ASSOCIATED TO BUY BUTTREY DEPOT

ELLIOT ZWIEBACH

SALT LAKE CITY -- Associated Food Stores here has agreed to purchase a nonfood distribution center in Payson, Utah, from Buttrey Food & Drug Co., Great Falls, Mont., in a deal valued at $10 million. Associated will now supply Buttrey's 39 stores in Montana, Wyoming and North Dakota with items carried in the mechanized Payson warehouse. The deal marks the entry of Associated into pharmaceutical sales and distribution, an area into which the company has sought entry for some time.

Associated said it will take over operations of the 263,000-square-foot facility some time before April 1, after it realigns inventories and modifies systems and procedures. According to observers, Buttrey has been putting more emphasis on food products and less on nonfoods as competitors like Wal-Mart have grown stronger in its operating area. Buttrey officials could not be reached for comment last week.

Associated will also supply the nonfood needs of its 700 independent retail supermarkets out of the facility, which will replace a 100,000-square-foot, largely manual-pick nonfood distribution center here. "With the inclusion of the Buttrey business, it is anticipated that sales of nonfood items from the Payson distribution center will exceed $110 million annually," said Richard Parkinson, president and chief executive officer of Associated. Sales at Associated's existing nonfood facility total $65 million, Parkinson said. Besides picking up $40 million in business from Buttrey, the wholesaler expects to add another $5 million in sales from customers who currently buy nonfoods from other sources, he noted.