VTL Group Sells its U.S. Franchise Assets to U.S. Equity Firm Bacon Whitney Corp.

Aug. 15, 2007
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VTL Group, based in Auckland, New Zealand, recently sold its U.S. franchise assets for $67.5 million to Bacon Whitney Corp, an American company owned by Halpern Denny Fund III LP.

The Halpern Denny Fund is one of three Boston, Mass.-based equity investment funds linked to John Halpern and George Denny, with more than $700 million under management between them.

VTL said the two investors held 9.95 percent each in VTL, and each had an agreement to purchase additional shares, which would lift those shareholdings to 21.21 percent.

Bacon Whitney bought from VTL’s American arm, Service America Group, all of that company’s franchising assets, including the 24Seven franchising licenses granted to it, the 64 existing franchises, and all its interests in Universal Vending Management LLC, a vending management firm.

Service America Group was previously known as All Seasons Services Inc.

Bacon Whitney paid by way of a 5-year subordinated note for $67.5 million, paying 10 percent per annum and convertible after six months at the election of Halpern Denny Fund III into equity securities of Bacon Whitney.

VTL also agreed to grant Halpern Denny the right to put its shareholding in Bacon Whitney on the basis of one share in VTL in exchange for each share held.

VTL Chairman Gary Stevens said the proposal endorsed VTL’s strategy of being a global franchisor, and assisted in establishing the value of its proprietary vending machine technology and 24Seven intellectual property. VTL will retain ownership of its Shop24 operation and the right to license its technology.

In addition to the purchase price, VTL will receive revenue from the supply of technology services to Bacon Whitney.

Federal Reserve ruling on debit receipts seen as boost for small value cashless transactions
The director of the Smart Card Alliance said the Federal Reserve Board’s recent decision to modify its Regulation E and eliminate the requirement to provide a receipt for debit purchases under $15 will benefit both consumers and merchants by making smaller transactions quicker and more cost effective.

“Contactless payment adoption at quick-service retail stores in the United States took off in part as a result of the payments industry rule changes that waived the requirement of signatures for credit card transactions under $25,” said Randy Vanderhoof, executive director of the Smart Card Alliance, in a prepared statement.

“The Federal Reserve Board ruling will be the start of another wave of locations where consumers can choose payment options other than cash or prepaid tokens or tickets at unmanned machines that demand low-cost, speedy transactions for operators.”

Previously, Regulation E required that a paper receipt be made available to consumers for all EFT and debit card transactions conducted in physical environments, including those unattended areas like transit, parking and vending machines, where consumers may not expect a receipt.

In many of these environments, the cost and operational challenges of receipt printing has limited the deployment of card acceptance terminals. The new rule, effective Aug. 6, 2007, eliminates the receipt requirement for transactions of $15 or less.

Quick-service restaurants, convenience stores and event concessionaires, along with vending, parking and transit operators, will all benefit from the Fed’s action on Regulation E, according to Vanderhoof.

The opportunity is significant: parking, vending and coin-operated machines alone represent $37 billion in annual spending, according to a report from the Federal Reserve Bank of Philadelphia, Pa.

Bravo! Brands ends master distribution agreement with Coca-Cola Enterprises
Bravo! Brands Inc. reached an agreement with Coca-Cola Enterprises, Inc. to terminate the master distribution agreement (MDA) entered into by the parties on Aug. 31, 2005. The termination allows Bravo! to move forward to finalize its negotiations with a new national distributor for its products.

Ben Patipa, president of Bravo! Brands, commented in a prepared statement: “The termination of our agreement with CCE was a joint decision between the two companies that reflects economic returns far below the expectations of both CCE and Bravo!. This termination of the MDA is a key step in our overall plan to restructure the business into an economically viable model through distribution with another national distributor.”

Bravo! Brands Inc. develops, brands, markets, distributes and sells nutritious, flavored milk products throughout the U.S. Bravo!’s products are currently sold under the brand names Slammers® and Bravo!™. Bravo’s Slammers® products are available in many channels of trade.

