Topco Associates LLC
Topco Associates LLC
7711 Gross Point Road
Skokie, Illinois 60077
Telephone: (847) 676-3030
Fax: (847) 676-4949
Web site: http://www.topco.com
Incorporated: 1944 as Food Cooperatives, Inc.
Sales: $3.5 billion (2001 est.)
NAIC: 422410 General Line Grocery Wholesalers
Topco Associates LLC is a leading procurer and distributor of private label grocery products to retail, wholesale, and food-service accounts. The firm also offers national brand buying, equipment purchasing, and other services. Topco is a cooperative that is owned by more than 50 member companies, including Associated Grocers, Inc., Meijer, Schnuck Markets, Fresh Brands, Big Y Foods, and Giant Eagle. The company distributes more than 7,000 products such as canned and frozen foods, produce, flowers, paper goods, pet food, and health and beauty care items. In addition to providing in-store brands exclusive to some members, Topco distributes a dozen lines of private label products under such names as Top Crest, Food Club, Full Circle, World Classics, Dining In, Shurfresh and Shurfine. The latter two were added in 2001 when Topco Associates, Inc. and Shurfine International merged to form the present organization. Topco's members are located around the United States as well as in Canada, Israel, and Japan.
The roots of Topco date to World War II, when a group of Wisconsin grocers founded a small buying cooperative to help them procure dairy products and paper goods, which were scarce due to wartime shortages. The company, called Food Cooperatives, Inc., began operations on September 29, 1944. After the war it also began distributing a line of grocery products for members under the Food Club label, and in December 1950 the organization merged with another co-op called Top Frost Foods, with which it shared some members. The combined firms took the name Topco, using part of each company's name. Members at this time included Alpha Beta, Fred Meyer, Hinky Dinky, Penn Fruit Company, Big Bear Stores, Brockton Public Market, Furr's, and Star Markets.
Topco's offerings now included products manufactured for it by outside firms under the Food Club, Top Frost, and budget Elna brand names, which were sold in members' stores as so-called "private label" goods. The products in these lines, which included canned and frozen foods and other basic items, sold for less than their nationally advertised counterparts. In addition to giving consumers a price break, they also provided grocers with exclusive products that had higher profit margins.
During the 1950s, Topco added new categories such as fresh produce, which it began distributing in 1958. In 1960, general merchandise, store equipment, and some health and beauty care products were introduced as well. By this time, the firm had a total of 27 members, each of whom paid one percent of the cost of their private label goods back to the cooperative to cover its operating expenses. Membership was open to retailers with a minimum of $10 million in annual sales, and each member was required to pay $5,000 for common stock and buy an amount of preferred stock that was based on a percentage of annual sales. The advantages to members included lower prices on private label products due to group buying, as well as higher quality achieved through the cooperative's quality assurance program. Topco now had a staff of 70 deployed at its headquarters as well as in several growing regions to oversee purchasing and quality control. The organization was selling about $60 million worth of products annually.
During the 1960s, Topco's offices were moved to new quarters in the Chicago suburb of Skokie, Illinois, and a number of other retailers joined the cooperative, including Tom Thumb, King Soopers, Giant Eagle, and McCarty-Holman. By the middle of the decade, the firm was distributing more than 1,000 food and non-food items to stores in 33 states.
Supreme Court Rules against Topco in 1972
In 1968, the U.S. Justice Department filed suit against the company for its practice of giving members exclusive rights to sell the firm's brands in specific territories. Though a lower court found in the company's favor, the case was appealed to the U.S. Supreme Court, which ruled against Topco in 1972. Afterwards, the organization began to place a greater emphasis on developing its members' individual private labels.
The 1970s saw the introduction of unbranded, starklypackaged, "generic" low-cost products across the United States, and Topco responded with a new line called Valu Time. This was the first nationally marketed generic brand to include such items as cigarettes and paper products. Its success helped Topco's sales exceed $1 billion in 1979.
In the 1980s, the firm's membership ranks grew with such new additions as Riser Foods, Randall's, Pueblo International, Smith's Food & Drug Centers, and Schnuck Markets. In 1988, Topco added a new line called World Classics, which featured nearly 100 higher-priced, "gourmet" products that were promoted in the style of national brands and offered retailers higher profit margins. Included were such items as white asparagus, raspberry vinegar, and cappuccino wafers. That year also saw a new line of health and beauty care items debut under the name Top Care. One hundred different products were offered, and the brand rapidly became a strong seller for the company.
In 1989, Topco named Robert Seelert president and CEO to replace Marcel Lussier, who had run the organization for a decade. Seelert had previously headed General Foods' Worldwide Coffee and International Foods unit. In 1990, the company introduced GreenMark, an environmentally friendly "green" product line. The 20 items initially offered included paper towels and napkins made from recycled paper, biodegradable compost bags, and coffee filters made from unbleached paper. GreenMark caught on quickly with consumers, and other items were soon added.
Daymon Associates Named Broker in 1991
In March 1991, Topco named New York-based Daymon Associates to handle private label merchandising at member stores. Daymon was to deploy 150 staffers at retail locations around the United States to assist in positioning and displaying items, doing in-store advertising, and handling coupon giveaways and product demonstrations. Daymon would also provide input about packaging, quality, and other issues. Though the arrangement had already been successfully tested at Giant Foods, and Topco's board had unanimously voted in favor of the move, there was some controversy about the decision among vendors. A short time after the Daymon agreement was reached, CEO Seelert resigned to take a new position, though he denied leaving over the Daymon issue. He was replaced in November by Lyman "John" Beggs, former president of Norelco Consumer Products Company.
