Bashas' Enters Premium Wine Business With Acquisition

DAVID SCHWARTZ

CHANDLER, Ariz. — Bashas', one of the nation's largest independently owned supermarket operators, is expanding into the high-end wine and spirits business.

The chain has broken from its traditional roots with the recent purchase of three Sportsman's Fine Wine and Spirits stores in the rapidly growing Phoenix area, officials said. A wine storage facility also is included in the purchase.

Terms of the deal, which closed late last month, were not made public.

“We're just happy to say it's come to fruition, and now the real fun begins,” Mike Proulx, Bashas' president and chief operating officer, told SN. “This is a whole new world for us, and it's a marriage we think will be a good one for us.”

Proulx said there are no immediate changes being planned for the new properties, which range from 3,100 to 5,000 square feet, and that most of the existing employees will be retained. A special division within the company has been set up to run the stores.

“Sportsman's does very, very well in this marketplace,” he said. “They have a great business model. Our plan is to use their expertise and certainly their ideas.”

Proulx said the company's long-term plans are to grow the Sportsman's banner, increasing the number of stores in Phoenix and Tucson, Ariz.

Bashas' officials were approached last summer by Sportsman's owner Robert Lee about the possibility of acquiring the popular wine shops, which got started in the Phoenix area in the early 1950s and grew to become a fixture with the fine wine crowd. Lee, a Canadian businessman, could not be reached for comment.

Sportsman's stores have a longstanding reputation in the area for cultivating the affluent consumer looking for a special or hard-to-fine premium bottle of wine not available at other retail or discount stores.

Not that Bashas', No. 52 on SN's list of the Top 75 food retailers in North America with estimated 2006 sales of $2.1 billion, is a stranger to selling fine wine. The company operates AJ's Fine Foods, an 11-store banner targeting just that market.

The AJ's stores include a section that caters to fine wine and liquor buyers, often vying with Sportsman's for the “Best of” awards in local popularity polls.

Bashas' officials said they believe that the purchase will only serve to complement the existing AJ's banner, offering customers more of an opportunity to buy products that may be allocated by select producers.

Neil Stern, retail analyst and senior partner at McMillan-Doolittle Consulting in Chicago, said Bashas' has a good reputation for developing niche markets, but that the company is jumping into a tough area.

“It's a category that has had a lot of growth and has a chance to differentiate you,” Stern said. “But there is a lot of margin pressure from Costco and the clubs out there.”

He said the jury still is out on whether the venerable Arizona company, which turns 75 years old this year, can be successful in this new arena.

“Bashas' been a chain to be admired for a lot of reasons,” he said. “One reason is they've developed formats to satisfy their different customers, and this could be another example of that. We'll just have to see.”