Food Trade News

Ahold Delhaize and Centerbridge Partners announced they have entered into a definitive agreement to acquire FreshDirect, the online grocer based in New York City. Ahold Delhaize will acquire the majority share – 80 percent – funded by cash on hand, and Manhattan-based private equity firm Centerbridge Partners, will be a minority equity investor with a 20 percent stake.

After the deal closes, FreshDirect will retain its brand name, report to a seven-person board comprised of members of Ahold Delhaize and Centerbridge, and continue to independently operate out of its facility in the Bronx. Current FreshDirect CEO David McInerney is expected to remain chief executive and report to the new board. McInerney, Joe Fedele (who departed in 2004) and Jason Ackerman founded the online retailer in 1999. Ackerman left FreshDirect in 2018. Prior to this announced acquisition, JP Morgan Asset Management held the largest stake in FreshDirect.

Financial terms of the deal were not disclosed. The transaction is expected to close in the first quarter of 2021, following the satisfaction of customary closing conditions, including regulatory clearance.

Frans Muller, Ahold Delhaize’s chief executive officer, said, “FreshDirect is a leading local brand in the fast-growing online grocery sector in the New York City metro area, one of the most important ecommerce food markets in the United States. With its unparalleled quality of fresh food, exceptional brand recognition, and dedicated people, it has generated remarkable customer loyalty. This acquisition further propels our omni-channel evolution. It is a great addition and fit for our portfolio of leading local brands. The deal allows us to reach additional customers in the New York trade area and therefore will add incremental sales to the business. It further enables us to address customers’ growing preference for convenient ways to shop. Finally, we are excited to have Centerbridge alongside of us in this venture and believe our combined focus, expertise, and scale will help us maximize the success of FreshDirect going forward.”

McInerney said, “We are strong believers that the future of grocery retail involves getting customers the best quality food, exactly when they want it, with the best customer service. We have built FreshDirect into a reliable and recognizable business to serve this purpose. This transaction marks an important milestone in the continued growth of FreshDirect. I believe Ahold Delhaize’s global scale, focus on strong, leading local brands, and ability to utilize cost-of-goods synergies, will allow FreshDirect to achieve its full potential.”

FreshDirect is one of the leading online/grocery delivery merchants in the U.S. While the majority of its business is in Metro New York (particularly in the five boroughs of New York City), the company has expanded its distribution network over the past few years to include the Delaware Valley and the Washington, DC area. FreshDirect has been privately-held since its founding 21 years ago and industry analysts estimate the company’s annual sales to be in the $650 million range. More than 60 percent if its revenue comes from perishables sales.

Acquiring FreshDirect gives Ahold Delhaize the platform to continue its omnichannel growth and although it is technically a stand-alone operation, several trade observers noted that they expect to see some linkage with Ahold Delhaize USA’s Peapod operation and its affiliates.

Gus Lebiak will become president and chief operating officer of Krasdale Foods Inc. effective January 1, 2021, replacing current president Steve Silver, who is retiring.

Since joining the 112-year-old, family-owned business which provides essential services to supermarket operators, including grocery distribution, merchandising, marketing and financing, eight years ago, Lebiak has assumed greater leadership roles within the company. Last year, he was promoted to chief operating officer of Alpha 1 Marketing, an affiliate of Krasdale. Following his retirement, Silver will continue to serve in an advisory capacity and will also remain on the board of directors where he’ll contribute to the ongoing growth of the company.

“We’re grateful to Steve Silver for his tremendous leadership and the significant role he has played in growing and diversifying Krasdale Foods,” said Krasdale CEO and chairman of the board, Charles A.  Krasne. “Looking forward, I am confident that Gus will be a strong leader, providing continuity and deep insights that will result in further growth of our business. His promotion is a natural progression of his career and is well earned. I look forward to working closely with him.”

“I also look forward to continuing to work closely with Gus,” said Thatcher Krasne, president of Alpha 1 Marketing. “Gus is well integrated into the Krasdale family and will continue our tradition of excellent customer service. I expect the transition to be very smooth.”

As COO of Alpha 1 Marketing, Lebiak currently oversees key departments such as advertising, digital services, customer service, community relations, retail operations, marketing, meat and produce, and merchandising, as well as retail regulatory compliance and training.

