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NGA 2013 Case Competition

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student pic.jpg thumb.jpgCompeting in the 2013 National Grocers Association Case Competition was an incredibly rewarding experience. Being a part of a team with diverse backgrounds, I not only learned a lot from working on the case but from three other talented women from the University of Minnesota as well.

We were asked to create a new marketing strategy to increase sales for Ray's and Chief's supermarkets located in Ohio. Throughout the preparation, with connections through The Food Industry Center, we were able to reach out to professors, advisors, industry leaders, and people working directly in the field to receive invaluable feedback allowing us to create a practical strategy that was relevant to the real word.

After only a few short months of practicing, presenting and preparing for the competition, arriving in Las Vegas in Mid-February was surreal. We spent every last minute up until our presentation practicing, rehearsing and perfecting our case. As the first team to compete, it was a huge sigh of relief after delivering our presentation. We were able to enjoy the rest of the conference without any headaches or stress.

One of my favorite experiences from the conference was being able to watch the other schools' presentations. I definitely took away a lot of skills and ideas that I will be able to implement into the future.

The rest of the conference was full of excitement. Dense Fung, a fellow teammate was a workshop moderator for an interesting perspective on social media in the current industry. We also spent a large amount of time meeting personal mentors and walking around a very large trade show where we were able to learn a vast amount about the retail food industry. New food products, old food products and innovative machinery were being displayed and sampled throughout the trade show. It was exhilarating being able to see industry leaders in one room talking about their different passions within the industry and seeing how they all align to create the incredible industry we are all so heavily dependent on.

Competing in the NGA case competition and being able to experience the conference was unforgettable. I was able to network with many industry professionals and students from across the nation while being able to immerse myself into an environment where people share my same passion for food.




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NGA Case Competition Reflection

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My interest in attending the National Grocers Association Convention started at the early age of 14 as a bagger at Lunds when I aspired to compete in the National Best Bagger Competition in Las Vegas. Fate had its own way of presenting an even more prestigious opportunity to attend the NGA Convention through the College Case Study Competition. I am proud to say that I was on the talented team of four women who competed in the 2013 competition.

I am not your typical student representing the Food Industry Center. I am a student at the School of Journalism and Mass Communications studying strategic communications with an advertising focus. I believe my background in marketing strategy gave our team an edge in the competition. The case we were faced with focused on increasing the market share through fulfilling the mission of Chief and Rays Supermarkets in Ohio. The company faced many challenges such as tough low price competitors and a diverse community of customers. It became clear throughout the competition that independent grocers are facing big box retailers who are heavily saturated in the market. There is an increasing need to differentiate themselves in order to stay relevant to the customer.

Through collaborating with executives at Supervalu and Lunds, professors, and our advisors, our team developed a three-part strategy based on two target markets. We saw opportunity in developing new signage, highlighting the signature products, and remodeling the produce department.

A valuable part of my experience at the competition was meeting industry professionals through the mentor program. My mentor Tony Ortega interviewed us just as much as we interviewed him. He believes in inspiring young people to become involved in the grocery industry because of the great sense of community. I had a chance to walk through the trade show booths to see the latest products and services being offered in the industry. This was an eye opening experience to how significant the food industry is to our economy.

This memorable experience is one I hope to share with others and in future job interviews to showcase my passion for the food industry. I hope to stay connected with all of the industry professionals I met through attending the NGA Case Competition. Teresa Chipps from Supervalu was especially supportive throughout the preparation and competition.

I would like to send a special thanks to Lisa Jore, who was key to our successful preparation and travel logistics. Furthermore, Dr. Boland provided excellent guidance in creating our strategy and presentation. His support throughout the competition gave us confidence in our work. Thank you for your dedication to our team.




