Food Trade News

Ahold Delhaize USA (ADUSA) is making changes. On February 1, the large Dutch-owned retailer said that it would be folding two of its largest support services groups – Retail Business Services (RBS) and Peapod Digital Labs (PDL) – into ADUSA by the end of the first operating quarter to create more simplicity and effectiveness throughout the organizations. Then five days later, the East Coast merchant said it would sell its two meat plants – in Camp Hill, PA and North Kingstown, RI – to large meat processor Cargill, Inc. Also on February 7, ADUSA said it has signed a new agreement with ecommerce platform DoorDash to home deliver groceries to customers of all ADUSA brands – The Giant Company, Stop & Shop, Giant Food, Hannaford and Food Lion – by next month.
Moreover, the large Zaandam, Netherlands-based chain announced its Q4 and year-end sales and earnings, which like many other food retailers recently, trended flat to slightly negative.

The biggest long-term news involves the internal restructuring at the large retailer’s U.S. operations. In a memo the retailer’s CEO JJ Fleeman, noted “Following the merger of Ahold and Delhaize Group in 2016, we set up a strong brand-centric operating model for the U.S. brands. This included support brands providing expertise and service to each of our local brands to help them in their markets and drive omnichannel growth. “Our brand-centric approach has been a great success, and today each of our brands holds the leading market share in their geographies. But persistent headwinds continue to challenge our businesses.

“To continue to ensure our brands are durable companies for the future and the leading omnichannel retailers in their respective markets, we are now at an inflection point where we need to simplify our operating model, improve organizational effectiveness, create clarity and focus, ensure strong and clear prioritization of work and initiatives, and reduce costs across all our businesses.

“Consistent with our ongoing discussions about getting back to the basics of our business, which is selling groceries, as well as being clear on our focus and priorities, simplifying ways of working and becoming more effective and efficient, we have taken a number of actions across each of our companies, including selling non-core businesses and stopping work.

“We know that this alone will not be enough. It’s still too hard and too complex to get work done across our U.S. companies.

“As a next step in reducing complexity and simplifying the operating model for our support functions, one of the first decisions we are taking is to move to one support brand – Ahold Delhaize USA. This means we expect to sunset the Retail Business Services and Peapod Digital Labs brands by the end of the first quarter, and we expect to move associates to Ahold Delhaize USA by the end of the first quarter.

“The only exception to the support brand transition is that ADUSA Distribution and ADUSA Transportation will continue to remain separate companies continuing to support the local brands.

“This shift will bring all support functions together to seamlessly partner with the local brands so they can do what they do best – be the trusted local grocer in their markets – and together we will accelerate omnichannel growth.

“As we transition functions to the new Ahold Delhaize USA entity, we will organize the new support organization with the following leadership structure: Roger Wheeler will continue in his role as chief commercial officer. ADUSA Distribution and ADUSA Transportation will continue to operate as separate entities led by Sanja Krajnovic, who will continue to report to Roger.”

Under the new ADUSA structure, Keith Nicks will continue his role as chief digital officer; and Natalie Dupill will continue in her role as head of U.S. strategy and chief of staff, overseeing ADUSA strategy, governance, strategic priorities, and enterprise portfolio management.

Additionally, Tracy Stone has been promoted to chief administrative services officer. In this new role, she will oversee key services provided in the U.S., including organizational effectiveness, led by Glenn Henry, which is a new function that Fleeman said he will we will share more about in the coming months. Also under Stone’s aegis will be business services, led by Jim Saccary, and communications and omnichannel service center, led by Christy Phillips-Brown.

The company is continuing its search for a chief information officer and upon appointment, this position will report to Fleeman, The IT leadership team will continue to report to Wheeler until an IT leader is announced.

Fleeman, who became ADUSA’s chief executive in April 2023 after a 33-year career, primarily with Delhaize America, also said that a new chief sustainability officer will be created for the U.S. “We are in the process of selecting this leader, who will be responsible for advancing the U.S. sustainability efforts and partnering closely with Ahold Delhaize in this work, as its importance is increasing with reporting and sustainability will be an integral part of our strategy going forward. Once named this leader will also join the Ahold Delhaize sustainability leadership team,” he explained.

