White Rose, Inc. Business Information, Profile, and History

History of White Rose, Inc.

White Rose, Inc. is the largest independent wholesale food distributor in the New York City metropolitan area. In 1997 it was supplying more than 18,000 food and nonfood items to more than 1,600 stores from Maryland to New England, especially supermarkets and chains in New York City, Long Island, and northern New Jersey. About 850 grocery, frozen food, and dairy items were being offered with the White Rose label.

Seeman Brothers Business, 1886-1965

Joseph and Sigel Seeman were among five Seeman brothers who founded Seeman Brothers & Doremus in New York City in 1886 with capital of $4,500. The two had decided to start their own business after failing to persuade their uncle to switch his wholesale grocery from cash-and-carry to delivery. When Doremus dropped out shortly after, the name became Seeman Brothers. Delivery was by horse and carriage, and the Seemans' matched teams were renowned. Gas-powered trucks began replacing them in 1905, but the last company horse-drawn wagon did not disappear until 1930.

When branded goods became popular, the Seemans gave the White Rose name to their entire line, which originally consisted of just three canned products: corn, tomatoes, and peas. But it was tea that made White Rose a household name. Since black fermented tea was popular at the turn of the century, in 1901 Seeman Brothers introduced a potent variety grown in Ceylon to wean coffee drinkers from their traditional brew. Every conceivable promotional technique of the time was used to establish White Rose Tea, from flyers to attractive young girls dispensing free tea by the potful. Seeman also pioneered in canned fish. The company reportedly bought the entire U.S. production of canned tuna in 1911 to offer it exclusively to White Rose customers.

Seeman Brothers converted from a partnership to a corporation in 1920 and became a public corporation in 1926. Net sales grew from $10.8 million in 1921 to $15.6 million in 1925, and net profits increased from $210,564 to $532,441 in 1922. Net profits came to $344,033 in 1925. Even during the Depression, the company made a profit and paid a dividend in each year. In 1943 it acquired Wilkinson, Gaddis & Co.'s wholesale grocery business in Newark, New Jersey, and added its warehouse to the one Seeman maintained in New York City. Net sales reached a postwar peak, not surpassed until 1955, of $33 million in 1948; net income, however, slumped after a peak of $775,530 in 1950 and came to only $115,353 in 1955.

Seeman Brothers became a very different company under John B. Fowler, Jr., who, with a group of associates, acquired control in 1959 and took the position of chairman and chief executive officer. He acquired, at very little cost, Francis H. Leggett & Co., an unprofitable wholesale grocer with distribution in Pittsburgh and Cincinnati, to add its Premium brand name to White Rose's own. He then acquired control of Seabrook Farms Co. to put Seeman into the frozen food business, along with three other quick-freezing operations and a wholesale food distributor in Hagerstown, Maryland. In fiscal 1960 (the year ended February 27, 1960), the company passed $1 million in earnings for the first time, although most of the gain came from Leggett's tax-loss carryover.

Fowler then organized, through Seeman's Leggett subsidiary, a voluntary association of independent food stores that by June 1962 had enrolled at least 56 stores with sales exceeding $40 million a year. In return for a pledge to buy nearly all of their inventories from Seeman, the members received price advantages and services such as advertising and merchandising advice to help them compete more successfully with big supermarket chains. Seeman's sales rose from $85 million in fiscal 1960 to $125 million in fiscal 1961.

But excess supplies of frozen vegetables forced Seeman to dump its products, sometimes below cost, thereby sustaining a deficit for fiscal 1962, despite a rise in sales to $135 million. Results continued to worsen because Seeman's voluntary cooperative of small stores was no substitute for a hookup with large chains, severe labor troubles, and Seabrook's problems as a relatively high-cost packer. Between 1962 and 1965 Seeman Brothers lost $9.1 million. To reduce a debt of more than $19 million, the company sold its wholesale business, including the White Rose and Premier labels, in 1965 to Di Giorgio Corp. for more than $3 million. This operation had lost $4.3 million on net sales of $34.8 million in fiscal 1965.

Di Giorgio Business, 1965-90

Di Giorgio also was taking control of another New York-area wholesale food distributor, Met Food Corp. Founded in 1941, Met Food had its headquarters in Syosset, Long Island, in 1963, when it earned $104,459 on sales of $45.5 million. The company also was sponsoring a small retail chain under the Met banner. Di Giorgio acquired a 34 percent interest in the company for cash in August 1964 and increased its stake to 97 percent in March 1965. Met Food became a subsidiary that included the former Seeman wholesale operation. In 1970 Met Food was distributing to retail stores dry groceries, frozen foods, dairy products, and other items, principally from a leased, 15-acre, enclosed modern warehouse in Farmingdale, Long Island, opened in 1967. About ten percent of its sales were under its own brands, the most important of which was the White Rose brand. That year it became the first U.S. company to make freeze-dried tea.

