On July 27, 2020, Brian Wynne took the helm of Acosta, the large food broker that had endured a difficult decade of performance issues and management changes that culminated in the Jacksonville, FL-based firm filing for bankruptcy in late 2019.
Wynne, who cut his teeth at Coca-Cola and also served as chief executive of U.S. Nutrition, knew of the hurdles that the new job would bring, having twice been an Acosta client in his previous jobs.
One year later, Acosta is still dealing with some of those previous challenges, but the landscape has changed radically, and the national sales agency is looking forward to once again growing its business.
The transformation actually began in January 2020 when Acosta exited its pre-packaged Chapter 11 status and a new group of investor and board members emerged. Not only was the company’s large debt significantly reduced, the new board promised to provide the financing and direction the company would need not only to survive but potentially prosper.
Tangible evidence of the needle moving forward can be seen in two moves the company made last month. In early June, Acosta acquired the Core Group, a large national broker which -according to Wynne – now makes his firm the largest foodservice broker in the U.S., at a time where that segment is beginning to boom again.
A few weeks later, the company acquired Impact Group, another national agency which specialized in natural and specialty for the retail sector, giving Acosta two unique footprints that delivered talent, scale and synergy to its existing business.
Wynne noted the deals also fit within his core strategies of growing the company. The Villanova graduate believes that in order to be successful, Acosta must strengthen and modernize its fleet of services, streamline its operations to better promote growth, and develop an aggressive performance-driven management team. He views Acosta’s role as being one of brand coordinator, focused on the needs of their clients (“The cut and slash model is not effective,” Wynne told me).
As Acosta continues to evolve there will be more changes as well. Wynne was blunt in his assessment of the company’s overhead concerns, which at one time included approximately 140 offices. He estimates that over the next 12 months about 50 percent of the broker’s offices will be closed or reduced in size.
He also addressed the issue of low commission rates which Acosta (and other national brokers Advantage Solutions and Crossmark) helped create by competitively bidding down their value over the past 20 years.
According to Wynne, the best way to create more revenue from Acosta’s clients is to provide them with “higher value work,” noting the broker/agency business can’t be successful if it primarily engages in a “salary arbitrage” approach. He pointed to opportunities in digital (e-commerce specifically) and in providing customized work for existing and new clients as potential growth revenue streams which Wynne strongly believes that manufacturers want and will pay for.
Brian Wynne: smart guy, nice guy. It’s clear that he’s already making a difference.
‘Round The Trade
According to research firm Edge by Ascential, Amazon will almost double its online edible food sales over the next five years. The London-based analytics company projects that amazon.com’s grocery sales will jump from $14.5 billion in 2021 to $26.7 billion in 2026. Also gaining significant online revenue during that period will be Walmart (from $10.1 billion to $19.5 billion); Kroger (from $7.9 billion to $13.5 billion); and Ahold Delhaize (from $5.7 billion to $12.1 billion in 2026). However, all merchants will lag behind Chinese e-commerce monolith Alibaba whose estimated current annual online sales of $20.6 billion will skyrocket to $34.2 billion in five years.
More Save A Lot news: before the bombshell that CEO Kevin McGrath was leaving to rejoin rival Lidl, the appointment of two new independent directors – Fred Boehler, CEO of Americold and Mike Motz, chief executive U.S. retail for Staples – to parent firm Moran Foods’ board seemed like important news. Now it seems kind of ho-hum.
The Fresh Market (TFM) is the latest grocery company attempting an initial public offering (IPO), having filed its S1 form with the SEC earlier this month. The Greensboro, NC-based retailer, which is controlled by PE firm Apollo Global Management, is hoping to raise about $250 million. TFM traveled the publicly-traded path once before (from 2010-2016) before the perishables merchant was taken private by Apollo for $1.36 billion. This is another example, like Southeastern Grocers earlier this year, of a perennially challenged merchant, coming off a strong sales year mainly created by the tailwinds of the pandemic, seeking the IPO option to repay its investors. The clout of a Wall Street powerhouse like Apollo may be able to pull this off, but then what? TFM is not a significantly better company than it was five years ago. In general, it has not done well in overstored and diversified markets, particularly in the Mid-Atlantic and Northeast.
Local Notes
In a recent interview with Bloomberg, FreshDirect’s interim CEO Farhan Siddiqi addressed some of the challenging issues impacting the e-grocer that Ahold Delhaize acquired an 80 percent stake in (for $328 million) this past January. Among the changes that Siddiqi, who replaced former FreshDirect CEO and holdover David McInerney in May, has already implemented are price reductions and a 25 percent expansion of item assortment. Additionally, there are plans to add two micro-fulfillment centers in Westchester County and on Long Island to help speed up delivery times. The former McDonald’s executive, who also serves as chief digital officer for Ahold Delhaize, responded to a question about the rising costs and diminishing returns of digital advertising by noting that his company is aware of the importance of physical stores and is considering one or two pop-up activities in New York later this year (Ahold Delhaize USA operates nearly 2,000 stores in the Eastern U.S.). “FreshDirect is a strong brand but people have forgotten about it because of new entrants – these new shiny objects. FreshDirect was in survival mode for a time. We need to switch it into growth mode, so we created a three-year plan,” he noted. According to Earnest Research, Instacart now commands a 45 percent share of the online-driven grocery delivery market while FreshDirect’s share has fallen to 21 percent…John Catsimatidis, CEO of privately-held Red Apple Group which also owns Gristedes, said he expects a 10-14 percent increase in food prices by October 1, a prediction significantly higher than other industry analysts have projected. Speaking to business reporter Ashley Webster on the Fox TV show “Varney & Co.,” “Trader John” acknowledged that those increases will be passed on to Gristedes’ customers. “You have to pass it on, otherwise you’re not doing your duty to guard your country, your employees and your company.”
Foxtrot, whose unique c-store model can now be found in Chicago, Dallas and most recently Washington, DC, plans to add 50 new units over the next two years including in new markets such as Boston and NYC…Turkey Hill ice cream has a new leadership team on board. The Lancaster, PA-based firm, which was acquired by PE player Peak Rock Capital from Kroger in 2019 for $215 million, has named Andy Jacobs as its new CEO replacing Tim Hopkins. Jacobs has served on Turkey Hill’s board for the past two years, Additionally, Paul Gagliano has joined the 90-year old company as chief customer officer. His most recent industry pit stop was at SlimFast where he also held the CCO role.
RIP to the Nabisco plant in Fair Lawn, NJ which closed its doors earlier this month. According to parent firm Mondelez, the Fair Lawn plant (as well as another in Atlanta) was no longer a strategic asset from a geographic footprint perspective and both were facing significant operational challenges including aging infrastructure and outdated production capabilities. I wonder how many Oreos and Ritz crackers I have eaten in my life that came from those Fair Lawn ovens?