Other key personnel included under the expanded ADUSA umbrella include: Greg Amoroso, who will continue in his role as chief financial officer; Kim Lyda, who was previously announced as a successor to Linn Evans, will assume the role of chief legal officer in April, when Evans transitions to his new role as chief legal officer for Ahold Delhaize.
In addition, each local brand president will continue in their roles and remain a part of the U.S. leadership team.

“With our industry changing rapidly around us, now is the time to fully leverage capabilities to accelerate omnichannel growth. This new operating model will make it easier to work toward better, together, as a support organization and with each local brand, while still preserving the brand-centric model that has been valuable to the organization.

“I want to recognize and appreciate the great work that has been done to get us where we are today. It’s because of your dedication and commitment to establishing strong capabilities in each of your functions, the great talent we have, along with thriving cultures and strong associate experiences, that we are now positioned to bring together all support brand teams into one Ahold Delhaize USA organization. As we move into the new operating model, we’ll leverage what you have built to streamline services to each of our local brands so they can execute their unique strategies, further differentiate in their marketplaces, and more effectively compete.

“Over the next several weeks, we will have teams working on a seamless transition of support brand associates into ADUSA. We will provide frequent updates on this transition, as well as next steps as we move forward as one support organization, including regular updates on our focus and critical priorities across all U.S. businesses.

“As always, I thank you for all you do to support one another, and the customers and communities we serve. To the Retail Business Services and Peapod Digital Labs teams and associates coming into Ahold Delhaize USA, welcome. I’m eager to work more closely with you, learn from you, and build an amazing Ahold Delhaize USA organization together,” Fleeman stated.

It’s clear that ADUSA is attempting to prioritize its omnichannel retail while revamping or shedding certain assets. At its two case-ready meat plants, Cargill was already part of both facilities in a day-to-day management role.

“As our brands focus on being the leading omnichannel grocery retailers in our markets, we have made the decision to sell these facilities so that we can continue to be intentional about our investments in the U.S. as we drive growth,” said Fleeman. “By aligning these facilities with a company that specializes in meat production, we can continue to provide quality products to our brands’ customers and increase our focus on being leading omnichannel retailers.”

With the acquisition announcement, Cargill will continue to provide packaged meat products to Ahold Delhaize USA brands in the Northeast. The deal was actually made by ADUSA subsidiary Infinity Meat Solutions. When it was still known as Ahold USA in 2013, the retailer opened a 163,650 square foot meat plant in Camp Hill to produce packaged ground beef, pork, muscle cuts and value-added products such as seasoned, marinate and breaded meats initially for The Giant Company and Giant Food. In 2020, ADUSA opened its second such facility near Providence, RI, a 209,000 square foot processing plant to serve Stop & Shop and Hannaford. Originally, the retailer utilized Vantage Foods as its management partner for both processing centers, but in 2020 Cargill acquired Vantage and has been a part of the Camp Hill and North Kingstown facilities since that purchase.

“With this investment, we look forward to our continued partnership with Ahold Delhaize USA companies while bringing additional high-quality, case-ready products to new retail customers. By bringing more of our case-ready and value-added protein products to retailers, their employees can spend less time on backroom prep work and more time helping their customers at the meat counter,” said Hans Kabat, president of Cargill’s North American Protein business.

Cargill said it plans to service other retailers from the Camp Hill and North Kingstown plants.

As for its newly created relationship with DoorDash, the e-commerce platform is already being utilized by The Giant Company, Giant Food, Stop & Shop and Hannaford. A Food Lion pilot project has already begun and will go “live” next month.

“As leading omnichannel grocery retailers in their markets, Ahold Delhaize USA brands are focused on providing fast and convenient grocery delivery for customers. The addition of DoorDash as a marketplace partner for our companies is very exciting,” said Fleeman. “The speed and ease of DoorDash and its strong reputation for providing great customer service aligns with the priorities of each of our local brands. We look forward to delivering this new option for customers of our local brands – as well as new customers through DoorDash – and leveraging this partnership to enable our brands as they continue to drive omnichannel growth.” ADUSA brands are already utilizing the services of Instacart as well.

