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As the Food Marketing Institute (FMI) prepares to commence its annual convention and exhibition in Chicago this weekend, it does so in a time of extraordinary upheaval within the industry. MNB will feature ongoing reports from the show, not just offering a look at what is happening there, but explaining why…and what it means for retailers, manufacturers, and consumers.

In advance of the opening of the FMI Show on Sunday, MNB engaged in an exclusive e-interview with Tim Hammonds, FMI's president and CEO, to get a sense of how the organization is grappling with a changing industry, and how industry is dealing with almost overwhelming competitive challenges.

MNB: The sense I get from some retailers with whom I speak is that they are concerned about the ability of FMI to represent the disparate segments of the business. it isn’t that they don't believe in FMI’s initiatives for independent operators; it is just their sense that this is a very tough time to be a trade association. Can you address what FMI is doing to address these concerns among some retailers, especially in view of the consolidating manufacturer community, the addition of FDI, and the highly varied retailer base that makes up your membership?

Tim Hammonds: If members had a chance to sit with me during the course of a year, I think they would be comforted to learn that almost never do issues get raised in the context of one competitor versus another. Quite the opposite; we find the breadth and diversity our membership to be a tremendous asset to the organization.

As I see it, the role of this association is to unite the industry around common goals and to provide an unbiased look at the issues facing all of us. An example of a common goal would be food safety. This is high on everyone’s priority list and one of FMI’s core strengths. An example of an unbiased look at issues would be the McKinsey research we presented at the 2003 FMI Midwinter on Competing In A Value-Driven World. You might be surprised to learn that some of our most glowing compliments for that study came from our largest members and our supercenter operators even though it specifically addressed how independents and regionals can survive and thrive in a tough climate.

Members facing a tough competitive climate, a tough political agenda, aggressive regulators, and suppliers going through wrenching change themselves need an association with real clout. They need an advocate with enough resources to develop unique programs they can’t find anywhere else, they need a widely respected political voice here in Washington, and they need someone the suppliers listen to and respect. In all those areas, FMI delivers results no other association in our industry can match.

MNB: Food safety remains a major concern, with the additional pressure of food security worries in a time of war. What’s your sense of where the industry is at, especially in the context of consumer concerns?

Tim Hammonds: There are two related but separate issues that we need to address. Food safety is concerned with normal safe handling practices throughout the entire food chain. Food security is concerned with the deliberate contamination of food for use as a weapon against our customers. In the post-9/11 world, this industry has pulled together to address both of these issues in a way that should make all of our customers proud.

Because stores and warehouses are open somewhere at all hours of the day and night, the public can rest assured someone is working hard to protect the integrity of our food supply literally 24 hours a day, seven days a week.

Over the last twelve months, FMI has developed two unique resources to address both issues. A new and unique custom food safety training and certification program for supermarket associates has just been released. Information for superSAFEmark is accessible on the home page of the FMI web site On that same home page, members can gain access to our Food ISAC. This is the Information Sharing and Analysis Center coordinated by FMI that functions as the communications link for the food industry from farm to table with the FBI and CIA intelligence services. This industry is working hard to be sure our nation’s most basic industry is also our nation’s safest.

MNB: FMI has always been a political player, with an active lobbying mission. For the moment, let’s put the war aside because that seems to have bipartisan support. What is FMI’s legislative agenda for 2003-2004, and how easy/difficult is it to pursue this agenda at a time when war seems to be all anyone wants to talk about, and the GOP owns the White house and Capitol Hill?

Tim Hammonds: I know it may seem that international events are dominating everything right now, but the political agenda is still full and moving. Our top priorities include all of the following.

• Making sure our suppliers understand how disastrous the new country-of-origin labeling requirements are for farmers and making sure producers are equipped with all the information they need to seek its repeal.
• Preserving the president’s tax package while we speed up the effective dates and make estate tax repeal permanent.
• Eliminating the double taxation of dividends.
• Working to help the administration craft a workable prescription drug benefit for seniors that preserves community pharmacies.

There’s more, of course, including immediate expensing for security equipment and systems, ergonomics guidelines, and WIC reform along with allowing fair market value for food donations. These are the hot buttons right now.

As to how easy it is to work on these issues, it isn’t. The situation in Iraq, the president’s stimulus package, tax reform, and the fact that presidential hopefuls are already crafting their campaigns have all combined to make this a very partisan environment. This isn’t an unusual environment for Washington but it does make it extremely important that we be able to count on our members to make the right contacts with the right people at the right time. Of course, this is one of the main reasons the industry decided to put FMI and FDI together. Presenting a unified voice for the industry has never been more important.

MNB: The nutrition/obesity issues are prominent in the news these days, and while more of the focus seems to be on fast food restaurants, it doesn’t seem too much of a stretch to conceive of the possibility that the role supermarkets play in people’s nutritional lives, and especially the childhood obesity epidemic, could become part of the national drama that is unfolding. What do you think retailers need to do to stay ahead of this curve?

Tim Hammonds: Just last month I did a column on this for our magazine The Advantage. My point was simple. The tobacco lawsuits never gained traction while the plaintiffs were arguing that tobacco caused cancer. Traction came when the argument shifted to the nature of information provided to consumers and the nature of advertising to the public. I predicted obesity lawsuits would follow the same course. If that happens, food retailers become targets right along with food manufacturers and fast food restaurants. To prevent this, supermarkets need to start right now to build a strong track record of providing accurate, easily understandable information on diet, health, and lifestyle choices (exercise) to their customers.

Once again, FMI has a wealth of information our members can use. It can be found in the Nutrition and Health Information section on the Consumer Affairs page of our web site.

MNB: Beyond the issues addressed above, are there other core concerns and issues that you feel FMI needs to focus on in the next 12 months?

Tim Hammonds: As a member driven organization, FMI knows each year will bring new and special challenges that demand action. We will work with our members to create pro-active solutions to each of these as they arise.

We already know what some of these issues will be in the year ahead.

Emerging demographic groups continue to reshape society and, by extension, the food industry. We will continue to help our members understand the needs of Hispanic and Asian shoppers as well as understanding the continuing pressure for price-driven marketing.

Technology continues to present our industry with a range of challenges and opportunities. Last year we worked with members on a landmark white paper to create an improved understanding of how all of our major technology issues are linked together. This year we will continue our efforts to help our members take advantage of emerging technologies. Issues like Sunrise 2005, the expansion of the UPC code, the creation of the electronic product code, data synchronization and UCCnet are all receiving attention.

Constant improvement in supply chain relationships is always a significant issue for our members and FMI. Over the past two years, our Industry Relations Committee has led a push for great cooperation with our partners in the manufacturing community. We will continue to work with our members to identify and improve trading relations issues. Adding the FDI Industry Relations Committee priorities to our mix has brought a new vitality to these efforts.

And finally, FMI will continue to be a forceful advocate in every possible way for the industry’s issues. The challenges there can be as varied as new government regulations to sudden attention from the animal welfare community. Whatever the case, we will try to understand member needs and then unite the industry behind a solution that ultimately benefits our consumers.
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