LAKES REGION – Grocery and convenience stores in the Lakes Region were sent scrambling last Thursday morning with the news that Associated Grocers of Maine was closing its doors, a victim of the struggling economy and the changing nature of the grocery business.

The Gardiner-based distributor AGM, as it’s more commonly referred to, was placed into receivership last Thursday after one of its two lenders, Savings Bank of Maine, filed a lawsuit seeking payment of outstanding debt against the company.

James Ebbert, the court-appointed receiver, declared the business was not viable and forced operations to cease last Thursday. Ebbert did not return phone calls seeking comment on the situation. A representative at AG of Maine, which was started in 1953 as a nonprofit, customer-owned cooperative, said the company would not be providing further comment.

The company was about $6 million in debt. As a result, nearly 100 employees, many of whom were unionized, will soon be unemployed. The closure has far-reaching impact, however, with owners of about 300 grocery and convenience stores throughout Maine spending this week figuring out where their next delivery of supplies will come from.

Dave Allenson, a member of the AGM board of directors and owner of the largest AGM store in the Lakes Region, Tony’s Foodland on Route 302 in Naples, was stunned by the distributor’s closing. He laments the loss of AGM, saying it was “a great company to deal with, with a lot of good people” who worked there. He says increased competition “came in and took business,” which hurt AGM’s bottom line.

Allenson said a few items were understocked this week, but by Friday, “we’ll be back to normal and customers won’t know the difference. We have great customers and they’re understanding of what’s happening.” He has signed up with a different distributor, Bozzuto’s Inc. based in Cheshire, Conn.

Don Warren, owner of Sunset Variety at the corner of Route 302 and Main Street in Raymond, was another local AGM store sent scrambling this week. He is now receiving product from Pine State Trading Company. Warren ordered cigarettes, groceries and deli cold cuts with AGM.

Warren most appreciated AGM’s central billing system. “I’d be writing one check,” he said. “The bread guy would deliver, Oakhurst would deliver, the chips guy would deliver, and it would all be on AG’s bill, so in other words we’re only needing to write one check because the billing was all centralized.”

Also affected by AGM’s closure is Raymond Speedy Stop’s owner Mark Accousti, whose order last Friday was 12 hours late, he said, due to delivery drivers having to collect money up front at each stop.

AGM supplied Accousti’s convenience store on Route 302 since it opened in December 2007. Accousti’s father, Tony, the namesake of Tony’s Foodland, which once had a location in the Raymond Shopping Plaza, was a longtime AGM customer. “We’ve been with them a long time,” Mark Accousti said.

“I don’t know who we’re going to go with. I’ve got six (business) cards on my desk from different suppliers and they all want our business,” Accousti said.

Accousti liked being a member of an association because they’re nonprofit.

“They make as much money as they need to live, and we reap the benefits.” he said. “If you go to a privately held company, you need to watch your invoices. They can change their prices at a moment’s notice. You’re not an equal partner in the company. AG was a co-op, so we were members and stockholders.”

While he isn’t on the board, Accousti has knowledge about AGM’s finances due to his family’s involvement with AGM over the years. Accousti said several factors went into the company’s demise.

“This size market that they supplied – 7,000 square feet and under – is a dwindling market because of supers,” Accousti said referring to supermarkets like Hannaford, Shaw’s and Walmart. “So even at their best, once you start losing membership, it’s hard to carry on.”

Accousti, who bought mostly cigarettes through AGM plus soda, chips and bottled water, said AGM buckled under a large operating costs and $6 million debt.

“They had a big (261,000 square feet) warehouse that they built back in the early 1980s, but it was a monster. So between that, their debt, and the economy the way it is, those were really the deciding factors,” Accousti said.

Accousti, like Sunset Variety’s Warren, will miss the central billing and prices, which he said AGM’s competitors probably won’t be able to match. The only positive he sees is the receiver’s collection strategy of offering a 20 percent discount by paying cash for whatever he buys now.

“They’re just trying to sell as much as they can, to sell off what they have in stock,” Accousti said. “But still you have to come up with cash, so a lot of customers who had needed the terms I’m sure will be in trouble. We are fortunate enough that we can pay up front for it.”