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Big Bump in Beverage Sales

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NEW YORK — Convenience-store retailers reported beverage sales growth of 6% during Labor Day weekend, signaling a strong summer overall at the cold vault.

“Given the strong Fourth of July (beverage sales up 5%) and Labor Day (+6%) holiday results, we are encouraged that beverage trends have accelerated through the key summer season, which should help drive solid third-quarter results for beverage manufacturers,” beverage analyst Bonnie Herzog of Wells Fargo Securities wrote in a research report.

Herzog, who surveyed c-store retailers shortly after Labor Day, credits lower gasoline prices, a decrease in promotional pricing and good weather for the boost in sales, which comes on top of a 4% increase in sales for the same holiday weekend in 2014.

Based on her survey, Herzog thinks Coca-Cola and Pepsi could see third-quarter sales up 5%, while Dr Pepper Snapple growth is closer to 3%.

“In the energy category,” she wrote, “Red Bull remains the leader based on its innovation and has generally outperformed [Monster Energy] with 8% sales growth,” she wrote. Monster grew about 7%, she added.

Alcohol beverages are projected to be up 4% in Q3, led by crafts and imports. “Anheuser-Busch InBev remains the strongest innovator and heaviest promoter,” Herzog wrote.

Other key c-store beverage trends found in the survey:

  • Lower retail fuel prices are generally driving increased foot traffic and larger basket sizes for in-store purchases.
  • Coca-Cola’s “Share a Coke” promo continues to support solid growth.
  • A majority of retailers have placed Mountain Dew Kickstart with carbonated-soft-drinks vs. energy.
  • Service issues are being resolved following Monster’s transition in distribution from Anheuser-Busch to Coca-Cola distributors, with some isolated areas still being negatively affected.
  • Retailers are not fully passing along Monster’s 6% price increase. Monster retail prices are up 4.3% on average.

Author(s): 
Steve Holtz

Kroger Boosts Leadership Team

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CINCINNATI — The Kroger Co. announced the appointment of four executive vice presidents to lead key lines of business, including new support for the grocery’s convenience-store branch.

Mike Donnelly has been named executive vice president of merchandising, Chris Hjelm executive vice president and chief information officer; Fred Morganthall executive vice president of retail operations; and Mike Schlotman executive vice president and chief financial officer. Each leader has been assigned additional responsibilities to streamline decision making under this new organizational structure.

“Kroger is fortunate to have an exceptionally strong group of leaders across our company,” said Rodney McMullen, Kroger’s chairman and CEO. “Our entire senior leadership team brings unmatched depth and experience to achieve our goals. This new organizational structure will help Kroger achieve laser-focus to accelerate growth, improve our connection with customers and deliver value for shareholders.”

Also, Kroger announced the retirement of senior vice president of retail divisions Geoff Covert, and the promotion of Sukanya Madlinger as his successor. Madlinger currently serves as the president of Kroger’s Cincinnati/Dayton division. She will be succeeded by Tim Brown, who currently serves as president of Kroger’s Delta division, based in Memphis. Brown’s successor will be named at a later date.

Mike Schlotman, EVP & CFO

Schlotman, 57, formerly senior vice president and chief financial officer, will continue to serve as CFO. In this expanded role, he will take on additional responsibilities for convenience stores, jewelry stores, data integrity and risk management. Schlotman joined the company in 1985. He was promoted to CFO in 2000.

Fred Morganthall, EVP Retail Operations

Morganthall, 64, formerly senior vice president of retail divisions, will lead all supermarket retail operations for Kroger. Under this new structure, Kroger’s three senior vice presidents responsible for retail divisions will report to him. Morganthall began his career in grocery retail in 1978 with Spartan Stores in Michigan and joined Harris Teeter in 1986. He joined Kroger in 2014 as part of the Kroger-Harris Teeter merger and was promoted to his current position in June.

Mike Donnelly, EVP Merchandising

Donnelly, 57, formerly senior vice president, will continue to lead the company’s merchandising, procurement and marketing teams. He has additional responsibility for digital, manufacturing and corporate brands, supply chain, culinary innovation, The Little Clinic and Vitacost. Donnelly joined the company at Fry’s Food Stores in California in 1978 and was promoted to his current position in 2011.

