Thinking Big At Eby-Brown

John Scardina takes both a macro and a micro view of the candy category as merchandising vice president for this large wholesale distribution company.
By Mary Ellen Kuhn
When you manage the candy and snacks categories for a wholesale distributor the size of Naperville, Ill.-based Eby-Brown Inc. (company sales are approaching $4 billion), it helps to have a big-picture perspective.
That's not a problem for John Scardina, Eby-Brown vice president of merchandising with responsibility for candy, snacks and meat snacks. An active participant in industry organizations, the affable but driven Scardina makes it a priority to stay abreast of new product trends, consumer demographics, health and nutrition news, and other issues likely to have an effect on the business of merchandising candy and snacks.
A self-professed workaholic, Scardina can't seem to get enough of the candy and snacks business Monday through Friday. He admits to regularly turning up in the office for at least a few hours during most weekends. It's clearly a labor of love for Scardina, who has been with Eby-Brown for 14 years. He's spent most of that time moving up the ladder in candy and snacks purchasing and merchandising, although he began his tenure at the company by spending 14 months as a route truck driver as part of the company's management training program.
So perhaps it's not surprising that Scardina is not the head-in-the clouds kind of manager who ignores the details of the business. Which is a good thing, because sweating the small stuff is what it's all about at Eby-Brown. It says so right in the "Our Philosophy" section of the employee handbook.
Eby-Brown at a Glance
Ownership: Privately held wholesale distributor. Co-Presidents/Co-CEOs: Tom and Dick Wake.
Corporate Objective: To be the dominant convenience channel wholesaler in the Eastern half of the United States.
Sales: $3.8 billion
Total Non-Cigarette
Sales Volume: $661 million
Candy and Snack Sales:
$205 million
Number of Stores Served: 25,000
Retail Channel Focus:
Number of Candy and Snack SKUs: 4,600
Distribution Centers: Eight
Also on that list of corporate guiding principles is the following reminder: "The customer is second only to God. We don't 'deal' with customers. We worship them, we make friends with them."
"We're a service-oriented company," Scardina emphasizes, picking up on the themes expressed in the corporate publication. "Without our customers, we don't exist as an organization. So our priority in life is to make sure that our customers are happy, that we're taking good care of them and addressing their needs."
To that end, Eby-Brown offers a host of services to its retail customers — most of whom are in the convenience-store channel — everything from plan-o-gram recommendations and category reviews to numerous information technology tools for automating retail operations.

Thinking micro and macro
As for Scardina, he's found that the task of making informed purchasing and merchandising decisions involves thinking on both a micro and a macro level. "One of my approaches is that I try to look at a segment on a micro basis as a trend develops, thinking in terms of: What does it mean to our trade channel? Our business? How will we attack that? Then, at some point, you do need to step back and stand on a ladder to take a more global view and say, 'OK, what does this mean to the business over the long-term? What is this going to mean to the business in 12 months, in 20 months?'
"It is critical that we view items from a category management perspective on behalf of our customers. Part of my obligation to our customers is to try and be their category captain first and Eby-Brown's second. We must always try and put the focus out where the product sells, which is at the retail level. If we can do it right for our retail partners, we all win."
Similarly, when Scardina works with a vendor category captain on a project such as establishing recommended plan-o-grams for retail clients, he likes to compare and contrast Eby-Brown's sales data against the vendor's. He's found that taking both sets of data into consideration often results in the truest picture of the marketplace.
Likewise, he observes, Eby-Brown's data can afford valuable insights to the vendors who take the time to analyze it. "Some vendors look at our data and start to see some trends in our business, and go, 'Well, are we missing something that we should be more attuned to?" Scardina notes.
Of course, Eby-Brown's sales data is drawn from a substantial retail base. The company services 25,000 stores in 28 states — in the Midwest, Middle Atlantic and Southeast.

