![Grocery items are stacked multiple layers high at the Supervalu's grocery distribution center Wednesday, Jan. 23, 2013, in Hopkins, MN. Supervalu has 1.7 million square feet of distribution space.] (DAVID JOLES/STARTRIBUNE) djoles@startribune.com Until 2006, almost half of Supervalu's business came from wholesaling, the company's original reason for being in back in the 1920s. Its purchase of Albertson's turned into more of a supermarket retail company, with wholesaling less than 25 percent of i](https://arc.stimg.co/startribunemedia/424XWW7VCUNDOW6PLJCZ4XWUIA.jpg?&w=1080)
A complex transaction that Supervalu orchestrated this year involving 18 Rainbow Foods stores was a "wholesale play," and the company has no intention of again becoming a big operator of traditional supermarkets.
That was the word Wednesday from Supervalu CEO Sam Duncan as he presided over the company's annual meeting at the Hilton Hotel in Bloomington.
In a deal sparking a major shake-up in the Twin Cities grocery business, a consortium of local supermarket companies led by Supervalu this spring bought 18 of Rainbow's 27 stores for $65 million. The other nine Rainbows may eventually close as Rainbow's parent firm, Roundy's, exits the market.
Ten of the stores will reopen under Supervalu's Cub Foods banner. But Supervalu wholesale customers — including Jerry's Foods and Lunds — will have ownership in several of the supermarkets.
"That transaction we did strictly as a wholesale play," Duncan told shareholders. Not only does the deal offer Supervalu more wholesale business, it helps the firm's retail customers by allowing them to expand, Duncan said.
Eden Prairie-based Supervalu was one of the nation's largest grocery retailers until early last year, when it sold its four biggest supermarket operations. The $3.3 billion deal halved Supervalu's annual revenue to about $17 billion, and made Cub its largest traditional supermarket chain.
It also made Supervalu's wholesale operations its paramount business, as measured by percentage of sales. "We are going to be a great wholesaler," Duncan said. "That is our focus. It is more than half of the company, and we are darned good at it. … I have no desire to be a big retailer."
Still, Supervalu maintains growth plans for Save-A-Lot, its national "hard-discount" supermarket chain. Save-A-Lot will grow its store base in 2014 for the first time in several years, Duncan said. Its growth had stalled due to Supervalu's woes.
