Food Trade News

Giant, Safeway, UFCW Agree To New Four-Year Contracts

After extending their labor agreements with Giant Food and Safeway for more than four months, United Food and Commercial Workers Local 27 (Baltimore, Eastern Shore and Delaware) and Local 400 (Washington DC, Virginia and Maryland suburbs) signed new four-year labor contracts.

In separate votes with the Baltimore-Washington’s two largest retailers (at locations in Baltimore and Oxon Hill), the nearly 26,000 retail clerks and meatcutters employed at both companies overwhelmingly authorized new pacts that provide for hourly wage gains for all four years, increased minimum wage levels and a maintenance of current health and welfare benefits.

We were also told that all back wages owed since October 26 will be reimbursed within the next 30 days.

Just as importantly, all parties agreed to a creative new strategy to deal with their jointly managed underfunded pension plan (the FELRA plan) which currently has a $1.1 billion liability and could become insolvent by next year.

While Giant and both UFCW locals had worked out a tentative resolution to the gnawing pension fund issue two weeks before the scheduled vote, Safeway offered a slight variable to Giant’s offer, which the UFCW initially rejected. However, at 2:00 a.m. on March 5 (the day of the vote), Safeway and the UFCW finally agreed on a plan much like Giant’s which would guarantee the benefits of the active and retired clerks and meatcutters should the FELRA plan become insolvent.

The creative part of the plan involves the creation of a new variable annuity fund (VAF) which will serve as the financial foundation for all future service benefits. Giant will initially contribute $6 million and Safeway $4.5 million as a stabilization reserve to the VAF that is designed to protect the fund on a long-term basis. Part of the new agreements state that Giant and Safeway will continue to contribute to the VAR for the next 25 years.

As for the existing FELRA multi-employer pension fund, the plan will likely become insolvent in the near future, primarily because all parties could not find a long-term solution to reduce the huge liability which has been increasing for a decade.

However, once probable insolvency occurs, UFCW members at both chains should be protected because the Pension Benefit Guaranty Corp. (PBGC) will likely cover about 70 percent of the more than $1 billion liability. The remainder of the liability will be covered by insurance which both chains maintain for just for such occurrences. Sources told us that Giant will contribute about $35 million and Safeway about $23 million to the FELRA fund to cover any temporary shortfall. The formation of the VAR also creates a new financial pathway to deal with service benefits which used to fall under the old FELRA plan.

“This is the best contract we’ve ever negotiated in the 28 years I’ve been with Giant,” said a department manager at one of Giant’s stores in the Baltimore area. “We got an extra year which provides all sides with more security. Our wages will increase each year and we’ve protected our health benefits and costs. Plus, finally carving out a new direction for the troublesome pension liability is a great strategy that should prevent a worst case scenario from occurring in the future.”

Mark Federici, president of UFCW Local 400, the largest United Food and Commercial Workers local in the country, said: “Both retailers should be commended and applauded for the commitment they’ve made to their retirees. These contracts should serve as a model for other companies to do the same. On a moral level, it was the correct thing to do, and it’s also good business to take care of the people who have helped these companies prosper.”

 

 

 

 

 

Expo West Cancelled Due to Coronavirus Fears

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Natural Products Expo West, one of the largest specialty food trade shows in the country, has been cancelled amidst fears of the spread of COVID-19, commonly known as coronavirus. Several exhibitors had already cancelled their booths and many retail buyers had announced that they would not be in attendance. It was already being projected that there would be a 40 to 60 percent decline in attendance compared to previous years.

 

 

 

 

Kurt Schertle of Weis Markets

In the premiere episode of Taking Stock: The Podcast, Jeff talks to Kurt Schertle, chief operating officer of Weis Markets, about the effects of industry disruptions and innovative ideas which are helping Weis “win.”

GIANT Food Stores Unveils New Company Name With Refreshed Brand Logos

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GIANT Food Stores introduced a new company name, the GIANT Company, at its annual business meeting in Hershey, PA on February 26.

“For nearly a century, we’ve been a trusted part of the communities we serve, helping families come together to share a meal and create special memories,” stated Nicholas Bertram, president, The GIANT Company. “For us, food and families go hand in hand and as we look to our future, we wanted to make sure our name reflects all we aspire to be as an omni-channel retailer. We are proud of the role our brand has played in connecting millions of families, and as The GIANT Company, we will continue to passionately serve our customers and communities for a better future.”