Investment firms buy U.S. Foodservice from Royal Ahold, N.V.
Kohlberg Kravis Roberts & Co. and Clayton, Dubilier & Rice, Inc. recently completed the previously announced acquisition of U.S. Foodservice, the second largest broadline foodservice distributor in the U.S., from Royal Ahold N.V. Funds affiliated with KKR and CD&R are equal partners in the transaction, valued at $7.1 billion.

U.S. Foodservice generated revenues of more than $19 billion in 2006 through operations covering a geographic area in which over 90 percent of the U.S. population resides. The company provides food and related products to independent restaurants, health care and hospitality customers, educational institutions and prominent multi-unit restaurant companies.

Cadbury Schweppes buys Southeast Atlantic Beverage Corp.
Cadbury Schweppes Americas Beverages (CSAB) has acquired Southeast-Atlantic Beverage Corp. (SEABEV), an independent bottling and distribution company based in Jacksonville, Fla.

SEABEV distributes much of CSAB’s soft drink and premium beverage portfolio, as well as several licensed brands, throughout most of Florida and northern Georgia.

Founded in 1939, it is the second-largest independent bottling company in the U.S., with 2006 revenues of $172 million and nearly 900 employees. The company operates two manufacturing facilities and 16 warehouses and distribution centers from Miami, Fla. to Atlanta, Ga.

SEABEV is the sixth bottling and/or distribution business to be integrated into the Cadbury Schweppes Bottling Group (CSBG), a division of CSAB formed in April 2006 with the acquisition of Dr Pepper/Seven Up Bottling Group.

Other major bottler acquisitions by CSAB since last year include: All-American Bottling Corp., which serves a large area of the Midwest and Mountain States; Seven-Up Bottling Co. of San Francisco, Calif., serving northern California; Hattiesburg (Miss.) Beverage Co.; and the Mississippi operations of Dr Pepper Bottling Co. of Paragould Inc.

NAMA requires board members to have its executive certification
The National Automatic Merchandising Association (NAMA) board of directors has voted unanimously that earning the NAMA Certified Executive (NCE) designation is now mandatory for all board members. The NCE is a mark of excellence that signifies accomplishment, initiative and professionalism in the vending, coffee service and onsite food management industries, and the vote was made during the board’s annual meeting in June.

The new board policy is effective immediately and states that to qualify as a candidate for the NAMA board, an individual must either be an NCE in good standing or agree to become an NCE no later than 24 months following the beginning of their board service. Directors who do not comply will not be eligible to serve a second term. Sitting directors who are not currently NCE certified will be given 36 months to comply. In addition, only sitting directors who hold the NCE designation will be eligible for election to the executive committee and/or to hold a board officer position.

Dole Food Co. joins the Alliance For A Healthier Generation
Dole Food Co., Inc. is collaborating with the Alliance for a Healthier Generation (AHG), a joint initiative of the American Heart Association and the William J. Clinton Foundation.

The Dole Nutrition Institute helps educate parents and consumers through a variety of channels ranging from videos, brochures, newsletters and Websites (dolenutrition.com and dolesuperfoods.com). Dole has recently collaborated with School Link Technologies and the National Dairy Council on a pilot program for the placement of vending machines in schools. All of the products chosen for the vending machines are USDA approved and reimbursable under its guidelines.

Cadbury Schweppes executive notes 12 percent sales gain from cashless vending
Mark Jackson, vice president of immediate consumption at Cadbury Schweppes Americas Beverages, recently presented his insights on cashless vending at a webinar sponsored by the Smart Card Alliance. He was among six presenters who participated in the event, entitled, “Contactless payments: the retailer experience.” He noted that his company partnered with USA Technologies and MasterCard to install up to 1,000 vending machines in select cities with credit and debit card readers.

From March to May, Jackson said 330 machines were equipped in three markets. He said the machines experienced a 12 percent sales improvement.

He also noted that cashless sales as a percent of total sales ranged from 3 percent to 24 percent.

