Butera Eyes Fresh Brands Buy

JON SPRINGER

SHEBOYGAN, Wis. — Paul Butera, who as chairman of the Certified Grocers cooperative led Certified's acquisition of voluntary wholesaler Fresh Brands here, is close to buying Fresh Brands back from Certified, sources told SN last week.

The move would coincide with Butera switching distributors for his Butera Markets chain from Certified to Fresh Brands, and could signal the beginning of additional consolidation among Midwest wholesalers, sources said. Other Certified retailers may also switch, sources added. Certified members not switching to Fresh Brands would be bought out of the cooperative and move to another wholesaler, possibly Affiliated Foods of Norfolk, Neb., the source added.

Butera, who was not available for comment last week, reportedly met with Fresh Brands retailers to discuss details of the changes late last week. A Butera spokeswoman told SN the chain was withholding comment but would issue a press release regarding its activities this week. An Affiliated official last week had no comment on rumors that it may acquire customers from Certified.

Certified in late 2005 purchased Fresh Brands, a voluntary wholesaler with 20 corporate stores and 74 franchised stores operating under the Piggly Wiggly and Dick's Supermarkets banners, for around $100 million. Fresh Brands, which then was a publicly traded company, said its board of directors had determined it was too small to compete as a stand-alone entity. The merger with Certified was to have provided additional buying power and facilitate acquisitions between Fresh Brands' Wisconsin base and Certified's Hodgkins, Ill., trade area, officials told SN at the time.

At the time of its merger with Fresh Brands in early 2006, Certified had around 200 members with combined sales of $600 million. Butera Markets, with 11 stores, was its largest customer. Fresh Brands' sales totaled $675 million.

David J. Livingston, a consultant based in Pewaukee, Wis., told SN the activity could be sparked by an excess capacity of warehouse space in the area resulting from Roundy's Supermarkets' move away from the wholesaling business and Supervalu's acquisition of the Jewel-Osco chain in Chicago. The latter event coincided with Supervalu selling its Cub stores in the Chicago area and taking over Jewel's distribution. That left less distribution activity running from Supervalu's Kenosha, Wis., facility.

“There's an excess of warehouse space and it's only getting worse,” Livingston said.

Pat Fox, a co-owner of Fox Bros., Heartland, Wis., and a customer of Fresh Brands, told SN last week that he received notice of Butera's intention to purchase Fresh Brands, but had yet to be informed of the details. Butera's background in retail should be good for Piggly Wiggly operators, he added.

“The positive is that Paul is a retailer. And having a retailer running the wholesale organization is a plus because he's going to have a focus on driving retail sales,” Fox said. “There are not a lot of wholesalers I am aware of that are being run by an individual from the retail world, focused on driving retail sales. As a retail operator, that's a plus.”