The U.S. economy was now in a recession, and the economic downturn served to boost sales of less expensive, private-label goods. Their share of overall supermarket sales increased from 16.4 percent in 1987 to 17.5 percent in 1991. For the latter year, Topco's gross sales hit $2.9 billion, a 21 percent increase over 1990. The organization had grown to 36 members.
In 1992, Topco reintroduced its stagnant World Classics line with new packaging and a greater promotional push. It was revised to focus on twelve popular categories, including pasta, carbonated drinks, and cookies. In September, the company named its third CEO in as many years, Steven Rubow. He had been with Topco since 1987, most recently serving as executive vice-president.
Topco's membership was now growing and reached a total of 45 by 1994. Member firms had some 3,000 stores around the country, which accounted for 14 percent of supermarket sales in the United States. New companies included the Pennsylvania-based, 30-store Insalaco Markets, the 19-unit Kings Super Markets chain of New Jersey, and Carr Gottstein Foods of Alaska, which had 23 stores and supplied a number of other independent grocers. In 1995, Topco became an international supplier with the membership of Canada's Oshawa Group and the Japanese SEIYU. Companies in Israel and Puerto Rico would later join as well. The company's annual sales now approached $3.9 billion.
In 1998, Topco added a new service for its members in association with Illinova Energy Partners. Illinova would perform utility accounting services to help cut costs and consumption, as well as check for billing errors, contest rate changes, and supply some Topco members with natural gas. That same year also saw Topco redesign its Top Care and Top Crest packaging to help boost sales. Logos were repositioned, the product guarantee was given a more prominent position, and label colors were refined to better mimic those of national brands. Among the firm's best sellers at this time were internal analgesics and cold and cough remedies, as well as batteries and camera film. Private label goods now accounted for 20.1 percent of total sales in supermarkets.
The mid-1990s saw the grocery industry experience a wave of consolidation, which caused membership in Topco to decline as member firms were bought up by larger companies. The loss of such chains as Dominick's Finer Foods of Northlake, Illinois, and Buttrey Food & Drug Stores Company of Great Falls, Montana, left the firm with 30 members by early 1999. Some were joining, however, including the 115-store Piggly Wiggly Carolina, which switched its private label health and beauty care line to Top Crest. Despite such gains, membership would later bottom out at 25.
In 2000, Topco began marketing a line of organic foods known as Full Circle, which included frozen vegetables, soy milk, and cereal. The firm also boosted its gourmet food offerings, adding Deli meats and cheeses and fancy chocolate bars. Another new product line, dubbed Skillet Dinners, featured meals that could be heated quickly at home.
Topco will leverage the volume, knowledge, and commitment of its members to be the least costly and most effective provider of specific quality goods and services for the exclusive benefit of its member-owners. Topco will be an excellent service, sales, marketing, and information resource.
Merger with Shurfine in 2001
In September 2001, the company announced it would merge with Illinois-based Shurfine International, a private label manufacturing and distribution cooperative which primarily serviced wholesale and foodservice accounts. Shurfine, which had been founded in 1948, moved its operations to Skokie, and the expanded company became known as Topco Associates, LLC. The members of Topco would own 85.7 percent and those of Shurfine 14.3 percent. Topco president and CEO Steven Lauer, who had headed the firm since 1999, retained the top posts. Shurfine's experience in wholesaling and foodservice, and Topco's recent efforts to move into the latter category, were expected to help stimulate growth for the firm.
After the agreement was finalized, Topco would have 54 members. It was restructured into Retail, Foodservice, and Wholesale divisions, with Shurfine CEO John Stanhaus given charge of the latter. The three units were set up to allow "cross-channel" procurement of products and services. Topco was now distributing 7,000 different products.
To obtain goods for its members, the company utilized a staff of 150 buyers who negotiated prices and sought cost savings from suppliers. A group of 20 quality assurance experts tested 130,000 samples annually to insure that they met or exceeded the quality of similar national brands. Topco also negotiated with 30 major vendors to earn discounts for its members on nationally-advertised products.
In 2003, Topco expanded the Full Circle natural and organic line with new rice, bean, popcorn, cookie and soy milk products, bringing its offerings to more than 125 items in 24 categories. The company also began using online auctions to speed the procurement process for canned foods and other goods. A new line of 50 prepared food products, dubbed Dining In, was introduced as well. It included microwaveable entrees like beef pot roast au jus and Cajun-seasoned chicken breasts, as well as other meat, seafood, and pasta dishes. Topco teamed up with Sweet Baby Ray's Gourmet Sauces and Certified Angus Beef for the project, which had taken a year to develop. The year 2003 also saw the company gain a new member, Stater Bros., which operated 157 grocery stores.
After nearly 60 years, Topco had grown into one of the leading procurers and distributors of private-label goods in the United States. The addition of Shurfine International had given it an entrance into the wholesale market, as well as a greater presence in foodservice sales. It continued to produce a wide range of items that gave consumers a lower-cost alternative to national brands.
- Food Cooperatives, Inc. is founded.
- Food Cooperatives merges with Top Frost Foods to create Topco.
- Topco begins marketing fresh produce.
- General merchandise, store supplies, and health and beauty products are added.
- The U.S. Supreme Court bars Topco from granting exclusive sales territories.
- Revenues top $1 billion with help from new Valu Time generics.
- World Classics premium foods and Top Care health and beauty aids are introduced.
- GreenMark "environmentally friendly" products debut.
- Daymon Associates is hired as a food broker to boost private-label sales.
- Canadian and Japanese retailers join Topco.
- Full Circle organics are introduced.
- A merger with Shurfine International creates Topco Associates, LLC.
Retail; Wholesale; Foodservice.
Wal-Mart Stores Inc.; Kroger Company; Wakefern Food Corporation; Associated Wholesale Grocers; Unified Western Grocers; Roundy's, Inc.
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