Associated Wholesale Grocers, the country's largest independent grocery store supplier, is spending $75 million on its first building in Minnesota — a 330,000-square-foot warehouse in St. Cloud.
The Kansas City, Kan.-based cooperative also known as AWG, which had $10.6 billion in sales in 2020, will be the primary supplier for Coborn's and other member stores in the Upper Midwest.
As a cooperative, AWG requires all new grocer partners purchases shares in the company, with a minimum investment of $18,000. An AWG share currently costs $1,200, according to its latest annual report.
"This gets us as close to what we in the industry call self-supplied," said Dennis Host, vice president of marketing at St. Cloud-based Coborn's Inc. "We now have an ownership stake in AWG, so that allows us a much stronger voice and the opportunity to better control things in our supply chain."
AWG will first open a dry goods warehouse in the I-94 Business Park at the former home of Creative Memories in January. Next fall, the company expects to open its new fresh-and-frozen facility about a mile south between I-94 and the Mississippi River.
"By this time next year, they'll be supplying retailers, including us, from the new facility," Host said. "AWG is very connected in the overall supply chain, and having the facility much closer has its benefits as well."
AWG could eventually add another half-million square feet at the new warehouse to create what it calls a "state-of-the-art facility with automated high-tech operations" if it finds enough demand to support the investment.
"We have experienced strong growth in this region, but distance and distribution costs weren't favorable for our members or us," AWG president David Smith said in a news release. "We believe this new division will be a game-changer for grocers in the area and will quickly become our highest-growth division."
The company operates 10 distribution centers in the South and Midwest, with its northernmost location being in Kenosha, Wis., until the St. Cloud expansion.
In September, the St. Cloud City Council approved a $1.7 million tax-increment financing subsidy for the project, and last week the state Department of Employment and Economic Development awarded a $175,000 grant. The warehouse is expected to employ 114 people with wages for most jobs averaging $20 an hour.