FOOD BANKS CAN STILL BANK ON RETAILERS, DESPITE ECR

Supermarkets are continuing to heavily support food banks despite changes in the supply chain that reduce the amount of excess inventory.A host of new programs devised by food banks in concert with manufacturers and distributors are encouraging supermarket cooperation. This is occurring even as Efficient Consumer Response pares down the amount of products in the pipeline and the warehouses.While certain

Supermarkets are continuing to heavily support food banks despite changes in the supply chain that reduce the amount of excess inventory.

A host of new programs devised by food banks in concert with manufacturers and distributors are encouraging supermarket cooperation. This is occurring even as Efficient Consumer Response pares down the amount of products in the pipeline and the warehouses.

While certain retailers, including H.E. Butt, Stop & Shop and Minyard, are known for their heavy involvement in food-bank programs, the industry as a whole has excelled in contributions and continues to do so.

Indeed, regional food banks win hands down as the most common community-relations activity for supermarket chains.

A Food Marketing Institute survey of community-relations efforts by supermarkets that's still being tabulated showed 82% of the 227 supermarket companies responding said they were involved or very involved with food banks.

"Donating to food banks was the single most popular community-relations activity," noted Celia Slater, manager of community relations for the Washington-based FMI, who is compiling the survey. Across the board, companies were more apt to be involved with food banks than any other charity, she said.

Supermarket corporate donations, not only of food, but of equipment, transportation and expertise, are a key part of the food-bank effort, noted executives at Chicago-based Second Harvest, the nationwide network of about 200 regional food banks.

This food-bank network distributes products to about 50,000 charitable feeding programs, including food pantries, soup kitchens and homeless shelters. Second Harvest said these programs feed about 26 million people annually, including more than 11 million children.

The Good Samaritan Food Donation Act, which was signed by President Clinton last Oct. 1, protects retailers, wholesalers and manufacturers who donate products to food banks, noted Slater.

The major reason food companies give for not participating in food-bank programs is the risk of liability if someone becomes ill from donated food, according to Second Harvest.

This law standardizes the liability exposure of donor companies by preempting assorted state laws offering varying degrees of protection. Second Harvest worked for the national law to ease the concerns of multistate companies.

While food-manufacturing groups have no record of claims generated by donated food, the law now protects donors from liability if a charity mishandles products and someone becomes ill.

Various food-industry associations, including the FMI and the Grocery Manufacturers of America, Washington, have helped develop standards and guidelines for food banks to ensure safe handling of donated products. The banks are also inspected by industry volunteers and health departments.

Packaging and distribution efficiencies in the food industry have reduced the amount of damaged and unsalable merchandise available for distribution to food banks, so Second Harvest has begun a number of programs to increase the percentage of such merchandise that goes to food banks, and to develop new sources of donations.

The newest program, Production Alliance, is an effort to have manufacturers produce some products directly for Second Harvest. Pillsbury is the first manufacturer to become involved in that effort.

Second Harvest is also trying to expand the number of reclamation centers operated by food banks to process unsalables for retailers.

In a third effort, Harvest Scan, Second Harvest food banks provide specific information on donated merchandise to participating manufacturers.

For supermarket chains, noted Debra Keegan, director of marketing at Second Harvest, the expansion of the reclamation centers is perhaps the most important program.

"As food banks begin to run reclamation centers, it provides an opportunity for the partnership with supermarkets to improve. We will provide the reclamation service, and do it for less money than other contractors because we don't have a profit motive," she said. A&P in Milwaukee, for example, has turned over its reclamation work to that city's food-bank program, she said.

Only six of the food banks affiliated with Second Harvest currently run reclamation centers -- in Milwaukee; Cincinnati; Nashville, Tenn.; McKeesport, Pa., near Pittsburgh; Tyler, Texas; and Omaha, Neb. At these sites, damaged and unsalable merchandise is scanned and the information compiled so it can be reported to manufacturers.

"The program appeals to retailers who want to get out of the reclamation business," Keegan noted.

Second Harvest is developing a turnkey program so it can, in effect, deliver a reclamation center to food banks that want to get into that business.

The new Production Alliance, said Keegan, provides an additional way for food manufacturers to donate to food banks, by producing first-line products directly for Second Harvest, which distributes them to regional banks.

The production run is a charitable donation for the company.

Pillsbury is already participating in the program.

In December, Pillsbury ran its production line for B&M baked beans in Maine for two days specifically for Second Harvest. "They donated 10,000 cases of beans -- a great product for us because it is protein-rich and shelf-stable," said Jahn Parise, Second Harvest spokeswoman.

Pillsbury produced 10,000 cases of mashed-potato flakes in an Idaho plant in January, and a run from its Progresso soup factory this spring, she said.

