Kroger 2007 Annual Report Download - page 27

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KROGER MANUFACTURING
Approximately 43% of the corporate brand units sold in our stores are
produced in Kroger’s manufacturing plants; the remaining corporate brand
items are produced to the Company’s strict specifications by outside
manufacturers. The Company performs a “make or buy” analysis on
corporate brand products and decisions are made based upon a
comparison of market-based transfer prices adjusted for plant profit versus
open market purchases. Kroger’s manufacturing plants produce breads,
dairy products, meat and thousands of other grocery items. By
manufacturing our own products, we lower our costs and pass on savings
to our customers.
Kroger’s 15 dairies and three ice cream plants operate at nearly full
capacity and produce all varieties of fluid milk, orange juice, cultured
products such as yogurt and cottage cheese, ice cream, novelty treats and
non-carbonated beverages. In all of our markets, private label milk is the
“national brand” for most customers. Kroger also operates two cheese
plants, which produce a variety of natural and processed cheeses for our
supermarkets.
Kroger’s three meat plants produce a variety of packaged meats, retail
meats, sausages, and home meal replacements.
Kroger’s seven bakeries supply cakes, donuts, cookies, bagels, muffins,
crackers, snacks, and rolls to Kroger retail stores and outside customers.
In addition, two frozen dough plants in Bowling Green (Kentucky) and Salt
Lake City (Utah) supply frozen cakes and dough to our retail stores. KB
Specialty Foods, a deli plant, manufactures a wide variety of deli salads,
puddings, desserts, glazes, cakes, icings, etc.
Grocery products, beverages, and water are produced in the Company’s
five grocery and three beverage plants. Corporate brand grocery items
include pet foods, sugar-based products like drink mixes, hot cereal, coffee,
spices, salad dressings, and peanut butter. Beverages include Kroger’s
Big K® corporate brand soft drink line.
The Kroger Co. Page 27
The quality of product carrying our banner brands is monitored by Kroger’s
in-house quality assurance group. All such product is sold in most divisions
with the following guarantee: “Try it, like it, or get the national brand free.”