Kansas City, Kan.-based Associated Wholesale Grocers and Norfolk, Neb.-based Affiliated Foods Midwest Cooperative announced that they have reached an agreement to combine the two cooperatives’ distribution businesses.
“This exciting endeavor is exactly what we need to allow our retailers to compete, grow and be profitable,” said Martin Arter, president and CEO of AFM. He further stated “the synergies between our joint cooperatives will help our retailers thrive. Our members benefit with a substantially lower cost of goods. Much credit is due to the vision of both AWG’s and AFM’s board of directors to see the possibilities of what we could become.”
David Smith, president and CEO of AWG, said the consolidation made perfect sense.
“We are excited about joining forces and combining the two cooperatives,” said Smith ‘Expanding our collective distribution areas into several new adjoining states and adding over 800 new member stores will make our unified cooperatives stronger together, leveraging not only the additional scale and buying power but also employing and implementing the best practices of each that have been developed over the 80 to 90 years that our respective cooperatives have been in business. Combining our distribution center networks and support infrastructure will allow us to more effectively serve our growing numbers of independent member-retailers. This unified business will further strengthen our relationship with the vendor community, reduce operating expenses and subsequent cost of goods, and enhance our ability to support and serve our growing membership.”
AFM is a retailer-owned cooperative supplying members that operate over 800 stores in 15 states. It has a distribution center in Elwood, Kan. AWG is a retailer-owned cooperative supplying members that operate over 3,000 stores in 30 states.
As proposed, the members of both cooperatives going forward would be members of a larger AWG.
The alliance was unanimously approved by the board of directors of each company, and, while still subject to certain conditions, including the approval by AFM shareholders, it is expected to close later this year.