Knowing what works
In the years he's been on the job, Scardina has weathered his share of trends and fads, and he's got some well-considered opinions about what works for the candy category and what does not. Here's what he has to say about a few key product categories.
2/$1 and $.99 non-pre-priced bagged candy — "When we talked about that segment several years ago, people said, 'That's a dying segment. What are you doing? It's not going to go anywhere.' But I thought there was a need within our business for what I'll call a price-point non-branded candy section. We stood behind that segment, and today it's a tremendous piece of our business."
Premium Chocolate — "I don't know of a convenience retailer that is really pushing the envelope with this segment and saying that we need to develop a premium chocolate segment at convenience retail. Based on demographics, there are areas where a premium chocolate offering can be successful. However, on a mass scale across our trade channel, the category is not a significant factor."
John Scardina on the Limitations of Limited Editions
How does Eby-Brown’s John Scardina rate candy vendors in terms of innovation?
"I’m happy to say that I think we’re starting to see some improvement," he says,
Until recently, he says, "I think you’ve had vendors relying too heavily on line extensions as opposed to being innovative. It’s great to have a line extension. But does it really add to the category? Does it create an incremental opportunity? I don’t think it does over the long term. I think it plays off the strength of the key brand and may draw that consumer who is used to having XYZ flavor over to the new flavor."
For the most part, Scardina says, he considers limited-edition programs "just a glorified way of doing a line extension," so he’s got some concerns about the proliferation of limited edition items.
He’s adamant about this perspective, despite the fact that line extensions have been strong performers over the past year and a half.
"As a wholesaler, our job is to make sure that we provide items to retailers – especially the new items. As some point, you do look at these new products and say, ‘There’s been a lot of duplication and how many variations on a theme are you going to have before you’ve blurred the line so much that nobody knows what the original brand is all about?"
"I think we may be getting close to the time when they [limited edition products] have run their course," he predicts.
Energy Bars — "It's a natural fit. You get a lot of bikers, runners, people going to play basketball, flag football and so on who are stopping in a convenience store for a Gatorade and an energy bar."
That said, however, Scardina believes that it's important to keep the c-store assortment at a reasonable number of SKUs in order to maximize profitability. "If you try to be all things to all people, you can wind up taking up too much real estate and not turning enough product. For most retailers, I think the ideal mix would probably be about two to three feet with about 16 to 24 SKUs covering everything from the performance, nutritional supplement, and dietary and healthy indulgence segments. I think that if you have a category built that way you can have some pretty big successes with it."
Low-Carb — For the record, Scardina is convinced that the low-carb movement has legs for convenience retailers. This is despite the fact that the young males who are prime c-store patrons may not lead the list of top low-carb lifestyle adherents.
"The low-carb phenomenon is not gender-specific; it's not age-specific," Scardina maintains.
With that in mind, Eby-Brown is currently preparing low-carb section plan-o-grams for candy, snacks, nutritional bars and ready-to-drink beverages.
"I think that as the educational process continues and as government labeling comes into the picture and as consumer tastes and trends change as they always do, the low-carb segment will start to get narrowed down a little bit," says Scardina. "But I believe it's here to stay. I truly believe it's going to have a home in every retail establishment — whether its grocery, drug, mass or convenience."
Will the proliferation of low-carb treats and snacks affect traditional candy consumption?
Scardina believes it will. "I think it should be a concern for the confectionery industry. I think it's important for the confectionery industry to get into head-to-head competition with those companies that have a low-carb portfolio.
"Hershey is starting to do it with their 1 Gram Sugar Carb bars," says Scardina. But he adds that too many other candy makers have failed to take the initiative on this front.
Rating Recent Rollouts
Here is John Scardina’s take on several recent or upcoming introductions from candy companies.

Skittles Fruit Gum – "It’s a very fun gum that I think kids will glom on to."

Hershey’s 1 Gram Sugar Carb Bar – "It’s a good line. They’re trying to play it safe with the label, which is fine. The label doesn’t scream low-carb, it screams low sugar carbs."

Altoids Gum – "It’s a great-tasting piece of gum. It’s something of a line extension, but it’s for a somewhat different consumer than the Altoids mints. There are mint consumers. There are gum consumers."

