Grocery Manufacturers Go B-to-B

SAN FRANCISCO (03/17/2000) - Fearful of being left out of the trend toward establishing Internet marketplaces, nearly 50 manufacturers, many in the food and beverage business, have hastily agreed to create their own. The players include such giants as the H.J. Heinz Company, Kraft Foods, Procter & Gamble, and Unilever North America.

Financial terms of the agreement have yet to be established, though each participating company will take an equity stake. The concept germinated less than two weeks ago at a meeting of the Grocery Manufacturers of America, a trade group. There, members eyed the recent announcement by Ford, GM, and DaimlerChrysler that the Big Three had formed a joint Internet venture.

After an hour's discussion, they decided to jump into the fray. Online marketplaces linking manufacturers with retailers are becoming a hot trend. In addition to the auto initiative, Cenex, Cargill and Dupont announced earlier this month that they were forming a marketplace for farmers, Rooster.com. The grocery trade group, well aware that its members might partner with another fledgling initiative, went into warp speed and signed up dozens of companies within days.

The e-marketplace, yet to be named, will be an independent company, and will sell a range of items from packaging products to raw ingredients like flour. It should eventually include auctions, catalogues, and other kinds of exchanges if companies choose, according to Tony Romeo, chairman of Unilever's interactive brand center. "We have the nucleus of a group that will work," says Romeo, though he emphasizes that "It's still very exploratory."

The GMA expects that details of the venture will be solidified by the end of the second quarter, though it is not known when the Web site will actually launch. But the participants expect that, when it goes live, the effort will dramatically improve supply-chain efficiency by unifying standards and reducing inventory, and thereby saving time and improving quality. The end point, they say, should be lower prices for consumers.

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