BATON ROUGE, La. -- It was 1950, and independent operators here, as elsewhere, were having a hard time competing with the chains.
ifficult to compete effectively on price.
In search of a long-term solution, a group of 17 local independents here formed a new cooperative and called it Associated Grocers.
"The concept of a cooperative or retailer-owned wholesaler has been around for a while," Jay Campbell Jr., president and chief executive officer, said. "In cooperative circles our company is very young."
Prior to the formation of AG, independents were at the mercy of local wholesalers. "We were paying them through the nose, and they were selling us only the deals they wanted us to have," Ferdie Barbier, founder of Big B Supermarket, Belle Rose, La., told SN.
National Supermarkets (later National Tea) also was making it tough for independents after it entered the Baton Rouge market. According to Sam Crifasi, founder of Hi Nabor Supermarkets here, "A lot of independents had to shut down because they couldn't buy at National's prices.
"At one point, we were down to only a handful of independents, and that's when they decided that, rather than fighting each other, they should band together, which enabled them to buy at better prices and compete with the chains."
The formation of AG didn't immediately resolve all the independents' problems.
Recalled Nolan A. (Sonny) Lamendola, founder of Lamendola's Supermarkets, Gonzalez, La., "We didn't have very much product to sell because most major vendors wouldn't sell to us."
Crifasi said he had the same experience. "Operating in those early years, we were like a toothpick going up against a telephone pole -- it was a real struggle," he declared. "Some vendors wouldn't sell to us because we were too small, but others wouldn't sell to us because other wholesalers in town didn't want to let the independent retailer get strong, so they told them not to sell to us."
AG has outlasted all those local wholesalers -- and National Tea as well.
AG operated on a shoestring budget that first year in a warehouse in a 2,500-square-foot building on the grounds of an old ferry landing site in downtown Baton Rouge.
"We didn't even have lights at first," the late Joseph Cicero, founding general manager, once said in an interview. "We illuminated the place with the lights from a car."
Sales in 1950 totalled $200,000. But business was good, and in less than six months, AG moved to a 4,500-square-foot facility, and in 1952, into a 6,800-square-foot warehouse.
In 1955, AG purchased its first delivery truck, replacing the traditional "cash and carry" concept with free deliveries to members.
Cicero served as general manager until 1958, when AG had about 64 members. However, an internal dispute about how the company was being run split the membership, with half opting to move to another supplier, the retailers recalled.
"Those who stayed did all right," Barbier said, "but those that left are long gone."
Added Lamendola, "We kept the warehouse, and Cicero and the others left. That's when we hired Sam Politz [as general manager], who held AG together."
To get the company back on its feet after losing half its membership, Politz realized the wholesaler needed more warehouse space to serve the membership better. "So we bought some land and built a larger warehouse, and that's when we started moving forward," Lamendola said.
"In the old building, there was very little space, and all we had were some canned goods. But we didn't carry produce, chicken, meat, health and beauty aids or cigarettes -- we had to buy all those categories from another supplier.
"In the larger warehouse, one of the first things we added was meat, then we started buying some limited produce. We were a going concern after that, and once we were able to add cigarettes, we were able to make some money -- and when you make money, you can sell cheaper."
That facility, covering 30,000 square feet when it opened in 1961, served the company's needs through 1975.
Politz continued as AG's general manager until 1976, a year past AG's 25-year anniversary. He was succeeded by Hillar C. Moore Jr., who carried the title of president and general manager.
"During Moore's time at AG, everything was going uphill," Lamendola said, "and the warehouse grew to the point that we didn't have to worry about what we could or couldn't sell. In Sam's day, we had to take anyone we could get as a member, but by Moore's time, we were able to be more choosy who we would sell to."
Under Moore's leadership, AG evolved from simply a warehouse-based company to a broader-based distributor, offering a growing number of retail services, beginning with insurance and retail counseling.
In 1990 Campbell, who was AG's chief financial officer, helped engineer the conversion of the cooperative to a for-profit retailer-owned company, with members owning equity in the company and warehouse profits being reinvested in growth rather than going back to members as patronage dividends.
"That change put AG on its feet," Lamendola told SN.
According to Barbier, "Before that, all the members had Class A stock and we each had one vote. But with the introduction of Class B stock, the largest members controlled more votes, which is the way it should be, because the one with the biggest holding will do the proper thing to make the organization grow."
Barbier recalled a brief period in the early 1990s when the board divided 6-6 along age lines, with the older and younger directors having trouble finding agreement on which direction AG should go. "The younger members apparently felt the older ones were trying to control the company," he said.
"But today we have a better understanding of each other on the board and we have an easier time agreeing on what's best for the organization."
Campbell succeeded Moore as president and chief executive officer in 1995 and got the company more actively involved in city, state and national organizations. He served as chairman of the National Grocers Association during 1999.
AG's volume grew from $21.7 million in 1970 to $60 million in 1975, $200 million in 1988 and $450 million last year.
As the company grew, so did its distribution facility, from the 30,000-square-foot warehouse that opened in 1961 through several expansions before the company built a 217,000-square-foot warehouse in 1975, the year of its 25th anniversary. As a result of expansions in 1985, 1992 and 1996 the facility grew to its present size of 530,000 square feet.
