Michael Funk: In general, it’s every two to three years.
Mark Shamber: They’re constantly cycling through. There are contract lengths anywhere from two to five years and there are a number of contracts that come up in any given year.
Glenn Primack (Broadview): Is the specialty highly fragmented similar to the organic in terms of the brands that you could buy?
Michael Funk: The opportunities to add brands to our portfolio exist several ways. It’s a highly fragmented product assortment.
Eric Larson (Sunhurst Asset Management): Tree Of Life has about $800 million business and Millbrook is not too far away from about half that size. What is the difference between Millbrook versus what you see at Tree Of Life?
Michael Funk: The product assortments are similar and they have the same breadths of product assortment on the specialty ethnic products. With UNFI being involved, there is a greater selection on the natural organic products that can compliment that and the other primary difference is in terms of distribution center footprint. Millbrook had the four facilities to try and service and compete on a national basis. Certainly they weren’t able to penetrate a lot of the chains, particularly on the West Coast and the Southwest, being some of the markets that they didn’t have real good access to. Tree’s footprint was still much better in terms of national distribution.
Eric Larson (Sunhurst Asset Management): Are the inventory turns on that specialty business comparable to your flagship business?
Michael Funk: There’s not as much perishables associated with it so that would tend to keep the turns a little higher, more along the lines of our dried business and some of our Haba supplement business.
Mark Shamber: They’ll be a bit slower at least in the short term because we’re trying to build up some of the forward buying opportunities that are out there that Millbrook had previously taken advantage of. In the near term, maybe the next three to six months, you’ll see that their turns would be even a little bit more slower than the rest of our business but then they should revert back to close to the grocery dry business.
Eric Larson (Sunhurst Asset Management): Does Tree Of Life also take an approach like yours in trying to own some of those specialty niche brands? Would you be competing with Tree for some of those assets to add strategic value?
Michael Funk: They have a branded portfolio of products. I don’t believe it’s significant; they’ve sold off some of that. But I would imagine they could be a potential competitor for a certain brand though I’m not aware of their current acquisitions on branded products right now.
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