Safeway 2004 Annual Report Download - page 18

16 SAFEWAY INC. 2004 ANNUAL REPORT
SAFEWAY INC. AND SUBSIDIARIES
Safeway has developed a line of some 1,300 premium
corporate brand products since 1993 under the “Safeway
SELECT” banner. The award-winning Safeway SELECT line is
designed to offer premium quality products 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
carbonated soft drinks; unique salsas; bagged salads; whole
bean coffees; the Indulgence line of cookies and other
sweets; the Verdi line of frozen pizzas, fresh and frozen
pastas, pasta sauces and olive oils; Milena’s take & bake
pizzas; the Primo Taglio line of meats, cheeses and
sandwiches; Signature soups, sandwiches and salads;
Artisan fresh-baked breads; NutraBalance pet food; and
Ultra laundry detergents and dish soaps. 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, cereals and low-fat cereal bars; and
Gourmet Club frozen entrees and hors d’oeuvres.
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 24% of Safeway’s private label
merchandise is manufactured 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 products to independent grocery stores and institu-
tional customers.
Safeway operated the following manufacturing and
processing facilities at year-end 2004:
U.S. Canada
Milk plants 6 3
Bread baking plants 5 2
Ice cream plants 2 2
Cheese and meat packaging plants – 2
Soft drink bottling plants 4 –
Fruit and vegetable processing plants 1 3
Other food processing plants 2 –
Pet food plant 1 –
Total 21 12
In addition, the Company operates laboratory facilities
for quality assurance and research and development in
certain 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 17 distribution/
warehousing centers (13 in the United States and four in
Canada), which collectively provide the majority of all
products to Safeway stores. The Company’s distribution
centers in Maryland, Alberta and British Columbia are
operated by third parties.
CAPITAL EXPENDITURE PROGRAM A key component of
the Company’s long-term strategy is its capital expenditure
program. The Company’s capital expenditure program funds,
among other things, new stores, remodels, manufacturing
plants, distribution facilities and information technology
advances. Over the last several years, Safeway
management has continued to strengthen its program to
select and approve new capital investments.