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NGA Experience 2013

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Working with the University of Minnesota Food Industry Center and attending the National Grocers Association conference was a great opportunity. It allowed me to apply what I have learned from my economic, sales, and marketing classes to a real life case study. As one of the four members of the University of Minnesota team, I had a large role in creating an adaptive solution for Chief and Ray's grocery stores. During our preparation we collaborated with both Supervalu and Lunds to gain input and advice.
Once we arrived in Las Vegas we participated in multiple presentations on a range of food industry related topics from experts in their field. After attending presentations we were paired with a mentor. My mentor was Ron Cook who is the Vice President and Director of Marketing for Neimann Foods Incorporated. He shared a wealth of knowledge on how both the food industry and the National Grocers Association conference has change throughout the years. He also walked me through the showroom of the conference where we networked, learned about new trends, and sample produces from a range of national food companies.
Finally, we gave our case study presentation to a panel food industry judges. This including giving a fifteen minute presentation about our specific strategy to promote Chief and Ray's grocery store's mission and increase their market share. This allowed us to explain our research on food market trends, our cost analysis, and positive future impact we how to have on Chief and Ray's grocery stores. Overall this experience gave me a greater network and knowledge of the food industry that I will be able to apply to my future education and career.
Tory Ahmann




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Awesome Experience in NGA Convention 2013

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Being able to participate in the National Grocers Association (NGA) Annual Convention in Las Vegas had provided me a valuable experience that I could never get out of the classroom. This opportunity allowed me to work on real-life problems and interact with professionals in the food industry. This wonderful experience opened my eyes to the real world and prepared me for my career in the food retail industry.

I found my passion in food and agriculture when I started my Applied Economics bachelor program at the University of Minnesota. Having lived in a fast-paced and finance-focused city, Hong Kong, for 17 years, I thought that the only way to become successful in this competitive job market is to get into the finance, banking, and stock market. However, being able to study under College of Food, Agricultural and Natural Resource Sciences, and to work with Dr. Boland and Lisa Jore at The Food Industry Center as a research assistant, has changed my mind. As I learned more about agricultural and food science, I began to shift my interest toward the food industry.

This case competition gave me a chance to work in the real world and how to communicate with real professionals, which include those coming from the corporate offices and those who are working in the retail stores. In addition, I learned about how food companies work internally and how they attract potential customers to shop at their stores instead of big box retailers, such as Wal-Mart. I also had a chance to hear professionals talk about marketing strategies and skills.

The most that I have gained during the convention is the mentor program. I was able to team up with a professional, of SuperValu, that had more than 30 years of experience in the food industry, with the same specialty that I am focusing on at school. He taught me a lot of things behind the retail store, such as how lighting, cases, and space can influence the overall impression on customers. He taught me that, "Equipment and people are as important as the quality of the products".

Throughout my college life and my experience in NGA, I realized there is such a closely-tied connection within the food industry. I also realized that working in the food industry is not just about earning money, but providing consumers with safe-to-eat and sufficient supply of foods for their daily needs. At the end, I would like to thank Dr.Boland, Lisa Jore, SuperValu, and Lunds and Byerly's for giving assistance and valuable input to our team and making all these happen. I would encourage all students to apply for this competition and gain all these valuable experiences that I had!




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On milk prices and the "fiscal cliff"

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Thumbnail image for Cow Milk Cliff Image.jpegEvery five years, U.S. Congress passes what is called a "Farm Bill". This legislation defines the set of food-related policies such as those that help agricultural producers to manage their risk, and low-income consumers with their food purchases. Like is the case with many other laws, rather than being a permanent law, the Farm Bill is designed in such way to expire after a certain number of years. The latest such legislation, passed in 2008, will expire at the end of 2012.

The idea that major legislation should be designed to have a sunset provision is a recent phenomena. In contrast, major agricultural policies of the 1950s were authorized by the Agriculture Act of 1949 which did not have an expiration date, but was designed to be a "permanent law". Reading the provisions of 1949 Act feels like looking through a window into another universe. Concepts, ideas, policies and rules that were relevant and helpful back then are far from applicable and not even remotely useful today. Similar to the original idea of the "fiscal cliff" - a set of such radical and deleterious changes in spending and taxation designed to encourage both major parties to compromise to avoid it - the "permanent law" was left in place when modern-day farm bills were being enacted. Rather than repealing the 1949 Act, the most recent Farm Bill, like many farm bills before it, just suspended it for the period of five years.

Today, U.S. dairy producers receive milk prices that are determined by market forces. Going forward, their representative organizations have petitioned the U.S. government to abolish all price support programs and help institute programs that would focus on managing very high risk in net revenue margins originating in volatile milk and feed prices. Those principles are embedded in the text of both the House of Representatives and Senate versions of the 2012 Farm Bill, designed to replace the 2008 farm bill whose dairy policy provisions expire at the end of December. Analysis done by leading dairy economists indicate that long-term effects of the proposed new policies are beneficial for consumers, as lower risk in the dairy sector would eventually translate into more affordable dairy products.

