Bristol Farms Regains Independence
By Tom Ryan
Bristol Farms, the upscale 13-store grocery chain in Southern California,
was sold last week by parent Supervalu Inc. to local management and an investor
“We look forward to returning to local and independent ownership with
the opportunity to reinforce our commitment to our local vendors,” Kevin
Davis, Bristol Farms’ chief executive, told the Los Angeles Times.
Founded in 1982 by two meatpackers, the chain was named after a street
in West Los Angeles with “Farms” added to denote an emphasis on fresh
products. Annual revenues are more than $200 million.
“They thought grocers should sell their products the same customized
way that specialty butcher shops did, instead of pre-set packages wrapped in
foam trays,” Mr. Davis said. “So they threw some sawdust on the floor,
opened up a big meat counter with the beef hanging in the back and started
stocking local produce.”
With most locations in Los Angeles County, the
chain has earned a reputation for its organic products and seasonal edible
gifts, supported by in-house catering serving everything from gourmet pastries
to full holiday meals.
In buying Bristol Farms in 2004, Albertsons hoped the
upscale concept would give it “the ability to operate smaller-format stores
in wealthier neighborhoods and differentiate themselves not based on price
but on quality and service,” said
Lloyd Greif, president of Greif & Co., a Los Angeles investment bank that
arranged the 2004 deal and the latest one. Facing a debt crisis and heightened
competition, Albertsons was sold in 2006 and broken into three pieces with
Supervalu acquiring more than 1,100 stores, including the 270 Albertsons and
Bristol Farms markets in Southern California.
Market observers said Supervalu
faced similar challenges with new competition in the food space from Wal-Mart,
Target and Costco.
Bristol Farms “became a corporate orphan,” said
Mr. Greif. “It
didn’t fit in with the strategy to compete for customers on price.”
Long, of the New York-based consulting firm SSA & Co., also said
synergies weren’t realized. “Everything was managed separately, because
Supervalu didn’t want to interfere with something that was working,” she
said. Bristol Farms itself began facing greater competition from Whole Foods
in the organic space.
Bristol Farms’ same-store sales fell five to seven percent
at the height of the recession but have rebounded along with overall luxury
“We’ve been positive in sales since spring, and that’s only increasing
in the second half of our fiscal year,” said Mr. Davis. “We’re finding
that people are doing their holiday gift shopping in stores like ours. Food
is a luxury, and it’s not an expensive luxury.”
The move comes as Supervalu
has struggled with declining comps over the last two years and has been selling
off some of its other locations. A Supervalu spokesman said the sale allows
both companies to operate more efficiently and effectively.
Discussion Questions: What are the pros and cons of Bristol Farms returning
to independent ownership? What lessons, if any, does this offer regarding larger
retailers acquiring smaller niche ones?
- Supervalu Announces Sale of Bristol Farms Division – Supervalu
- Sale of Bristol Farms Announced; Stores to Continue to Operate With Independent
Ownership Under Current Bristol Farms Management – Bristol Farms/ PRNewswire
via COMTEX/Trading Markets
- Bristol Farms markets sold – Los Angeles Times
- Supervalu sells boutique grocery chain Bristol Farms – Minneapolis