Tree of Life, Inc.

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Tree of Life, Inc.

1750 Tree Boulevard
St. Augustine, Florida 32086-0410
U.S.A.
(904) 824-4699
(800) 260-2424
Fax: (904) 825-2013
Web site: http://treeoflife.com

Wholly Owned Subsidiary of Koninklijke Bols Wessanen, N.V.
Founded: 1972
Employees: 2,000
Sales: $916.6 million (1998)
NAIC: 42221 Durgs & Druggists’ Sundries Wholesalers; 42249 Other Grocery & Related Products Wholesalers

Tree of Life, Inc. is the world’s leading marketer and distributor of natural and specialty foods, serving, in 1999, more than 10,000 retailers in the United States, Canada, and the Caribbean. It had an inventory of more than 25,000 products, a fleet of more than 165 trucks (the industry’s largest), and more than 1.3 million square feet of warehouse space. More than 1,000 items were being marketed under the company’s own brand names. Tree of Life’s distribution and transportation network allowed it to present any new product from coast to coast in a single day. The company also was offering retailers marketing and merchandising expertise, including unique in-store training programs. Gourmet Award Foods was the name of the company’s specialty foods group. Tree of Life was a wholly owned subsidiary of Wessanen U.S.A., the American subsidiary of Koninklijke Bols Wessanen, N.V., a Dutch company with more than two centuries of experience in the food industry.

Development and Growth in the 1970s and 1980s

Tree of Life was founded by Irwin Carasso in St. Augustine, Florida in the early 1970s as a natural foods retailer. It soon developed into a successful regional wholesale distribution company. The rapid growth of the natural foods industry in the 1980s enabled Tree of Life to establish operations in key markets across the country. Carasso sold Tree of Life in 1982 to Wilson Financial Corp., a company based in Jacksonville, Florida and controlled by Jacksonville financier J. Steven Wilson. Annual sales had reached $40 million by 1985, when the company was sold to Koninklijke Wessanen (which became Koninklijke Bols Wessanen in 1993). The sale included another Wilson Financial unit, American Natural Snacks Inc., which was making items such as roasted nuts and carob- or yogurt-coated pretzels in St. Augustine.

The growth of Tree of Life was piecemeal. For example, it purchased Midwest Natural Foods Distributor, an Ann Arbor, Michigan company with distribution outlets throughout the country by the late 1980s. This company was moved to Bloomington, Indiana and combined with another division to form Tree of Life’s Midwest unit. Customers included health food and specialty food stores, some grocery store chains carrying natural foods, and some food cooperatives. Gourmet Award Foods, a specialty foods distributor supplying ethnic and fancy food products from around the world, was created in 1988 from specialty foods distributors Tree of Life had added earlier. Consumer demand was a significant factor in the growth of both the natural products and specialty foods businesses, because shoppers in supermarkets increasingly were demanding niche products.

Further Growth in the 1990s

Tree of Life’s sales reached $370 million in 1991 and $410 million in 1992 (of which Gourmet Award Foods’ share came to $60 million). By late 1993 it was operating nationwide, with ten distribution centers stretching from Miami to Seattle. Aside from American Natural Snacks, the company now included Atlanta area-based Swan Gardens, which was manufacturing a soy-based cheese substitute. Tree of Life had outgrown its 85,000-square-foot distribution center near its corporate headquarters and was planning a new 70,000-square-foot facility in St. Augustine. With 280 staffers, the company was the second largest employer in St. Johns County.

Tree of Life’s sales reached $540 million in 1995, and it held a 30 percent share of the natural foods market in the United States that year, making it the largest distributor of natural foods and health supplements in the nation. In 1996 Tree of Life made its tenth acquisition since being purchased by Wessanen, adding McLane America, Inc., the Salt Lake City-based specialty foods distribution subsidiary of McLane Co., Inc. With annual sales of about $60 million, McLane America was supplying supermarkets west of the Mississippi with gourmet, ethnic, and health food items. The operation was attached to Gourmet Award Foods, and its Salt Lake City facility added to Gourmet Award’s distribution centers in Albany, New York, St. Paul, Minnesota, and Dallas, Texas. Tree of Life was now supplying 12,000 different natural/organic foods and food supplements to more than 5,000 retailers in the United States, Canada, and the Caribbean.

Tree of Life strengthened its national distribution network by acquiring Specialty Food Distributors, Inc. of Plant City, Florida in 1997 and Ray’s Food Service, Inc. of Portland, Oregon in 1998. The latter, with annual sales of $80 million, was the leading marketer and distributor of specialty foods in the Pacific Northwest. This enterprise was combined with Tree of Life’s Northwest division to form Tree of Life/Gourmet Award Foods Northwest, allowing it to offer a full assortment of natural and specialty foods products and services and one-stop shopping to all natural foods stores and supermarkets in the region.

