Affiliated Foods Inc., a prominent name in the grocery wholesale sector based in Amarillo, Texas, has been honored as The Shelby Report of the Southwest’s 2024 Wholesaler of the Year. This accolade marks a significant milestone for the cooperative as it celebrates its 76th year, underscoring its enduring commitment to independent retailers and innovative business strategies within the affiliated foods distribution network.
The story of Affiliated Foods began modestly, rooted in the collective ambition of six retailers who sought to enhance their competitive edge. By pooling their resources to establish a shared warehouse, they aimed to leverage group buying power, securing better prices and fortifying their position in a competitive marketplace. This foundational principle of cooperation and mutual benefit has been the cornerstone of Affiliated Foods’ remarkable journey.
Randy Arceneaux, the President and CEO of Affiliated Foods, reflects on the cooperative’s origins, noting the similarities with other co-op warehouses. However, he emphasizes the exceptional longevity and scale Affiliated Foods has achieved. “76 years later, we’re still here,” Arceneaux states, “Not to mention, we’re doing $1.7 billion a year in volume.” This substantial figure is a testament to the co-op’s sustained growth and impact within the affiliated foods industry.
Initially, Affiliated Foods served a localized customer base within a 30-mile radius of its warehouse. Today, the company’s reach extends across eight states, supporting over 240 members operating from 740 different locations. Affiliated’s distribution network is expansive, with trucks traveling up to 720 miles in a single direction to ensure timely and efficient delivery. The diversity of its member retailers is also notable, ranging from smaller stores of 5,000 square feet to large supermarkets spanning 65,000 square feet, highlighting the co-op’s adaptability and broad appeal within the affiliated foods market.
Arceneaux emphasizes the strength of independent operators, stating, “That’s the beauty of the independent operator. They have stores based on the need within the community they serve.” This localized approach, combined with the robust support of Affiliated Foods, allows these retailers to thrive in diverse markets.
While the core membership comprises traditional grocery stores, Affiliated Foods also caters to a segment of convenience stores, including well-known names like Allsup’s and Yesway. This diversification illustrates the co-op’s capacity to meet varied demands within the broader affiliated foods sector.
Arceneaux highlights a successful example of product innovation driven by member needs: the development of produce micro-packs. Initially created for Allsup’s convenience stores, these grab-and-go produce packs gained widespread popularity, becoming a sought-after item in the produce departments of larger member stores. “It was intended for one group of members and it has become a key item for all,” Arceneaux explains, showcasing how solutions developed for specific needs can benefit the entire affiliated foods network.
The Pivotal Role of the Board of Directors in Guiding Affiliated Foods
The strategic direction and sustained success of Affiliated Foods are significantly shaped by its 13-member board of directors, composed of representatives from across the company’s extensive trade area. This board plays a crucial role in guiding the growth and development of the warehouse, ensuring that the cooperative remains responsive to the evolving needs of independent operators within the affiliated foods landscape.
According to Arceneaux, the board’s primary responsibility is to “help shape the growth and development of the warehouse, along with ensuring they are doing what’s needed to help the independent operator survive.” This dual focus on strategic expansion and member support is central to the board’s operations.
A defining characteristic of the board is that all members are active store owners. This ensures that decisions are grounded in real-world retail experience and a deep understanding of the challenges and opportunities faced by independent grocers. Arceneaux points out the unique dynamic of the board, “They have to do a great job of walking into a board meeting, taking off their hat as a retailer and putting on a board member for Affiliated hat and keep focused on what’s good for the whole cooperative.” This ability to prioritize the collective good of the cooperative is essential for effective governance.
Arceneaux draws a compelling analogy to explain the cooperative’s function: “We are just a mirror image of a supermarket, but we don’t have a checkout stand. We’re just a big grocery store.” He emphasizes that the success of Affiliated Foods is intrinsically linked to the success of its members. “If we’re successful at wholesale, then it allows our membership to be successful at retail because we’re giving them the right programs, the right items, the right cost of goods to be competitive.” The board’s fiduciary duty, mirroring that of the CEO, is to ensure these supportive programs and efficient operations are in place. This ultimately drives down costs, enhancing the competitiveness of member retailers in their respective markets within the affiliated foods sector.
The visionary approach of the board has been instrumental in Affiliated Foods’ strategic investments, particularly in establishing subsidiary production companies. These subsidiaries, encompassing a dairy, bakery, bottled water plant, meat-cutting, and produce facilities, represent a significant step towards greater control over supply and quality within the affiliated foods chain. Furthermore, the co-op’s partnership with a vertical growing operation for tomatoes and peppers exemplifies its commitment to innovation and securing a sustainable supply chain for its members.