However, as "fiscal cliff" negotiations brought the entire Congress to standstill, the new Farm Bill has not been passed on time, creating a real possibility that the 1949 Act may once again be the law of the land. If that were to happen, dairy prices, rather than being an outcome of market supply and demand like they currently are and should be, would effectively be set by the U.S. government, at the level that would more than double the retail prices of milk. However, the artificial price increase would not happen overnight. The nuts-and-bolts of the ancient program insure that some weeks would pass before the Secretary of Agriculture would even be able to complete all logistical work so that the government could start with massive purchases of dairy commodities. Furthermore, at the time of writing this post, dairy futures markets do not indicate that market has any trust that such course of events would actually take place. Whatever may transpire with the "fiscal cliff" in the days and weeks to come, it is to be expected that reasonable legislation will be put in place that protects dairy consumers and continues to base milk price on market forces of supply and demand.

Further reading:
The New York Times, Dec 21, 2012:"With Farm Bill Stalled, Consumers May Face Soaring Milk Prices."

Novakovic, A. (2012, September) "Is Reverting to the 1949 Agricultural Act Really a Possibility for Dairy Price Supports?" Information Letter 12-06, Program on Dairy Markets and Policy.




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The Economic Impact of Food Waste

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IMG_20121218_171933.jpgIt is no secret that food waste is a serious issue. When talking about ending hunger and feeding an increasing population, environmental experts such as Jon Foley of the University of Minnesota Institute on the Environment often state that part of our strategy in feeding the world must include reducing food waste. The reason is the Environmental Protection Agency estimates that more than 34 million tons of food waste was generated in the United States in 2010, with only 3% diverted from landfills. Food waste is the single largest material in municipal solid waste. Worldwide, the United Nations Food and Agricultural Organization estimates that approximately one third of food produced for human consumption is lost or wasted every year.

With all the attention on how much food is wasted around the world, at The Food Industry Center we were curious about the economic impact of this food waste. Fortunately for us, Jean Buzby and Jeffrey Hyman of the USDA Economic Research Service published an estimate of the Total and Per Capita Value of Food Loss in the United States in the July 2012 issue of Food Policy. The authors focus on the retail value of food loss in the United States to estimate the economic impact.

Using Loss-Adjusteed Food Availability (LAFA) data published by the USDA ERS and Nielsen Homescan Data for retail food prices, Buzby and Hyman estimate the consumer and retail food loss value for more than 200 individual foods and categories of food. Their results are staggering. They estimate in 2008 "the total value of food loss at the retail and consumer levels in the United States was $165.6 billion." They find 41% of the value is losses in meat, poultry and fish, 17% of the value is in vegetables, and 14% of the value is in dairy products. Per capita, this represents the value of food waste to be $390 a year, almost 10% of average food expenditures. For an average household of 2.4 people, this represents 654 pounds of food not eaten at a retail value of $2.56 a day. These numbers offer a compelling case for consumers to reduce their personal food waste.

In addition to the retail cost, the authors also highlight the production costs of food waste. They state that in 2008 it cost an estimated $1.3 billion to landfill food waste, and the production of the wasted food took an estimated 300 million barrels of oil amongother costs. For this reason, the authors believe that looking for market based approaches that promote reducing food waste, while reducing the cost of production, will be the most successful approach to combat the environmental, economic, and societal implications of food waste.

Let us know what you think! What are some of your ideas to reduce food waste in the United States?



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The Value of Corporate Social Responsibility

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In response to a demand for sustainable and ethically produced goods, companies of all sizes around the world are integrating corporate social responsibility (CSR) into their business structure as a form of self-regulation. This is especially prevalent for Western companies working in third world countries where only following loose regulations may be perceived as not doing enough. While the debate on the value of CSR for a company rages on, Monika Hartman argues in Corporate Social Responsibility in the Food Sector, published in the March 2011 issue of the European Review of Agricultural Economics, the food sectors impact and dependence on the economy, the environment, and society will make CSR reporting especially relevant.

