INDUSTRY MERGERS TRANSFORM TWO STATE GROUPS

JON SPRINGER

A lot has changed in the 100 years since state food-merchant associations were formed in New York and Wisconsin. But, say executives of the associations, changes over the last half-dozen years have been as dramatic as any in their respective histories.

Sweeping consolidation throughout the industry has changed the groups from largely social organizations of independent retailers into politically minded trade associations whose memberships include multibillion-dollar corporations. While the Food Industry Alliance of New York State and the Wisconsin Grocers Association will celebrate their past this year, they are clearly focused on the legislative challenges their members face today.

Barbara McConnell, president of Food Industry Association Executives, Flemington, N.J., said such concerns are typical of state associations today.

"Initially, state organizations were formed for networking, sharing information and providing things like couponing and employment services for their members," McConnell said. "But, as the industry grew, the larger companies were able to handle many of those issues internally, and they realized they could benefit their business most through government relations.

"It's been a dramatic shift."

Following are the stories of those changes in New York and Wisconsin, and a look at the challenges the organizations face today:

New York Food Alliance

The Food Industry Alliance of New York State was founded as the New York State Food Merchants Association in 1900, but the name change is just one of its noticeable changes of the last years, said James Rogers, president. Industry consolidation resulted not only in a smaller number of member companies, but leaner companies less willing to spend promotional dollars, so the FIA has been tightening its belt and narrowing its focus accordingly, Rogers said.

"We did some strategic planning in the mid-1990s that has really affected how our organization runs and what it's all about," Rogers said. "We wound up making some gutsy moves, but they were necessary ones. We feel like everything we do today has to have value for our members and it has to be quantifiable."

Included among the recent changes:

Changing the organization's name to reflect a broader membership base.

Moving its offices from Tarrytown, N.Y., to the state capital in Albany.

Elimination of its newspaper in favor of weekly alerts by fax and e-mail.

Elimination of its annual trade show in favor of a "trade summit."

Inviting suppliers and manufacturers to have the same "full membership" as retailers and wholesalers, including seats on the FIA board.

For years, the FIA's annual convention and trade show provided members a chance to meet, socialize and exhibit and was a major fund-raiser for the organization, Rogers said. However, exhibiting at shows had become prohibitively expensive for participating companies -- particularly those looking for a return on investment and quantifiable effect on the bottom line.

So, starting in 1997, the FIA dropped its convention/trade show in favor of a Trade Summit, a business-only, two-day event featuring a series of prearranged 45-minute sessions between the FIA's 20 leading chains and wholesalers and manufacturer/suppliers. The move saved thousands of dollars for member companies yet still provided the opportunity for member companies to do business, Rogers explained.

"The companies tell us it's gone extremely well for them," he said. "The cost is modest [registration is $300] as compared to the trade show and I think all our members get more out of it. The trade show simply wasn't as beneficial to us as it once was."

The drop in revenue as a result of canceling the trade show put the FIA "between a rock and a hard place," Rogers admitted, but the group has helped make up for the loss by introducing a new event, the Leadership Banquet. The Leadership Banquet salutes FIA board members and top executives from member companies. Keynote speakers at the first two events were New York Gov. George Pataki and Attorney General Eliot Spitzer.

"It's a networking event that ties into our government-relations efforts," Rogers said.

The FIA has been quite busy on the legislative front, Rogers said. In recent years the FIA lobbied lawmakers in Albany to pass an increase in the handling fee on bottle returns and reduce the ton-mileage tax on delivery trucks by 25%. It also supported a successful effort to reduce unemployment tax for its members. In all, those changes saved the industry as much as $40 million a year, Rogers said.

This year, the FIA's major legislative aim is to allow wine sales at supermarkets (New York currently allows wine sales only in state-licensed liquor stores, although supermarkets can sell beer). Rogers admitted it would be a tricky sell politically but added the organization has solid argument behind it.

"New York is the second-largest wine-producing state in the country, and yet there are restrictions on who can sell it here," Rogers said. "We believe wine is an extension of meals at home -- essentially a table food. Allowing supermarkets to sell wine would be a great convenience and may increase sales, which would be good for the state and our members. Our members are already carding people for beer sales so there really is no issue there.

"Some legislators just don't want to touch the issue," Rogers continued. "But that's what a trade association is all about, representing members to pass legislation and change the status quo."

Wisconsin Grocers Association

The Wisconsin Grocers Association was founded in 1900 as the Wisconsin Retail Grocers and General Merchants Association, in LaCrosse, Wis., and underwent no fewer than six name changes since, said Brandon Scholz, who became the group's president in 1997. However, he said, the organization still holds true to the declaration of purposes set forth by founder John Mulder in 1900:

"We declare that the purpose of this association shall be to encourage and promote ... the welfare of the individual merchant and consumer; to correct trade abuses; to disseminate trade information; to encourage improvements in business methods among retail merchants; and generally advance the interests of such merchants," wrote Mulder in 1900.

Scholz, a former chief of staff to former U.S. Rep. Scott Klug, R-Wis., said he joined the WGA at the time the Madison-based organization needed to focus on lobbying efforts.

"For too many years, this organization was just getting clobbered in the legislature," Scholz said. "I say this without any disrespect for those people who came before me in this organization. They built a great membership, but for the most part it was a social club. Today, we feel doing government affairs is what this organization should do."

Scholz said it is especially important for grocery chains to keep an eye on the statehouse because, "Today, we find there are very few pieces of legislation that don't affect us in one way or another."

One such issue Scholz and the WGA are watching now is privacy. According to Scholz, a bill is currently circulating in the state senate that, while well-intentioned, has the potential to shut down frequent-shopper card programs. Scholz said the bill is aimed at those who misuse confidential consumer information. He testified at a hearing that such legislation would be unfair to WGA's supermarkets.

Elsewhere, the association in 1999 successfully lobbied for changes in state laws, allowing retailers to be eligible for winning lottery-ticket payouts and sales incentives. The WGA also secured its members an exemption from the personal property tax for computers and related equipment, such as scanners and coupon dispensers, that could save businesses $64 million a year, Scholz said.

Unlike New York, Wisconsin has continued to hold an annual trade show and convention. It also publishes a bi-monthly magazine, Wisconsin Grocer, which was first published in 1912. According to Scholz, both are necessary to raise money for the organization and are a highlight of membership.

"No organization can exist on dues alone," he said. "For our part, we have to view our organization as a small business and run it that way."