FLEMING TO SERVICE FAIRWAY RETAILERS

OKLAHOMA CITY -- Fleming Cos. here said last week it has reached an agreement with Fairway Foods, Bloomington, Minn., to service retailers currently supplied by Fairway's distribution center in Menominee, Mich.

f product annually.

Fleming said it expects to begin supplying former Fairway customers today from its distribution centers in LaCrosse and Superior, Wis., with Fairway simultaneously ceasing operations at Menominee.

The former Fairway-supplied stores are located in northeast Wisconsin and Michigan.

Fairway is the onetime wholesale division of Holiday Cos., Bloomington, Minn. It had signed an agreement in principle last October with Nash Finch Co., Minneapolis, under which Nash Finch would have acquired the Menominee facility. However, Nash Finch said in late December it had terminated that agreement, noting that due diligence "has led us to conclude that this acquisition does not, and will not, meet the business criteria we established for the transaction."

When Fairway initially announced the pending sale of the Menominee facility, it said it would shut down its other two wholesale-food operations -- a 520,000-square-foot distribution center in Northfield, Minn., and a 170,000-square-foot facility in Fargo, N.D. The three facilities had combined for an estimated $70 million in annual volume.

The company said most of the volume from the two closed facilities was transferred to Supervalu, Minneapolis.

Fairway said it was ceasing operations because "it has become increasingly difficult for grocery wholesalers to compete effectively in today's environment of consolidation and acquisition by the largest firms. Our business projections pointed us toward this difficult but inevitable outcome."

Fairway was founded in 1914 as a cooperative wholesaler. For the last few years it has been a division of Holiday Cos., which operates 300 combination convenience stores and gas stations and 30 sporting-goods stores in the Upper Midwest.