Chris Hjelm, EVP & CIO

Hjelm, 54, formerly senior vice president and chief information officer, will continue to serve as CIO and lead Kroger technology, research & development, and the company’s customer connect and support centers. In this expanded role, he will take on additional responsibilities for 84.51 degrees, indirect sourcing and corporate travel. Hjelm joined Kroger in 2005.

Geoff Covert Retirement

Covert, 64, is retiring after nearly 20 years with the company. Before joining Kroger, he spent 22 years in a number of management positions with Procter & Gamble. Covert joined Kroger in 1996 as vice president of the grocery products group. He later served as senior vice president and president of Kroger manufacturing, before being named president of the company’s Cincinnati/Dayton division.  In 2010, he was promoted to senior vice president of retail operations. Covert has served in his current role since 2012.

“We have valued Geoff’s insights and contributions to our manufacturing and retail operations teams,” said Mr. McMullen. “We thank Geoff for his many years of dedicated service to Kroger, and wish him and his family the very best in retirement.”

Sukanya Madlinger, SVP Retail Divisions

Madlinger, 52, succeeds Covert as senior vice president of retail divisions. She joined Kroger in 1986 in the store management training program and has held various leadership positions in operations and merchandising before being named to her current role as president of the Cincinnati/Dayton division in 2010.

“Sukanya is an outstanding executive whose leadership has always reflected her passion for our associates and the customers we serve,” said McMullen. “Her experience and commitment to our customer-first strategy will make her a great addition to our senior leadership team.”

Tim Brown, President Cincinnati/Dayton Division

Brown, 55, succeeds Madlinger as president of Kroger’s Cincinnati/Dayton division. He began his Kroger career at the age of 17, working as a bagger at a store in Illinois. He joined the company’s management training program in 1981. Throughout his 38-year career, Brown has served in leadership positions in merchandising and operations in seven of Kroger’s retail divisions and at the company’s general office in Cincinnati. He has been president of Kroger’s Delta division since 2012.

“Tim is a dynamic leader whose commitment to our associates, customers and communities is an example for others to follow,” said Mr. McMullen. “He brings a broad range of experience to our Cincinnati/Dayton division.”

Kroger, one of the world’s largest retailers, employs nearly 400,000 associates who serve customers in 2,626 supermarkets and multi-department stores in 34 states and the District of Columbia under two dozen local banner names including Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry’s, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith’s. The company also operates 780 convenience stores, 327 fine jewelry stores, 1,342 supermarket fuel centers and 37 food processing plants in the United States.

Chicago To Tax Vaping Cartridges?

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CHICAGO — A Chicago alderman is expected to propose a tax of $1.25 on e-cigarette cartridges and 25 cents for each milliliter of liquid to fill the cartridge.

The tax would raise just $1 million per year toward fixing the city budget hole but could also be part of a desire to curtail the increasingly common use of the products by young people, the alderman said Thursday, according to a report in the Chicago Tribune.

Ald. Proco “Joe” Moreno said he will introduce the plan to the City Council to institute the tax on each e-cigarette cartridge and the liquids that fill them. E-cigarette sales are dwarfed by those of conventional cigarettes, but Moreno said teens are taking up electronic smoking in rising numbers even as their use of cigarettes has gone down significantly.

“Big Tobacco is now going at our youth in a different way, through technology, and through vaping and e-cigarettes,” said Moreno, who was joined by public health advocates who support the new tax at a City Hall news conference, according to the report. Younger smokers are most likely to be deterred from buying the products by price increases, Moreno said.

It’s not clear if Mayor Rahm Emanuel supports the tax or if Moreno has the votes necessary to approve it.

NYC Gets Its Own 7-Eleven Coffee

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NEW YORK — 7-Eleven Inc. introduced a new coffee this month just for its New York City convenience stores.

New York Bold was introduced on Twitter Sept. 3 with the catchphrase “The attitude is now a coffee.”

