May 24, 2018
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Taking stock: Food distributor’s financial troubles leave small grocers scrambling

By Matt Wickenheiser, BDN Staff

Small grocers around the state scrambled this week to secure sources for their goods when the cooperative food distributor they belonged to was placed in receivership and headed for liquidation by court order.

Gardiner-based Associated Grocers of Maine was in business since 1953, but according to a letter on its website from the court-appointed receiver, the co-op in recent years “struggled to remain profitable in an extremely competitive marketplace.”

The co-op began with 44 members, but had grown to more than 300 stores in Maine, Massachusetts and New Hampshire. The co-op was composed mainly of independent, small-town and rural businesses.

Most of those grocers said they were surprised to learn just how bad Associated Grocers of Maine’s situation was, and had little information.

“We don’t know anything when it comes to the actual details of anything,” said Roger Collins Jr., whose family owns Rogers Market in Hudson and the Fruit Bouquets business in Brewer. “The only thing we know is the bank has taken over operations.”

According to the letter from the receiver, “despite the best efforts of management and AGM’s dedicated employees, the continued loss of customers coupled with struggling same-store sales resulted in a significant operating loss for the fiscal year that ended on March 25.”

According to court records, the co-op owed Savings Bank of Maine $6 million, plus interest of $137,764 — and was accruing owed interest at a rate of $1,648 a day. And a report in the Kennebec Journal, citing Kennebec County Registry of Deeds records, said that Associated Grocers of Maine also has a $4.8 million second mortgage on real estate and equipment through Camden National Bank.

The company employs more than 100 people, and the Maine Department of Labor was aiding them by coordinating services providing information on unemployment, re-employment and training.

One thing grocers like Collins did know immediately: They had to act fast to maintain the supply of everything from cigarettes to hot dogs, whole-wheat bread to ice cream.

“Fortunately for us here at Roger’s Market, we have a great relationship with our vendors,” said Collins. “We can still get product — we can still have things on our shelves.”

In the short term, the change means more work for grocers — instead of getting in bulk what they need for product from one main distributor acting as a sort of middleman, they have to use a variety of companies.

Several out-of-state distributors that compete with Associated Grocers of Maine have made a push into the state in the wake of the receivership, including Pembroke, N.H.-based Associated Grocers of New England (unconnected to the Maine firm) and Bozzuto’s Inc. of Cheshire, Conn.

In a Friday release, AG New England President and CEO Mike Bourgoine said his company has hired three former AG-Maine employees and is talking with others about job opportunities.

“We have been working with a number of Maine retailers and will begin supplying a number of stores immediately,” Bourgoine said. “AG New England has always served some Maine independent grocers and is now reaching out to offer assistance to others.”

Collins said — as did several other Maine grocers affected by the demise of AG Maine — he’s going to use AG New England as a distributor. Ron Picard, owner of Friends and Family Market in Ellsworth, said he found out Wednesday about AG Maine’s problems, and was meeting with AG New England on Thursday. He’s expecting his first shipment on Monday, he said. The larger distributor carries more products in the Shurfine brand, and, in some cases, at lower prices.

“We may be able to get a little better pricing — that will definitely help our customers,” said Picard.

Mark Kelley, owner of Country Farms Market in Easton, noted that there are several other distribution options out there, and he’s going to pick one soon.

“I gotta run my business; it’s my commitment, it’s my life,” said Kelley. “I can’t sell an empty shelf.”

In the meantime, the smaller vendors that provide him with bread, milk, ice cream, etc. have set up accounts for his market, so he can get what he needs. He wasn’t happy to see AG Maine fold, but his business should be fine, he said.

“It’s a Maine company with Maine employees and Maine stores. We’re sad we’re going to lose all that, but that’s the way it’s worked out,” said Kelley. “There’s two or three other real good alternatives. By next week everybody’s going to be supplied.”

Neither Kelley, Collins nor other Maine grocers would discuss money they might lose that was essentially invested in AG Maine, in the form of stock options and capital savings that would be used to purchase equipment.

Dave Bean, owner of W.A. Bean & Sons of Bangor, a meat company, said he has received an increase in orders from a number of small grocers that normally would rely primarily on AG Maine for their meats.

“For us, it’s probably a very temporary fill-in,” said Bean, “and we appreciate the business.”

Especially seeing as how AG of Maine was one of W.A. Bean’s customers. The co-op owes the Bangor business roughly $4,000, Bean said.

“I don’t think we’ll ever see that money,” said Bean.

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