“From day one, DoorDash has been focused on creating opportunities for our merchant partners to compete, succeed, and flourish in every environment,” said Tony Xu, CEO and co-founder at DoorDash. “We’re excited to partner with Ahold Delhaize USA brands to support the growth of their digital channels and help them engage consumers in new ways. As consumers’ favorite local commerce platform, we look forward to expanding our East Coast selection and giving consumers more access to everything in their neighborhoods, including groceries, retail, flowers, food, and more.”

Revenue and earnings-wise, Ahold Delhaize USA followed the path of many retailers over the past four months – comp stores sales were down and profits were flat to slightly negative when compared to Q4 in 2022. At ADUSA, net sales were down 1.5 percent year-over-year in Q4 at constant exchange rates, while same-store sales excluding gasoline declined 1.9 percent. The company said that diminishing inflation, the reduction of SNAP benefits and its sale of online grocer FreshDirect (to Getir) adversely affected results. Ahold Delhaize said it lost about $268 million on its three-year investment of FreshDirect where it paid approximately $327 million for an 80 percent stake (investment firm Centerbridge Partners owned the remaining 20 percent of Fresh Direct).

However, unlike other traditional supermarkets, ADUSA’s comp store decline has now lasted four consecutive quarters. The bright note was once again Food Lion which has now posted an impressive 45 straight operating quarters of positive comp store revenue. Hannaford, too, continued a more modest sales streak, with 10 consecutive quarters of increased comps. Both those ADUSA brands were originally owned by Delhaize America before the 2016 merger.

Ahold Delhaize also revised its 2024 sales and earnings projections, noting that it expects to achieve an underlying operating margin of more than 4 percent; underlying EPS comparable to 2023 levels; free cash flow of around $2.46 billion; and net capital expenditures of around S2.4 billion.

Even with a less-than-stellar fourth quarter, Ahold Delhaize CEO Frans Muller remained optimistic, telling shareholders: “I am pleased to report a solid end to the year for Ahold Delhaize. The local brands in our strong international portfolio have been steadfast in creating value for customers by enhancing their highly personalized loyalty programs, increasing access to omnichannel offerings, and expanding their innovative own-brand assortments.”

For all of fiscal 2023, ADUSA’s sales were $59 billion, with $4.6 billion of that amount generated from online orders. As of December 30, 2023, ADUSA operated 2,048 supermarkets, three fewer than the year before.

Flashfood, the Toronto-based firm that connects shoppers with fresh food and groceries at significant savings, has promoted Nick Bertram to chief executive. The former Giant Company leader, who joined Flashfood in February 2023 as COO and president, replaces Josh Domingues, who becomes executive chairman. Domingues founded Flashfood in 2016.

Since his arrival, Bertram has focused on developing Flashfood’s internal infrastructure and technology to prepare the company for a period of hypergrowth. A new company visual identity was also recently unveiled.

“This past year has been about readiness: developing our architecture so it can support the adoption of generative AI and machine learning, which is essential to deliver maximum value for our shoppers and retail partners and ultimately achieve the global scale our critical mission demands of us,” said Bertram, who was named president of the Carlisle, PA-based Ahold Delhaize USA brand in 2018 after executive positions with Jewel-Osco and Walmart. “This new visual identity for Flashfood represents the external layer of so much work underneath the surface by hard working team members across the company, and it’s such a pure, joyful expression of our optimism for the future of Flashfood.”

Reflecting on the transition, Domingues said, “I founded Flashfood eight years ago to address an ambitious, urgent problem in our food system. Then and today, I believe this problem is solvable and I am immensely optimistic about the future. I could not be more excited to hand the reins over to someone I have full confidence in – someone who I have worked alongside for almost a year and who has earned my trust.”