The coffee is a blend of Central American, Colombian and Brazilian beans, according to a Grub Street report. It “caters specifically to the bold, rich desires of New Yorkers.” 7-Eleven said New York City franchisees created the new blend themselves, basing bean selection on customer feedback.

In stores, signage states the new brew was “made for New York [and] chosen by New Yorkers.”

The new coffee is coupled with new “stay hot” coffee cups that don’t require a sleeve. The recyclable cups feature the Statue of Liberty and encourage drinkers to participate in 7-Eleven’s coffee rewards program.

Author(s): 
Steve Holtz

Lubel Among Most Powerful Women in Business

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SAN ANTONIO — Kim Lubel, chairman, CEO and president of convenience retailer CST Brands Inc. has been named one of Fortune’s 50 Most Powerful Women in Business.

Based in San Antonio, CST Brands is a convenience-store retailer with 1,900 locations in the United States and Canada and $10.8 billion in revenue in 2014. CST also owns the general partner of CrossAmerica Partners LP, a wholesale distributor of fuels, which distributes fuel to over 1,100 locations across 23 states.

“It’s such an honor to be included in this list with inspirational women like Mary Barra at General Motors, Indra Nooyi at PepsiCo and megastar Taylor Swift,” Lubel said. “It’s also an honor and a privilege to lead our incredible 13,500 team members as we grow and strengthen CST Brands.”

Lubel was first named to the Fortune list in 2013, the year that CST Brands spun off of Valero into a standalone company with Lubel at the helm. Since then, Lubel has led transformational growth at CST, including the strategy to acquire the general partnership of Cross America Partners LP, as well as expanding the network of stores through new store construction and acquisitions across the country.

This year, CST plans to build nearly 50 new convenience stores in North America from the ground up, allowing for larger, more spacious interiors with award-winning interior design and a larger selection of hot and cold food and beverages.

Creating a retail culture across the entire organization is a priority for Lubel. This year, she instilled four new core values at CST: innovation, strategic thinking, entrepreneurial spirit and servant leadership. At CST, all executives and office employees are required to work in the stores for at least two days a year through a program Lubel calls “Corner Store Time.” On her Corner Store Time days, Lubel can be found helping to bake whoopie pies, taking out the trash or refilling the coffee urns in an effort to better understand the day-to-day tasks of store employees.

“A servant leader serves first and then leads,” Lubel said. “It’s not just about being ‘nice’ but about motivating and inspiring employees to reach further than they thought possible.”

Lubel has also made community service a priority for CST, raising millions for Children’s Miracle Network Hospitals and Big Brothers Big Sisters. In 2014, Lubel initiated a signature fundraising event for CST, the Corner Store Country Run 5K. The series raised $1 million for Big Brothers Big Sisters and local children’s charities in 2014 with eight races and has expanded to 10 cities in 2015. CST was selected as the Big Brothers Big Sisters 2015 Community Impact Award winner, recognition for a valued partner that unites their network to make a big impact for mentors and mentees.

A graduate of the University of Texas School of Law, Lubel spent over 15 years at Valero prior to taking on her role at CST. She serves on the board of directors of Tulsa-based WPX Energy Inc. Since 2009, Lubel has served on the San Antonio & Bexar County United Way. She also serves as co-chair of Go Public, a collaborative campaign among Bexar County’s 16 public school districts to rally for the importance of a strong public education system.

CST Brands Inc., a Fortune 500 company, is one of the largest independent retailers of motor fuels and convenience merchandise in North America. Based in San Antonio, CST employs 13,500 team members at approximately 1,900 convenience-store locations throughout the Southwestern United States, New York and Eastern Canada.

Mondelēz Refocuses on 'Well-Being Snacks'

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DEERFIELD, Ill. — Even as Mondelēz International launches aggressive cost-reduction program, the snack maker is turning its innovation strategy to better-for-you snacks.

“We intend to become the global leader in well-being snacks,” said Mark Clouse, executive vice president and chief growth officer, “with 50% of our portfolio in the well-being space by 2020, up from more than a third of total revenue today.

“Our goal is to simplify and enhance the ingredient and nutritional profile of our base business while also focusing on breakthrough innovation to address consumers’ well-being needs. Over the next five years, we expect to focus 70% of our new-product development efforts on well-being platforms.”

