FOODTOWN IN WHOLESALE ACCORD WITH WHITE ROSE

MICHAEL HARRISON

CARTERET, N.J. -- The 50-store Foodtown co-op, once Twin County's biggest customer, is beginning the new year with a new wholesaler -- White Rose Foods here.

White Rose held a joint press conference with Foodtown executives -- attended by SN last week -- to discuss the new agreement. Terms, which were undisclosed, were worked out just before Christmas, executives from the wholesaler and the co-op said.

Twin County, Edison, N.J., filed a Chapter 11 bankruptcy petition in December and began liquidating its assets soon after. Its primary customer was the Foodtown Cooperative that operates in New Jersey and the New York metro area.

Another grocery chain formerly supplied by Twin County, D'Agostino Supermarkets, Larchmont, N.Y., has an open-ended agreement with Minneapolis-based wholesaler Supervalu, SN learned last week.

The Foodtown stores represent an approximately 25% boost in volume for the wholesaler -- about $200 million a year, according to Steve Bokser, president and chief executive officer of White Rose, which is a division of Di-Giorgio Corp.

In a separate interview, George Conklin, vice president of administration for White Rose, told SN the company's warehouses will now be operating at near capacity. However, according to Conklin, the facilities, which include a frozens warehouse built last year, can be expanded by another 25%.

With that in mind, Arthur Goldberg, Di-Giorgio's president and chief executive officer, was emphatic in sending the message that "we have the capital to help stores grow. There are boundless opportunities and we have the access to capital. In fact, right now, we have an unused $60 million line of credit -- that's unused!"

The retail executives in the room were quick to respond to that, particularly Joseph Azzolina, chairman of the Foodtown board, owner of several Middletown, N.J.-based stores and co-host of the press conference. Making a reference to the wave of mergers that have created several colossal supermarket companies, he said "Consolidation is OK up to a point, but the big guys have been trying to gobble everyone up.

"We've been afraid of the [Ahold-owned] Edwards. We're not afraid anymore. The buying power was already there [for co-ops], now the merchandising power is there, too. That's the key, merchandising and advertising. And when people see how stable this is, people are going to want to come in."

Peter Lavoy, a former Twin County executive who now has an untitled executive position with the Foodtown board, said, "Before, we [Foodtown] were wholesalers and retailers. Now we can concentrate on retail."

Asked after the press conference what Lavoy's role will be, Azzolina told SN "He's a new Foodtown executive who's heading the further growth of Foodtown as a new retail power in the tri-state area."

"Thank God," John Estevez Jr., vice president of the four-store Estevez Foodtown group, said to SN after the press conference. "This is all really good to hear. We've wanted to make a move down the road and now we can go ahead with plans to grow. This is definitely a stepping stone."

His father, Juan Estevez, president of the group, which has stores in Manhattan, the Bronx and Yonkers, said, "With White Rose's support, we know we'll be able to count on the loyalty of our customers."

Ron Ginsberg, president and CEO of three Union, N.J.-based stores, said "I bet a lot of new members will be anxious to fly our banner. We're going to explode." Asked by SN how many new members the co-op could expect, he said, "well, we're into '99. That's a pretty good number."

Another Foodtown operator, Ed Paczkowski, who has two stores in South Amboy, N.J., said "I feel optimistic. We've been in this business since 1928. I have two sons in the business and we want to keep it going."

Meanwhile, Nicholas D'Agostino Jr., chairman and CEO of D'Agostino Supermarkets, said his company had "a week-to-week commitment" with Supervalu since Twin County filed its Chapter 11 petition. Now, "we're going to stay with them as long as they fulfill our needs," he said.

D'Agostino said he "spoke with White Rose" about a long-term agreement but "they just couldn't meet our needs. There was a problem with some item matches."

While White Rose executives admitted their new deal with Foodtown would not be completely glitch-free, they did not foresee any insurmountable problems. For instance, software conversions needed to keep the retailers in sync with the wholesaler "will take some time," Bokser said. On the bright side, he added, the company was making a conversion to come into Y2K compliance anyway.

"It's all in place. I would say in a month it will be up and running," he said.

Conversely, logistical advantages include the fact that Foodtown stores are between 3 and 30 miles from White Rose. And, Azzolina said, White Rose "is right near the [New Jersey] Turnpike and all the major arteries. Imagine if there's a major snow storm," as there was last week in the Northeast and Midwest. "It's a lot harder to get deliveries when you're 180 miles away."