While these in-house production capabilities add operational complexity, Arceneaux affirms that they empower the co-op to “control its own destiny in those categories.” He credits the board’s forward-thinking mindset: “Kudos to our board over the years to not be closed minded but rather open minded and say, hey, our philosophy is this – if we can do it as good or better, at the same cost or lower, then we ought to do it ourselves.” This proactive philosophy has been pivotal in shaping the robust infrastructure of affiliated foods.
The subsidiaries under the Affiliated Foods umbrella include Plains Dairy, Tri-State Baking Company, Affiliated Fresh Cuts, Farmers Veg Pak, and Panhandle Pure. The most recent addition, Panhandle Pure bottled water, originated from a critical need identified during the COVID-19 pandemic. Supply chain disruptions during this period highlighted the vulnerability of relying solely on external suppliers, particularly for essential items.
Arceneaux recounts how Affiliated Foods’ members maintained uninterrupted supplies of milk and bread during the pandemic because of their in-house production capabilities. “We didn’t have any other customer base to service outside of our customers, so we controlled that, and they never ran out of those key element items during the pandemic. Hence, today is why we have a Panhandle Pure bottle facility to produce bottled water.” This proactive response to supply chain vulnerabilities underscores the strategic advantages of vertical integration within the affiliated foods model.
The decision to establish Panhandle Pure was a direct response to pandemic-era shortages. “We got cut so much product during the pandemic from our supplier that we said we’re not going to be controlled by this anymore. We’re going to go out and put in our own bottled water plant and control our own destiny moving forward. And that’s been tremendously successful for us.” This exemplifies a strategic shift towards greater self-reliance and resilience in the affiliated foods supply chain.
Affiliated Foods continues to invest in its subsidiaries to enhance their capabilities and align with evolving consumer demands. An ongoing expansion of the bakery aims to diversify its product range to include specialty breads. Currently, the bakery focuses on producing staple items like white, wheat, whole wheat, and honey wheat bread. However, Arceneaux notes a growing consumer trend towards healthier and more diverse bread options. “With the expansion, we will have the opportunity to get into grain breads and put our customers into a category that they actually own now, not having to depend on a third-party bread company to provide those items.” This strategic move enables retailer members to stay ahead of market trends within the affiliated foods sector.
This bakery expansion allows retailer members to offer a wider variety of products, keeping pace with evolving consumer preferences. Similarly, on the dairy front, Affiliated Foods recently launched a fresh, lactose-free milk product in half-gallon and gallon sizes, directly responding to consumer demand for dietary-specific options. These initiatives collectively enhance Affiliated Foods’ competitive advantage in terms of cost and supply reliability for its members in the market, reinforcing its position within the affiliated foods industry.
The latest area of strategic exploration for Affiliated Foods is its partnership with Brushwood Acre Farms, a vertical produce grower. While Affiliated Foods does not own the growing operation, it has entered into a contract to purchase 100 percent of Brushwood Acre Farms’ produce. Arceneaux expresses optimism about this venture, stating, “a big runway in that,” with potential for Brushwood Acre Farms to expand its operations and diversify its product offerings. This partnership further strengthens Affiliated Foods’ commitment to innovation and securing diverse sources within the affiliated foods supply chain.
Further enhancing its produce operations, Affiliated Foods is constructing a 110,000-square-foot new products facility as part of its Farmers Veg Pak subsidiary. This expansion addresses space constraints in the main warehouse and consolidates produce operations. “More space was needed in the main warehouse, so they decided to move produce across the street and tie it into the total produce operation,” Arceneaux explains.
This strategic relocation will free up 83,000 square feet in the main warehouse, which will be repurposed for expanded frozen and dairy storage, reflecting AFI’s continued growth in these categories. “Basically, they will all be connected … and a lot bigger footprint for produce,” Arceneaux adds, emphasizing the enhanced operational efficiencies. These improvements will contribute to extended shelf life, increased productivity, and optimized temperature control within the produce facility, ultimately reducing waste and improving cost-effectiveness for member retailers within the affiliated foods network. “All of that will increase our efficiencies and the quality, which also reduces shrink, which all comes into play for our membership and cost of goods.”
Another significant expansion involves adding 110,000 square feet to the dry facility of the main warehouse. This expansion features 45-foot ceilings and the installation of a vertical selection area designed for slower-moving items. “The auto-selectors will select multiple stores in a vertical process, which will allow efficiencies and not traveling the whole million-square-foot warehouse, where those items are in different areas and different slots throughout the dry space,” Arceneaux explains. These technological upgrades and facility expansions are geared towards enhancing operational efficiency and reducing costs, ultimately benefiting the affiliated foods cooperative and its members. “Those efficiencies come into cost savings at the end of the day.”
