Finding Its Core

Alon Brands signs with Core-Mark International

Mitch Morrison, Vice President & Retail Executive Platform Director, Winsight

ODESSA, Texas -- On a trip two years ago to El Paso, Texas, Mike Scarpelli did what he always does when he leaves his back yard of Odessa, Texas--he traipses unassumingly into other c-stores for ideas.

And on this trip, Scarpelli, vice president of marketing at Alon Brand's Retail arm, Southwest Convenience Stores, noticed a line of fresh, prepackaged sandwiches that impressed him.

"What I saw looked pretty good. It was the freshness that got my attention," Scarpelli shared with CSP Daily News. "I inquired about it and found out that the sandwiches were coming from Core-Mark."

So when the retail chain's contract with its longtime distributor came up for renewal earlier this year, Scarpelli and parent company, Alon Brands leadership team of Yossi Lipman and Kyle McKeen, sprung to action.

In January, officials from Southwest Convenience and Core-Mark International met and brainstormed about fresh foodservice, consolidating what was a vast DSD network servicing Southwest Convenience's far-flung network of more than 300 stores, stretching from Odessa to Albuquerque, N.M.

On Monday of this week, the two companies signed a five-year deal effective next January that makes Core-Mark the retailer's primary wholesaler. And the deal comes as both companies are embracing dramatic growth and change within their respective cultures.

South San Francisco, Calif.-based Core-Mark has surged, inking several major contracts across the Southwest and Southeast, including a deal in July with Alimentation Couche-Tard in the Southeastern U.S. As well, Core-Mark has bulked up through strategic distribution acquisitions.

Indeed, just this week, Core-Mark reported a net sales increase of 11.6% for the third quarter, due in large part to its springtime acquisition of Forrest City Grocery Co. and contract with Couche-Tard.

The company has also significantly upgraded operationally, garnering dividends with two major programs--its fresh initiative and its Vendor Consolidation Initiative (VCI) which, through parlayed relationships with scores of local vendors and DSDs, has allowed the wholesaler to build a vibrant dairy and fresh foods platform. "Our division alone will hit nearly $6 million in dairy sales," said Alan Thomas, president of Core-Mark's Albuquerque division, who, along with his Fort Worth division counterpart Bill Stein, is credited with the deal with Southwest Convenience Stores.

The retail arm of Israeli-backed Alon Brands, the 303-store Southwest Convenience will now draw from Core-Mark's warehouses in Fort Worth, Texas, and Albuquerque, N.M. "We were impressed with Core-Mark's commitment to flexibility, freshness and vendor consolidation," said Scarpelli. "This will allow us to eliminate some of the DSDs and deliver a higher quality program to our customers."

"This is a great deal, and we're very excited to grow our operations in the Southwest," added Chris Hobson, Core-Mark's marketing vice president. "We really worked hard on making this deal happen and we're looking forward to working with Southwest Convenience."

Officials from both companies emphasized Core-Mark's flexibility and its Fresh Initiative foodservice program, which features more than 1,500 SKUs, from wraps and sandwiches to soft yogurts and other day-part options. "The food category is growing at an incredible speed," Hobson said, citing as examples "fresh-cut fruits, salads, sandwiches, wraps."

"Foodservice is going to be an evolution for Southwest Convenience. It's not going to come overnight but they have a long-term approach and they know they have a long-term partner in us who will be able to help them grow their foodservice program."

The Deal

"This is a big deal for us, one we're very excited about," Thomas said of the Southwest contract. "The Lubbock-Odessa area is one we had identified as a strategic area for us."

Thomas reflected on Scarpelli's sandwich experience from more than two years ago and several subsequent conversations between the two. "It's not a coincidence in how we started," he said. "We share a lot in common. We are both focused on trip consolidation, on fresher food and on being flexible."

Indeed, delivering a fresher image is a critical part to a rapidly transforming Alon Brands company.

Already the largest 7-Eleven franchisee in the nation, Alon recently announced it is rebranding its fuel moniker from FINA to ALON (see Related Content below for previous CSP Daily News coverage), launching a multi-million capital infusion over the next two years that will deliver a more robust forecourt, coupled with a reinvigorated c-store, anchored in a fresh foodservice offering.

"It's a continuous focus on being a better retailer," McKeen told CSP Daily News. "We're going through an aggressive remodeling campaign with an emphasis on foodservice. Core-Mark is an important partner in this effort."

Mitch Morrison Winsight CSP By Mitch Morrison, Vice President & Retail Executive Platform Director, Winsight
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