Hartman highlights that while the ethical argument for CSR is not contested, the economic argument is. The standard neoclassical view of the firm sees CSR as a moral hazard to shareholders, as the firm's only social responsibility is to maximize profits within the laws and regulations of the operation. Critics of this view have begun the search for the economic argument for firms to engage in CSR. Hartman summarizes the breadth of research on the impact of the CSR on financial performance, consumers, employees, and supply chain partners. The evidence is four mathematical meta-analyses that indicate a positive relationship of CSR and financial performance. She states that research has found "doing good does not have to be at the expense of doing well" and thus the question "has been moving from whether to when" firms benefit from CSR.

The impact CSR has on financial performance is generally reported through risk management, enhanced performance ,and brand differentiation. Food companies looking to reduce waste are not only decreasing the cost of operation, they are decreasing their environmental impact. Additionally, Hartman explains that CSR is gaining ground with employees. There is limited evidence that employees who value CSR will accept lower wages if they believe they are working in a socially responsible company. There is also support for the idea that employees stay longer and are more motivated, ultimately decreasing cost of production.

There is mixed evidence about CSRs when looking at how the consumer views the firm. On one hand, Hartman cites research that has found consumers weigh negative CSR information more heavily than they do positive, so only exceptional behavior is valued and rewarded. On the other hand, having a positive reputation helps mitigate negative press. Consumers who believe a company is socially responsible are less likely to abandon the company during a negative incidence. Additionally, Hartman states food companies are operating in highly competitive markets, and research has shown that CSR can provide a vehicle for differentiation.

Whether food companies choose to take a proactive approach to CSR or not, they may be finding pressure to engage in CSR from their supply chain. Nestle, PepsiCo, Coca-Cola, Walmart, and Unilever are all food companies who are supply chain members of the Carbon Disclosure Project. These are large food companies who have made commitments to sustainably sourcing of their products and who are encouraging supply chain partners to participate in the CDP.

Hartman closes by saying that while engaging in CSR can be valuable for a company, the larger the company the more resources there are to commit to it. Small food companies, however, receiving pressure and requests from different customers will incur a relatively high burden. Thus standards are needed in the industry to promote adoptive management, but not push out small-scale suppliers. As food is central to our lives, it is becoming more important for food companies of all sizes "to engage in a more proactive strategy with respect to CSR."



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Hurricane Sandy and the Food Supply Chain

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When Hurricane Sandy pounded the Eastern seaboard leaving millions without power, the food supply chains, from farm to fork, were inevitably affected. Crops and livestock across the Caribbean and United States were adversely affected, with some producers warning of short-term shortages and the Farm Services Agency of the USDA issuing $15.5 million in disaster funds for counties affected by Sandy. Plants and processors struggled to keep running and product moving as power outages, flooding, and damage across the region made food distribution difficult. Grocery stores flooded, resulting in the disposal of contaminated foods. Other retailers lost power, having to shut stores after suffering multi-day power outages. The problems were exacerbated by the shortage of fuel available around the NYC area.

Despite these challenges, we did not see reports of food shortages. Large cities such as New York City generally only have 2-3 days of food on hand. For this reason, the movement of food was a critical part of the Sandy recovery. New York City's Office of Emergency Management kept food supply companies at the decision making table. If needed, trucks carrying food into the city were allowed to caravan with police escorts along bridges and roads closed to the general public.

While the storm is not projected to have long term impacts on the food supply chain, the initial impact brought various groups together to work towards maintaining a steady food supply in the short-term. Anheuser-Busch switched a beer line in a Georgia plant to cans of potable water that was distributed to those in need of water. Damaged restaurants are slower at reopening, consequently decreasing food demand through the supply chain. Particularly for things like fresh fish which forces fisherman to adjust their supply. Additionally, the USDA issued waivers for SNAP participants to temporarily purchase hot foods with their benefits as well as reimburse participants who lost food in the storm.

The lack of a food shortage in New York City and the response on behalf of millions of people and companies after hurricane Sandy is a testament to the hard work and emphasis that local, state, and national emergency programs have placed on getting basic needs such as food and water to people. For more about Sandy relief efforts visit the Red Cross.



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The Food Industry Center goes to Dairy Academy

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IMG_20121129_175056.jpgOn November 2nd, The Food Industry Center co-hosted a Dairy Academy Tour for University of Minnesota students with the Midwest Dairy Association. The Dairy Academy is an educational program for retailers, wholesalers, and other students of the dairy industry, sponsored and organized by the Midwest Dairy Association (MDA).

