AWG’s Upper Midwest division opened in St. Cloud, Minnesota, in 2022. It is comprised of two facilities – a 300,000-square-foot dry facility and a state-of-the-art, 330,000-square-foot fresh/frozen facility.
Emile Breaux, SVP, chief sales and support officer for AWG, said the expansion into the new geography just made sense.
“We knew that there were a number of really great independent retailers that operate in the northern central U.S. geography, and we didn’t have a way to reach those folks in an efficient way. Kenosha really was too far away to the Nebraska facility. When Coborn’s expressed interest in becoming part of the co-op, that really gave us the base that we needed to establish the distribution center there.”
Coborn’s, headquartered in St. Cloud, became AWG’s first member in the new division. The employee-owned grocery retailer has more than 9,000 employees and 590 stores across Minnesota, North Dakota, South Dakota and Wisconsin.
Coborn’s President and COO Dave Meyer said the company had heard from many others about their experiences with AWG.
“AWG’s co-op model intrigued us as it got us as close to being self-supplied as we could get without having to make all the capital and infrastructure investments of a warehouse on our own. AWG brings a tremendous amount of transparency and collaboration that has been very refreshing. What they do for us, they do for everyone, which is the best of the co-op model.”
Meyer said Coborn’s was very happy AWG chose St. Cloud as the site for its Upper Midwest facilities and was a “significant consideration” for the company to join the co-op.
“Growth is a big part of who we are. If we grow, we provide bigger opportunities for our employees, and it creates opportunities for our entire company by being part of AWG.
“Our partnership with AWG has provided us with a conduit to that growth. AWG has scale – they’re not just St. Cloud – it’s all of their warehouses, all across the country and that allows us access to the same large-scale leverage that the bigger retailers get, so the playing field is more level.
“As with any big initiative like this and any major transition of your supply chain in a very complex industry, we certainly had some speed bumps along the way, but we worked hard together and are in a great place now to continue to move forward and grow together,” Meyer said.
AWG President and CEO David Smith said while the co-op had experienced growth in the area, distance and distribution costs weren’t favorable. The Upper Midwest division was created as an opportunity for growth.
He said adding Coborn’s, one of the nation’s top independent grocers, to the division was “a blessing.”
Smith said he believed the division would be a “game changer” for grocers in the area and would become a high-growth division for AWG.
James Neumann, SVP of special projects for AWG, said Smith understands the need to continue to grow the co-op.
“David just saw opportunities to reach more independents with the co-op model of members owning their own wholesaler and being able to grow as we grow,” Neumann said. “David understands that growth is absolutely paramount. It’s about attracting new business into our co-op and expanding our geographic footprint, but also making our operations run more efficiently and working within the management team here at AWG. We’ve got some really exceptional folks in operations, at division level as well as in our transportation and logistics.”
The St. Cloud location also allowed existing members in the region to relocate to the new division, drastically reducing freight expenses and improving profitability. The migration of existing members from the Great Lakes and Nebraska divisions began in the first quarter of 2023, utilizing more of the building’s available capacity and saving those members millions annually in freight costs. The new facility is also strategically located to allow future business development opportunities in the region.
The new warehouse has seven modern banana rooms, a full generator backup, 40-foot clear ceiling heights and an efficient operational design. The physical site was designed to allow for future ambient and frozen automation and the addition of a new division office.
This expansion created AWG’s ninth full-line wholesale division. AWG currently operates divisions in Kansas City, Kansas; Springfield, Missouri; Oklahoma City, Oklahoma; Goodlettsville, Tennessee; Hernando, Mississippi, Pearl River, Louisiana; Norfolk, Nebraska; Kenosha, Wisconsin; and St. Cloud, Minnesota.
AWG President-elect Dan Funk said the co-op is excited about the growth in the division.
“We’ve been able to move 80-plus stores from other divisions into that Upper Midwest division, and that’s created more capacity for us in some of our other northern divisions. It’s also allowed us to take some capacity from our southern divisions and reposition that into areas like Great Lakes, where we have some business caught between our Nashville and our Great Lakes division. Smoothing out capacity, post-pandemic, and being able to manage capacity has been a big part of that Upper Midwest project.”
CFO Gary Koch said AWG is committed to the region. He said the volume from Coborn’s continues to grow, and the division has added new members, as well as transferring members from other divisions.
“Now, they’re in their true home division of Upper Midwest, and we have other prospects that are in the pipeline for transferring to AWG, for the benefit of the lower cost of goods than what they currently have.”
Tye Anthony, SVP of merchandising for AWG, said the division is “another great market that we’ve added to the AWG portfolio.” He said they expect the Upper Midwest division to be very successful, building off the partnership with Coborn’s.
“It’s just another great independent market. That willingness and desire to be a part of the co-op, and the benefits of being part of the co-op, it’s another great market for us to get into. We’re excited about it … We’ve made great investments there, and we’re happy about that.”
Shelly Moore, chief information officer, said the Upper Midwest division offers the co-op an opportunity and ability to expand and grow.
“As you can imagine, starting off operations anywhere takes a lot of time, investment, faith and confidence from new members. Coborn’s has certainly weathered those initial startup stages with us.
“I think the standout up there is there’s a lot more independent owner-operators up there, a lot more growth potential for us to go after. Both the facility as well as the land that we’re positioned on allows us that trajectory for growth, most certainly.”
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