By 1973 Met Food was the largest wholesale grocer in the New York metropolitan area. It changed its name to White Rose Food Corp. in 1974. This operation was distributing about 7,000 products in 1979, about 500 of which were under the White Rose label, including frozen as well as canned fruits and vegetables and delicatessen items, which were introduced when the dairy operation moved to Carlstadt, New Jersey, in 1976. White Rose Food accounted for about $400 million of Di Giorgio's $897 million in sales in 1978. The subsidiary introduced its first television campaign in 1982, airing 50 30-second commercials a week for seven weeks on five local stations to publicize White Rose products. In 1983 White Rose became the leading distributor of ice cream in the New York area. It added fresh meat to its line by acquiring Schnoll Foods in 1984. By 1988 it was the largest wholesale distributor of fresh meat in the metropolitan area.

In 1987 White Rose was handling more than a million cases of groceries per week, 15 percent under its own private labels. It was sponsoring voluntary groups under the Met Food and Super Food names and was a supplemental source of supply to the King Kullen, Gristede's, Red Apple, Sloan's, and Waldbaum chains and the ShopRite and Foodtown co-op members. Supermarket chains carrying the White Rose private labels included Royal Farms, Scaturro Supermarkets, Dan's Supreme, Domino Supermarkets, and Kings--in all, more than 1,800 stores. Aside from airing TV commercials, White Rose was advertising its private-label line heavily on radio, buses, newspapers, and point-of-sale material. Its significant amount of Spanish-language advertising included commercials broadcast in the Dominican Republic, even though White Rose did not distribute there. (It was selling, however, to Puerto Rico and the Virgin Islands, as well as to Bermuda.)

Except for its huge, 615,000-square-foot grocery warehouse in Farmingdale, White Rose had its operations in New Jersey: dairy in Carlstadt (but moved to Kearny in 1989), frozen foods in Secaucus, and meat in Newark. Its distribution now included candy, house chemicals, poultry, paper products, and soft drinks. In 1989 White Rose acquired Pioneer Food Stores Co-op for an undisclosed sum, adding the company's New Jersey grocery warehouse to its facilities. Founded in 1944, Pioneer, at the time of its purchase, was serving 51 Pioneer stores, 50 of them in New York City and one in Westchester County, New York.

In 1989 Arthur M. Goldberg, a former trial lawyer and an active investor, made a successful tender offer for the company's outstanding shares that cost him and his backers about $166 million. Armed with $175 million in bank loans, he took control of the company in 1990, converted it to a private firm, and began selling all of its five divisions except White Rose, a process completed in 1994, when Di Giorgio and White Rose became, in effect, synonymous.

White Rose in the 1990s

Di Giorgio was losing money when the company changed hands, and its expenses mounted as interest payments on its debt--more than half of which had been incurred for the acquisition--came due. Goldberg started a cost-cutting campaign almost immediately, offering White Rose drivers and warehouse workers a new three-year contract in 1990 with no increase in wages and elimination of overtime, which had allowed many of them to earn $900 to $1,000 a week for a 50- to 60-hour workweek. The contract also contained a clause shifting 20 percent of health insurance premiums to employees and, according to an International Brotherhood of Teamsters official, another clause effectively eliminating seniority and allowing the company to hire nonunion subcontractors.

Although members of Teamster locals representing the frozen food and dairy divisions signed the contract, workers in the Farmingdale local went out on strike in February 1991. Goldberg closed this warehouse in July, shifting the operation to Elizabeth, New Jersey. He fired the 425 strikers in August, replacing the truck drivers with nonunion personnel and the warehouse workers with lower-paid Teamsters hired by a New Jersey subcontractor. In July 1992 the Farmingdale local agreed to end the strike in return for its members sharing in a $1.5 million settlement and being placed on preferential hiring lists for jobs that would pay them less money than previously.

Di Giorgio sold White Rose's meat division in 1991. In 1992 the company acquired the Global division of Sysco Corp. for $11.75 million and moved White Rose's frozen food division from Secaucus to Global's facility in Garden City, Long Island. Two years later Di Giorgio purchased Royal Foods from Fleming Cos. for $17.2 million and moved White Rose's dairy and deli operations from Kearny to Royal's plant in Woodbridge, New Jersey. In early 1995 the grocery and dry goods division moved from Elizabeth to a new 645,000-square-foot distribution center in Carteret, New Jersey. Soon after, White Rose and Di Giorgio moved to this location from Somerset, where Goldberg had established executive quarters on acquiring the company. The Farmingdale facility was sold in 1997 for $12.5 million.

White Rose gained more business in 1993, when Red Apple Group, owner of the Gristede's and Sloan's supermarket chains, dropped the Krasdale Foods private-label brand from Sloan's and began offering White Rose goods instead. Sloan's even bought a full-page New York Times advertisement promoting White Rose products. In 1994 White Rose made the first major redesign to its product label in several decades in connection with an advertising campaign that was carried on coupons, newsprint, more than 250 billboards, and 180 bus routes throughout the New York metropolitan area.

Despite Goldberg's crackdown on labor costs and year-to-year gains in revenue, Di Giorgio lost money in every year of the 1990s through 1997 except for 1996, when it reported net income of $2.1 million. The annual interest expense rose as high as $24.9 million in 1995. Di Giorgio earned $5.7 million on operating income in 1997 but lost almost $3 million after taking an extraordinary charge of $8.7 million for early extinguishment of debt. Its long-term debt was $159.3 million at the end of 1997.