Best results were in college, recreation, hospital, and white collar office locations. He said poorest performers were government and retail locations.

Custom Vending marks 40th anniversary
Custom Vending Co., Beltsville, Md., serving the Washington D.C. and Baltimore markets, is celebrating its 40th year in operation. The family-owned company transferred ownership in 1993 to John Sartori and Dominic Finelli.

NAMA will hold coffee event Feb. 12 and 13 in Philadelphia, Pa.
The National Automatic Merchandising Association will hold a coffee seminar in Philadelphia, Pa. Feb. 12 to 13, 2008. The program is designed for operators involved in coffee service delivery and will feature supplier showcases, networking, training and education focused on the operator.

The 2-day event will feature supplier presentations, coffee business building seminars, and face-to-face meetings with the industry’s best known leaders.

A special roundtable discussion session will be led by Rick Lefke, president of R.C. Lefke & Associates and NAMA Knowledge Source Partner, who specializes in training and development of leadership and management skills. Another highlight is a special area where attendees will have the opportunity to hear industry suppliers present the advantages of their product or service. The program is geared toward all operators involved with coffee service, and is open to members and non-members alike.

Massachusetts Vending Association Scholarship Fund awards $27,000 to 24 students
The Massachusetts Vending Association Scholarship Fund, a tax exempt, public charity, announced that it has awarded a record $27,000 in scholarship aid to 24 students whose parents are employed by both operator and supplier member companies. The winners are chosen by an independent evaluation committee of professional educators. This year’s top awards of $2,500 each were won by Jillian Lorento, who was sponsored by A & F Vending Corp., of Fall River, Mass., and Brittaney Talbot who was sponsored by the Pepsi Bottling Group of South Norwood, Mass. In addition, the fund granted five $1,500 awards, 12 $1,000 awards and five $500 awards to 22 other applicants.

Since its inception, the fund has granted more than $325,000 in scholarship aid. It is supported by voluntary contributions from the member companies, the proceeds from its annual golf tournament, and the investment income from its funded endowment. This year’s annual meeting and golf outing is scheduled for Tuesday, Sept. 11, 2007, at the Glen Ellen Country Club in Millis, Mass. Please contact Allan Z. Gilbert for registration information at 978-887-9633.

Tennessee vending lobbyist urges support for food tax relief
Tennessee legislators are once again considering reducing the sales tax rate on the retail sale of food and food ingredients for human consumption. Current proposals in the state senate would provide a sales tax holiday for the tax on food during the months of November and December, and proposals in the house would provide a permanent roll-back on the state sales tax on food to 5.5 percent from 6.5 percent currently in place.

Tennessee Automatic Merchandising Association lobbyist Martha Gentry is urging the Tennessee vending industry to write or call their legislators, or any legislator with whom they have a personal relationship, and remind those legislators that the point of sale for food can be a vending machine as well as a grocery store or convenience store. Thus, if sales tax relief is granted for food, it should be granted regardless of the point of sale.

Energy drink maker signs distribution pact with Low Country foodservice/vending operation
Who’s Your Daddy, Inc., a brand management company focused on the marketing, sales, production, and distribution of Who’s Your Daddy® “King of Energy™” drinks, announced initial distribution of the company’s energy drinks in coastal South Carolina and Georgia will commence through Low Country Restaurant Supply in Ridgeland, S.C., the largest vending company in the geographic areas served by the company.

The territories served by Low Country cover some of the most popular tourist destinations in the U.S., reaching from Myrtle Beach, S.C. on the north to Jekyll Island and Cumberland Island National Seashore on the south.

Reunion Island Coffee has new Website
Reunion Island Coffee has launched a new company Website, www.ricoffee.com, with a focus on serving the OCS and vending industries. The new Website showcases the entire range of products and marketing materials, and complements the introduction of the company’s elegant new image.

Reunion Island Coffee began as a roaster catering to local foodservice operators, and has since developed a full range of value-added products and services aimed at bringing premium-quality coffees to the coffee service and vending markets. In the Website’s “For Business” section, operators will find downloadable resources such as program guides, product catalogs and sell sheets representing the comprehensive marketing services Reunion Island Coffee has to offer.