E-commerce is another key focus area for the company, addressing the intersection between time compression and technology in snacks. Through a dedicated team, the company is optimizing existing e-commerce platforms by converting every consumer connection into a purchase opportunity, as well as building the next-generation portfolio to take advantage of those incremental growth opportunities.

“We estimate that e-commerce could become one of the fastest-growing platforms within our company, increasing from less than $100 million in revenue today to as much as $1 billion by 2020,” said Clouse.

Finally, the company is broadening its portfolio to target aspirant consumers on one end of the spectrum and affluent consumers on the other to respond to shifts in income distribution. “By doing so, the company is maximizing its category reach and driving incremental consumers to its brands and categories,” the company stated.

The refocusing comes as Mondelēz “reconfigures” its manufacturing network. Since 2012, Mondelēz International has closed, sold or streamlined 78 production facilities and completed or announced the construction of 14 greenfield or brownfield sites, with 40 new state-of-the-art manufacturing lines expected to be on-stream by year-end 2015.

Mondelēz International Inc., East Hanover, N.J., is a world leader in biscuits, chocolate, gum, candy and powdered beverages, with billion-dollar brands such as Oreo, Nabisco, Cadbury, Trident and Tang, among others.

Alon Brands Certifies Comdata POS System

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DALLAS — Convenience retailer Alon Brands has certified Comdata’s Smart Solutions POS system as a preferred solution for locations with a high volume of over-the-road transactions.

Comdata’s Smart Solutions suite of POS devices offer flexible, convenient payment options for store operators, according to the company. The robust PCI PA-DSS-compliant system consolidates transactions from the fuel desk and other profit centers into one convenient system, streamlining the payment process at both the fuel desk and at the pump. Alon joins Sinclair Oil and Cenex as a certified Comdata provider.

“This certification now allows Comdata’s Smart Solutions POS system to be brand certified with three brands across America, increasing our footprint of service and value for truck stop and c-store owners across the nation,” said Greg Secord, president of North American Trucking at Comdata.

With pump controls at the fuel desk and pay-at-the-pump options for drivers, the Smart Solutions technology reduces the amount of time drivers spend completing fuel and retail purchases. Its intuitive platform decreases cashier training time and simplifies back-end reporting, making it easier for store owners to integrate the system into daily operations.

“Alon Brands is always looking for ways to improve operational efficiency and enhance the customer experience with technology,” said Amir Wurzel, vice president and chief information officer of Alon Brands. “We’re excited for this new relationship with Comdata, which will help us to provide best-in-class POS solutions to our distributors.”

Based in Dallas, Alon Brands markets Alon motor fuel products at more than 800 locations.

Comdata Inc., Brentwood, Tenn., is a leading business-to-business provider of innovative electronic payment solutions.

August: Highest Gasoline Consumption Since 2007

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NEW YORK — Gasoline consumption reached its highest level since 2007 during August, according to a Reuters report.

In response to lower gasoline prices, motorists are using their cars more and buying larger vehicles with lower gasoline mileage, according to the report.

The increase essentially wipes out nearly a decade of consumption decline, the report said.

Gasoline consumption averaged 9.5 million barrels per day (bpd) during August, according to the Energy Information Administration, the highest seasonal level since 2007.

As the summer drew to a close, consumption was up by around 400,000 bpd, about 5%, compared with 2014.

The volume of traffic on U.S. roads is also rising fast, and the increase is apparent in states as diverse as New Hampshire and Florida.

Florida’s traffic rose by almost 3% in the first six months of 2015 compared with the same period in 2014, the fastest increase since 2005, according to the state department of transportation as reported by Reuters.

New Hampshire’s traffic was up by around 2.5% between January and July compared with the same months in 2014, the fastest increase in more than a decade.

Motorists are also buying larger, more fuel-hungry vehicles, Reuters reported. Car sales were up by 2.7% in August compared with the prior year but light truck sales surged 5.5%, according to Wards Auto.

Distribution Leaders Named to Hall of Fame

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CHICAGO — Two industry veterans were inducted into the Convenience Distribution Association’s (CDA) Hall of Fame Wednesday at the group’s 18th-annual Convenience Distribution Business Exchange held in Chicago.