“Since coming on-board at Krasdale, Gus has worked closely alongside me to create a culture of collaboration among employees resulting in our best-in-class management team,” Silver said. “Most recently, when our industry faced unprecedented challenges, Gus played a big part in helping Krasdale help its customers to get through the pandemic on solid footing. I have complete confidence in his ability and leadership.”

With more 40 years of grocery industry experience and an educational background which includes an MBA in corporate finance, Lebiak has a diverse skillset that has made him indispensable within many areas of the business. He began his career working in-store at Mayfair Supermarkets before moving to the wholesale side of the business as a category manager at Twin County Grocers. From there, Lebiak assisted in the launch of Allegiance Retail Services, a supermarket cooperative, serving as director of grocery and then vice president of center store, before leaving to join Krasdale Foods as a vice president.

“I feel so honored to lead this team, building on the vision and values of Steve Silver and the Krasne family,” Lebiak said. “Throughout my four decades in this industry, I have never worked with a more dedicated or talented team. The management team at Krasdale is top notch. I look forward to working closely with Charles and Thatcher Krasne along with senior management and our valued employees to innovate and to continue consistent, long-term growth across all areas of the business.”

On November 5, Weis Markets announced stellar sales and earnings in its recently completed third quarter, which ended September 26.

Comparable store sales jumped 14.8 percent while net income zoomed 118 percent to $31.3 million when compared to the corresponding period last year. Additionally, the Sunbury, PA based regional supermarket operator reported that online revenue increased 160 percent.

“Our sales and current demand continue to be impacted by a significant number of people working remotely, often with children attending school the same way, which results in more at-home meals, said Jonathan Weis, the retailer’s chairman and CEO. “Our customers have also adjusted the way they shop, making fewer trips to our stores but buying larger orders. Additionally, our e-commerce sales continue to grow at a record rate. We’ve adjusted to meet this increased demand with agile procurement, consistent in-stock conditions, disciplined marketing and pricing programs and accelerated replenishment schedules. Over the past seven months, our associates have adapted and taken on additional challenges, cleaning and sanitizing our stores throughout the day and doing their best to ensure social distancing and a safe shopping environment during challenging times. We are grateful for all they do.”

Weis added that his company has taken steps to secure sufficient inventory to remain in stock and serve its customers during the upcoming holiday season.

For the first three quarters of fiscal 2020, the publicly-traded but closely-held regional chain produced sales of $3.09 billion, an increase of 16.9 percent. Comp store sales for its first 39 weeks rose 17.3 percent and e-commerce revenue grew 147 percent. Net profit this fiscal year has been $99.5 million versus $26.9 million for the first 39 weeks of fiscal 2019.

Ahold Delhaize, the Zandaam, the Netherlands based retailer that operates five banners in the U.S., reported overall third quarter net sales of $20.8 billion (17.8 billion euros), up 6.8 percent, or 10.1 percent at constant exchange rates.

At Ahold Delhaize USA, which includes The Giant Company, Giant Food, Stop & Shop, Food Lion and Hannaford, comparable store sales (excluding gas) grew 12.4 percent, due largely to gains realized from the COVID-19 outbreak. Brand performance was strong across the board, led by growth at Food Lion and Giant Food. Online sales in the segment were up 114.7 percent in constant currency.

The retailer’s U.S. underlying operating margin was 5.0 percent, up 0.6 percentage points from the prior year at constant exchange rates, driven largely by operating leverage from higher sales growth due to COVID-19, offset in part by significant costs related to COVID-19.

Ahold Delhaize’s net income was $79.6 million (68 million euros), driven down 84.9 percent in the quarter due primarily to a previously announced $675.1 million (577 million euros) provision for a U.S. pension plan withdrawal, primarily affecting Stop & Shop and Giant Food. However, underlying income from continuing operations was $620.1 million (530 million euros), up 8.6 percent in the quarter.

COVID-19-related costs were approximately $549.9 million (470 million euros) year to date, and approximately $163.8 million (140 million euros) in the third quarter, including safety measures and enhanced associate pay.

The retailer’s 2020 underlying EPS outlook was raised to growth in the high-20 percent range and the company said it continues to expect free cash flow to be at least $1.99 billion (1.7 billion euros), net of a fourth quarter payment for a U.S. pension plan withdrawal, and capital expenditures of around $2.9 billion (2.5 billion euros).