Domingues’ new duties include leading Flashfood’s strategic expansion initiatives and corporate development while continuing to serve as an active voice for the company.

Flashfood also announced the promotion of chief brand officer Jordan Schenck to the newly created position of chief customer officer. Schenck joined the company in March 2023 after previous stints with Sunwink and Impossible Foods.

“Flashfood is a category-defining company making tangible progress towards delivering a better, healthier, and more sustainable food system,“ said S2G Ventures senior managing director and OpenTable Founder Chuck Templeton. “In my experience, marketplaces like Flashfood that drive real tangible value and utility for their customers have exponential opportunity to scale, and that’s the trajectory the company is on.”

Flashfood currently partners with more than 2,000 stores across North America including Meijer’s, Stop & Shop, Save A Lot, Giant Food, Loblaw’s, The Giant Company, Giant Eagle and Tops.

In her annual State of the State address on January 9, New York Governor Kathy Hochul offered several initiatives to help combat retail theft. In addressing overall crime and public safety, Hochul, a Democrat who is ineligible to run again for governor in November 2024, said she will propose a plan that she said will tackle property crime, provide relief to small businesses, and bring peace of mind to New Yorkers while they shop.

Across the state, property crime has risen exponentially since the pandemic. From January to June 2023, larceny in New York City was up 12 percent over the same period in 2022 and up 58 percent compared to the first six months of 2017. In the rest of the state, although 2 percent down from 2017, larceny has risen 3 percent year-over-year, trending upward. As a result, business owners and retail workers are facing increased stress and financial strain, and New Yorkers are concerned and frustrated when running simple errands at a local pharmacy, grocery store or retail shop.

Governor Hochul, who first took office in 2021 after Andrew Cuomo resigned, and then won the 2022 gubernatorial race, unveiled a plan that includes:

*Introducing legislation to establish criminal penalties for online marketplaces and third-party sellers that foster the sale of stolen goods and increase criminal penalties for assaulting retail workers;

*Launching the Retail Theft Joint Operation to coordinate through the state’s network of Crime Analysis Centers (CAC) the response of law enforcement agencies and prosecutors, modeled on the successful intra-state task force on gun trafficking, but focused on combatting organized retail theft crime;

*Deploying a dedicated New York State Police team to build cases against organized retail theft rings;

*Setting up a New York State Police Smash and Grab Enforcement Unit;

*Expanding the work of the 11 CACs by providing a centralized intelligence gathering and evidence collection strategy across the state designed to receive intelligence from retailers victimized by organized crime theft. These data, intel and evidence would be collected by the CACs and shared with local law enforcement to enhance the investigation and prosecution of these crimes across state jurisdictions;

*Establishing a Commercial Security Tax Credit to help business owners offset the costs of certain store security measures;

*Providing funding for dedicated teams in district attorneys’ offices throughout the state focused on property crime, primarily organized retail theft;

* Funding for the district attorneys and new State Police units to allow for an increased use, enforcement and prosecution of trespass affidavits and other legal strategies to assist small businesses in combatting this retail theft;

In her 60-minute address, Hochul also introduced initiatives designed to prevent gun violence, reduce domestic violence and combat hate crimes.

Darren Caudill has joined Wakefern Food Corp. as executive VP-chief sales officer, a new position. Caudill, who had been serving as an industry consultant for almost a year, will once again work with Wakefern president Mike Stigers, who was named the day-to-day leader of the co-op in June 2022. Both executives worked together at UNFI (and predecessor firm Supervalu) for a decade where most recently Caudill was senior VP-sales, merchandising and marketing and Stigers was CEO of UNFI’s Cub Foods retail division. Caudill also spent more than 30 years at Kroger, mostly in merchandising positions.

As Wakefern’s new chief sales officer, he will head up the center store, own brands, fresh and prepared foods departments along with digital and innovation, marketing, merchandising and sales and analytics divisions.

“We’re excited to welcome Darren to Wakefern. His proven track record of success in sales and marketing, combined with his extensive experience in grocery retail and wholesale, will allow us to continually innovate and elevate the in-store and online customer experiences we deliver,” said Stigers.

