Butera to Purchase Fresh Brands

JON SPRINGER

Sheboygan, Wis. — Paul Butera confirmed last week that he will buy out his fellow co-owners of Fresh Brands and gain sole control of the retailer-wholesaler here.

The deal gives Butera control of 26 corporate stores and a distribution business serving 95 additional stores operating under the Piggly Wiggly banner in Wisconsin, Illinois and Iowa. Several members of the Butera family with roots in the grocery industry are joining Paul Butera in the venture, Fresh Brands said.

Butera said he will retain his position as chairman of Certified Grocers, the Hodgkins, Ill.-based cooperative that backed the purchase of Fresh Brands in 2005. Butera and several members of the cooperative known as Certifresh Holdings bought Fresh Brands in late 2005 for $100 million. With a 15% ownership of Certifresh, Butera was the group's largest shareholder as well as Fresh Brands' chief executive officer and chairman.

“I thought about retiring, but that didn't take, so I want to have a little more fun,” Butera told SN in an interview last week.

He said Fresh Brands' stores have done well since the Certified deal, but there are still opportunities to reduce costs and improve store volumes. He said the stores will get “a little more aggressive” in pricing.

The deal won approval of Fresh Brands' members in a vote last week.

“I felt like it was better for me to own it and control it,” said Butera. “I think this will be a benefit to Fresh Brands members. Their cost of doing business will go down.”

Butera said he intends to move the volume from his 10-store Butera Markets chain from Certified to Fresh Brands within a year. He said the decision to buy Fresh Brands should not affect Certified co-op members, although Butera is the cooperative's largest customer. A source told SN last week that Affiliated Foods Midwest, Norfolk, Neb., was also looking to acquire retail accounts from Certified.

As reported last week in SN, Pat Fox, a co-owner of two Piggly Wiggly stores based in Heartland, Wis., said that Butera's background in retail should be good for Piggly Wiggly operators.

“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.”

Fresh Brands went up for sale in 2005 after its directors determined, among other challenges, that the $675 million company was too small to compete on its own. But Butera disagreed. He said he had long admired the company and tried to purchase it as far back as four years ago. “The company is big enough to survive,” he said.