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Albertsons Goes Gourmet With Bristol Farms Acquisition

BOISE, Idaho - By acquiring Bristol Farms--Southern California's premier fresh, gourmet, and specialty food retailer--Albertsons, Inc. not only adds a new banner to its portfolio, but also will enter one of the industry's fastest-growing sectors, that of gourmet food retailing.

The Boise, Idaho-based retailer, which made the acquisition announcement yesterday, did not disclose terms of the transaction.

All 11 Bristol Farms stores in Southern California will continue to operate under the Bristol Farms banner, with separate management operating the business independently from Albertsons' traditional food and drug operations, Albertsons said. Kevin Davis will continue as Bristol Farms' president and c.e.o.

Bristol Farms' stores average about 14,000 square feet, and primarily feature prepared and upscale foods. More than two-thirds of the company's sales come from fresh products.

"This acquisition makes sense for an operator like Albertsons, and might also make sense for other mainstream chains, since the upscale food market continues to grow leaps and bounds," Michael Keighley, editorial director of Gourmet Retailer, told Progressive Grocer. Both publications are owned by VNU Business Media.

"The only catch is that there aren't that many gourmet/upscale stores on the market that are part of a chain, and thus large enough for a big chain like Albertsons to consider," Keighley said.

Burt Flickinger, managing director at the New York-based consultancy Strategic Resource Group, said Albertsons was exposed first hand to the strength of upscale formats after the California strike drove some of its mainstream customers to Whole Foods and other niche retailers. He said he could foresee Albertsons expanding the Bristol format beyond its current territory.

"Albertsons did their homework," Flickinger told Progressive Grocer. "They saw this as a great opportunity to take a regional chain and potentially take it to scale nationally."

In a statement released yesterday, Albertsons' chairman, c.e.o., and president Larry Johnston, said: "Bristol Farms has clearly built a solid leadership position in the Southern California specialty, gourmet market segment with strong performance over the past several years. This acquisition is the latest example of our dedication to diversify into new formats that can accelerate growth, tap into new customer segments, and maximize return on invested capital."

Other recent additions to Albertsons' portfolio include a subsidiary, Extreme, Inc., which will oversee a new price-impact banner called Super Saver; and Shaw's, the West Bridgewater, Mass.-based retailer known as the No. 2 grocer in New England, which Albertsons acquired in April.

The transaction was completed through a merger whereby Bristol Farms has become a wholly owned but independently operated subsidiary of Albertsons, Inc. Bristol Farms was formerly majority owned by private equity funds managed by Oaktree Capital Management, LLC.

Albertsons, Inc. operates approximately 2,500 retail stores in 37 states across the United States, under banners including Albertsons, Jewel-Osco, Acme, Albertsons-Osco, Albertson's-Sav-on, Sav-on Drugs, Osco Drug, Super Saver, Shaw's, and Star Markets.

-- Jenny McTaggart
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