President and CEO Frans Muller said: “As COVID-19 continues to impact our communities, I am increasingly proud of our teams’ performance. Their intense focus on the safety of our stores and distribution centers and their persistent efforts to provide outstanding service to our local communities are commendable.

“The operational execution by our teams remains outstanding and has continued to drive strong Q3 performance in both the U.S. and Europe. Our results reflected our ability to leverage our leading local digital and omnichannel platform, which generated nearly 115 percent net consumer online sales growth in the U.S. and nearly 50 percent growth in Europe in the quarter, at constant exchanges rates. While there remains a high level of uncertainty in the market, our strong year-to-date performance allows us to raise our 2020 underlying EPS outlook once again.

“We continue to adapt to changes we are seeing in consumer shopping patterns and behavior. Over the coming years, we will invest in our business to solidify our position as an industry-leading local omnichannel retailer and increase our share of the consumer wallet. We will find ways to improve our online productivity and are on track to achieve the 1.9 billion euros ($2.2 billion) cumulative cost savings target by 2021. To benefit all of our stakeholders, we aim to strike the appropriate balance between investing in the health and safety of associates and customers, supporting our local communities, prioritizing environmental, social, and governance (ESG) initiatives, and returning capital to shareholders.”

The retailer said it continues to solidify its position as an industry-leading local omnichannel retailer in 2021 and beyond, concentrating on growing in three main areas: online capacity, supply chain and technological capabilities.

Currently, Ahold Delhaize’s U.S. businesses reach 90 percent of households in the markets where they operate with home and delivery as well as click and collect, around 70 percent of which have access to same-day options.

In 2020 and 2021, cumulatively, the retailer plains to increase online capacity by nearly 100 percent in the U.S. and will have expanded click and collect to nearly 1,400 locations in the U.S. by 2021, doubling the number of locations since the beginning of 2020.

With regard to its U.S. supply chain, the company Ahold Delhaize had previously noted that it will be moving to a fully integrated self-distribution model by 2023, adding that it is progressing on their deliverables ahead of schedule, with the first integrated distribution center of the transformation initiative going live in 2021.

In omni channel, Ahold Delhaize said its U.S. businesses are focused on enhancing subscription offerings. Carlisle, PA based The Giant Company will test a new subscription offer in the first quarter of 2021 with an annual membership fee of less than $100, improved value proposition and preferential delivery time slots with the aim of driving increased loyalty and engagement. The Central PA retailer will be working with Mirakl, a French cloud-based ecommerce company which specializes in online marketing platforms.

U.S. businesses will offer an “endless aisle” solution with an additional 80,000-100,000 general merchandise and food items in the first half of 2021. Additionally, the value proposition will be enhanced through the launching of 1,500-2,000 more own-brand items in 2021, growing from the current base of 15,000 items.

At Quincy, MA-based Stop & Shop, ADUSA’s largest brand, its current remodeling program will be accelerated with approximately 60 additional stores in 2021, an increase from 31 stores in 2020. The retailer said the remodeled stores are performing well with sales lifts in line with expectations.

The company’s third quarter financial report also included an update on its environmental, social, and governance (ESG) call to action.

Ahold Delhaize said that its U.S. brands are enhancing their value proposition through its leading own-brand offerings with a goal of having 51 percent of these sales be from healthy products by 2022. They will also be focusing on increasing discounts and rewards on healthier products and will implement easy-to-use nutritional labeling across its portfolio by the end of 2025.

In October, the U.S. brands announced a target for at least 54 percent of own-brand food sales to be from products that achieve one, two or three stars through the Guiding Stars nutrition program by 2025.

The company also provided an update on its environmental initiatives, reporting a focus to work toward zero plastic waste from its own-brand packaging by 2025, including aiming for 25 percent of own-brand plastic packaging made from recycled materials. The company is also committed to science-based targets for 2030 to halve carbon emissions from its operations and reduce value chain emissions by 15 percent.

The retailer stressed that they embrace clear standards on human rights, such as non-discrimination and the prevention of forced and child labor. Following the publication of its inaugural Human Rights Report in June 2020, Ahold Delhaize is now strengthening governance and working with its brands to develop local roadmaps that take into consideration the six salient issues addressed in the report.

