Hannaford Supermarkets: Sustainability Strategy and Innovation

presented by Megan Hellstedt

Sustainability In ActionFMI Sustainability SummitJune 18, 2008

• 165 stores in Northeast U.S. (ME, NH, VT, MA, NY)

• More than 26,000 employees

• Owned by Delhaize Group, Belgium

About Hannaford...

Our Approach

Hannaford has a strong history of working to enhance our communities and conserve natural resources while building a successful business model.

People Products Planet

CSR Strategy

Global to Local

Overall Delhaize Group Strategy and metrics

Banner-specific strategies tailored to geography and customer base

Many opportunities for sharing successes between banners - global synergy groups

Hannaford Strategy

Identified relevant issues

5-year strategy with position statements and goals

Metrics, aligned with Delhaize Group

Governed by Working Group and Steering Committee

Reasons for Success

Cross-departmental representation

Issue Sponsors (each Working Group member is the expert on at least 1 issue)

External advisors allow in-depth topic research when needed, keep us grounded

Support of Senior Officers and all department VPs

Program Examples

Building healthy communities: Guiding Stars

Innovative building design: LEED store

Why Guiding Stars?

Shoppers want an easy way to quickly identify and choose foods that support a healthy lifestyle.

Why?

Consumer confusion regarding nutrition information in media, advertisements, food packaging and nutrition facts panels.

Epidemic levels of obesity & related chronic illness; Hannaford wants to be part of the solution for our shoppers.

In-store, point-of-purchase guidance to support choices

Grounded in Sound Science

Hannaford formed a panel of nutrition experts to translate proven science into an algorithm for rating foods.

• Harvard University• Dartmouth Medical School• Tufts University• University of California, Davis

• Edmund S. Muskie School of Public Service at USM

• Food, Nutrition & Policy Consultants

Advisory panel drew from research conducted by leadingnational & international health organizations in developing labeling practices and determining beneficial nutrient levels.

U.S Food and Drug AdministrationUnited States Department of Agriculture

The Algorithm(patent pending)

The formula creditsa product’s score for:

vitamins minerals

dietary fiber whole grains

The formula debitsa product’s score for:

trans fat saturated fat cholesterol

added sodium added sugars

The resulting score represents a weighted total of a product’s nutrient content and presence of all elements considered.

Keeping it Simple

Hannaford created a four-tier rating system to identify foods that meet varying levels of nutrient content, per the formula.

No stars Only foods that score above 0 receive stars

Good Nutritional Value

Better Nutritional Value

Best Nutritional Value

Stars by Category

What percentage of foods received stars?

26% of foods receive at least one star (approximately 8,700 of 33,500+ rated products)

By category, stars are:100% of fruits & vegetables51% of cereals50% of seafood23% of meat22% of dairy7% of soups7% of bakery

Program Communication

Stars appear on:Unit Price Tags (shelf labels)Scale labels & signs

If the product has no stars, it means one of two things:

Product does not meet the nutritional criteria for a star.Product is not rated (< 5 kcal, multi-packs, alcohol, etc.)

Brochures, flyers, TV/radio adswww.hannaford.com‘Ask the Nutritionist’

Sales and Movement

Movement of items with stars are up over the same period a year ago, especially in Center Store

overall packaged goods: 2.5xstarred meats & poultry: 2.5xwhole milk -4%; fat-free milk +1%starred cereals: 3.5xstarred yogurts: 3.5xfrozen dinners/entrees: 4.5x

Adding new starred items; reformulating private brandLicensing announced in November

LEED Store

Augusta, Maine

LEED Retail Pilot

goal of Platinum LEED certification

opening 2009

Why build green?

living laboratory

push ourselves to design and apply new technologies

establish best green building techniques to apply to prototype stores

reduce long-term operating costs

better environment to work and shop in

hub for community education about building green

Cony H.S. fixtures (99% recycled)95% demolition recycling goal

Re-used site (brownfield)

Urban area

Sustainable site designlower heat island effect

lower light pollution

Recycled/renewable/local materials

About the Store

Green roof

Solar

Geothermal

Daylighting

New refrigeration design

Reduced water usage by approx. 30%

About the Store