FDI BOARD MEMBERS VOTE TO JOIN FORCES WITH FMI

DALLAS -- Food Distributors International said its board of governors voted last week to become part of the Food Marketing Institute.The board's decision, which proposes to make FDI the wholesale component of FMI, came during a meeting held immediately prior to FDI's annual business conference here. FDI members will be asked to vote on the FDI-FMI consolidation in the next 60 to 90 days.The next step

DALLAS -- Food Distributors International said its board of governors voted last week to become part of the Food Marketing Institute.

The board's decision, which proposes to make FDI the wholesale component of FMI, came during a meeting held immediately prior to FDI's annual business conference here. FDI members will be asked to vote on the FDI-FMI consolidation in the next 60 to 90 days.

The next step in the consolidation process will be a vote by FMI's board on May 4, a day prior to the start of FMI's annual convention in Chicago, Karen Brown, FMI senior vice president, communications, told SN.

Both associations said the target date for the two associations to combine is Jan. 1, 2003.

The decision by FDI, Falls Church, Va., to join Washington-based FMI will not constitute a merger, nor will a new association be formed to accommodate members of FMI and FDI, as had been speculated prior to the vote, an FDI spokesman told SN last week. "The board decided the best idea was to keep the FMI structure and to ask FDI members to become part of that structure," he explained.

Under the new structure, wholesalers will join retail chains and independent retailers as the three components of "a single umbrella organization," according to FDI.

However, as previously reported, the food-service arm of FDI -- the International Foodservice Distributors Association -- will not remain part of FDI when it consolidates with FMI but will become a stand-alone association. IFDA said last week it will continue to operate as part of FDI until the FDI-FMI combination is completed.

According to John Gray, IFDA president, "Food-service distributors have felt an increasing need to be able to more sharply focus on their own business issues and alliances, which often are quite different from [those of] the wholesale channel."

FDI said it will begin mailing ballots to members within the next few weeks. Al Plamann, president and chief executive officer of Unified Western Grocers and FDI's immediate past chairman, said he expects the voting to be completed by mid-June.

He also said he expects FDI members to approve the consolidation "because we've touched enough bases to deal with all significant issues and concerns that exist out there. And although we have not polled the membership, the board members have been very supportive of this process, and if they are representative of their constituencies, then we could get a strong yes vote," Plamann said.

The decision was made to become part of FMI, rather than create a new association that would encompass FDI and FMI, Plamann explained, "because FMI has tailored itself to accommodate different industry segments, so it really didn't require any reformatting. Wholesalers will be able to continue to do what they want while becoming stronger within the FMI structure."

Rich Parkinson, a member of FDI's board of governors and president and CEO of Associated Food Stores, Salt Lake City, said some concerns were raised at the board meeting about whether the views of smaller wholesalers would get the same kind of attention they get within the FDI structure in an organization as large as FMI.

"But the answer to those concerns is, the wholesale component of FMI would have a warehouse advisory board composed of the same types of companies as the board of governors FDI has now," Parkinson explained. "In addition, wholesalers will gain up to 10 seats on FMI's board of directors -- in addition to the eight they have now -- that would include some smaller wholesalers.

"But it's important to note that the people who raised those concerns were still positive about the move to join with FMI -- they just wanted to make sure those concerns would be considered," Parkinson said.

He said questions were also raised during the FDI board meeting about what would happen if there were a difference of opinion between wholesalers and other FMI members on various governmental issues, "but those questions were resolved when it was pointed out such differences would be rare and probably inconsequential," Parkinson explained.

"Wholesalers will be able to go forward with our own government issues and our productivity issues, and we will continue to have business meetings that will probably be expanded to include retailers as well.

"And it will all be encapsulated within FMI as it is now within FDI, with the ability to eliminate redundant support functions and to be members of just one organization instead of two, which will streamline the association and make representation more efficient."

Jay Campbell, an FDI director and president and CEO of Associated Grocers, Baton Rouge, La., told SN the decision to combine FDI with FMI will be beneficial for all companies.

"In this industry, we have a considerable amount of duplication in meetings, so any collaboration by organizations to try to do things at the same times and the same places is a positive thing. And if we can do that and eliminate redundancy of services, and if we can control the costs of doing it collaboratively and still meet the needs of members, then that's a good justification for consolidation.

"And if a combination of two associations produces greater benefits to members, then the cost of admission to that association is worthwhile," Campbell said.

According to the FDI spokesman, FDI's board did not vote on a formal proposal for the two organizations to combine. Instead, the sense of the board became clear in a series of motions at the meeting, he said.

Among those motions:

That FDI members already in FMI maintain those memberships and those who are not members join FMI.

That John R. Block, FDI president and chief executive officer, become executive vice president of FMI in charge of the association's wholesale component.

That FDI members be represented within FMI by a wholesale advisory board and be given an unspecified number of additional seats on FMI's board of directors.

That FDI's food-service component -- the International Foodservice Distributors Association -- form a new stand-alone trade group, headed by John Gray, IFDA president and FDI executive vice president and general counsel.

According to Block, discussions of combining FDI and FMI into a single organization have been under way for several months.

Block said FDI will continue all of its previously scheduled activities through the end of this year. All of IFDA's 2002 programs will also proceed as scheduled, Gray noted.