Ahold Delhaize noted that its brands aim to provide competitive associated pay based on industry practices and local market conditions and strive for 100 percent gender balanced candidate and succession slates for all leadership positions. Further, they aspire for 100 percent of associates to rate the company as inclusive.

In discussing outlook, the retailer said that COVID-19 continues to create significant uncertainty for the remainder of 2020, though. However, due to the company’s strong performance so far this year, guidance for underlying EPS is being raised to the high-20 percent range from low-to-mid-20 percent growth previously. The group will reach its $826 billion (7 billion euros) net consumer online sales goal in 2020, one year ahead of plan.

Underlying operating margin in 2020 is still expected to be higher than 2019.

The 2020 free cash flow outlook of at least $1.99 billion (1.7 billion euros) is reiterated and includes the effect of paying the majority of the previously announced $675 million (577 million euros) pre-tax obligation to withdraw from the UFCW International Union – Industry Pension Fund in Q4. The capital expenditure guidance of around $2.9 billion (2.5 billion euros) is maintained and reflects the company’s accelerated investments in digital and omnichannel capabilities. In addition, Ahold Delhaize remains committed to its dividend policy and share buyback program in 2020, as previously stated. A new $1.17 billion (1 billion euros) share buyback program has been authorized, to start at the beginning of 2021.

Reading, PA-based Redner’s Markets Inc., said it will add new staff at every location throughout its Eastern Pennsylvania, Maryland and Delaware trading area.

Like many other retailers, Redner’s has experienced new sales growth during the COVID-19 pandemic. The retailer also noted that its recently expanded “Redner’s Ready” online ordering service has contributed to revenue gains. That growth has impacted all Redner’s divisions – convenience (21 Quick Shoppes), grocery (44 Redner’s Markets) and warehouse – and will result in new employment opportunities.

“We expect to hire full and part time, cashiers, stock clerks, prepared food workers, among others, in all of our stores to enhance our service model. We are excited about the growth we are experiencing and welcome all the new additions. We look forward to offering meaningful employment and continuing our essential service to our communities,” said Robert McDonough, the regional chain’s VP-human resources.

Current benefits for Redner’s 4,800 associates include an Employee Stock Ownership Plan (ESOP), health plans, and financial incentives. The company has been conducting job fairs in select communities and are encouraging job seekers to come out and talk with a recruiter, store director, or go online at www.rednersmarkets.com to learn more about these opportunities.

In addition to the job additions at its stores, Redner’s also announced increased starting wages for workers at both of the corporate warehouse facilities. Beginning on November 1, starting wages will increase to $15/hour with a $500 signing bonus. Current and existing workers’ wages have also been adjusted.

Redner’s, which was founded by the late Earl “The Chief” Redner, is currently celebrating its 50^th anniversary.

It was a record setting year for the Wakefern Food Corporation, parent company of ShopRite, Price Rite Marketplace, Fresh Grocer, Fairway Market, Gourmet Garage and Dearborn Market. Helped by COVID-19 related sales increases and the opening of new stores, the Keasbey, NJ-based distributor reported retail sales of $18.3 billion for the 53-week fiscal year ending October 3, 2020, a 9.75 percent increase from the prior year’s retail revenue of $16.6 billion.

The announcement was made at Wakefern’s virtual annual meeting held on October 22. During the past 12 months, the largest retailer-owned cooperative in the United States opened four new ShopRite stores, welcomed a new banner, Manhattan-based Fairway Market, and added a new member, the Maniaci family and their four stores in Northern New Jersey that now trade under the Fresh Grocer banner.

Wakefern chairman and CEO Joseph S. Colalillo, president and COO Joe Sheridan, and executive VP Chris Lane addressed Wakefern shareholders, store management and staff at the 90-minute meeting.

Wakefern said that hundreds of associates from across the cooperative tuned into the annual meeting, which was broadcast live. Leadership reported on the 2020 fiscal year and how Wakefern and its family-owned supermarkets rose to every challenge and supported their communities during the unprecedented COVID-19 public health emergency. In addition to the cooperative-wide effort to keep stores stocked and running smoothly during the crisis, Wakefern members also incorporated the latest safety protocols in all stores.

