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Kate Spade in deal to gain full control of Japanese venture

BY Staff Writer

New York — Fifth & Pacific Cos., formerly known as Liz Claiborne, said that its Kate Spade LLC brand is buying out the interest of its partner in a joint venture based in Japan, the Associated Press reported.

Kate Spade will have full ownership of Kate Spade Japan Co. after it buys Sanei International Co.’s 51% stake in the business. Fifth & Pacific said the deal is expected to cost $45 million to $50 million, including debt repayment and transaction fees.

Fifth & Pacific sold the Liz Claiborne brand and its Monet brand to J.C. Penney Co. last year to focus on its Kate Spade, Lucky Brand, and Juicy Couture businesses. The company officially changed its name and its ticker symbol in May.

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GMA exec heads to Hillshire Brands

BY CSA STAFF

DOWNERS GROVE, Ill. — A Grocery Manufacturers Association executive is taking on a new role at Hillshire Brands.

Dennis Belcastro has been named VP government and industry affairs for Hillshire Brands and will be responsible for developing and implementing the company’s engagement strategy with federal, state and local elected officials, regulatory agencies and key policy-makers, in addition to managing strategic customer and industry events. Belcastro officially steps into his new role on July 30.

Most recently, Belcastro was EVP industry affairs and collaboration at the Grocery Manufacturers Association. At GMA, he led the Industry Affairs Council, one of three key industry guidance and governance committees that represent more than 300 leading food, beverage and consumer product companies.

"Denny’s ability to facilitate relationships with all levels of government and across the industry will help Hillshire Brands navigate and respond to the regulatory environment that surrounds modern food production," Hillshire Brands CEO Sean Connolly said. "We are pleased to have him bring his knowledge of the industry and food business acumen to Hillshire Brands."

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Study finds traditional grocery stores, food brands may fall out of favor

BY CSA STAFF

NEW YORK — It seems that traditional grocery stores and established food brands may lose their position in the market due to a confluence of changing demographics, economic factors and customer preferences, according to new research from global investment bank Jefferies and global business advisory firm AlixPartners.

In their study, "Trouble in Aisle 5," the companies surveyed 2,000 consumers ages 18 years and older and found that millennials — those consumers born between 1982 and 2001 — are positioned to become the next "mega-generation" as baby boomers — those born between 1946 and 1964 — move into the next phase of their lives and consequent shopping patterns.

"We envision an environment that will require increased nimbleness and a relentless focus on the consumer for established food manufacturers and retailers, and the potential for rapid growth for new concepts and products," said David Garfield, managing director at AlixPartners and head of the firm’s consumer products practice.

Millennials, the study noted, present a strikingly different attitude towards consumption than their baby boomer parents and grandparents. For them, convenience outweighs loyalty. "Trouble in Aisle 5" found they are 23% less likely to value food brands in their purchasing decision and 18% less likely to shop at traditional grocers, a major shift from baby boomers’ shopping priorities. In line with this, millennials are much more willing to explore different distribution models (i.e., online shopping, smartphone shopping, delivery services, etc.) and spread their shopping across different brands and channels (i.e., mass merchants, club stores, drug stores, convenience stores, online, etc.) to fulfill their shopping needs. Interestingly, most of the millennial demographic is price sensitive but are willing to pay more for the specific attributes they value: convenience; freshness; health; variety (of flavors, international/ethnic cuisines, product sizes, etc.,); and natural/organic (58% of millennials, compared with 43% of baby boomers).

"Millennials clearly present significant challenges, and food-makers and traditional grocery retailers need to start making changes now to address the emerging needs of this demographic group, as in many ways we’re just in the second inning of this ball game," said Scott Mushkin, managing director and senior equity research analyst covering food and drug retailing and packaged food at Jefferies.

Although millennials’ prominence continues to rise, Jefferies’ and AlixPartners’ study noted that baby boomers continue to maintain significant influence on traditional center-of-the-supermarket purchases, although they are set to move out of their peak-earnings years into retirement and will be more reliant on fixed incomes by 2016. Because of this, appears less willing to pay additional money for what they desire.

Overall, the study concluded, food-makers and grocers will have to adjust to meet the needs of both millennials and baby boomers as they age and as their finances, preferences and choices change.

"In addition to adjusting to a new financial situation, baby boomers are now paying greater attention regarding their food choices as a means of remaining healthy and extending longevity," said Rich Vitaro, director in the consumer products practice at AlixPartners. "Taste, freshness and quality will continue to be important, as will products addressing health and wellness and specific dietary needs tied to aging."

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