SUPERVALU UNIT PPI DROPPING MANUFACTURING

LISA A. TIBBITTS

MINNEAPOLIS -- Supervalu here has sold several manufacturing operations of its Preferred Products subsidiary to John B. Sanfilippo & Son, Elk Grove, Ill.

Preferred Products, Chaska, Minn., said it can now refocus on its core business of marketing, distributing and selling its more than 8,800 private-label products under the Chateau, Flavorite, Shoppers Value, Nature's Best and Preferred Selection brands.

The sale includes Supervalu's peanut butter manufacturing and candy, nuts and coconut bagging operations. Sanfilippo, a nut and food manufacturer, bought the operations for an undisclosed amount. The transfer of operations is expected to be completed Feb. 24.

The operations are currently handled at Preferred Products' processing plant in Chaska. Supervalu said it will retain the Chaska property.

As part of the agreement, Preferred Products will purchase these items from Sanfilippo for up to 10 years.

Preferred Products is also negotiating the sale of its sugar rebagging operations -- a move that would end PPI's involvement with the manufacturing side of the private-label business.

Preferred Products annual sales from manufacturing, excluding sugar, total about $35 million.