“Our store associates embraced their roles. Their courage and commitment was amazing; their teamwork energizing. Throughout the last seven months, I’ve witnessed our entire organization live our purpose of caring deeply about people, helping them to eat well and be happy. It never had to be said, it’s just what we did,” said Colalillo, whose family owns five ShopRite stores in New Jersey and Pennsylvania.

Sheridan said 2020 created a new customer with new expectations that include cooking more at home and shopping more online. To accommodate this new customer, Wakefern added capacity to its online shopping offerings, including ShopRite from Home. He added that the company continues to innovate, improve and expand the digital shopping experience.

“Our customers turned to us for reassurance and for the things they wanted and needed for their families during this challenging time, and we were there for our customers, our neighbors, our friends and our families,” said Sheridan. “There have been a lot of changes to how we operate and how people shop, but our goal is always to provide the best and safest possible shopping experience for our customers. And that’s exactly what we are doing.”

Lane reported on the company’s successful initiatives and the focus the cooperative maintained even during a year of remarkable change and challenges.

Those accomplishments included the continued rollout of ShopRite’s flagship store brands, Bowl & Basket and Paperbird, and the recent expansion and rebrand of its other store brands, Wholesome Pantry and Wholesome Pantry Organic. The Wholesome Pantry brand of accessible foods, which is free from additives and artificial ingredients, was re-introduced this month with an updated look and feel, select new products, and a fresh tagline, “Food Set Free.”

Wakefern also opened its second stand-alone micro-fulfillment center, which uses advanced robotics to quickly assemble ShopRite from Home grocery orders and expands the reach and capacity of online shopping service for stores. Lane said the cooperative plans to open additional micro-fulfillment centers over the next few years.

Lane also detailed Wakefern’s plans to deliver wholesome and affordable fresh foods and meal solutions to customers. Fresh to Table, unveiled this month at three ShopRite stores, features a convenient “store-within-a-store” format that gives customers a whole new way to access fresh meal solutions and on-trend foods. The Fresh to Table experience provides a “One Stop Dinner Shop,” showcasing five ingredient chef and dietitian inspired meals that change weekly, as well as “Prep & Eat,” “Grab & Eat,” and “Heat & Eat” sections. The Fresh to Table experience also offers a digital component with the newly redesigned ShopRite Order Express app and integrated recipe shopping lists available through in-store QR codes and online, at ShopRite’s Recipe Shop available at shoprite.com.

“Step by step, we persevered and chipped away at our goals during 2020, even as we simultaneously responded to a global pandemic.  And for that, we can only thank each and every one of you,” said Lane.

Colalillo also presented this year’s “Chairman’s Award” to Doug Wille, Wakefern’s recently retired chief financial officer. Colalillo thanked Wille for his more than four decades of service to the cooperative. Neil Falcone, Wakefern’s former VP-ShopRite Financial Services (SFS) and corporate finance, has been named Wakefern’s new CFO.

Geoffrey Eickhoff, president and chief operating officer of Eickhoff’s Supermarkets (five ShopRite stores), was also welcomed as a new member of Wakefern’s board of directors during the meeting, and leadership thanked retiring board member, Vince Lo Curcio of Nutley Park ShopRite, Inc., for his 10 years of service to the board.

Wakefern shareholders re-elected to the board of directors at the meeting include: Colalillo as chairman and CEO; Sean McMenamin (two ShopRite stores); Larri Wolfson (owner of the Lincoln Park, NJ ShopRite); Dominick J. Romano (whose company, Ronetco, owns eight ShopRites); and Irv Glass (whose company, Glass Gardens, owns 11 ShopRites) were elected vice chairmen; Lawrence Inserra, Jr. (whose company owns 23 ShopRites and two Price Rites) was elected treasurer; Jeff Brown (11 ShopRites and two Fresh Grocers) was named assistant treasurer; Richard Saker (30 ShopRites and a Dearborn Market), is now secretary; and Ned Gladstein (whose company, Sunrise Supermarkets, owns two ShopRites), Nicholas Sumas (whose company, Village, owns 30 ShopRites, three Gourmet Garages and five Fairway Markets), and Shawn Ravitz (five ShopRites and a Price Rite) were elected assistant secretaries.

Sheridan was also re-elected as president and COO, and Lane was re-elected as EVP.