The logo for each banner in the family of brands – GIANT, MARTIN’S, GIANT Heirloom Market, GIANT DIRECT and MARTIN’S DIRECT – has been refreshed, offering a fresh take on the company’s widely recognized logos. The most notable characteristic of the new logo is the leaf that is part of the “A” in each banner’s name, designed to signify The GIANT Company’s commitment to growth and freshness.

Immediately, the new GIANT logo can be seen on the exterior of The GIANT Center, a 10,500-seat multi-purpose arena located in Hershey and the company’s headquarters in Carlisle. Over the course of the year, the company will integrate its new name and logo into its operations.

Added Bertram, “Even though our name and logo are changing, our commitment to the families we serve isn’t; in fact, it’s only getting stronger. As a purpose-driven organization, we are laser-focused on our goal of making a difference in the lives of those we serve, inside our stores, online and deep within our communities. Starting with the heart and soul of our company – our more than 33,000 team members –The GIANT Company will live its purpose, providing a simplified experience and inspiring fresh ideas, while creating healthier communities for today, tomorrow and beyond.”

The company, which started as a two-man butcher shop in 1923, currently operates 186 stores across four states, offering families an array of services that have grown beyond groceries to include grocery delivery and pickup, catering, in-store pharmacies, nutrition education and on-site fuel stations.

Redner’s: Special Section

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On the occasion of its 50th anniversary, Food Trade News and Food World present a special section marking the history, accomplishments, and people of Redner’s Markets.


ShopRite Awarded FMI Foundation’s Gold Plate Award For Its “Family Meals Month” Campaign

Jim Hunt of JOH Receives Harry O’Hare Award For 2019

Acme Markets Foundation Celebrates 2019 Holiday Giving Campaign At Bala Cynwyd, PA Store

Late last month, Acme Markets held events celebrating the Acme Foundation’s 2019 holiday giving campaigns. First, Acme Markets and the Foundation teamed up with 6abc Philadelphia to announce the food drive results benefiting Philabundance and the Regional Feeding America Food Banks with a $178,442.55 grant to Philabundance and several other grants to local Feeding America Food Banks. This photo from the event held at the Bala Cynwyd, PA Acme includes (l-r) Kate Colyer, Philabundance; Dana Ward, Acme Markets; Scott Smith, Philabundance; Niki Hawkins, 6abc Philadelphia; and Jim Perkins, Acme Markets.
Next up was the presentation of more than $389,000 in grant funding for childhood breakfast programs through Hunger Is. At that presentation, also at the Bala Cynwyd Acme, are Dana Ward (l) and Jim Perkins, both with Acme Markets.

Fairway Files Chapter 11 Again As Village Gains ‘Stalking Horse’ Status For 5 Stores

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For the second time in four years, Fairway Group Holdings (Fairway Market) has filed for Chapter 11 bankruptcy protection in the Southern District of New York Bankruptcy Court. This time it appears that the 14-store Manhattan-based foodie merchant which bills itself as “Like No Other Market,” will end up like many other failing supermarkets as it seeks a sale of its entire operation.

Fairway, founded in 1933 by the Glickberg family, had been seeking a sale of its entire company since September when primary private equity firm owners, Brigade Capital (33.6 percent equity); Goldman Sachs Specialty Situations Group (29.9 percent equity); and FS KKR Capital Corp. (22.1 percent equity) decided that they could not find a path to continue operations.

Part of that decision lied in the fact that Fairway had substantial labor and pension responsibilities, something that it inherited from the previous majority owners, Sterling Investment Partners when it rescued the once-great merchant out of bankruptcy in 2016.

In its filing on January 23, the petition noted that Village Super Markets, the second largest member of Wakefern Food Corp., had successfully achieved “stalking horse” status for Fairway’s five Manhattan stores (Harlem, Upper West Side, Upper East Side, Chelsea and Kips Bay) and its new perishables distribution center (PDC) in the Bronx which opened in 2015, for $70 million. Village made its initial foray into Manhattan last year when it acquired three Gourmet Garage specialty stores. As the “stalking horse” for those five Manhattan units and its PDC, Village would enter the bankruptcy auction process with lead bidder status

The petition also noted that although the Village offer would be free and clear of existing labor and pension liabilities, it would be obligated to negotiate with Fairway’s labor unions. Village’s current 30 ShopRite stores in New York, New Jersey, Pennsylvania and Maryland are already organized.