Hershey’s S’Mores Bar – "The bar has a good taste and texture, it’s something new and different. I think it will add to the category."

M-Azing Crunchy and
Peanut Butter – "These two new items from Masterfoods are a very different offering from the vendor. The concept of imbedding a flat chocolate bar with mini-M&M’s is neat. Plus the two flavors/textures they have chosen are popular. I think the end result is a winner."

"We're in the in the beginning phases of this low-carb rage," he reflects. "I truly believe that it's here to stay, and I believe that better labeling and regulation are required. And I think that the confectionery industry needs to be a part of that process."
What's more, Scardina adds, it's definitely conceivable that the proliferation of low-carb offerings may affect retailers' profitability — which is another reason he'd like to see leading candy vendors begin to offer more low-carb items. "If the low-carb category starts to grow, and it doesn't have the traditional funding support mechanisms behind it as confections do today, what does it mean to retailers' profitability?"
He reflects: "I don't think that consumers will ever completely walk away from confections." Nonetheless, he adds, the American public's concern about obesity and the proliferation of treat and snack alternatives positioned as more healthful than candy are certainly issues that the industry needs to examine.

Effective merchandising
When it comes to the goal of increasing candy sales, the bottom line, as Scardina sees it, is stimulating sales at the store level.
"The key with the new items is to make sure that you're merchandising them correctly with display vehicles that will stimulate the consumer's curiosity to try the new item," he says. "Then you have to have that item merchandised on an everyday basis so that if the consumer likes it, he or she can come in and find it again.
"A critical component to this approach is speed to shelf. We want to be able to roll new items out to our customers and have them merchandised in both a promotional position and a primary permanent position at retail within the first eight weeks of the new item's release from the vendor."
Only about 40 percent of convenience-store patrons wind up walking down the candy aisle, Scardina estimates, so front-end merchandising is critical, he stresses. "The chance of the shopper seeing that Snickers bar they love and buying it on impulse is not good unless that bar is displayed on a front-end counter rack or in a floor display in a high volume traffic area of the store or at the front-end register in a candy set."
As a distributor, Scardina enjoys the benefit of a middle-ground position between retailer and vendor, and he's capitalized on that vantage point to work toward implementing merchandising strategies that are beneficial to both groups.
He notes that there's a tendency for vendors to focus too much on persuading retailers to install display fixtures designed to showcase only their own brands.
"One of the things we're trying to work with the vendor community on — and we're having some success with — is coming out with joint-venture racks or a cost-sharing rack system. What we're doing is bringing it to two or three or more vendors and saying, 'Look, here's our fixture concept. We want to cost-share the expense of the rack and the expense of placing that rack with you, and in return we want to place six to ten of your items on the rack."
As a member of the American Wholesale Marketers Association's Warehouse-Delivered Snacks Committee, Scardina has worked on the group's multi-vendor end cap (MVE) project, and he likes what he's seen. "We have been on a push to place the MVE rack at retail in a high visibility location within the front-end areas at retail," he says. Research has shown that packaged snacks rate as high as 77 percent in terms of consumer impulse. Our goal is to focus on that impulse with approximately 80 top-selling SKUs combining a variety of snack vendors and items."
Scardina points out, "Snacks have an average gross margin of 37.2 percent and are considered to be one of the highest gross profit areas of the store. When you combine proper placement of the MVE along with the best-selling items from some of the best manufacturers, the results are greater sales and profits."
Recent MVE industry results published by the AWMA Warehouse Delivered Snack Committee based on seven chains and 186 stores seem to support that position. Total warehouse delivered snacks sales increased by 63 percent and MVE items sales increased by 114 percent over the prior year's sales when the MVE was not present.
"What we're trying to do as a wholesale community and as an industry is to join the need that exists at retail and the need that exists within the vendor community, because if we don't take a category approach and have the right items in the right spot at the right time, then we all lose," says Scardina.
"The convenience store channel is having some better times now," he continues, "but with the decline of the margins being made on gasoline and pay-at-the-pump, which means that consumers are not going into the store, it's really become critical for all of us to look at the inside-the-store scenario and say, 'How can we help the retailer increase gross profit margin? How can we help drive more people into the store?' The bottom line is: How can we get people to buy more products? The industry needs to keep that push on to drive sales from the inside of the store." n
Keeping the New Product Pipeline Full at Eby-Brown

