EXECUTIVE UPDATE: SOURCING COE
1
1
▪ Brief reminder of what was discussed last time for P7: P7 S4OC results were $2.4M favorable to Forecast 2 despite inflation pressure remaining high in P7
▪
S4OC Results: P8 Sourcing Savings were $1.2M favorable to Forecast 2; Market Savings in Fresh show an over-delivery based on commodity indexing; the current, inflationary environment has had an adverse effect on Cash Savings Trade rate insights: Deeper dive on trade rates with our top 15 national brand suppliers is underway to understand gaps in funding rates
▪
EXECUTIVE SUMMARY
▪ Inflation & Cost forward look: Working hypothesis is that inflation peak is P8, new high of ADUSA cost inflation +12.7%
▪
Latest detail happenings! ▪ Fresh ▪ Private Brands ▪ A Brands
2
P8 - S4OC RESULTS
P08
YTD P08
FY 2022
($ in millions)
Var
Var
Var
Sourcing
Actual
F2
B/(W)
F2
B/(W)
LE
F2
B/(W)
Actual
A Brands
8.3
8.0
0.3
60.9
59.0
2.0
90.0
95.0
(5.0)
Private Brands (incl. GM/Seasonal)
1.9
0.8
1.1
6.9
8.0
(1.1)
8.5
11.1
(2.6)
Bakery
0.0 0.1 0.0 0.3 2.3 0.1
0.2 0.4 0.0 0.8 1.3 0.2
(0.2) (0.3) (0.0) (0.5)
0.4
1.7 6.6 0.3 5.7
(1.2)
1.4
2.6 8.2 0.5 9.8
(1.2)
Deli
11.9
5.4
13.6
5.4
Floral Meat
0.0 1.5
(0.3) (4.3)
0.2 5.5
(0.3) (4.3)
Produce Seafood
1.0
37.6
22.5
15.1
43.3
28.2
15.1
(0.1)
1.9
2.2
(0.3)
2.9
3.2
(0.3)
Fresh
2.8
2.9
(0.1)
53.3
39.0
14.3
66.9
52.6
14.3
Total Sourcing
13.0
11.8
1.2
121.1
106.0
15.2
165.4
158.7
6.7
P08 Sourcing Savings were $1.2M favorable to Forecast 2:
• A Brands: A Brands slightly ahead of period projections • Private Brands : Favorable $1.1M due to captured market savings for Cane Sugar from P07 & P08 which totaled $1.5M • Fresh: In line with period projections • While Market Savings are showing an over-delivery based on commodity indexing, the current, inflationary environment has had an adverse effect on Cash Savings * Latest Estimate is based on anticipated or closed events
3
TRADE RATE DETAIL – P8 YTD
•
YTD delta to prior year closed to 20 bps (down from 40 bps at the end of P-7)
•
Solid trends in Everyday Funding (both to LY and to 2019)
•
Largest opportunity remains in the Scan Funding bucket for both time periods
•
First steps of deep dive on top 15 suppliers completed and reviewing with Chief Merchants
4
COST INFLATION TRENDS AND PROJECTED FORECAST
• The ADUSA cost inflation in P8 continued to strengthen • Goldman Sachs forecasted food inflation to peak during Q2 • Due to the persistent influx of cost change requests, we’ve anticipated ADUSA cost inflation to peak later than that. • Our working hypothesis remains that ADUSA inflation will plateau during P7-P9. • CPI year over year trend in P7 did ease slightly as fall in energy offset food increases.
P8 Cost Inflation was
12.7%, a new high.
Current
*Recent Cost Inflation (per Business Analytics)
• It is likely that Labor costs will continue to rise • Energy and packaging prices should
Forecast
Inflation will largely depend on labor
remain high, though will remain sensitive to signs of recession
ADUSA Inflation (green = forecast)
• 2H 2022 Pork trim, pork belly, and ham are forecasted to be lower than current • Q4 of 2022 (end of North American growing season) could see some opportunity in the soybean market (vegetable oil) • Eggs likely will remain high throughout
Jan Feb Mar
Apr
May Jun Jul
Aug Sep Oct
Nov Dec
2021
1.4% 1.6% 1.4% 1.2% 1.0% 1.0% 3.0% 3.5% 4.6% 5.1% 5.5% 5.8%
2022
7.3% 8.4% 9.7% 9.8% 10.8% 11.2% 12.0% 12.5% 11.7% 10.8% 10.0% 9.1%
2023
8.3% 7.6% 6.8% 5.0% 4.5% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
2024
3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
2022, forecast calls for price improvement in P1/P2 of 2023
• Turkey could have potential in the back half of 2023, will likely get worse before it gets better
5
MARKETS ON THE MOVE – P8 INSIGHTS
A detailed look at economic implications
Crude Oil
Labor: Our Primary Concern
Freight, Fuel, & Resin
The US COVID-19 response injected about $6 trillion into the economy – an amount roughly equivalent to one quarter of the country’s annual GDP . This was unprecedented, and the results have been very peculiar; we have had two quarters of negative real GDP growth, meeting the technical definition of a recession, but the labor market is still historically tight (the opposite of what we usually see during a recession). Some key stats: • The JOLTS survey is reporting 11.2 million job openings in the US – double the normal rate, and nearly unchanged since December 2021 • Non-farm Payroll numbers have been exceeding forecasts by a lot – by 105% in July • Compared to Feb 2020, the “professional and business services” sectors are employing 986,000 additional people • Compared to Feb 2020, the manufacturing sector is (only) employing 41,000 more people • Interest rates are forecast to peak at around 4% in March of 2023 On its own, the Fed’s interest rate regime is probably not enough to slow the job market (and therefore inflation). According to GDP data, US consumers are decreasing their spending on goods (-1.1% contribution to GDP) but increasing their spending on services (+1.8% contribution to GDP) . With inflation running hot and the COVID- 19 stimulus behind us, it’s unclear how long the US consumer can continue this spending growth. Our forward-looking view suggests that, when the consumer’s spending slows, the JOLTS number will fall, then the payroll numbers will fall, and then the surging labor costs should cool down.