People in the News

AM Promotes Gary Thom to Associate Publisher
Automatic Merchandiser Magazine has promoted Gary Thom from national display sales manager to associate publisher. He has been with the magazine since 1999, beginning in the inside sales department and moving to regional display sales manager in 2004. He was named national display sales manager in 2006.

Industry Loses Langdon Flowers
Langdon Strong Flowers, whose integrity, vision, and people strengths helped shape and define Flowers Foods and its predecessor companies, Flowers Baking Co. and Flowers Industries, for 60 years, passed away in Thomasville. He was 85.

Clearly Canadian Brands Names President Brent Lokash Chief Executive Officer
Clearly Canadian Brands announced that Brent Lokash has been appointed to the position of CEO of the company and will be replaced as president by David Reingold. Reingold is a leader in the Canadian health food industry and was the majority owner of DMR Food Corp., a top seller of organic and natural snack foods in Eastern Canada, and My Organic Baby Inc.

Hershey Co. Names Bert Alfonso Senior Vice President and Chief Executive Officer
The Hershey Co. announced that Bert Alfonso, vice president, finance and planning, North American commercial Group, has been named senior vice president, chief financial officer, effective immediately. He reports to Richard Lenny, chairman.

NAMA Promotes Dan Mathews To Executive Vice President
Dan Mathews, NCE, formerly senior vice president and chief operating officer for the National Automatic Merchandising Association (NAMA), has been promoted to executive vice president, NAMA President and CEO Richard M. Geerdes, NCE, recently announced.

Mars promotes thom Sharki and tabs craig hall for ice cream
Mars Snack Food, formerly known as Masterfoods USA, recently promoted Thom Sharki from vice president of retail sales to vice president for vending. He assumes responsibilities previously held by Jim English, who left the company.

The company also named Craig Hall as general manager of ice cream. He was formerly the chief operating officer of Celebration Foods, a manufacturer and distributor of frozen dessert products including Carvel® ice cream cake products.

Interstate Bakeries’ Chief financial officer leaves
Interstate Bakeries Corp., which owns Hostess pastries, announced the resignation of Ronald B. Hutchison as executive vice president and chief financial officer. J. Randall (Randy) Vance, senior vice president of finance and treasurer, will serve as interim chief financial officer and oversee the company’s financial operations.

Industry loses charles hall, formerly with quaker oats
Former Quaker Oats executive Charles Ray “Chuck” “DoDa” Hall, 63, passed away recently. Hall had retired from the Quaker Oats Co. as a regional manager.

Kasavana will assume leadership of nama technology initiatives
Prof. Michael Kasavana, Ph.D., endowed professor for the National Automatic Merchandising Association (NAMA) at The School of Hospitality Business at Michigan State University (MSU), will assume the leadership of all of NAMA’s technology initiatives. Kasavana will be working with NAMA’s senior director of technical services, Larry Eils, who will be retiring next year. Kasavana has been on the faculty of MSU for more than 30 years.

Sodexho names scott boynton vice president of vending
Sodexho, Inc., a nationwide provider of integrated food and facilities management services, announced the appointment of Scott Boynton as division vice president of vending services for Sodexho’s business and industry market. He will be based in Fort Lauderdale, Fla.

Boynton joined Sodexho in 2001 as one of the founder’s of Administrative Associates, the vending management entity that is now Sodexho Vending Services, a wholly-owned Sodexho operating unit. Prior to forming a joint venture with Sodexho in 2001, Boynton owned and operated Great American Vending in Miramar, Fla., which was acquired by All Seasons Services Inc., which is now called Service America Group.

Gary Lentz joins vend lease Co.
Gary Lentz recently joined the Vend Lease sales team. Lentz brings over 18 years experience to the team with his extensive knowledge of the vending industry. Formerly, Lentz served numerous roles with State Sales and Service, and most recently, as director of vending sales with Betson Enterprises.