Fleming to sell grocery division
By Andrew Gomes
Advertiser Staff Writer
A Vermont company has agreed to purchase the wholesale grocery distribution business of Fleming Cos. Inc. in an estimated $400 million deal that would make C&S Wholesale Grocers Inc. Hawai'i's largest grocery supplier.
The purchase agreement announced yesterday is subject to financing and approval by a Delaware judge overseeing the bankruptcy of Texas-based Fleming, which filed for Chapter 11 in April and recently has struggled to fill customer orders.
Since June 27, Fleming has been working under a supply agreement with C&S in an effort to improve deliveries to Fleming customers, which in Hawai'i include Foodland Super Market Ltd., Times Super Market, military commissaries and Daiei.
"This arrangement with C&S, one of the nation's largest grocery wholesalers, is designed to allow performance to be restored and enhanced in our grocery wholesale divisions," Pete Willmott, Fleming's interim president and chief executive officer, said in a statement.
Some local grocers yesterday said product shortages, which mostly were limited to Fleming's Best Yet brand of foods and packaged goods, have been reduced, though others said order fulfillment continues to be a problem.
"I'm kind of looking forward to the time when things will improve," said Ron Shima, president of Shima's Market in Waimanalo. "It hasn't happened yet."
The Defense Commissary Agency, which operates five military commissaries in Hawai'i, also said Fleming distribution continues to be an issue, though the agency has found alternate distributors to ease supply shortages.
At Foodland, the state's largest supermarket chain, spokeswoman Sheryl Toda said that Fleming's service has improved and continues to get better by the day.
C&S is the third-largest wholesaler and distributor of food and grocery products in the United States, with about $11 billion in annual sales. The closely held private company, founded in 1918, operates distribution facilities in eight states, mainly in the Northeast.
Fleming operates distribution facilities in California, Hawai'i and 12 other states, mostly in the Midwest and South.
In Hawai'i, Fleming has about 230 employees and distributes an estimated 25 percent or more of all packaged grocery items, representing an estimated $300 million a year in sales.
The majority of Hawai'i's grocery market — which includes Safeway, Star Markets Ltd., Costco, Wal-Mart, Sam's Club, KTA Superstores on the Big Island, and Big Save on Kaua'i — either supply themselves or primarily use other distributors.
Fleming also supplies convenience stores, including 7-Eleven Hawai'i and Longs Drugs stores, but its Core-Mark convenience store distribution division is not included in the sale agreement with C&S.
A sale to C&S is expected to be completed by the end of August, though other buyers could emerge and bid for Fleming's grocery distribution assets July 31 at an auction in a Delaware bankruptcy court.
A final sale hearing is scheduled for Aug. 4.
Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.