Tree of Life introduced a new proprietary-branded vitamin and supplement line in 1998. By 1999 it had raised its market share in natural foods to 35 percent. About 60 percent of its business, however, now was being generated by specialty foods, compared with 40 percent a few years earlier. The specialty foods category, which had grown both autonomously and by acquisitions, was more attractive to the company because it offered higher profit margins than natural foods. In all, sales reached 1.81 billion guilders ($916.6 million) in 1998, and operating income came to 61.7 million guilders ($31.3 million). These figures compared with 1.47 billion guilders ($724.9 million) and 53.1 million guilders ($26.2 million), respectively, in 1997.

Tree of Life announced in February 1999 the acquisition of Wine & Schultz, Inc., a specialty foods distributor based in Louisville, Kentucky, servicing Illinois, Indiana, Kentucky, Ohio, and Tennessee and providing sales, marketing, and distribution services to supermarket retailers throughout the region. The operation was added to Tree of Life/Gourmet Award Foods’ Midwest division in Bloomington, which Norman Wine, the company’s president, joined as director of specialty food marketing. In the same month parent Koninklijke Wessanen announced the acquisition, for Tree of Life, of the North American-based Specialty Foods Group of Hagemeyer N.V., a Dutch company. The purchase consisted of the marketing and distribution companies Liberty Richter in New Jersey, MBC Foods in Milwaukee, Fine Distributing in Atlanta and Fort Lauderdale, Florida, and Ashley Koffman in Calgary and Toronto, Canada. Annual sales of these companies came to more than $300 million.

Tree of Life in 1999

Tree of Life’s national system of distribution centers and the industry’s largest tractor-trailer fleet were strategically positioned to serve every major metropolitan market in the United States with next-day delivery. This same distribution and transportation network allowed the company to present any new product from coast to coast in a single day. It also allowed Tree of Life’s retail customers to efficiently coordinate product introductions and promotions at all levels, from local to national. Electronic communication was making it possible for retailers to utilize on-line ordering systems such as MSI, Telzon, POS, and EDI. They also had instant access to the company’s realtime pricing, catalogs, and promotions.

Tree of Life had 11 distribution centers in 1999. Its warehouse technology included radio-frequency picking and smart conveyors to expedite the fulfillment processes. The company offered to deliver daily or weekly to stores, using electronic routing and dispatching.

Tree of Life’s inventory of more than 25,000 products offered a broad assortment of premium imported, kosher, fat-free, natural, and organic foods; ethnic specialties; personal care items; vitamins and herbal supplements; and frozen and refrigerated items. The foods it was carrying ranged from Mexican salsas to Mandarin oranges, pasta to peanut butter, cookies to crackers. The more than 1,000 items in Tree of Life’s family of proprietary products included fat-free, reduced-fat, and all-natural and all-organic products; foods for consumers with allergy and dietary restrictions; frozen entrees and side dishes; instant single-serve products; and gourmet and ethnic specialties.

Tree of Life and Gourmet Award Foods also were offering marketing and distribution services in 1999. These were available to small and large retailers alike, from natural foods stores and gourmet grocers to supermarket chains and major drugstores. Retail services included shelf management, back door check-in, ordering/receiving services, and store/department set design. Marketing and merchandising expertise were offered in the areas of product assortment, monthly merchandising guides, co-op advertising, product demos, and category management.

Company Perspectives:

Our Mission: To provide unmatched retail-oriented marketing and distributing services with a focus on the health conscious/quality conscious consumer.

Tree of Life’s retail service programs offered to write and receive orders, maintain store shelves, set up and break down promotional displays, add new departments or reset existing ones, and even to help design a new store from the ground up. The company also offered a series of unique in-store training programs to help maximize retail merchandising efforts and improve the overall performance of the retailer’s staff. A monthly merchandising guide was being circulated to all customers, packed with exclusive purchasing opportunities and merchandising tips, in-depth information on new products, and emerging consumer trends. Other merchandising programs ranged from co-op advertising and product demonstrations to national promotions, endcaps, and impulse displays. Gourmet Award Foods was holding an annual international food festival for retailers and vendors.

Principal Operating Units

American Natural Snacks; Gourmet Award Foods Midwest; Gourmet Award Foods Northeast; Gourmet Award Foods Southeast; Gourmet Award Foods Southwest; Swan Gardens; Tree of Life/Gourmet Award Foods Northwest; Tree of Life/

Gourmet Award Foods West; Tree of Life Midwest; Tree of Life Northeast; Tree of Life Southeast; Tree of Life Southwest.