A graduate of The Ohio State University, Caudill has served as a member of the board of directors for Minnesota Grocers, Kemba Columbus Credit Union and as a member of the advisory board of directors for the Institute for Research in Marketing at the University of Minnesota Carlson School of Management.

In another executive level personnel move, Francisco Alberto has been promoted to VP-marketing and sales at the co-op. He was most recently director of marketing and sales planning at the company, a job he had held for the past two years. Alberto has been with Wakefern for 22 years, beginning his career as a receiving clerk.

The move to bring Caudill on board is part of a continuing reshaping of Wakefern’s leadership team. In August 2023, Stigers named John Jantson, another Supervalu/UNFI veteran, as the Keasbey, NJ-based cooperative wholesaler’s chief information officer, replacing Cheryl Williams, who had been at Wakefern for 23 years, the last seven as the company’s CIO.

Then on January 10, Stigers continued the company’s restructuring with the announcement that three veteran senior executives had left the organization: Steve Henig, who joined Wakefern in 1992 and most recently served as chief customer officer; Bryant Harris, the co-op’s chief merchant, who joined Wakefern in 2020 after previous stints with Save A Lot and Walmart/Sam’s Club (19 years); and Bill Mayo, the company’s chief administrative offer who joined Wakefern in 1995 and has served in the CAO post since 2018

Costco workers in Norfolk, VA last month convincingly voted to join Teamsters Local 822, marking the union’s first organizing victory at the wholesale retailer in more than two decades. The 238-worker group of associates employed at the Costco on Glenrock Road now must hammer out a contract with Costco management.

“This campaign was all about standing together as a group and taking control over our well-being in our workplace,” said Damion Thomas, a front-end cashier at the Norfolk Costco who served on the organizing committee. “We can’t wait to be covered under a strong Teamster contract that will give us a real voice and bring real change to the job.”

With the addition of the Norfolk facility, 56 of Costco’s 600 U.S. warehouses are now organized. Of those, 40 are located in California where some of the old Price Club stores remained unionized after it merged with Costco in 1993. Additionally, employees at 14 other warehouses in New York, New Jersey and Maryland (all former Price Club locations) joined the Teamsters in 2002. Another Costco location in Glen Allen, VA (which was not a Price Club unit) was unionized in 2004. Those 56 unionized stores represent about 18,000 of Costco’s approximately 206,000 workers in the U.S. and Puerto Rico.

“Costco workers saw the new energy at the International under the O’Brien-Zuckerman (Teamsters International president Sean O’Brien and secretary-treasurer Fred Zuckerman) administration, and they wanted in. I’d like to thank the Teamsters warehouse division and organizing department for their support throughout this campaign. Most of all, I want to thank the workers for standing strong,” said James Wright, president of Local 822 and International vice president at-large. “This campaign was all about boots on the ground. These workers understood the power that comes with being a Teamster.”

In October 2022, the Teamsters ratified a first-ever national master agreement for those already organized Costco workers. The national agreement boosts wages and pension contributions by the employer and provides members with higher semi-annual bonuses and a more flexible attendance policy, among other workplace improvements.

From the other side, Costco management has taken a different view of the Norfolk election. Instead of pointing fingers at its employees in the manner that former Starbucks CEO Howard Schultz did, former CEO Craig Jelinek (who retired on December 31) and new chief executive Ron Vachris looked at themselves for the results of the election.

In an internal letter to its U.S. employees, Vachris and Jelinek said they were disappointed with the Norfolk workers’ decision and attributed the result to a “failure on our part.”

“At Costco, we take great pride in our relationships with each other. We’re not anti-union, but our core value of ‘taking care of our employees’ has never been the result of any union,” Vachris and Jelinek stated in the letter, which was dated December 29.

Eight days earlier, in a statement about the then-upcoming vote, Local 822 said that it was seeking “strong representation to address years of concerns and improve working conditions,” adding that many of the Norfolk workers who voted to unionize were influenced by that national master agreement.