Technology Upgrades Driving Efficiency in Affiliated Foods Operations
Affiliated Foods is actively investing in technology upgrades across its operations to further enhance efficiency and service delivery. A key initiative is the near completion of a new procurement system within the warehouse. Additionally, the co-op is in the process of implementing a new yard management system to optimize trailer tracking at the facility.
Arceneaux explains that the yard management system will “increase efficiencies in moving loads and having them ready for delivery.” These technological enhancements are crucial for streamlining logistics and ensuring timely product flow within the affiliated foods distribution network.
Looking ahead, Affiliated Foods is in the initial stages of implementing a truck tracking system. This mobile application will provide real-time visibility, allowing stores to track their deliveries while en route. Arceneaux highlights the significance of this advancement, stating it is a “big, big deal for our membership, and we’re excited about that.”
This truck tracking system directly addresses member feedback. Affiliated Foods conducted a customer satisfaction survey through ROFDA in September, which revealed a desire for improved communication between the warehouse and its members. The tracking system is a direct response to this feedback, offering retailers real-time updates on delivery statuses. Furthermore, truck drivers will utilize a customer satisfaction form upon delivery, creating a feedback loop to continuously improve service quality within the affiliated foods ecosystem.
To further enhance communication and transparency, Affiliated Foods is launching a website integrated with its customer portal, AFI News. This platform will be video-driven, enabling Arceneaux and his management team to communicate directly with members through video updates. Content will include information on new items, process improvements, and overall updates on the state of Affiliated Foods. “That will be video driven where I or any one of the management team can get out there and post videos to inform customers of new items, new processes, giving them a State of Affiliated. I can get on there once a week, just let them know what’s going on in our world here at the warehouse and how that’s going to impact them as a customer.”
Arceneaux emphasizes the effectiveness of this video communication strategy for engaging with the membership. “It will allow all of the key people in our company to communicate with that customer through video through our retailers’ portal, which I think is as good as it gets when you come to communicate with the membership,” he states. This proactive communication strategy reinforces the collaborative spirit of affiliated foods.
Top-to-Top Vendor Meetings and Strategic Procurement at Affiliated Foods
Randy Arceneaux’s extensive background in procurement and marketing in the grocery industry significantly influences his leadership at Affiliated Foods. He maintains a hands-on approach, remaining actively involved in procurement operations and participating in every business review. Arceneaux enjoys negotiation and plays a key role in shaping the strategic direction of Affiliated Foods.
Arceneaux is deeply involved in developing strategies to drive business growth for Affiliated Foods and its members. “Because again, at the end of the day, price is important in our stores. Price is always going to be important, but also how we go to market with our members as far as the service aspect or the variety aspect also plays a part in that.” He understands that while competitive pricing is crucial, service quality and product variety are also vital components of success in the affiliated foods market.
Arceneaux’s commitment to securing the best possible terms for Affiliated Foods members is evident in his continued engagement in top-to-top meetings with vendors. He challenges his team to consistently improve their negotiation skills, “be better every day on the negotiating side … making sure that we’re getting our fair share of not only product but getting our fair share of the marketing funds available from the CPG companies.” This proactive approach to vendor relations is essential for maintaining a competitive edge within the affiliated foods industry.
The Cooperative Culture at the Heart of Affiliated Foods
As a cooperative, Affiliated Foods operates under the guiding principle that “we are owned by who we serve.” This foundational understanding shapes the company culture and decision-making processes. All profits generated by Affiliated Foods are returned to its members annually, providing a significant financial benefit that members can reinvest in their businesses.
Arceneaux underscores the daily pressure on him and his team to maximize efficiency and minimize costs. “The pressure is on me and my team every day to be as nimble as we can, find efficiencies as we can, not only to drive cost down every day for them to be competitive, but also to make sure that we give them good year-end dividends that they can utilize to reinvest in their stores, i.e. in pricing and/or equipment, or back into their own associates,” he explains. This focus on member benefit is a defining characteristic of the affiliated foods cooperative model.
The cooperative structure fosters a unique accountability. “That’s the beauty of the co-op environment. It’s not hard to remember who you work for every day when you get to this building. It’s pretty simple. We work for the customer that we service every day – they’re also our boss. So I’ve got over 240 bosses that I report to every day.” This sense of direct accountability to the membership permeates the culture at Affiliated Foods.
Arceneaux emphasizes the culture he has cultivated at Affiliated Foods over the past 15 years, stressing that “at the end of the day, every decision we make, every action that we take here every day, impacts the end user, which is our member, which actually goes all the way down to the consumer.” This focus on the end-to-end impact of their operations, from warehouse to consumer, reinforces a culture of responsibility and customer-centricity within the affiliated foods organization.