No successful bidders were named for Fairway’s other nine units including three in the City of New York – two in Brooklyn, and one in Douglaston, Queens. Other units are located in Stamford, CT; Plainview, NY; Westbury, NY; Pelham Manor, NY; Paramus, NJ; and Woodland Park, NJ. The retailer also operates four free standing liquor stores. Fairway closed an underperforming store in Nanuet, NY in September. In general, the struggle of the company’s suburban locations, an expansion strategy accelerated by Sterling Investment Partners, has been a key reason for Fairway’s failure over the past seven years.

In its filing, Fairway has proposed a series of auctions to determine the final outcomes of its stores beginning on March 13 and continuing into early April. The filing said it hopes the entire process can be completed by May 27.

In the meantime, all 14 stores remain open because Fairway received $25 million in Debtor-In-Possession (DIP) financing to temporarily continue operations.

“We would like to extend gratitude to our employees, vendors, distributors and customers for their support, dedication and loyalty over the years. It has always been Fairway’s priority to ensure our patrons are provided with the most optimal grocery experience, with the freshest foods and best-quality products, and our employees feel appreciated. After careful consideration of all alternatives, we have concluded that a court-supervised sale process is the best way to meet our objectives of preserving as many jobs as possible, maximizing value for our stakeholders, and positioning Fairway for long-term success under new ownership,” said Abel Porter, Fairway CEO in a statement.

“The scale advantages that extremely large grocers such as Amazon, Walmart, Target, Costco, BJ’s, Stop & Shop, CVS, Walgreens, Aldi, Lidl, Dollar General and Dollar Tree have over regional grocers like Fairway cannot be overstated,” Porter added. “These larger grocers all have investment grade credit ratings, which makes their cost of capital meaningfully lower and affords them extraordinary capacity to invest in lower prices, higher wages, more advertising, more effective modern technology and further growth, all of which enhance the probability a consumer will become and remain their customers.”

Not only do many of Fairway’s competitors enjoy greater financial leverage, they also enjoy freedom from union contracts and existing pension funds. Approximately 80 percent of the company’s 3,000 associates are organized. Many of those workers belong to UFCW 1500 based in Westbury, NY.

However, in the bankruptcy filing, it was clear what the root was of Fairway’s real problem – its balance sheet. The specialty retailer lost $68.8 million on revenue of $643.3 million over the 52 weeks ending December. 1. While gross profit on sales was $227 million and EBITDA was $23 million, its operating expense, including interest and cost of promotions, created the substantial loss. Additionally, comp store sales declined by approximately 5 percent in the 52 weeks ending January 12.

 

UFCW Reaches Tentative New Contract With Giant; Strike Vote Set For Safeway

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After extending their labor agreements for nearly four months with Giant Food and Safeway, United Food and Commercial Workers Local 27 (Baltimore, Eastern Shore and Delaware) and Local 400 (Washington DC, Virginia and Maryland suburbs) have tentatively agreed to a new contract with Giant, the unit of Ahold Delhaize USA based in Landover, MD which operates about 155 stores in the region.

However, unable to reach satisfactory progress levels in their view, both Locals announced they will seek a strike authorization vote from the approximately 11,000 clerks and meatcutters who work at Safeway’s Eastern division’s approximately 110 stores.

Both votes will be held on March 5 at the Gaylord Hotel (Local 400) in Oxon Hill, MD and at Pimlico Race Course (Local 27) in Baltimore.

The decision to vote on both a proposed new Giant pact and to take a strike vote against Safeway was made at a press conference and rally held on February 19 at Safeway’s store on 4th St. SW in Washington, DC.

UFCW officials are recommending ratification of Giant’s proposed offer and rejection of Safeway’s offer along with a strike authorization caveat if Safeway’s offer is not improved. Of course, Safeway could improve its offer in the next two weeks which could potentially negate a strike authorization vote.

Giant and Safeway (ranked first and second respectively in market share in the Baltimore-Washington market) have been negotiating separately with the two unions since its most recent contracts expired on October 26.

After bargaining new contracts collectively for nearly 40 years, both chains elected to negotiate separately during its 2016 bargaining which resulted in new three-year pacts with both retailers. That individualized negotiations process continued with these contracts.

A critical issue from the outset has been how to develop a collective agreement about how to reduce the $1.1 billion underfunding of their joint multi-employer (FELRA) pension plan. Giant has given written assurances that its approximately 15,000 store level associates will have their FELRA plan benefits protected during the next three years. At presstime, Safeway has made no such written promise.

Some predict that the FELRA plan could become insolvent as soon as next year.