CPG Industry Unsaleables Rate Declines from Record High in 2002

Miami Beach, Fla. - July 20, 2004 – Food, beverage and consumer products manufacturers reported that the cost of unsaleable products declined to 1.11 percent in 2003 compared to a record high of 1.18 percent in 2002, according to the Food Marketing Institute (FMI)- Grocery Manufacturers of America (GMA) 2004 Unsaleables Benchmark Report. The survey results were released today at the 2004 Joint Industry Unsaleables Management Conference.

Unsaleables, which include damaged goods, expired or out-of-date products and seasonal merchandise, cost the CPG industry $2.57 billion in 2003, down from $2.71 billion in 2002. Decreases were most dramatic in the convenience and drug store channels. The unsaleables rate dropped from .97 percent in 2002 to .86 percent in 2003 in convenience stores and from 2.57 percent in 2002 to 2003’s 2.02 percent in drug stores.

Survey respondents reported several reasons for the decline, including improved collaboration with trading partners, increased focus on managing unsaleables and unsaleables policy compliance (such as creating departments or teams to focus on returns) and improved packaging and logistics.

Damage remains the most frequent cause for unsaleable goods, accounting for 58 percent of the total, followed by expired products (22 percent), discontinued products (13 percent) and seasonal products (six percent).

A complete copy of the 2004 Unsaleables Benchmark Report may be downloaded in .pdf format at http://www.gmabrands.com/industryaffairs/docs/benchgma2004.pdf.

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Food Marketing Institute (FMI) conducts programs in research, education, industry relations and public affairs on behalf of its 2,300 member companies — food retailers and wholesalers — in the United States and around the world. FMI’s U.S. members operate approximately 26,000 retail food stores with a combined annual sales volume of $340 billion — three-quarters of all food retail store sales in the United States. FMI’s retail membership is composed of large multi-store chains, regional firms and independent supermarkets. Its international membership includes 200 companies from 60 countries.

The Grocery Manufacturers of America (GMA) is the world’s largest association of food, beverage and consumer product companies. Led by a board of 42 Chief Executive Officers, GMA applies legal, scientific and political expertise from its more than 140 member companies to vital public policy issues affecting its membership. The association also leads efforts to increase productivity, efficiency and growth in the food, beverage and consumer products industry. With U.S. sales of more than $500 billion, GMA members employ more than 2.5 million workers in all 50 states.