There’s a global energy shortage:
• US Diesel exports are at a ten-year high • East Coast diesel supplies recently hit a 30-year low • Unless we experience a large economic decline, there is little reason for the energy markets to ease.
WOGS
Natural Gas
Proteins
• Beef exports should be +3% for the year while production falls 1%. • Recessionary buying behavior generals shows a rotation out of beef and into less expensive protein like eggs. This factor may help keep egg prices supported.
6
COMMODITY INSIGHTS
Should Cost Analysis Findings from analysis of P8 items submitted for future cost changes
Consumer Price Index* July 2022 CPI +8.5% YOY
Fully Warranted 31%
Partially Warranted 34%
Not posted yet
3,487 Items Analyzed by Should Cost in P8: 61% A-Brands, 18% Fresh, 21% Private Brands
Not Warranted 35%
*Source: Bureau of Labor Statistics CPI of All Items (includes Food and Energy) report
Commodities On The Move
Inflation Forecast for Key Commodities
HDPE (Packaging) -19% Increased production capacity.
70.0%
Steel % Flat High demand, tariffs
62.7%
60.0%
Coffee +15% Drought and a freeze in Brazil
Aluminum +26% High demand
50.0%
37.4%
36.1%
40.0%
34.8%
Chicken Deli WOG +36% Labor shortage, an industrial shift to higher- value products China/W Coast US Container rates -31% Dropping demand, improved port congestion.
Diesel +49% High crude oil prices
30.0%
23.5%
22.6%
20.3%
18.3%
15.8%
20.0%
15.1%
Soy Oil +8% Favorable weather in the US.
10.0%
1.0%
0.0%
Flour +31% Drought in wheat-growing regions, Ukraine.
-2.9%
-10.0%
Beef
Pork
Turkey
Chicken
Corn
Soybean Meal
2021 Inflation 2022 Inflation
SOURCE: EMI, Inc.
7
COST CHANGE UPDATE
YTD-P8 Cost Change UPC Request
YTD Cost Changes – Impact
12000
70% A-Brands, 20% Fresh, 10% Private Brands
9730
10000
8840
7679
7677
8000
6917
6392
6025
5,905
6000
2021 avg 5,840 items per period
4000
2000
2019 & 2020 avg 972 items per period
Requests across total store
0
P1
P2
P3
P4
P5
P6
P7
P8
Key supplier notes – P8 incoming requests
A Brands
Private Brand
Fresh
Kimberly Clark and P&G cost requests for Paper increases entered in P8, seeking effective dates in P10. Both suppliers averaging +6-7% list cost increases; suppliers initial offer included everyday funding rates being maintained Submitted cost change requests averaging +6%; initial offers appear to show everyday funding gap of -$1M across ADUSA, requesting effective dates in P11
Requesting +19% cost increase on private label baby electrolyte liquids to be in effect in P10
Requesting +20% cost increase
Private label cost decrease on canned pineapple from Rema Foods which will result in +$358k savings for P9
Requesting +11% cost increase on packaged chopped salads/coleslaw items
8
APPENDIX
9
PROJECTED S4OC 2023
S4OC projections based on key assumptions, predictive inflation assumptions, and ability to capture savings
Saving for the connected customer
2023 Identified Projected Savings
2023 Unidentified Projected Savings
2023 Projected Savings
A Brands number does not reflect any additional activities that could come from Commercial Evolution over and above currently known
1
Private Brands projection reflects the economist forecast for 2023 of stabilization (no significant deflation)
2
National Brands Private Brands*
$95M $73.5M ($21.5M)
Similarly, Fresh was submitted to Finance as $0 Cash Savings
3
$13M $13M $0M
Sustainability costs are not a straight deduction in S4OC for PB or Fresh but do impact the total scope of where sourcing and merchandising will negotiate savings (meaning less opportunity may exist to secure lower COGS). They also impact the total department cost basis in the P&L, meaning COGS would likely increase in totality.
$60M $22M ($38M)
Fresh*
4
Total Sourcing
$168M $108.5M ($59.5M)
*Sustainability (RRC/PCR) cost impact is not reflected in any S4OC projections. Estimated costs to meet GSO goals range from $130M to $180M based on current initiatives & recent inflationary cost pressures.
This does not include regulatory compliance for MA Q3 (gestation crate-free pork) estimated at $5-$7M for MA stores only and $150M-$250M for ADUSA (2025 commitment).
10
PRE-MERGER STARTING POINT
Top 10 Vendors (based on total COGS, excluding DSD)
*1,021 Vendors included – data does not include vendors that only service one OpCo
KEY
• Overlapping SKUs – items found at both Ahold USA and Delhaize America • Non-overlapping SKUs – items only found at one OpCo • Total COGS – Ahold USA and Delhaize America unit volume multiplied by MLP (manufacturer list price) • AUSA Ttl Fund Rate – Ahold USA Funding ($) divided by Ahold USA COGS • DA Ttl Fund Rate – Delhaize America Funding ($) divided by Delhaize America COGS • Funding ($) calculated using Double Net Cost methodology
11
SOURCING SYNERGY SAVINGS 2016
12
S4OC RESULTS SINCE MERGER
2017M 2018
2019
2020
2021 2022*
TOTAL
A BRANDS
$178.6M $42.3M $45.5M $68.0M $50.6M $90M $480M
$103.1M $78.0M $92.3M $80.1M $119.2M $66.9M $540M
FRESH
$72.1M $7.8M $10.8M $45.8M $40.3M $8.5M $185M
PBS & CSC
ANNUAL TOTAL
$353.8M $128.1M $148.6M $193.9M $210.1M $165.4M $1.2B
*Current line of sight for the full year 2022
13
Fresh Sourcing Value Levers
Providing highlights of Fueling our Future initiatives, Sustainability news, ever evolving commodity markets, S4C results, and more!