Pat Carrico, former CDA chairman, and CEO and president of South Bend, Ind.-based Richmond-Master Distributors Inc. was given the Hall of Fame Award. Altria Group Distribution Co.’s Bob Sears, director of section sales, was this year’s recipient of CDA’s Dean of the Industry Award. Both award recipients were on hand to receive their awards.

A Mentor and Leader

Introduced by previous inductee Steve Shing with GSC Enterprises, Sulphur Springs, Texas, Carrico was described by his peers as “quiet,” “deliberate,” “an effective leader” and a “man of vision.”

“I can’t think of anyone who deserves it more,” Shing said.

After 50 years in the wholesale industry, Carrico has served as a mentor and leader. He was the chairman of CDA (formerly AWMA) in 2004 when the organization’s “fate hung in the balance,” Shing said. While he worked with the association to maintain its financial viability, Carrico demonstrated the “honesty, kindness, patience and strong work ethic” that would eventually earn him a spot in the CDA Hall of Fame.

“And have you ever seen such an amazing head of hair on a great grandfather, no less?” Shing joked.

Industry Ally

Honored for his ability to “value the importance of partners in a distributor’s success,” Altria’s Sears was named the 2015 Dean of the Industry. Presenting the award, Keith Canning, managing partner with Pine State Trading Co., Gardiner, Maine, described Sears as “the best” and “very, very good at what he does.”

“Bob is one of those people that makes you smile when you see him coming your way,” Canning said. And when challenges arise on the retail front, Sears is the kind of ally “you want in your fox hole.”

For his part, Sears said upon acceptance of the award “we try hard to listen and I hope I’ve help advance that effort.”

“Being truthful is an important part of building relationships,” he said.

CDAis the trade organization for convenience-products distributors in the United States. Its distributor members represent more than $92 billion in U.S convenience product sales, serving a variety of small retail formats. Associate members include leading convenience-product manufacturers, brokers, retailers, suppliers and others allied to the industry. The CDBX event is a meeting for CDA members where, in just two and a half days, member distributors get 30 top-to-top meetings with key trading partners in one venue.

Author(s): 
Abbey Lewis

QuickChek to Donate Water to Marathon Runners

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WHITEHOUSE STATION, N.Y. — QuickChek Corp. will supply more than 5,000 bottles of water to participants in the inaugural Suffolk County Marathon & Half Marathon to Support Our Veterans on Sept. 13. The convenience-store chain is a Silver Star sponsor of the race benefiting veterans living in Suffolk County, N.Y.

“We’re pleased to support our service members and their families who give so much of themselves,” said QuickChek CEO Dean Durling, whose family-owned company recently raised $132,000 to support military families through an in-store promotion and a charity golf outing. “As the neighborhood shopping destination close to where our customers live and work, we look to be active members of the communities we serve. We believe in helping those in need by giving back where we can.”

QuickChek team members from its store in Lake Grove, N.Y., as well as its corporate headquarters in Whitehouse Station, N.J., will hand out bottled water to the finishers of the marathon and half marathon. The race begins at Heckscher State Park and continues through Suffolk’s downtowns, parks and waterfronts.

The company also will participate in the post-race Taste of Long Island Festival, which features live musical entertainment, local food and produce.

Net proceeds from the events will be used to support and expand veterans’ services in the county.

QuickChek has a long history of giving back to the neighborhoods and communities it serves, raising millions of dollars to support a variety of causes benefiting children, families and military veterans through its 140 stores across Long Island, the Hudson Valley and New Jersey.

Local community support includes the Long Island Cares food bank and contributions to the Suffolk County Police Athletic League, Island Slow Pitch, Brookhaven Fast Pitch, Suffolk County Baseball and L.G. Cares. QuickChek also donated 25 cents for every sub, sandwich and wrap sold to the Middle Country Youth Association baseball league during the first 30 days of the company’s opening its Lake Grove store.

QuickChek Corp., based in Whitehouse Station, N.J., operates 140 convenience stores in New York and New Jersey.

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