The culture at Affiliated Foods is deeply rooted in the concept of family – encompassing both the AFI associate family and the member family, all ultimately serving the families shopping in their stores. “It is all about family – the family of AFI associates and members, who serve those shopping in the stores.” Arceneaux eloquently connects their work to the fundamental importance of food in people’s lives. “What more is there than food, right? We all sit around a table at some point of the day with certain people – family, friends. Food is the center of what we do.”
He reiterates that Affiliated Foods’ primary role is to serve its member-owners. “He said Affiliated’s role is serving the members that own the co-op. “That’s our culture here. I think everyone here understands that very, very well … At the end of the day, that’s our goal – how do we make our members successful? Because without a successful member, we don’t have a successful warehouse for them. And this is their warehouse; this is not our warehouse.” This clear understanding of purpose and member-centricity defines the affiliated foods cooperative.
To achieve this goal of member success, Arceneaux emphasizes the critical importance of strong communication and collaboration within AFI. “To achieve that goal, Arceneaux said the communication and collaboration within AFI has to be strong, adding that there are no silos in the building.” He stresses the absence of silos and the necessity of cross-departmental cooperation. “Nobody operates in their own little world and secludes themselves from what takes place in this facility. Everyone works in unison with each other’s department because we all have the same goal at the end of the day, with the same cause at the end of the day. And everybody understands that and so collaboration within our management, collaboration within our supervisors, collaboration within our production facility with our production employees, all have to take place for this engine to work.” This collaborative ethos is integral to the operational efficiency and success of affiliated foods.
Randy Arceneaux: Driving the Bus and Steering Affiliated Foods Towards Continued Success
Randy Arceneaux’s passion for the grocery business remains undiminished after 48 years in the industry. He finds immense satisfaction in witnessing the daily operations of Affiliated Foods and the collective effort of its 1,500 employees. “Arceneaux said he has been in the grocery business for 48 years, and the passion he had for it when he started remains today. He said the best part of his job at AFI every day is watching the organization in action.”
He expresses awe at the scale of the operation, particularly as Affiliated Foods expands to 1.3 million square feet. “When we finish our expansion, we’re at 1.3 million square feet. I’ve got 1,500 people that come to this building every day, understanding what their purpose is and how all of that is orchestrated to come together. And at the end of the day, we’re taking care of our customers with the products and services that they need to compete in the marketplace. And it happens every day.” This daily execution of a complex logistical operation, serving the needs of independent retailers, is a source of pride for Arceneaux.
Arceneaux reflects on the often-unseen complexity of the grocery supply chain. “He said the average consumer has no idea what it takes to get groceries on a shelf for them to buy. It all starts not only at the production facilities but also with the retailer understanding their customers and markets enough to carry the right goods and services.” He emphasizes the crucial roles of both retailers in understanding consumer demand and wholesalers like Affiliated Foods in ensuring efficient supply.
He underscores the interconnectedness of the entire affiliated foods ecosystem, from production to retail. “They come to AFI to make sure they carry those goods and provide the services to help them be successful. Then, it takes the associates at the warehouse to understand their part in delivering those goods and services to help their members succeed.” Arceneaux finds profound meaning in this collective effort. “When you think about that full circle that takes place every single day here, it somewhat overwhelms you and at the same time, it just makes your heart feel good at the end of the day, that you’re contributing not only to feeding America in your region, but that you’re contributing to the lives of individuals and giving them a purpose every day,” Arceneaux said.
As CEO, Arceneaux sees his role as communicating his vision and ensuring that AFI associates remain aligned with their mission. He uses the analogy of a school bus driver to describe his leadership style. “Everybody in this organization has heard me say this – I’m just a school bus driver. My job is to keep the school bus between the lines on the road. But everyone that comes to this facility every day, they are the engine, the parts, the doors, the tires, the seats of that school bus. They’re the ones that really make the school bus run.” He views his responsibility as maintaining focus and direction, while empowering his team to drive the organization forward. “I just have to keep it focused and keep it between the lines moving forward. And what a joy that is every day to have that opportunity to continue to be a bus driver. I really enjoy it.” This analogy encapsulates Arceneaux’s humble yet effective leadership of Affiliated Foods, steering the cooperative towards continued success within the affiliated foods industry.
Affiliated Foods’ recognition as The Shelby Report of the Southwest’s 2024 Wholesaler of the Year is not its first. The company was also honored with the same award in 2019, marking a consistent record of excellence and leadership within the affiliated foods sector.
Read more wholesaler and distributor news from The Shelby Report.
For more information and updates on Affiliated Foods, visit our Affiliated Foods News Page.