P8-2022
14
2022 Value Levers
Sustainability
Partnering with Economists & Category teams to understand and plan for commoditymarket changes and steps to optimize or mitigate the projected impacts
Utilizing Economic Insights to better inform collaborative conversations across brands and leverage scale in cost change negotiations
Partnering with Ahold Delhaize Sustainability and Brand Category teams to define and implement innovative solutions to achieve Sustainability targets
Negotiating w/suppliers to align to 'best' terms across the brands (while also comparing and leveraging similarly situated suppliers to improve terms.)
Slide 5
Slide 4
Slide 3
Slide 6
Contracts
Fueling our Future
S4C
Leveraging contract knowledge and collaboration with Legal/Contract Support to prepare optimal agreements while limiting liability and holding suppliers accountable to current contract terms
Leveraging size and scale of ADUSA to take costs out of the business for brands to reinvest
Cross Brand initiatives to fuel our future and achieve our ambitions
Slide 7-9
Slide 10
Slide 11
15
Payment Terms
16
ESG: Environmental, Social, Governance
Plastic Center of Excellence •
Emerging Issues • No new updates
PCE finalized 2023 project list and have socialized the 2023 budget with Brand Finance and Sustainability Leads. Detailed 2023 project list and estimated budget is listed in the appendix September kicks off 2022 campaign season for supply shift practice packaging assessment
Fresh Sourcing Representation in the following ESG Forums :
•
GHG Scope 3 •
• • • •
PCE (Plastic Center of Excellence) GHG Scope 3 (Greenhouse Gas)
September 16 we will hold our second Scope 3 idea factory (virtually). Main topics will be SBT Levers 3 and 4 which is low carbon products and service design and business model innovation • Conagra will be discussing low carbon product design • Smithfield will be discussing business model innovation • Global Scope 3 SME working group created to complement the Accenture R2Z roadmap
Animal Welfare Emerging Issues
Animal Welfare • Team is continuing to work with suppliers and develop roadmaps to execute 2025 commitments • 2022 Thesis Sustainability Insights Assessment campaign launched in August, to be completed by October 10
17
P8 Should Cost Highlights
• YTD we have seen an increase of 510 should cost submissions vs. LY, with Deli Bakery seeing the largest increases, up 402 vs. LY • Members of the Fresh Sourcing team continue to assist the Sourcing Support team until the Intake Analyst roles are trained and fully functional. • Since the beginning of the pandemic, we continue to see a marked increase in time spent negotiating cost increases coupled with a decrease in avoidance results.
Teams are working together to discuss and capture additional activities related to cost mitigation (incremental funding, delayed implementation, etc.)
18
Markets On The Move A detailed look at economic implications
Crude Oil
Labor
Emerging Concerns
• Labor shortages will continue to impact our supply, resulting in allocations, OOS, etc. These shortages are also driving wage increases, increasing costs for suppliers. Federal aid is declining, so we might see long term relief, however the shortages will continue in the short term
• Droughts in western USA have been a concern and it could last for a long period of time, this could lead to high price increases on crop commodities with direct impact on, corn, soybeans and wheat.
WOGS
Proteins and Grains
• WOG prices rose again in P8, just past their previous 2022 peak from P7. Several suppliers have expressed that they are seeing decreased demand for WOGs, and supply appears to have loosened considerably. We have filled the Hannaford supply gap left by George’s as part of a larger strategic partnership with Tyson, and currently have no impending supply gaps in WOGs for any of our great local brands. • We are seeing significant declines on wings which is the biggest decline we have seen since pre- pandemic. • Egg prices dropped from their P7 peak but are still far above historical prices from the past 2 years. Prices are projected to remain stable at this level before returning to normal historical levels near the beginning of Q1 2023. • Grain prices remained relatively low after their drop in P7, though still higher than historical averages for Wheat, Soybeans, and Corn. The export agreement between Ukraine, Russia, Turkey, and the UN appears to be holding; 27 ships so far have left Ukraine. If the agreement holds (or, in a perfect world, expands to additional shipments and products) we could start using the resulting market shift as leverage to push for price relief.
Wings
Freight, Fuel, & Resin
• Cost of transportation and freight continues to stay high, driven by labor shortage. However, the Crude Oil market has dropped below $100 a barrel. Diesel fuel is now below $4.00 a gallon for national average. • Packaging prices continue to increase. Natural gas price is a key contributor as it is a common ingredient for resin production. Natural gas prices remained high throughout P8.
Eggs
Sources: PDL Economic Insights Team, gasworld.com
19
Fueling our Future Highlights – Produce and Floral
Dept
FoF Project Initiative
Updates
Fresh Sourcing Operations is evaluating reporting opportunities to increase visibility and support negotiations. Category teams have made this an emphasis in should cost negotiations as a way to increase trade fund rates. Fresh Sourcing utilized fruit and veg cross brands to host a buyer training for the updated cost share process. The buyers started to go through and add commentary in Period 8, and CMs are gathering feedback from their teams, including possibly expanding the assortment tracked. Hannaford, Food Lion, and TGC entered a 2-year contract with Fowler Packing to secure their supply of Mandarins, both Private Label and Branded. This contract was the first of its kind for both the Fruit team and the Supplier. . The CM+1 team hosted representatives from QA to further discuss how we can progress in this space. QA will be assisting in building a business case for pilot DCs to develop a process for ripening Avocados, potentially removing additional costs out of the business by doing so. Teams have been working closely with key suppliers in Controlled Environment Agriculture (CEA) to develop a long-term strategy for growth in this space. Private Brands and the CM +1's aligned in P8 to introduce TOI into the Produce category. PB is working with each CM on assortment. Fresh Sourcing has added a "main component" column to cost increase tracking so as markets come down, it can be more easily identified as an opportunity. We have not yet started to see relief in impacted markets. Fresh Sourcing and Food Lion category teams have initiated discussions with CH Robinson as a consolidation center to assist with getting better pricing to the DCs. Teams are currently exploring multiple commodities and suppliers delivering LTL, mainly out of the FL, GA, and TX/MX regions. Discussions with CH Robinson continue to progress, with data being collected and shared in designing what the program would look like. Select CMs traveled to Holland with Mastronardi to identify unique items that could possibly be introduced into the Produce assortment, in TOI and/or as an exclusive item to ADUSA. The Logistics team is testing a West Coast FOB load to be delivered between two Brands from different Legacies. A load of Iceberg Lettuce will be picked up from Nunes and delivered first to Chester, NY at Stop & Shop, and then into Hannaford's facility in Schodack, NY as a test.
