Supervalu plans to retain Unified private labels: CEO

Supervalu plans to continue offering Unified Grocers’ private brands to Unified’s customers upon completion of their planned merger, Supervalu President and CEO Mark Gross said.

“Our goal, every step of the way, will be to provide products and services that work best for all our customers and their stores,” he said in an email exchange. “This includes continuing to distribute high-quality Topco and Unified private label brands such as Springfield, Western Family and Natural Directions.”

Minneapolis-based Supervalu also offers a lineup of its own private brands, which are expected to be offered to Unified’s customer base along with Supervalu’s menu of retailer services, such as data analysis and technology services.

As previously reported, Supervalu expects to complete the $375 million acquisition of Commerce, Calif.-based Unified by late summer.

Unified’s Springfield private label is a national-brand equivalent that was launched in the 1950s and is the wholesaler’s largest in-house private brand. It includes about 1,000 SKUs in the baking, beverages, canned goods, condiments, frozen, household, packaged, pet, refrigerated and snack categories. Natural Directions, which was launched in 2008 and is distributed as part of Unified’s Market Centre specialty division, includes about 200 SKUs of natural and non-GMO products in the dry, frozen and refrigerated categories.

The Market Centre division also distributes a cadre of “signature brands” — niche products that Unified’s members have exclusive rights to sell in their markets.

“We’re thrilled about Unified’s Market Centre and the opportunity that may exist to provide new growth opportunities across multiple geographies,” Gross said. “As we bring together these two great organizations, we’re committed to continuing to deliver dynamic and competitive offerings for all customers following the transaction close.”

Unified had joined the Topco Associates private-label cooperative last February, allowing Unified’s customers access to that group’s two dozen proprietary labels, including its Top Care and related lines of general merchandise and HBC products. Skokie, Ill.-based Topco took over the management and distribution of Western Family private-label products, which are carried by many Unified members, later last year.

Unified also has supplier agreements with regional providers and distributors of fluid milk and related dairy products under various local brands. Those suppliers include Dean Foods in Southern California, Producers Dairy in Northern California and Darigold in the Pacific Northwest.

Also on the perishables side, Unified has an extensive in-house meat program, and the wholesaler partners with Seattle-based Charlie’s Produce to supply retailers in the Pacific Northwest and Southern California regions with a wide offering of fruits and vegetables, prepared produce items, floral and home meal replacement items. In Northern California, Unified partners with Fresno-based OK Produce.

Meeting Unified’s customers

Gross and Mike Stigers, EVP of Supervalu’s wholesale division, along with Unified President and CEO Bob Ling, are conducting a series of town hall meetings with Unified’s customers to discuss the future of the combined companies, according to Paul Dingsdale, a spokesman for Unified.

Rob McDougall, a member of Unified’s board of directors and president and CEO of Encino, Calif.-based Gelson’s Markets, said he is confident the merger will benefit Gelson’s and will bring long-term stability to Unified’s members. Unified, a member-owned cooperative wholesaler, has been operating at a loss for the last four years.

Both Supervalu and Unified “are dedicated to serving the independent grocer,” McDougall said in an email statement. “Bringing together two highly complementary grocery wholesaler organizations will ensure that all owner-members have a stable and secure source of supply over the long term. 

“This decision does not negatively affect Gelson’s in any way, and will likely provide benefits in even greater buying power of the combined entity and access to a greater breadth of value-add services from Supervalu.”

In a conference call with analysts last week discussing the merger, Gross said the combined companies would have “tremendous opportunities” to secure better terms with suppliers and improve margins.

“That should come from working with the combination of our merchandising teams here on basically a national plan, and then, overlaying that with specifics to the different markets that Unified operates in,” he said in the call.

Warehouse consolidation

Unified had already been looking at restructuring its distribution operations in the Pacific Northwest, where it operates two large distribution centers, before the Supervalu agreement, Dingsdale said. Unified leases a warehouse in Seattle and owns a facility in Milwaukie, Ore.

“We have been looking at ways to potentially combine those into a newer facility,” he said. “That was part of our strategic plan.”

Supervalu owns a smaller warehouse in Tacoma, Wash., and another in Billings, Mont. In a conference call last week, Gross said the Pacific Northwest was one area where the two companies could likely consolidate some infrastructure.