Technomic and Blacksmith Applications to Extend and Expand their "Best Practices" Trade Spending Study

Chicago, March 6, 2006, Business Wire – Technomic and Blacksmith Applications have announced a continued collaboration of their Foodservice trade spending study, both in terms of adding a second wave of participants as well as extending the scope to focus on tactical methods to increase the effectiveness and efficiency of trade practices for some of the original participants and other interested parties.

The findings from the original study confirm the tremendous challenges facing manufacturers and the need for executive level commitment to take aggressive steps to improve the return on investment relative to trade dollars.

The study identified some industry "best practices" and provided insights to alternative ways to approach trade spending as well as "industry benchmarks" to identify how the industry is actually spending versus how they say they'd like to perform.

"Manufacturer trade spending in foodservice continues to increase in cost and complexity, and for most manufacturers, has become the second largest P&L line item after cost of goods," said Gary Karp, Vice President, Technomic, Inc. "Historically, however, in many cases the trade spending burden is assumed as a cost to do business and the appropriate strategic focus is not given to trade spending considering the size of the budget. Leading companies are now realizing they need to take greater control over spending, minimize the trade spending 'tolls or greens fees' and manage trade spending more strategically to drive profitable volume."

"Separately, benchmark data indicates that about 23% of all billback claim dollars are invalid as compared to the corresponding approved program, with the most common driver being a rate deviation," said Paul Wietecha, President, Blacksmith Applications. "Additionally, almost two-thirds of operator fixed/deviated price claims contain at least one deviated line item, with the claim amount varying from the expected amount by an average of 45%."

Another revealing benchmark finding indicates that while most manufacturers want to focus their spending efforts on operators rather than distributors, benchmark data indicates that only about 38% of total trade spending dollars is spent with operators [including contract management feeders; national, regional and local chains; and non-profit bids]. Major obstacles to transformation, as identified by manufacturers, are fear of volume loss and skepticism about trading partner willingness to change.

This analysis is based on Blacksmith and Technomic's recently-completed, multi-client study that addressed Foodservice trade spending. It was based on a combination of process and practice analysis, program structure evaluation and a benchmark study of the client data in Blacksmith's FORGE^SM and SHIELD^SM software applications.

About Technomic, Inc.
Technomic Inc. provides food and foodservice clients with the research, insights and strategic consulting support they need to enhance their business strategies, decisions and results. Its services include category and channel analyses, customer satisfaction studies, opportunity assessments, benchmarking programs and brand equity enhancement. Technomic offers clients proprietary management consulting solutions and shared-cost, common-interest research.

About Blacksmith Applications
Blacksmith Applications provides software and analytical consulting solutions to empower sales, marketing and finance personnel to make more informed, more profitable, and more timely decisions. While Blacksmith provides solutions to the CPG industry, the company specifically focuses on the unique requirements of Foodservice organizations. Blacksmith's product offerings support distributor and operator contract and trade program creation, including profitability evaluation and approval routing prior to deal approval; billback/claim validation and management; deduction resolution; and reporting and analytics. Currently, Blacksmith has more than 2,800 users, including more than 350 broker users, who rely on the company's solutions to reduce contract and deduction management costs, complexities, and overspending. The results are increased speed to market, improved visibility into customer and product performance, and controlled trade spending - all enabling increased revenue and more strategic and profitable decision making. Blacksmith Applications is headquartered in Lawrence, Massachusetts. For more information, visit www.blacksmithapps.com or call 1-866-572-9299.

Source: Technomic Inc.
Chris Urban, 312-876-0004, or curban@technomic.com

Blacksmith Applications Contact:
Tina Wefer
Senior Product Manager
Blacksmith Applications, Inc.
(312) 981-6381
twefer@bigredflame.com