Produce/Floral
Digital Trade Funds
Produce/Floral
Cost Sharing Visibility
Produce/Floral
Seed to Table Initiative - Forward Buying
Produce/Floral
Expand Self Ripening Capabilities
Produce/Floral
Vertical Farming Strategy
Produce/Floral
Should Cost Decrease Strategy
Produce/Floral
Consolidation Center
Produce/Floral
Fresh ADUSA Strategic Partnerships
Produce/Floral
Cross Brand Load Building
20
Fueling our Future Highlights – Meat and Seafood
Dept
FoF Project Initiative
Updates
Turkey Grinds Fueling the Future Insights and Suggestions Document that was prepared by Sourcing and CMs was presented to CM+1. Request for a bulleted version of the high-level opportunities was requested by the CM+1 and was provided by Sourcing. Sourcing to schedule a meeting to follow up on next steps for Turkey Grinds.
Meat/Seafood
Turkey Grinds
Team is working through the fact pack for the non-compliant pork event. With the delay on the MA Q3 law, the team is monitoring insights on how the market is reacting. The team is looking to launch this event in the next two weeks.
Meat/Seafood
Combined Pork Event
Market has been very volatile over the past few months. Based on feedback from consumer insights, the team is going to delay this event until market conditions improve. Sourcing to follow up to see if there is still a need to find additional capacity.
Meat/Seafood
Bacon
A call is scheduled with Smithfield next week to strategically discuss and review opportunities within this category around current program and new items.
Meat/Seafood
Pepperoni
Meat/Seafood
Entrees/Sides
Team is planning for a direct negotiation with Reser's in the upcoming weeks to review plan for holiday.
Three events are being executed by A-Brands and Fresh Sourcing for this year(Smoked Sausage, Own Brand Patties and Frozen Meatballs). The team met to review the schedule for 2023. List of potential events will be shared in next update.
Meat/Seafood
Full Side Case review
Meat/Seafood
Holiday Ham
Event is finished and awarded. Team will be looking at a potential common label for next year and better alignment of specs
Poultry-Chicken(Commodity, ABF, Non- GMO)
Meat/Seafood
Team is finalizing fact pack and will be rolling out event in the next few weeks.
Meat/Seafood
Marinated Pork Tenderloins
See Combined pork event
Meat/Seafood
Nature's Promise Pork
See Combined pork event
Meat/Seafood
Lunch Meat
Market has been very volatile over the past few months. Based on feedback from consumer insights, the team is going to delay this event until market conditions improve.
21
Fueling our Future Highlights – Deli and Bakery
Dept
FoF Project Initiative
Updates
Team requested further clarity on Chicken and Turkey models that were presented for review. Sourcing is waiting to secure updated models for Economist and Category team review. Follow up meeting to discuss models in detail is set for 9/13, but contingent upon the information being available beforehand to have valuable dialogue. The brands have aligned to bid both an import and domestic cheddar option for Q1. Sourcing is preparing the bid to kick off following the team summit scheduled from 9/21 - 9/23 at the Food Lion campus. We had a follow up call last week on moving GFI to EDI. We can start moving to EDI invoicing once we have approval from all brands. Sourcing has coordinated necessary approvals with the brands and awaiting feedback from working group on next steps to implement. Teams have aligned to take additional loads from Tyson starting with deliveries on October 2. This secures supply for 2023 with Tyson across all 5 brands with a common spec across Hannaford, Giant Food, Giant Company, and Stop & Shop. Food Lion will utilize a smaller spec to increase available supply. Discontinuation Letters and notice have been given to Koch and Allen Harim for Food Lion and Stop & Shop with last shipments occur October 1. This removal allows for the brands to move into 18 Tyson additional loads. Supply is now secure for 2023 for total ADUSA. Sourcing and brands will continue to negotiate pricing for 2023 as supplier have been hesitant to provide set pricing as they await the grain harvest impact to feed cost. Continuing to meet with Richs to align on cost evaluation process to implement into contract so we can transition conversation to longer term partnership cadence. Based on how they have purchased commodities, Rich's first opportunity to re-look at pricing will be January 2023. Brill has aligned on our common goal to implement a cost evaluation process on a quarterly basis. Sourcing sent proposal to Brill for a pricing review schedule to begin in October with pricing implementation to follow 30 days after review, we are awaiting their confirmation. The next step will be to execute this into a contract - sourcing is working with contract support to capture all items for this schedule. Donuts RFP for secondary supply has been closed. After reviewing pricing and supplier commentary, CMs have decided to stay with the incumbents as the supply of donuts has improved. CMs would still like to look at Donuts as a whole and add to the assortment with a more Gourmet Thaw & Sell offering, we will discuss next steps for this at the summit in September. In preparation for the discussion, CMs have completed a "Fresh Alignment Form" to help private brands & sourcing understand the goals by banner. The review will also include suggestions from the Innovation Team. Due to supply concerns in Q2, focus for secondary supply was placed on Table Talk Pies to ensure coverage for Holiday. A discovery was conducted June week 1 and results were provided to category teams. As of August week 1, the outlook for Table Talk pies has improved and CMs do not feel we will need to dip into a secondary supplier for the time being. Continuing to meet with Lofthouse to stay up-to-date on constraints & their plans to correct the supply issues. Current priority is to get core business up and running so we can start to focus on other programs (volume incentives, e-commerce). As of June, Lofthouse products have been taken off allocation but will see another increase on 9/25. We have received confirmation that the sale of the Treehouse business that has been divested will have no impact to in-store Bakery. After testing Buy Online/Pickup in store strategies at Stop & Shop in the Spring, Stop & Shop has been approved for additional E-Commerce tests starting January 2023. The new test will include a "virtual aisle" for Bakery which will offer UPC and pre-made items to the customer. There will also be opportunities to promote products on the tiles within the Bakery page. Results will be quickly shared as the test rolls out. Ecomm Ways of Working meets frequently to go thru process and improvement suggestions. Currently, SS is the first banner to utilize the photo studio at HRD to close the gap on their items that are not listed online - once they are finished, we will designate another banner to do the same. Next steps for the group will be to determine how we can utilize images for the same product across all ADUSA ecommerce platforms to create efficiencies and consistency.
