Supervalu, Delhaize Said Eying Stalwart Baltimore Grocer

BALTIMORE - Could Supervalu and Delhaize be eyeing Mars? Industry speculation has it that Mars Super Markets, a longtime presence in the Baltimore and Washington, D.C. markets, is considering selling 17 of its 18 stores plus a 300,000-square-foot distribution center, and major players Supervalu and Delhaize are at the front of the line of suitors.

Supervalu and Delhaize declined to comment on any potential acquisitions, and Mars Super Markets president Vito D'Anna was unavailable for comment. Local observers said the Mars operation is on the block because of rising competitive pressures.

Consultant Jeremy Diamond, who has followed the Baltimore market for many years and whose family used to own the Food-A-Rama grocery chain there, said he believed that despite rebuffing many offers to sell in the past, the D'Anna family, which runs Mars Super Markets, is finally ready to sell.

"It looks like [they're] are serious this time about selling the company," Diamond told Progressive Grocer. "They've been using an outside management firm to run the company for the past 10 years, since the founding brothers died."

However, that doesn't mean that a sale would come without its hitches. "It's hard to say how much the company would receive in a potential sale," said Diamond. "Many of the Mars locations were bought at the Pantry Pride bankruptcy auction in 1981. Those locations are on the smaller side.

"Mars has about five or six newer stores that are larger, like today's industry standards, and do more volume -- between $500,000 to $800,000 weekly volume for the larger stores," continued Diamond. "Mars also bought the old Food Fair/Pantry Pride distribution center at the bankruptcy auction in 1981. The center is small and outdated. Whoever buys Mars will probably sell off the distribution center or demolish it."

Mars does have a major ace in the hole. "One thing good about Mars, they have great locations," observed Diamond. "Their real estate is their biggest asset."

Diamond likened the situation to a smaller-scale replay of Food Fair/Pantry Pride auction of 1981, when Pantry Pride shed 53 stores in the area.

"Back in 1981, independents like Mars, Food-A-Rama, Valu Food, Kash N' Karry, wholesaler B.Green & Co., and others expanded their retail presence, [growing] from a couple of stores to being local chain stores by swallowing up most of the Pantry Pride stores," he recalled. "The big chains didn't do much and eventually lost market share," a development he describes as "surprising to many industry leaders and the media."

As to the potential advantages of such an acquisition to Eden Prairie, Minn.-based Supervalu, "[The company] has a strong presence in the Maryland and D.C. areas with their 60-store Shoppers Food and Pharmacy chain. Shoppers is the No. 3 chain by market share in both the Maryland and D.C. areas," noted Diamond. "If they bought the Mars Super Market chain, Shoppers would be very close to gaining the No. 2 spot in both Maryland and D.C., and would squeeze out more competition by lowering prices, possibly creating a price war, as seen in the 1980's. They would bump Safeway out from the current No. 2 spot in Maryland and D.C."

Delhaize's Food Lion, meanwhile, recently broke into the Maryland and D.C. areas with their Food Lion, Bloom, and Bottom Dollar format stores, said Diamond. "If they bought the Mars food chain, it would give them more of a presence in those areas overnight, which is what they need in the Maryland area. Since Food lion is a Southern grocery chain, it doesn't have the same brand/name recognition as the other chains [in the area, which include] Giant Food, Safeway, Shoppers Food and Pharmacy, Whole Foods, and Magruder's. Food Lion also could fit each Mars store with one of their three banners, depending on the neighborhood."

Diamond added, however that he was not sure what either chain would do with the Mars distribution center, being that its only 300,000 square feet, which he categorized as "on the small side for today's efficient distribution center."

The regional press has reported that one Mars store would not be included in the package sale.

"It's located in a shopping center where a Wal-Mart is being built, and Wal-Mart would be buying that store to expand there," said Diamond. A call to Wal-Mart for confirmation was not returned at presstime.
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