Through a special arrangement, what follows is a summary from a current article from Private Label Buyer, presented here for discussion.
With its move to buy Sunflower Farmers Market, Sprouts Farmers Market will become the second largest natural and organic foods retailer behind Whole Foods Market.
Based in Phoenix, Sprouts is owned by private-equity firm Apollo Global Management LLC, but minority owners Stan Boney and Shon Boney have run the operations since Sprouts' merger last year with 45-unit Henry's Farmers Market.
With 35 more from Sunflower slated to join the fold when the buyout closes this spring, Sprouts will have more than doubled in size in the past 18 months. It will have more than 140 stores in eight states.
Beyond gaining economies of scale and a higher door reach with the Sunflower acquisition, Sprouts will benefit by increasing its selection and item count as it integrates Sunflower's private label offerings. Based in Boulder, CO, Sunflower reworked its own PL offerings just over a year ago after acquiring the rights to the Sunflower private label name in its own markets from Supervalu.
Sprout's President Doug Sanders told Supermarket News in a recent interview that the company learned plenty in the past year as it integrated Henry's with Sprouts, lessons that will benefit the company as it prepares to merge Sunflower's stores into Sprouts. The private label strategies were one of the most important parts of the company's 2011 merger with Henry's, which also includes the Texas-based Sun Harvest chain.
"Henry's had a different approach than Sprouts in some categories," Mr. Sanders said. "For example, they had a larger focus on fine wines, and we're integrating that approach at Sprouts. Henry's also put more emphasis on bulk foods, and we're adding that at the Sprouts stores."
The size of Sprouts and its expansion into four new states with the Sunflower deal puts it squarely in a position to compete against Whole Foods and Trader Joe's in the natural/organic foods retailer industry nationwide.