Cooper Farms - TOI Poultry (Long Term Partnership) Q1 – Cheddar Push (Aligned Seasonal Buys)
Deli
Deli
Deli
GFI Assortment Optimization
2023 Rotisserie WOG (Surety of Supply/Spec Alignment)
Deli
Bakery
Richs (Long Term Partnership)
Bakery
Brill (Long Term Partnership)
Donuts (Surety of Supply/Assortment Review)
Bakery
Bakery
Holiday Pie Supply
Lofthouse (Surety of Supply/Long term Partnership)
Bakery
Bakery
Ecommerce - Buy Online/Pick-up In store
Bakery
Ecommerce - Getting products online
22
P8-2022 Save for Customer Results
•
Overall, Slight miss to FC2 in P8
• One of the key drivers/changes in P8 was the Hot House market, we have been seeing very favorable results from the market in recent periods, however market declines in P8 resulted in a large decline in savings • Despite the miss in P8, Fresh is still exceeding YTD FC2 by $14.3M • LE = 66.9M (original budget = $40M)
Market Impacted Actuals
S4C Brand
Fresh Sourcing Savings Target
Actuals vs Target + (-)
Dept.
ADUSA Bakery
$211,017 $367,882 $791,541
$0
($211,017) ($301,320) ($459,584) $1,001,600 ($125,856) ($34,361)
ADUSA
Deli
$66,562 $331,957
ADUSA Meat ADUSA Produce ADUSA Seafood ADUSA Floral
$1,323,069
$2,324,669
$210,512 $34,361
$84,655
$0
Total
$2,938,381
$2,807,843
($130,538)
Fresh Sourcing Savings Target
Market Impacted Actuals
Market Impacted Actuals
Market Impacted Actuals
Fresh Sourcing Savings Target
Actuals vs Target + (-)
Fresh Sourcing Savings Target
Actuals vs Target + (-)
Actuals vs Target + (-)
Brand Dept.
Brand
Dept.
Brand
Dept.
Giant FoodBakery Giant FoodDeli Giant FoodMeat Giant FoodProduce Giant FoodSeafood Giant FoodFloral
$23,779 $38,700 $66,193 $161,423 $42,039 $6,865 $338,999
$0 $0 $0
($23,779) Hannaford ($38,700) Hannaford ($66,193) Hannaford $196,004 Hannaford ($35,309) Hannaford ($6,865) Hannaford
Bakery
$29,600 $73,411 $102,533 $175,172 $27,393
$0 ($29,600) Food Lion Bakery $62,663 ($10,749) Food Lion Deli $331,957 $229,424 Food Lion Meat $159,341 ($15,831) Food Lion Produce
$58,777 $60,708 $343,791 $312,701 $26,804
$0
($58,777) ($56,809)
Deli
$3,899
Meat
$0 ($343,791)
$357,428
Produce Seafood
$710,939 $398,238
$6,730
$69,368
$41,975 Food Lion Seafood
$0 $0
($26,804)
$0
Floral Total
$0
$0
$0 Food Lion Floral
$0
$0
Total
$364,157
$25,159
$408,110
$623,330 $215,219
Total
$802,780
$714,839 ($87,941)
Fresh Sourcing Savings Target
Market Impacted Actuals
Market Impacted Actuals
Fresh Sourcing Savings Target
Actuals vs Target + (-)
Actuals vs Target + (-)
Brand
Dept.
Brand
Dept.
