Ultra Foods closing a sign of trouble at Joliet-based Central Grocers

JOLIET – The closing of Ultra Foods is a sign of trouble at the grocery supply company that has its corporate headquarters in Joliet.

Central Grocers on Wednesday would not respond to questions about its future.

But sources said Central Grocers, which puts out the Centrella-brand food products seen on the shelves of many independent grocers, is pursuing alternative strategies for the company.

Central Grocers moved its corporate headquarters and food distribution center to Joliet in 2009, a time when the company was looking for more space for an expanding business.

Central Grocers this week announced it is seeking a buyer for its Strack & Van Til supermarket chain, which includes Ultra Foods stores.

The company’s Ultra Foods store in Joliet is among nine that are closing by June 18. Meanwhile, a buyer is being sought for the other 22 stores in northwest Indiana and the Chicago region.

But the retail side of the business might not be the end of Central Grocers’ problems.

Central Grocers is a grocery co-op owned by its member stores, which include Berkot’s Super Foods, Tony’s Finer Foods and other independent and regional grocers that operate in the Joliet area and other parts of the metropolitan market.

The company has been in business since 1917, is the seventh-largest grocery cooperative in the U.S., and supplies about 400 independent supermarket stores, according to its website.

Among the questions Central Grocers would not answer is whether it still is supplying 400 stores.

It recently is down at least two stores – the two Certified Warehouse Foods stores in Joliet that closed last week.

Ken Clymer, the owner of Certified, said Central Grocers’ failure to pay a rebate to its members last year contributed to the financial problems that led to the closing of his stores.

Clymer said it was the first time he did not get the annual co-op rebate, which was used in past years to improve his stores and more recently to pay for operations.

At a stockholders meeting in November, Clymer said, he and other Central Grocers co-op members heard that the company sustained substantial losses last year, mostly from operations of the supermarket chain.

“I was shocked when I went to the meeting, and I saw the losses were so massive,” Clymer said. “I looked at that, and I said, ‘There’s no way they’re going to recover.’”

In late February, Clymer said, he and other co-op members received a letter from Central Grocers informing them that the company was pursuing options and more information would be available in coming weeks.

Clymer said he has been unable to get any information since from Central Grocers. But he has learned that some co-op members have started going elsewhere for their grocery supplies.

Representatives from Berkot’s Super Foods and Tony’s Finer Foods did not return phone calls seeking comments about the Central Grocers situation.

Central Grocers referred questions to a communications firm in New York, where a spokesman said he would not be able to comment on several matters, including the financial condition of the company.

The retail grocery business has become extremely competitive with big discounters such as Wal-Mart and Aldi trying to capture more of the business.

Henry Dreiling was coming out of Ultra Foods in Joliet on Wednesday and said the store is one of three supermarkets where he shops.

“It’s this, Wal-Mart or Aldi,” Dreiling said.

Once Ultra closes, Dreiling said he will add Food 4 Less, located kitty-corner from Ultra, to his supermarket shopping list.

Jewel-Osco also is located at the Larkin Avenue and Theodore Street intersection that includes the Ultra Foods store. But other customers interviewed in the Ultra Foods parking lot mentioned Wal-Mart as the next likely option for them.

“That’s terrible,” Kristie Jordan said when she learned that Ultra Foods is closing. “It’s bad for the community. It doesn’t leave you anything else than Wal-Mart, and everybody doesn’t want to shop at Wal-Mart.”

“I don’t like shopping at Wal-Mart for groceries,” said Samantha Hill, but she said Wal-Mart was her next likely choice.

Wal-Mart and Aldi have been putting pressure on independent grocers by adding locations, updating stores and cutting prices, said Jon Springer, editor of Supermarket News.

“The current conditions are very tough on grocers,” Springer said. “There’s been a year of straight deflation, which is unusual in food.”

Monthly consumer food prices have been dropping for a year, taking a toll on supermarkets not well-capitalized to sustain the loss of income, he said. Meanwhile, many market analysts think there are too many supermarkets.

“The amount of grocery businesses,” Springer said, “are probably too many for all the companies to survive.”