CHANGING FORTUNES 2004

ELLIOT ZWIEBACH

Food companies come and they go, but rarely does a major industry player flame out and disappear as quickly and as surprisingly as Fleming did.

As 2003 dawned, Fleming was the nation's No. 10 company on SN's Top 75 list, with estimated sales of $15.5 billion. But the bankruptcy filing by Kmart Corp., its largest single customer, in mid-January hurled Fleming into a financial spiral from which it couldn't recover, and after filing its own bankruptcy petition on April 1 and closing distribution centers and selling off assets, Fleming as a grocery wholesaler no longer existed by late summer after 86 years of doing business.

In December, Fleming filed a reorganization plan that would enable it to emerge from Chapter 11 protection as a wholesale distributor for convenience stores.

Looking at this year's Top 75 list, it's unclear exactly where Fleming's 15-plus billions of dollars worth of volume went.

The biggest share clearly went to C&S Wholesale Grocers, Brattleboro, Vt., which acquired a large portion of Fleming's operations and rose to No. 13 on this year's list, with estimated sales of $11.3 billion, from No. 18 on last year's list, when sales totaled an estimated $9.7 billion.

Another gainer was Associated Wholesale Grocers, Kansas City, Kan., which saw volume jump to $3.7 billion from $3.1 billion -- enabling the company to climb six notches to No. 28 from No. 34 -- following the acquisition of four Fleming distribution centers and a pickup of retail customers from those facilities.

However, any benefits from Fleming's misfortunes were not evident in the results of two other Midwest wholesalers, with sales at Supervalu (No. 8 on the list) remaining flat at an estimated $20.3 billion and sales at Nash Finch (No. 26) dipping to an estimated $3.9 billion from last year's $4 billion.

As an industry segment, wholesalers as a group (Page 12) experienced an overall sales boost of 3.3% over the previous year.

Looking at other industry categories, alternative formats (Page 13) saw sales increase 8.3% over the prior year, and Canadian companies (Page 13) experienced a sales jump of 11.9%.

One other company besides Fleming also disappeared from SN's Top 75 list following a bankruptcy filing -- Eagle Food Centers, Milan, Ill., which liquidated its store base through the second half of the year.

Making their debuts on the 2004 list are Trader Joe Co., Monrovia, Calif., at No. 36 and Wal-Mart's Neighborhood Markets at No. 59.

In other significant shifts on this year's list:

7-Eleven, Dallas, saw volume grow by about $1 billion to $11.1 billion, enabling it to jump two spots past A&P, Montvale, N.J., and Meijer Inc., Grand Rapids, Mich., to No. 14.

A&P fell to No. 17 from No. 15 a year ago following the sale of its Kohl's stores in Wisconsin.

Super Target, the supercenter division of Target Corp., Minneapolis, added 24 new stores and moved up one notch to No. 21 from No. 22 a year ago.

Super Kmart, a division of Kmart Corp., Troy, Mich., closed 57 of its 120 supercenters and slipped 10 notches -- to No. 38 from No. 28 a year earlier.

Price Chopper Supermarkets, Schenectady, N.Y., jumped to No. 37 from No. 43 on the strength of four new stores.

Save Mart Supermarkets, Modesto, Calif., jumped 12 spots to No. 40 from No. 52 with the addition of 26 warehouse stores it acquired from Fleming at the end of 2002.

Spartan Stores, Grand Rapids, Mich., dropped to No. 42 from No. 30 following the closing of 30 corporate stores in Michigan and Ohio.

Penn Traffic Co., Syracuse, N.Y., fell to No. 55 from No. 40 after filing for Chapter 11 reorganization and selling or closing more than 50 stores at year's end.

Overall sales for the Top 75 companies rose 15.3% to $602.9 billion over the prior year. Nine of the top 10 chains on SN's Top 75 list remained unchanged in rank from a year ago, with No. 1 Wal-Mart Supercenters followed by Kroger Co., Costco, Albertsons, Safeway, Sam's, Ahold USA Retail, Supervalu and Publix Super Markets. Replacing Fleming at No. 10 on the list was Canada's Loblaw Cos., which moved past Delhaize America.

Wal-Mart Supercenters continued to dwarf all other retailers with estimated sales of $103.2 billion from just 1,470 locations -- almost twice as much volume as its nearest competitor, Kroger, which took in an estimated $53.6 billion with three times the number of stores.

Wal-Mart entered the grocery business with supercenters in 1988 and passed all conventional food operators for the first time in 2001. It has continued to expand its volume lead over the last three years as it opens more than 200 additional supercenters annually -- a growth rate projected to boost Wal-Mart's grocery-related sales by 20% a year, compared with less than 5% a year for conventional operators.

When sales at Wal-Mart Supercenters are combined with the $33.5 billion from Wal-Mart's 538 Sam's Clubs (No. 6 on the list) and the $1.3 billion from the company's 60 Neighborhood Markets (No. 59), it gives Wal-Mart control of $138 billion of U.S. food sales.

Even excluding general merchandise sales at supercenters and club stores, the $31 billion in groceries and supermarket-oriented sundries sold at Wal-Mart Supercenters and the $20.4 billion worth of similar items sold at Sam's totaled $51.4 billion, approaching Kroger's $53.6 billion -- a number that itself reflects a broad mix of general merchandise and fine jewelry; excluding those nonfood items from the mix would leave Kroger a distant second to Wal-Mart on a food-only basis.