CERTIFIED, FRESH BRANDS LOOK TO BUILD MORE BUYING POWER

ELLIOT ZWIEBACH

HODGKINS, Ill. - Certified Grocers Midwest here plans to seek acquisition opportunities to fill the gap between its own Illinois-based operating area and that of Wisconsin-based Fresh Brands, following the completion of the merger of the two companies last week.

Sheboygan, Wis.-based Fresh Brands will operate as a voluntary wholesaler, while Certified will continue to operate as a member-owned cooperative, Paul Butera, Certified chairman, told SN.

He said Certifresh, the holding company formed to facilitate Certified's acquisition of Fresh Brands, will seek growth opportunities for both operations by looking for acquisitions in Wisconsin and northwest Indiana.

He also said two stores that Fresh Brands said it would close would remain open. "They may not be making money at this time, but that doesn't mean they're not good stores," Butera said.

Certified intends to be more aggressive in perishables, with plans to remodel and enlarge those sections departments at some of Fresh Brands' Piggly Wiggly stores, he said.

With the completion of the merger last week, Louis Stinebaugh stepped down as president and chief operating officer of Fresh Brands. Succeeding him with the titles of president and chief executive officer was Ken Koester, who holds those titles at Certified.

Bruce Brandfon, assistant to the president of Certified, has been assigned to oversee the Fresh Brands operation on-site, Butera said. Brandfon, who previously worked for Supervalu and then a food brokerage, was hired by Certified six months ago as a trouble-shooter to work on special projects.

In the wake of the merger, Certified will have sales of about $1.3 billion, including approximately $675 million from Fresh Brands (which encompasses 74 franchised Piggly Wiggly stores, 20 corporate-owned Piggly Wigglys and Dick's Supermarkets, and two convenience stores, plus a handful of independents whose sales comprise less than 5% of the total) and approximately $600 million from Certified's 200 retail members.

That will mean greater buying power for Certified and lower prices for all its retail customers, according to Piggly Wiggly operators contacted last week by SN.

"We're hoping we end up with lower prices, and that will enable us to lower our prices and be more competitive," said Bob Dirkse, owner of Cedar Grove Piggly Wiggly, Cedar Grove, Wis.

Like most Piggly Wiggly operators, Dirkse said he is taking a wait-and-see attitude toward what will happen now that the merger has been completed. "They've made it clear to us we won't see any changes in the first year," he said, "though after that, if Certified thinks its overall programs are better than ours, they may implement changes."

Jim Wieser, owner of Plymouth Piggly Wiggly, Plymouth, Wis., also said he anticipates Certified's stronger buying power will result in lower prices.

He said Fresh Brands executives met with franchisees early last month to answer questions, "and after that meeting, I think we realized this will be a positive for all of us. My biggest concern, however, is losing Stinebaugh and the board of directors because they were easy to work with. But all the supervisors who worked with the stores will remain, and that's a good thing."

Jay Mentink, owner of Mentink's Piggly Wiggly in Oostburg, Wis., said he anticipates that duplicate buying operations will probably be eliminated over the next few months. "But there are some things we do differently. For example, we have a full accounting program that they don't, and we advertise as a single group, which they don't."