Stop & ShopBakery Stop & ShopDeli Stop & ShopMeat Stop & ShopProduce Stop & ShopSeafood Stop & ShopFloral
$65,878 $141,380 $192,537 $477,572 $67,296 $20,321 $964,983
$0 $0 $0
($65,878) The Giant Company Bakery ($141,380) The Giant Company Deli ($192,537) The Giant Company Meat $322,937 The Giant Company Produce ($67,296) The Giant Company Seafood ($20,321) The Giant Company Floral
$32,984 $53,682 $86,488
$0 $0 $0
($32,984) ($53,682) ($86,488) $100,251 ($38,423) ($7,175)
$800,509
$196,201 $296,451
$0 $0
$46,980 $7,175
$8,557
$0
Total
$800,509
($164,474)
Total
$423,510 $305,009 ($118,501)
23
P8-2022 Contracts Completed
Event Contracts Totals P8
Value of Completed Contracts
Total Cogs Awarded
DEPT Bakery
End of P8
End of P7
Variance
Dept
Awarded Supplier
Event Name
21 25
21 24
0 1 0
NP Brioche buns rolls and loaf
Deli
Bakery
$1,468,000
Floral Meat
9
9
Bakerly LLC
17 30 15
18 30 15
-1
Deli
Koch
Deli Wog 2022
$15,000,000 $172,415 $6,729,999 $23,370,414
Produce Seafood
0 0 0
Meat
All-holding
NP Sausage & Kielbasea
Produce
Pete Pappas LLC
PB Tomatoes
Totals
117
117
Total
Completed Contracts P8
DEPT Bakery
1 1 0 1 1 0 4
Deli
Floral Meat
Produce Seafood
Totals
Note: • Completed contracts are contracts fully executed by suppliers • Total contracts are the number of contracts currently being worked on by the team
24
Fresh Sourcing Team
Jennifer Merriman – Director Fresh Sourcing Location: Salisbury, NC jmerriman@peapoddigitallabs.com Phone: 704-310-3074
Shane Frank – Manager Fresh Sourcing Operations Location: Carlisle, PA shane.frank@peapoddigitallabs.com Phone: 570-581-3441
Tyler Hagmaier – Manager Fresh Sourcing Produce/Floral Location: Quincy, MA Tyler.Hagmaier@peapoddigitallabs.com Phone: 407-401-1361 (Cell)
Patrick Killiany – Manager Fresh Sourcing Meat/Seafood Location: Carlisle, PA pkilliany@peapoddigitallabs.com Phone: 717-240-1540
Corey Buletza – Manager Fresh Sourcing Deli/Bakery Location: Carlisle, PA corey.buletza@peapoddigitallabs.com Phone: 717-254-1668 Misty Duvall – Fresh Sourcing Analyst IV Deli Location: Carlisle, PA misty.duvall@peapoddigitallabs.com Phone: 717- 960-5754
Michael Bowles – Fresh Sourcing Analyst IV Produce/Floral Location: Salisbury, NC michael.bowles@peapoddigitallabs.com Phone: 704-310-3831
OPEN – Fresh Sourcing Analyst Meat/Seafood Location: TBD
Margaret Sylvain - Fresh Sourcing Operations Analyst III Location: Scarborough, ME Margaret.sylvain@peapoddigitallabs.com Phone: 207-885-2725
Phone:
Alison Moore – Fresh Sourcing Analyst IV Bakery Location: Chicago, IL alison.moore@peapoddigitallabs.com Phone: 773-458-0331 (cell)
James Thompson – Fresh Sourcing Analyst IV Meat Location: Carlisle, PA James.thompson@peapoddigitallabs.com Phone:717-254-1676
Lawrence Danielka – Fresh Sourcing Analyst IV Produce/Floral Location: Salisbury, NC Lawrence.danielka@peapoddigitallabs.com Phone: 704-310-4919 Grant Fifer – Fresh Sourcing Analyst III Produce/Floral Location: Salisbury, NC Grant.Fifer@peapoddigitallabs.com Phone: 217-494-2366 (Cell)
Ermal Taraj – Fresh Sourcing Operations Analyst III Location: Quincy, MA Ermal.taraj@peapoddigitallabs.com Phone: 617-888-1744
Stacy Sheely - Fresh Sourcing Analyst III Deli Location: Carlisle, PA Stacy.sheely@peapoddigitallabs.com Phone: 717-960- 5826 Patrick Hegdahl – Fresh Sourcing Analyst III Deli Location: Chicago, IL patrick.hegdahl@peapoddigitallabs.com Phone: 651-442-5333 Crystal Gray – Fresh Sourcing Analyst III Bakery Location: Carlisle, PA crystal.gray@peapoddigitallabs.com Phone: 717-240-1525
Kayla Golden – Fresh Sourcing Analyst III Meat Location: Landover, MD Kayla.suttie@peapoddigitallabs.com Phone: TBD
Ghazal Farooqui – Fresh Sourcing Operations Analyst II Location: Chicago, IL Ghazal.Farooqui@peapoddigitallabs.com Phone: 312-576-4159
Matthew Paradiso – Fresh Sourcing Analyst III Produce/Floral Location: Quincy, MA Phone: TBD
Cody Norton – Fresh Sourcing Analyst III Meat Location: Scarborough, ME Cody.Norton@peapoddigitallabs.com Phone: TBD
Questions? Please reach out to the Fresh Sourcing team!
25
25
Appendix
26
Proposed 2023 Packaging Project List and Estimated Budget-GF BRAND DEPARTMENT LEAD PRODUCT PACKAGING CHANGE EST. ANNUAL IMPACT EST. IMPLEMENTATION DATE NOTES / MITIGATION PLAN PROJECT STATUS 2023
Contract end date still needed from NFR Contract end date still needed from NFR
GIANT FOOD
Deli / Bake
Indirect
Rigid polystyrene containers PS to PP
$660,800
P7 2023
Not started
$330,400
Replace OPS / black bottoms
GIANT FOOD
Deli / Bake
Indirect
Platters
$20,400
P5 2023
Not started
$13,600
This is a placeholder. Need to work with Private Brands to firm up cost estimates. Only Brand required to be compliant by 2024 is Stop & Shop Started
NJ PCR law - beverage containers
minimum 15% PCR content by 2024 Move to recyclable bags Move to recyclable bags Move to recyclable bags Move to recyclable bags Move to recyclable bags Move to recyclable bags
GIANT FOOD
Grocery
Private Brand
$880,000
P10 2023
$220,000
Project was moved due to supplier unable to secure fruit Project at risk already of not being completed due to supplier performance issues Risk - supplier asking for full shelf life test which takes 12 months
GIANT FOOD
Grocery
Private Brand Frozen fruit bags
$112,000
P7 2023
Started
$56,000
GIANT FOOD
Grocery
Private Brand Candy bags
$23,010
P7 2023
Not started
