As you'll see on Page 1, two industry trade associations appear to be headed for a merger. They are the Grocery Manufacturers of America, which represents food and beverage manufacturers, and the Association of Sales & Marketing Companies, which represents sales agencies. That category of activity used to be known as food brokerages. Indeed, until recent times ASMC was known as the National Food Brokers Association.
It's easy to view this news as minute industry arcana: things of interest to a few people in the industry, such as manufacturers' trade-relations people, those employed by trade associations and trade-press editors.
But before we dismiss the meaning of this event out of hand, let's take a look and see if this might be a harbinger of things to come in the industry itself, and in the trade-association business. I think it might be.
In any case, here's how the thing stands: The board of GMA met last week in New York and approved the proposed merger. The board of ASMC is to meet on Dec. 7 to consider the merger. (Nothing concerning Pearl Harbor Day shall escape this pen.)
Two weeks ago, I would have made bold to predict that this proposed merger is a done deal. The presidential election fiasco has illustrated that the least expected outcome sometimes is just what happens, and that counsels a lot of caution. Nevertheless, it looks like a done deal. What forces are behind such a union of trade associations? In a word, blame it on the consolidation of manufacturers and retailers.
Consolidation begets bigness and bigness begets more of the same. The process in this industry has run like this: Retailers have become bigger and more concentrated. Bigger retailers want to find efficiency by dealing with fewer vendors and making bigger buying deals. So vendors merge to keep pace with that demand. Meanwhile, food brokers -- traditionally the most fragmented element of the food distribution equation -- are pressured to become larger and find new services to provide to vendors and retailers.
To some extent, brokers have been able to combine -- and have morphed into sales and marketing agencies -- but many have fallen by the wayside too, as is often the case with small companies in an era of consolidation.
And, just as big retailers like to deal with big vendors and big sales agencies, so do they like to deal with bigger, and fewer, trade associations. Another instance of this type of activity is the Western Food Industry Exposition, a trade show that brings together several regional associations in the West, under the aegis of the California Grocers Association. As reported, WFIE met in Las Vegas last month. And, by the way, next year's WFIE will be managed by the Food Marketing Institute.
So, it's not difficult to predict that other trade associations will entertain the idea of combining or simplifying their presentations in ways that will make it easier and cheaper for sponsoring manufacturers. One way to do that is to combine shows, as is happening, or by dropping booth shows.
So, in that sense, this proposed trade-association merger is a microcosm of what we can expect from many different levels of the industry in the next several months.
