Safeway 2000 Annual Report Download - page 17

Safeway Inc. and Subsidiaries
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Safeway has developed a line of more than 1,100
premium corporate brand products since 1993 under the
“Safeway SELECT” banner. The award-winning Safeway
SELECT line is designed to offer premium quality prod-
ucts that the Company believes are equal or superior in
quality to comparable best-selling nationally advertised
brands, or are unique to the category and not available
from national brand manufacturers.
The Safeway SELECT line of products includes carbon-
ated soft drinks; unique salsas; the Indulgence line of cookies
and other sweets; the Verdi line of fresh and frozen pastas,
pasta sauces and olive oils; Artisan fresh-baked breads;
Twice-the-Fruit yogurt; NutraBalance pet food; Ultra laundry
detergents and dish soaps; and Softly paper products. The
Safeway SELECT line also includes an extensive array of
ice creams, frozen yogurts and sorbets; Healthy Advantage
items such as low-fat ice creams and low-fat cereal bars; and
Gourmet Club frozen entrees and hors d’oeuvres.
In addition, Safeway has repackaged over 2,500 corporate
brand products primarily under the Safeway, Lucerne and
Mrs. Wright’s labels.
MANUFACTURING AND WHOLESALE The principal function
of manufacturing operations is to purchase, manufacture
and process private label merchandise sold in stores operated
by the Company. As measured by sales dollars, approximately
one-third of Safeway’s private label merchandise is manufac-
tured in company-owned plants, and the remainder is
purchased from third parties.
Safeway’s Canadian subsidiary has a wholesale operation
that distributes both national brands and private label prod-
ucts to independent grocery stores and institutional customers.
Safeway operated the following manufacturing and pro-
cessing facilities at year-end 2000:
U.S. Canada
Milk plants 7 3
Bread baking plants 6 2
Ice cream plants 4 2
Cheese and meat packaging plants 1 2
Soft drink bottling plants 4 –
Fruit and vegetable processing plants 2 3
Other food processing plants 3 1
Pet food plant 1 –
Total 28 13
In addition, the Company operates laboratory facilities
for quality assurance and research and development in cer-
tain of its plants and at its corporate offices.
DISTRIBUTION Each of Safeway’s 12 retail operating areas is
served by a regional distribution center consisting of one or
more facilities. Safeway has 16 distribution/warehousing cen-
ters (13 in the United States and three in Canada), which col-
lectively provide the majority of all products to Safeway stores.
Safeway’s distribution centers in northern California and
Maryland are operated by third parties. Safeway also sources
product from an additional distribution center in British
Columbia that is owned and operated by a third party.
CAPITAL EXPENDITURE PROGRAM
A component of the Company’s long-term strategy is its
capital expenditure program. The program funds, among
other things, new stores, remodels, manufacturing plants,
distribution facilities and information technology advances.
Over the last several years, Safeway management has signifi-
cantly strengthened its program to select and approve new
capital investments, resulting in continuing strong returns
on investment.