Category: McLane

(BRK.A), (BRK.B)

Berkshire Hathaway’s McLane Company Inc., a leading supply chain services company providing grocery and foodservice supply chain solutions throughout the U.S., has been awarded the eastern and Midwest business by Circle K, one of the largest convenience store companies in the U.S. and Canada.

Included in the multi-year agreement, McLane will begin servicing 1,161 Circle K locations starting January 2017, and an additional 982 locations in January 2018, totaling 2,143 stores.

In addition, Circle K has extended a multi-year agreement with McLane to continue servicing its 1,356 former Pantry locations.

“Circle K is well-known and respected in the industry. They, like McLane, continue strategic growth throughout the United States to better meet the needs of their customers,” said Tony Frankenberger, president at McLane. “It is an honor to be chosen to service such a significant amount of the Circle K business, and to expand our relationship with Circle K.”

About McLane

McLane Company, Inc. is one of the largest supply chain services leaders in the U.S. providing grocery and foodservice supply chain solutions for convenience stores, mass merchants, drug stores and chain restaurants throughout the United States. McLane, through McLane Grocery, McLane Foodservice and wholly owned subsidiary, Meadowbrook Meat Company, Inc., (MBM), operates 80 distribution centers across the U.S. and one of the nation’s largest private fleets. The company buys, sells and delivers more than 50,000 different consumer products to nearly 90,000 locations across the U.S. In addition, McLane provides alcoholic beverage distribution through its wholly owned subsidiary, Empire Distributors, Inc.

In May 2003, Berkshire Hathaway acquired McLane Company from Wal-Mart, and the company currently has more than 20,000 employees.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

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Berkshire Hathaway’s McLane Company, a $28 billion supply chain services company, is suing in federal court over Texas’s “One Share” rule which currently prohibits it from selling alcohol in Texas.

The Alcoholic Beverage Code regulates the alcoholic beverage industry in Texas by establishing a three-tier system where participants in each tier—manufacturers, distributors and retailers—must operate independently. These laws are commonly called “tied house laws,” and prohibit control or influence among the tiers.

McLane Company, based in Temple, Texas, and the Texas Association of Business are suing the Texas Alcoholic Beverage Commission (TABC) claiming that the TABC has taken this common prohibition to an absurd extreme by asserting that even one overlapping share of stock ownership across tiers, whether direct or indirect, violates its interpretation of the law, the so-called One Share Rule.

They assert that the TABC is applying this rule arbitrarily and only in limited instances. They note that in the last year, over 40 manufacturers, distributors and retailers with overlapping ownership had over 2,500 permits approved or renewed by the TABC.

“The TABC’s application of Texas alcohol law defies common sense as the majority of alcohol manufacturers, retailers and distributors have some over-lapping ownership with businesses in other tiers,” said Bill Hammond, CEO of the Texas Association of Business. “The TABC is arbitrarily picking winners and losers, and that is simply not how we operate in Texas.”

They also claim that the TABC is out-of-step with other states that operate under a three-tier system. For example, in New York, Maryland, Arkansas, Kansas, Kentucky and Michigan, companies are prohibited from having interests across more than one tier only if they control or influence the activities of businesses in more than one tier.

“The Texas Association of Business opposes regulatory actions—like the TABC’s so-called One Share Rule—that harm the Texas economy and job creation, for no good reason. We’re taking this action to demand that our government create a level playing field for all business in the State of Texas—anything less goes against the very fabric of our state,” said Hammond. “Texas has succeeded principally because we make it easier, not harder, to do business here. Regrettably, the TABC’s policies do not reflect the vision and philosophy of the state, and through its absurd interpretation of the Alcoholic Beverage Code, it is discouraging business expansion.”

The Texas Association of Business says it believes that the TABC’s erroneous interpretation of the law and inconsistent licensing practices clearly violate the protections afforded to all businesses by the U.S. Constitution.

The Texas Association of Business calls for the TABC to abandon the so-called One Share Rule, and begin enforcing the three-tier system in what it feels is a fair, consistent and legal manner, similar to other state alcohol agencies.

McLane’s parent company, Berkshire Hathaway, owns 2% of Walmart, and this has been the basis for the prohibition.

Berkshire acquired McLane from Wal-Mart in 2003, and roughly one-third of its annual revenues are still from Wal-Mart.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

(BRK.A), (BRK.B)

Berkshire Hathaway’s McLane Company, a $48 billion supply chain services leader, providing grocery and foodservice supply chain solutions for convenience stores, mass merchants, drug stores and chain restaurants throughout the United States, is rolling out the McLane Kitchen’s nationwide Fresh Produce + supply chain solution.

Fresh Produce + is a turnkey solution that provides top quality products, operational best practices, merchandising units, information on suggested retail pricing and best-in-class customer service to help operators establish their locations as destinations for fresh produce.

According to Mclane, what makes Fresh Produce + truly unique is McLane’s unmatched ability to deliver fresh produce nationwide, allowing operators in multiple regions to offer a consistent product mix of healthier options. For single c-stores, McLane’s nationwide distribution means leveraging the company’s buying power to better compete pricewise, while ensuring the high-quality fresh produce.

Because choice in pricing is a key factor in creating a solution that works for every retail customer, Fresh Produce + offers mark-up options associated with varying levels of product guarantee. Fresh Produce + is also fully compatible with McLane’s Premium Ordering Management Suite (POMS) and smart handheld technology, giving operators the ability to order fresh items just like any other SKU. Over the coming months the solution will integrate seasonal items and category management to ensure operators continue to grow their return.

According to an independent study, close to half of the nation’s population visits a convenience store each month. What’s more,48 percent of Americans say c-stores are a place to buy fresh items.

According to a 2015 NACS retailer sentiment survey, 50 percent of c-stores have expanded fresh fruit sales, while 30 percent have increased cut fruit and vegetable offerings.

“We recognized our customers wanted a consistent way to fill their consumers’ need for safe, fresh, better-for-you produce,” said Holly Veale, product director for foodservice at McLane. “McLane Kitchen’s Fresh Produce + solution makes fresh produce and cut fruit available to all our customers, regardless of size or location.”

In conjunction with the nation-wide rollout of McLane Kitchen’s Fresh Produce + solution, McLane recently announced its affiliation with The Partnership for a Healthier America (PHA), a nonpartisan nonprofit organization devoted to working with the private sector to ensure the health of the nation’s youth by solving the childhood obesity crisis within a generation. McLane is the first grocery and chain restaurant distributor to make a commitment to PHA.

“We’re honored to come on board as the first grocery and chain restaurant supply chain distributor to support PHA’s efforts,” said Tony Frankenberger, president of McLane Grocery Distribution. “It is now more important than ever for the food, retail and distribution industries to work together to help solve the childhood obesity problem, and to offer consumers fresh and healthier products to make better food choices on a daily basis.”

“Consumers are shopping more and more at convenience stores throughout the week, and their demand for healthier options — regardless of where they shop — is not slowing down,” said PHA CEO Lawrence A. Soler. “We are proud that companies like McLane are stepping in and joining the ranks to provide thousands of Americans access to nutritious foods. This is a tremendous opportunity to reach customers where they are — in convenience stores, drug stores, mass retailers and restaurants.”

“The fresh and better-for-you food category will continue to expand as consumers become more health-conscious and the c-store industry places additional emphasis on growth,” added Veale.

“Now, through Fresh Produce + and McLane’s nationwide distribution network, location will no longer hinder a retailer from offering fresh produce choices to their customers.”
Veale concluded, “McLane’s role in making fresh products available to any c-store location — no matter the size or individual buying power — will be a game changer in the industry.”

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.