$11,505
Croutons and dressing pouches
GIANT FOOD
Grocery
Private Brand
$15,791
P7 2023
Started
$7,896
GIANT FOOD
Grocery
Private Brand Rice Cakes
$5,137
P1 2023
Started
$5,137
GIANT FOOD
Grocery
Private Brand Cold cereal bags
$3,982
P7 2023
Started
$1,991
Project could be delayed if PB takes to RFP
GIANT FOOD
Grocery
Private Brand Bacon bit pouches
$1,806
P7 2023
Not started
$903
Cost estimates are a placeholder. Working with FMF and Cargill to firm up estimates. Pilot to kick off P4 2023Started
GIANT FOOD GIANT FOOD
Meat Meat
Fresh
FMF foam trays
Foam to fiber Foam to fiber
$900,000 $630,000
P8 2023
$375,000 $315,000
Indirect
In store use foam trays
P7 2023Contract ends 4.30.2023
Not started
30% PCR film hit shelf in July of 2022
GIANT FOOD
Meat
Fresh
NP ABF chicken 30% PCR film 30% PCR in film
$6,321
P7 2022
Completed
$3,161
Move to non black tray
GIANT FOOD
Meat / Deli
Fresh
Side case entrees
$0
P10 2023
Not started
$0
Bags only used during apple season. Suppliers can purchase multiple years of supply of totes at once Primary goal is to move to non black tray, preferably clear. Ultimate goal is to move to fiber tray. This may need to be a two step process
Move to recyclable bags
GIANT FOOD
Produce
Fresh
Apple bags (totes)
$56,320
P10 2023
Started
$14,080
Move to non black tray and ultimately fiber tray
GIANT FOOD
Produce
Fresh
Mushroom tills / trays
$0
P10 2023
Not started
$0
Moved from 2022 project list due to supply chain / port congestion issues Started Moved from 2022 project list due to supply chain / port congestion issues Started
GIANT FOOD
Seafood
Fresh
Imported shrimp bags
multi material bags
$567,046
P7 2023
$283,523
GIANT FOOD
Seafood
Fresh
Frozen fin fish
Multi material bags
$65,056
P7 2023
$32,528
27
Proposed 2023 Packaging Project List and Estimated Budget-FL
EST. ANNUAL IMPACT
EST. IMPLEMENTATION DATE
BRAND
DEPARTMENT
LEAD
PRODUCT
PACKAGING CHANGE
NOTES / MITIGATION PLAN PROJECT STATUS
2023
Platters
Replace OPS / black bottoms
Contract end date still needed from NFR Contract end date still needed from NFR This is a placeholder. Need to work with Private Brands to firm up cost estimates. Only Brand required to be compliant by 2024 is Stop & Shop
FOOD LION
Deli / Bake
Indirect
$58,400
P5 2023
Not started
$38,933
Rigid polystyrene containers
PS to PP
FOOD LION
Deli / Bake
Indirect
$0
P7 2023
Not started
$0
NJ PCR law - beverage containers
minimum 15% PCR content by 2024
FOOD LION
Grocery
Private Brand
$2,800,000
P10 2023
Started
$700,000
Croutons and dressing pouches
Move to recyclable bags Move to recyclable bags
Risk - supplier asking for full shelf life test which takes 12 months Started
FOOD LION
Grocery
Private Brand
$158,385
P7 2023
$79,193
Candy bags
Project at risk already of not being completed due to supplier performance issues Project could be delayed if PB takes to RFP
FOOD LION
Grocery
Private Brand
$143,465
P7 2023
Not started
$71,733
Bacon bit pouches
Move to recyclable bags
FOOD LION FOOD LION
Grocery Grocery
Private Brand Private Brand
$110,628 $36,026
P7 2023 P7 2023
Not started
$55,314 $18,013
Started
Ice cream cups Cold cereal bags
PS cup to PP
Move to recyclable bags Move to recyclable bags
FOOD LION
Grocery
Private Brand
$19,936
P7 2023
Started
$9,968
Rice Cakes
FOOD LION FOOD LION FOOD LION
Grocery
Private Brand
$2,965
P1 2023
Started
$2,965
Meat Meat
Indirect
$8,000,000
P7 2023Contract ends 4.30.2023
Not started
$4,000,000
In store use foam trays Foam to fiber
FL ground turkey tray Recyclable barrier tray
Fresh
$345,000
P1 2023 Project could be counted in 2022 Started
$345,000
NP ABF chicken 30% PCR film
30% PCR in film
30% PCR film hit shelf in July of 2022
FOOD LION
Meat
Fresh
$69,719
P7 2022
Completed
$34,860
Side case entrees
Move to non black tray Move to recyclable bags
FOOD LION
Meat / Deli
Fresh
$0
P10 2023
Started
$0
Apple bags (totes)
Bags only used during apple season. Suppliers can purchase multiple years of supply of totes at once Primary goal is to move to non black tray, preferably clear. Ultimate goal is to move to fiber tray. This may need to be a two step process Moved from 2022 project list due to supply chain / port congestion issues Moved from 2022 project list due to supply chain / port congestion issues
FOOD LION
Produce
Fresh
$512,000
P10 2023
Started
$128,000
Mushroom tills / trays Move to non black tray and ultimately fiber tray
FOOD LION
Produce
Fresh
$0
P10 2023
Not started
$0
Imported shrimp bags multi material bags
FOOD LION
Seafood
Fresh
$1,033,999
P7 2023
Started
$517,000
Frozen fin fish
Multi material bags
FOOD LION
Seafood
Fresh
$390,086
P7 2023
Started
$195,043
28
Proposed 2023 Packaging Project List and Estimated Budget-TGC BRAND DEPARTMENT LEAD PRODUCT PACKAGING CHANGE EST. ANNUAL IMPACT EST. IMPLEMENTATION DATE NOTES / MITIGATION PLAN PROJECT STATUS 2023
Cost estimates are a placeholder. Working with FMF and Cargill to firm up estimates. Pilot to kick off P4 2023 This is a placeholder. Need to work with Private Brands to firm up cost estimates. Only Brand required to be compliant by 2024 is Stop & Shop
THE GIANT CO
Meat
Fresh
FMF foam trays
Foam to fiber
$1,300,000
P8 2023
Started
$541,667
minimum 15% PCR content by 2024
THE GIANT CO THE GIANT CO
Grocery
Private Brand
NJ PCR law - beverage containers
$960,000 $870,000
P10 2023
Started
$240,000 $435,000
