automatically bills the vendor and credits the store,” he said. “Let’s say a vendor has an allowance of 50 cents if you sell a product at $1.49 or $1 if you sell it at 99 cents. The system automatically recognizes all that in real time and bills the vendor appropriately. All the store has to do is set the retail.” The software also allows independents to execute complex promotions such as Buy 5/Save $5, “When You Buy” events such as Buy 3 for a hotter retail, or a cross-department promotion such as buy pizza and bagged salad and get a two-liter soft drink free. The data also helps ARG staff members “become better ad writers,” he said. They can measure ad effectiveness because the data shows how many units sold following an ad drop. “Through the data, we have fact-based decision-making, just like the chains do,” Wolf said.

Through the data, we have fact-based decision-making, just like the chains do.

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The IPro data is also used for category management purposes to help stores finetune their assortment based on sales trends or key missing items.

that have the highest lost sales potential. We do it by peer ad group because we can compare their store to all the other stores in their geographic region to determine the best-selling items. We’re able to show you’ve lost sales because the No. 2 yogurt item’s tag has fallen off and you haven’t scanned one unit in 90 days.” “We are just now beginning to scratch the surface of the benefits to retailers” with iPro, Wolf said, but he expects another future use of the software will be as an ordering tool. “It will help stores place their orders based on what they sold last year, which is particularly important on holiday items that may only sell one or two weeks per year,” he said.

“We are able to show stores when they’re missing key items. We’re able to show stores their slowest-moving items to help them manage their inventory,” he said. Each Monday, retailers get an email that helps them manage their shelves. “Say a tag falls off and the shelf space gets taken up with another product,” Wolf said. “We have the ability to notify them—and we do it every Monday—of the items

CONGRATULATIONS CONGRATULATIONS Alliance Retail Alliance Retail Group! Group! Snack Time! Snack Time! Party Time! Party Time! Any Time! Any Time!

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