Associated Wholesale Grocers (AWG) knows its customers can't live on bread and milk alone. The second-largest retailer-owned cooperative in the US (behind Wakefern Food Corporation), AWG supplies more than 2,800 retail outlets in some two dozen states from eight distribution centers. In addition to its wholesale grocery operation, AWG offers a variety of business services to its members, including marketing and merchandising programs, shelf management, insurance, and store design. The firm sold its company-owned retail stores, which operated under the Homeland and other banners, in 2011 to focus on its wholesale business. AWG was founded by a group of independent grocers in 1924.
AWG's trade area encompasses 24 US states, including: Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, New Mexico, North Carolina, Oklahoma, Ohio, South Carolina, Tennessee, Texas, Virginia, West Virginia, and Wisconsin.
AWG's 2011 sales increased by 7% vs. 2010, to a record $7.7 billion. Net income rose more than 3%, to $169.5 million, over the same period. The grocery wholesale is working to control costs. Indeed, in 2011 its general and administrative expenses were 3.45% of sales, a decline of 13 basis points from 2010, a record low as a percentage for the company.
A decade after acquiring the Homeland chain of grocery stores in Oklahoma out of bankruptcy, AWG sold its supermarket business, known as Associated Retail Grocers (ARG), to a group of employees in a transaction valued at $145 million. (AWG paid $47 million for the 44 stores in 2001, and over the years grew ARG to 76 stores through subsequent acquisitions.) The sale frees AWG to focus on its growing wholesale business and supply chain. To that end, in 2012 AWG completed construction of a new warehouse in Pearl River, Louisiana that will better serve retailers from Texas to Florida. In late 2012 AWG completed an addition to its headquaters in Kansas City, bringing all its corporate resources under one roof for the first time in 20 years, making for a more efficient operation.
AWG continues to build sales of its billion-dollar, private-label products line, which includes the Best Choice, IGA, and Always Save brands. In addition to marketing the products as lower-cost alternatives to brand-name products, the co-op has been investing in efforts to make sure the quality of its private-label items matches competing national brands. The company also owns and operates the Value Merchandisers Company (VMC), which offers some 22,000 nonfood items to its members, including health and beauty care, general merchandise, and seasonal and promotional products.
Operating in a fragmented business, AWG competes with a large number of local and regional suppliers, as well as distributors of specialty items. The food wholesale business also has its share of national giants, including C & S Wholesale, Nash-Finch, and wholesale grocery and retail company SUPERVALU. – less