Meat
Indirect
In store use foam trays
Foam to fiber
P7 2023Contract ends 4.30.2023
Not started
Moved from 2022 project list due to supply chain / port congestion issues Contract end date still needed from NFR Project was moved due to supplier unable to secure fruit Moved from 2022 project list due to supply chain / port congestion issues Bags only used during apple season. Suppliers can purchase multiple years of supply of totes at once Risk -supplier asking for full shelf life test which takes 12 months Contract end date still needed from NFR Project at risk already of not being completed due to supplier performance issues 30% PCR film hit shelf in July of 2022
THE GIANT CO
Seafood
Fresh
Imported shrimp bags
multi material bags
$661,154
P7 2023
Started
$330,577
THE GIANT CO
Deli / Bake
Indirect
Rigid polystyrene containers
PS to PP
$627,760
P7 2023
Not started
$313,880
THE GIANT CO
Grocery
Private Brand
Frozen fruit bags
Move to recyclable bags
$165,500
P7 2023
Started
$82,750
THE GIANT CO
Seafood
Fresh
Frozen fin fish
Multi material bags
$120,355
P7 2023
Started
$60,178
THE GIANT CO
Produce
Fresh
Apple bags (totes)
Move to recyclable bags
$61,400
P10 2023
Started
$15,350
THE GIANT CO
Grocery
Private Brand
Croutons and dressing pouches Move to recyclable bags
$32,926
P7 2023
Started
$16,463
THE GIANT CO
Deli / Bake
Indirect
Platters
Replace OPS / black bottoms
$30,200
P5 2023
Not started
$20,133
THE GIANT CO
Grocery
Private Brand
Candy bags
Move to recyclable bags
$29,980
P7 2023
Not started
$14,990
THE GIANT CO THE GIANT CO THE GIANT CO
Meat
Fresh
NP ABF chicken 30% PCR film 30% PCR in film
$11,022 $10,008 $7,490
P7 2022 P7 2023 P1 2023
Completed
$5,511 $5,004 $7,490
Grocery Grocery
Private Brand Private Brand
Cold cereal bags
Move to recyclable bags Move to recyclable bags
Started Started
Rice Cakes
Project could be delayed if PB takes to RFP
THE GIANT CO THE GIANT CO
Grocery
Private Brand
Bacon bit pouches Side case entrees
Move to recyclable bags Move to non black tray
$3,520
P7 2023 P10 2023
Not started Not started
$1,760
Meat / Deli
Fresh
$0
$0
Primary goal is to move to non black tray, preferably clear. Ultimate goal is to move to fiber tray. This may need to be a two step process
Move to non black tray and ultimately fiber tray
THE GIANT CO
Produce
Fresh
Mushroom tills / trays
$0
P10 2023
Not started
$0
29
Proposed 2023 Packaging Project List and Estimated Budget-HRD
EST. ANNUAL IMPACT
BRAND
DEPARTMENT
LEAD
PRODUCT
PACKAGING CHANGE
EST. IMPLEMENTATION DATE NOTES / MITIGATION PLAN PROJECT STATUS
2023
Contract ends 4.30.2023
HANNAFORD
Meat
Indirect
In store use foam trays Foam to fiber
$5,300,000
P7 2023
Not started
$2,650,000
This is a placeholder. Need to work with Private Brands to firm up cost estimates. Only Brand required to be compliant by 2024 is Stop & Shop Contract end date still needed from NFR Moved from 2022 project list due to supply chain / port congestion issues
NJ PCR law - beverage containers
minimum 15% PCR content by 2024
HANNAFORD
Grocery
Private Brand
$960,000
P10 2023
Started
$240,000
Rigid polystyrene containers
HANNAFORD
Deli / Bake
Indirect
PS to PP
$958,160
P7 2023
Not started
$479,080
HANNAFORD
Seafood
Fresh
Imported shrimp bags multi material bags
$269,191
P7 2023
Started
$134,596
Bags only used during apple season. Suppliers can purchase multiple years of supply of totes at once Started
HANNAFORD
Produce
Fresh
Apple bags (totes)
Move to recyclable bags
$256,000
P10 2023
$64,000
Project was moved due to supplier unable to secure fruit Risk - supplier asking for full shelf life test which takes 12 months Contract end date still needed from NFR Moved from 2022 project list due to supply chain / port congestion issues Project at risk already of not being completed due to supplier performance issues 30% PCR film hit shelf in July of 2022
HANNAFORD
Grocery
Private Brand Frozen fruit bags
Move to recyclable bags
$224,500
P7 2023
Started
$112,250
Croutons and dressing pouches
HANNAFORD
Grocery
Private Brand
Move to recyclable bags
$41,613
P7 2023
Started
$20,807
Replace OPS / black bottoms
HANNAFORD
Deli / Bake
Indirect
Platters
$40,800
P5 2023
Not started
$27,200
HANNAFORD
Seafood
Fresh
Frozen fin fish
Multi material bags
$34,009
P7 2023
Started
$17,005
HANNAFORD
Grocery
Private Brand Candy bags
Move to recyclable bags
$33,504
P7 2023
Not started
$16,752
NP ABF chicken 30% PCR film
HANNAFORD
Meat
Fresh
30% PCR in film
$20,184
P7 2022
Completed
$10,092
HANNAFORD
Grocery
Private Brand Rice Cakes
Move to recyclable bags
$12,149
P1 2023
Started
$12,149
Project could be delayed if PB takes to RFP
HANNAFORD
Grocery
Private Brand Bacon bit pouches
Move to recyclable bags
$11,264
P7 2023
Not started
$5,632
HANNAFORD
Grocery
Private Brand Ice cream cups
PS cup to PP
$8,463
P7 2023
Started
$4,232
HANNAFORD
Grocery
Private Brand Cold cereal bags
Move to recyclable bags
$1,529
P7 2023
Started
$765
HANNAFORD
Meat / Deli
Fresh
Side case entrees
Move to non black tray
$0
P10 2023
Not started
$0
Primary goal is to move to non black tray, preferably clear. Ultimate goal is to move to fiber tray. This may need to be a two step process
Move to non black tray and ultimately fiber tray
HANNAFORD
Produce
Fresh
Mushroom tills / trays
$0
P10 2023
Not started
$0
30
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