The goal of Dairy Academy is to foster knowledge of the dairy industry from farm to fork,and help individuals understand the dairy supply chain. Our Tour schedule worked backwards, from fork to retail. We started at a local retail grocery store. Not only did the grocers give us insight into the layout of the store (i.e. the produce is to the right of the door because produce has high margins) we also learned specifically about how products in the dairy aisle are stocked and organized. Our discussion gravitated toward the current popular trends in yogurt products. Where there used to be just a few kinds of yogurt, the section is rapidly expanding to specialty varieties such as greek or kefir.

Our second stop was a visit to the First District Association cheese plant in Litchfield, MN. Our group toured the Association's new processing facility where we learned how the milk is inspected and taken in upon arrival, then subsequently processed into cheese. FDA is in the process of expanding, but currently receives over 4 million pounds of milk each day. Clint Fall, CEO of First District, who was a Food Industry Leader in the Classroom speaker last spring, explained that the byproduct of cheese making is whey. He noted that while cheese is still the big money maker for their cooperative, whey plays a critical role in improving the bottom line of plants.

During lunch, we sat down with local dairy producers to learn about their farms and their work with MDA. One farmer had invested in a methane digester to generate energy from waste. University of Minnesota dairy extension specialist Jim Paulson provided a discussion on sustainability and the challenges dairy producers face in the near future in demonstrating sustainable agricultural practices to consumers. TFIC researcher Dr. Marin Bozic and TFIC Director Dr. Mike Boland offered an analysis of the complicated structure of milk pricing.

The day ended with a tour of a local dairy farm. Our gracious hosts showed us around their 800 cow milking facility, explaining how sick cows are cared for and how the rest of the herd is moved through the milking parlor. The farmers were very proud of their facility and very eager to show us their family operation. At the farm, as well as the grocery store and the processing plant, our hosts explained why they enjoyed a career in the dairy industry and the opportunities and challenges they faced in the future.

The Midwest Dairy Association is a Sponsoring Member of The Food Industry Center. MDA represents more than 9500 dairy farms across 10 Midwest states. They are funded through the dairy check off program and receive $0.10 of every 100 pounds of milk sold by the dairy farmers. They work to increase consumer confidence as well as improve sales and understanding of dairy products. A very special thanks to Midwest Dairy Association and the local businesses that hosted us throughout the day!



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The Organic Thanksgiving Premium

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America just celebrated Thanksgiving! While a time for family and food, Thanksgiving also marks the start of the holiday spending season and a boost to the US economy. Thanksgiving itself is the most traveled holiday of the year, where AAA expected 43.6 million Americans to travel 50 miles or more for the weekend with 3.1 million of those traveling by air to their holiday destination. Even with the slow economy, the National Retail Federation projected 147 million shoppers to turn out for Black Friday.

Fortunately, for consumers, the price of a Thanksgiving dinner didn't increase much in the last year. Despite drought across much of America's farmland, the annual American Farm Bureau Federation's informal price survey of 155 volunteer shoppers across 35 states expected the cost of Thanksgiving for a family of 10 to be $49.48 compared to last years $49.20. Shoppers looked for the cheapest prices without using promotions or coupons. The following table highlights the price differences from last year.

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While not a formal comparison, at The Food Industry Center we were curious about the price premium on an organic Thanksgiving meal compared to a conventional Thanksgiving. I went to a local organic and natural food store and a conventional grocery store in St. Paul to record comparable prices of the items in the Farm Bureau survey. I followed the same method, looking for the cheapest priced product without the use of coupons and chose grocery stores as close to each other as possible.

The prices from the conventional grocer were quite close to the estimates from the American Farm Bureau Federation. If we assume the relish tray and the miscellaneous ingredients to be the same price as the Farm Bureau estimates, the conventional grocery price was $51.94, just over the AFBF estimates. Under the same assumptions the organic Thanksgiving dinner had a premium, coming in at $99.31, almost 2 times the price of the conventional grocer. For the most part on items such as peas, pumpkin pie, and dairy products, the prices were very similar. The organic premiums came from only a few items. The organic rolls and cranberries were both two times more expensive than the conventional ones. The organic turkey is where the price of an organic Thanksgiving really hits at a whopping $63.84 ($3.99/lb) for a 16 lb turkey compared to the price of $1.49/lb for a conventional turkey.

We hope everyone had a great Turkey Day, and wish safe travels for your trip home!



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