Eby-Brown's candy and snack assortment numbers about 4,600 SKUs from hundreds of vendors, so it's not surprising that candy and snack merchandising vice president, John Scardina, has clear-cut expectations of vendors and streamlined procedures for making new-product decisions.
"If you're a new vendor and you're approaching me, what I'll always request of you is to send me samples and product information and pricing — and my preference is that you send me a shipping case as it would be shipped into our distribution center," says Scardina. "It's not that I'm greedy," he continues with a grin. "It's important that I see what our warehouses are receiving so I can determine right from the outset that the configuration is something that makes sense within our distribution system."
Having it shipped rather than presented in the course of a vendor visit not only saves time, it also allows Scardina to evaluate the new item without the vendor's influence. If he's interested in what he sees, he'll follow up with a vendor meeting.
Scardina meets regularly with existing vendors throughout the course of the year, but the week of the All Candy Expo is a particularly intense period of vendor interaction. In addition to the hours he spends walking the show, Scardina also schedules a series of private meetings with key vendors over several days during the Expo. During the meetings, vendors are invited to present their promotional programs for the coming year.
There are always some surprise new-product rollouts, and some smaller vendors do not have all their plans in place at this point on the calendar, but most of Scardina's candy programs for the coming calendar year are in place by the end of summer.
"Between June and September of this year," he says, "we'll pretty much have 80 to 85 percent of a framework down for all of the promotional activities we're going to do in the coming year. And that 15 percent that isn't covered is really designed for those new items that come along or the vendors who aren't 100 percent resolved with their new items."
While Scardina works closely with a support staff that includes buyers who handle inventory management and a team of administrative assistants, the corporate culture at Eby-Brown gives individual executives plenty of decision-making autonomy, and he appreciates that fact.
"We don't do things by committee," says Scardina. "There isn't a whole lot of, 'Let me get back to you,'" when dealing with vendors, he says. "Instead it's, 'Here's our decision. Here's where we're moving.'"
When making new product decisions, says Scardina, "The first thing we look at are the promotional aspects — what display vehicles are offered and the size of those display vehicles — so that we can put it out there in front of that consumer for that trial basis. And the price point as well is critical.
"We're dealing with very limited floor space, so those display vehicles that are 96-count, 144-count, 180-count, those are ideal for our environment."
Getting to Know John Scardina

Age: 41
Family: Wife, Missy. Step-children: Aaron, 17;
Courtney, 14.
Career Track: Left a national sales position at the age of 27, after deciding to re-evaluate his career path. Joined Eby-Brown in 1990, and – in keeping with company practices – started as a route driver. Spent 14 months driving a truck, then moved on to work in customer service, field merchandising and sales. At the urging of company owners, Tom and Dick Wake, Scardina transferred into the purchasing/merchandising area and moved up the ranks to his current position as a vice president.
Industry Activities: Member of the American Wholesale Marketers Association's Warehouse-Delivered Snack Committee and member of the National Confectioners Association's Buyer Advisory Board.
Leisure-Time Pursuits:
Cooking and entertaining friends and family. Golf. Also serves his community as a member of the board of directors of the Batavia Foundation for Educational Excellence, a group that awards grants to support academic programs and projects not routinely funded in school budgets.
Best Part of the Job: "I love the people and the relationships that I've developed in this business. Without the people, it just wouldn't be as fun."
Least-Favorite Part:
The paperwork!
Alternate Career: "I would love to have the ability to take a couple of years off, go to a culinary school and open a restaurant."
Words to Live By:
"Stretch yourself. Know at least a little bit about a lot of different things."