FMI-FDI MERGER PACT LIKELY WITHIN MONTHS: BLOCK

FALLS CHURCH, Va. -- John Block said he expects Food Distributors International here to reach an agreement with the Food Marketing Institute in the next few months and for the two associations to effect a merger by Jan. 1.Block, president and chief executive officer of FDI, spoke to SN prior to the start of FDI's annual Business Conference & Partners Program this week in Dallas.FDI's board was scheduled

FALLS CHURCH, Va. -- John Block said he expects Food Distributors International here to reach an agreement with the Food Marketing Institute in the next few months and for the two associations to effect a merger by Jan. 1.

Block, president and chief executive officer of FDI, spoke to SN prior to the start of FDI's annual Business Conference & Partners Program this week in Dallas.

FDI's board was scheduled to meet last Saturday to discuss the merger. Although a formal vote for or against the merger was not on the board's agenda, Block said it was possible a formal vote could be taken at the meeting.

According to Block and Jerry Lestina, incoming FDI chairman, the time is right for the two associations to get together.

"All companies in the industry, including FDI members, are faced with the challenge of improving the efficiencies of their operations and of continuing to cut costs, and they're interested in looking at opportunities to combine the two associations as a way to achieve those results and to multiply our strengths," Block said.

"Because both associations work hard on government affairs issues, there's a feeling we can multiply our strengths by coming together.

"FDI's wholesale members think, by and large, there's a lot of value if they combine with FMI into a single organization because FMI has a huge amount of resources that will allow us to do more in the areas of research and education. And FDI also brings a lot to the table in terms of logistics expertise, which is one area of strength that will be of benefit to a merged organization.

"We have been working for years with warehouse operations and transportation professionals at our wholesale member companies, and many have expressed the hope this work will continue."

Lestina, president and chief executive officer of Roundy's, Pewaukee, Wis., said he believes the merger would benefit all segments of the food industry, particularly in the area of communications, citing two unique aspects of FDI's annual conference: Vendex, a series of scheduled meetings between vendors and wholesale customers; and the business conference suites, where top-level wholesalers move from room to room visiting with their suppliers.

The Vendex meetings are conducted at the tactical level, while the conferences in the business suites involve executives at a more strategic level.

In a post-merger environment, Lestina said, "adding chain representatives and independent retailers to that mix would be very beneficial, and it would give manufacturers a single venue at a given time to meet with all their customers in one place. In addition, it would cut down on costs for everyone involved.

"And it's a natural to combine FMI's midwinter conference and FDI's executive conference into a single meeting."

Lestina said a joint industry committee composed of members from the FDI and FMI boards plans to meet to determine the structure of the merged entity, the strategic issues it will deal with and the priorities it will have.

Asked if FDI might retain its current name as a segment of FMI, Lestina said there's been no determination yet on what names will be used. "The merged association might retain the FMI name, or it might come up with a new name," he explained.

According to Block, part of the impetus for combining the two associations is the effort to reduce duplication of efforts -- a point made clear by the presence of the same eight industry executives on both association's boards of directors, he said.

FDI contemplated a merger with the National Grocers Association several years ago, Block said, "but we could never put it together. But with eight common board members, this merger seems like something we could do with each other."

Another asset FDI would bring to a merged association, Block said, is the annual business conference itself -- "the industry's hardest-working business meeting," he declared.

In addition to the Vendex and business conference suite meeting, this year's event will feature three general sessions, including the following:

A panel discussion on the present and future of the industry featuring Phil Smith, senior vice president, procurement, Unified Western Grocers, Los Angeles; Chris Estes, executive director of purchasing, Git-n-Go Convenience Stores, and Bill Loneman, senior director of corporate retailing, Nash Finch Co., Minneapolis.

An executive forum sponsored by Unilever featuring a talk by Gen. Henry H. Shelton, former chairman of the Joint Chiefs of Staff.

A luncheon speech by former first lady Barbara Bush.

The conference will also include the presentation of FDI's annual Herbert Hoover Award to Mike Wright, chairman of Supervalu, Minneapolis, for his record of industry and community service.

Lestina said he is optimistic that wholesale distribution will continue to help independents flourish. "The independent still has a marvelous future in this country, especially those willing to reinvent their businesses," he said.

"We see it in our region all the time -- independents who have the ability to put together programs exclusive to their marketing areas rather than pursuing the cookie-cutter approach of the chains. Developing those exclusive programs is crucial for anyone who wants to be successful as a way of differentiating himself."

Although a majority of independent retailers are "doing what they need to do," Lestina said, "there's another segment that's continued to make money over the years and has no interest in reinventing itself, and those are the ones that will have to sell out or close."

Lestina said he expects more wholesale consolidation. "There are still some opportunities, though, most of the big deals have already been consummated."

He said consolidation is making it more difficult for retailers to remain independent.