"We are talking with other manufacturers about the program and hope to have them on board by this summer," noted Keegan.

This program, said Parise, is, in part, an effort to cut back on Second Harvest's value-added processing program, in which manufacturers donate products, but the food banks have to come up with packaging for the donation.

The Harvest Scan program is an agreement between food banks and manufacturers to provide additional tracking information on donated products.

Currently, four manufacturers are participating -- Kellogg, Mead-Johnson, Smuckers and Church & Dwight -- and food banks in five cities are set up to do the scanning -- Denver; Hillside, N.J.; Milwaukee; Boston; and Fort Worth, Texas.

The banks take these manufacturers' unsalable products from retailers and wholesalers, scan them, and provide reports of how much was usable and, therefore, donated, and how much had to be discarded, so the manufacturer can take the appropriate tax deduction for the donation.

"If providing data helps offset costs to the manufacturers and, therefore, increases donations, that's what we want to do," noted Keegan.

As the FMI survey shows, supermarkets in general are major participants in the food bank program.

H-E-B, based in San Antonio, works with 14 of the 19 food banks in Texas, and recently began working with feeding-assistance programs in Mexico following the February opening of its first supermarket across the border, in Monterrey.

"When we opened the store in Monterrey, we established a program to donate all the usable food from that store," said Eddie J. Garcia, manager of public affairs and head of the chain's food-bank efforts. He indicated that program would be expanded as H-E-B expands in Monterrey, with a second store in the city planned for late fall or early 1998 and a couple more on the drawing board.

The chain started a test program in Mexico four years ago, establishing the first food bank in the country.

H-E-B has donated more than 150 million pounds of food and nonfood items to Texas food banks since that program was established in 1983. The company also provides products for emergency and disaster-relief operations in Texas and the Southeast as well as Mexico.

Robert Tobin, chairman and chief executive officer of Stop & Shop Cos., Quincy, Mass., is an avid supporter of the food-bank program and serves as a director of Second Harvest.

"We donate products worth about $12 million at retail every year," he noted, along with sponsoring food drives in the stores and raising about $250,000 a year with an annual coupon book, donating 5 cents for every coupon redeemed by customers.

The in-store exposure of the food-bank program has helped generate food-bank volunteer efforts from both customers and Stop & Shop employees, he added.

But the chain's efforts go beyond donations from its reclamation centers. "We are the transportation arm" for food banks in the chain's New England markets, he noted, with trucks available whenever the banks need them.

Stop & Shop also supplies equipment such as trailers, pallet jacks, used computers, used checkstands and warehouse racks. "We have our health inspectors check their warehouse" and help train food-bank personnel in food-handling practices.

"Basically, we've adopted them," said Tobin of Stop & Shop's relationship to the food bank. "It's easy to write a check," he noted, "but it's important to get people involved emotionally" with such programs. "If we were to end our involvement now, we'd have a mutiny on our hands from our people."

The grocery industry's increased efficiency, the whole ECR effort, "works against food banks," Tobin said. "As the industry becomes more efficient, there's less unsalable merchandise, so the food banks are looking for other ways" to obtain products. Not only are the food banks seeking direct donations of manufactured goods, such as the Pillsbury program, but there is also increased interest in taking prepared foods, both from restaurants and from supermarkets as they expand their prepared foods programs.

And, Tobin commented, even as the supply somewhat diminishes, "we are already seeing demand picking up" as welfare reforms are implemented.

Liz Minyard, co-chairman of Minyard Food Stores, Coppell, Texas, has been active in the North Texas Food Bank program since it began in 1982. Minyard's, like other chains, donates food, plus paper bags, office furniture, shelves and warehouse racks.

"We are also donating fresh produce as part of our regular contribution," she said.

Second Harvest has made a major effort recently to increase the amount of fresh fruits and vegetables available to food banks, with assistance from the United Fresh Fruit and Vegetable Association, Alexandria, Va., and the Produce Marketing Association, Newark, Del.

"We also are a source of help to the food bank on things like running a warehouse," noted Minyard. "We have an open-door policy" whenever the bank needs help or advice.

Procter & Gamble's recent changes in its policy toward unsalables, aimed at improving efficiency by paying retailers a flat quarterly amount to cover previous refunds and adjustments, is not expected to affect the availability of that company's products for food banks.

Elaine Plummer, a spokeswoman for P&G, Cincinnati, said that, by and large, unsalable merchandise will be coming back to the company from retailers and wholesalers as it has in the past. P&G processes that merchandise and then donates it to Second Harvest.

"We average $8 million worth of products a year to Second Harvest," she said.

The only change will be that small amounts of products with a value of less than $175 will be left for the retailers or wholesalers to dispose of, through local food banks if they choose.