Organic Garage Finalizes Its Transition to a Decentralized Distribution Model; Anticipates Savings of $1M Annually

Organic Garage Ltd. (“Organic Garage” or the “Company”) (TSXV: OG; FRA: 9CW1; OTCQX: OGGFF), one of Canada’s leading independent organic grocers, announced today that it has finalized the closing of its distribution and warehouse facility and has moved to a fully decentralized distribution model. Cost savings from the transition are anticipated to exceed $1 million annually.

Organic Garage had originally adopted a hub-and-spoke model where the centralized distribution facility was to service its group of stores with the intent of being able to exercise greater control over its supply chain, albeit at substantial expense. After analyzing the costs of continuing to run the centralized distribution model, it was determined that the savings were substantial enough to warrant a transition to a decentralized model. Concurrently, the Company was able to negotiate preferential pricing and rebate programs with its distributor network due to the significant increase in volumes that they will now see, particularly on brands that Organic Garage had previously been purchasing direct from the manufacturers. Thus, in addition to the operational savings from the switch in its distribution model, the Company anticipates further benefits to gross margins as a result of its ability to leverage its distributors’ logistics at their cost.

Simplification and flexibility were also factors of consideration for the Company prior to making the decision for the transition. The Company has removed additional layers of complexity with respect to their operations and now has the option of reviewing expansion opportunities outside of the downtown or Greater Toronto Area, independent of the logistical considerations associated with a centralized distribution model.

Organic Garage CEO Matt Lurie further discussed the rationale for the move to a decentralized distribution model in an interview with Proactive Investors.

“The significant savings and ultimate benefit to our bottom line as a result of the change are simply too great to ignore,” stated the Organic Garage CEO, Matt Lurie. “Our ability to pivot our entire distribution and supply chain model in the midst of significant sales increases and the ongoing pandemic with minimal disruption to our business is a huge accomplishment and speaks to the strength of the team we have in place at Organic Garage and the nature of the relationships that we have with our distributors and suppliers.”