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Business Observer Friday, Apr. 30, 2004 16 years ago

Ethnic Foods, Hot Niche

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Several owners have opened Bravo Supermarkets, large-scale ethnic stores, in Bradenton and Orlando. With the success of these stores and the growth in the Hispanic market, more are on the way.

Ethnic Foods, Hot Niche

Several owners have opened Bravo Supermarkets, large-scale ethnic stores, in Bradenton and Orlando. With the success of these stores and the growth in the Hispanic market, more are on the way.

By Sean Roth

Real Estate Editor

These are particularly hard times for independent grocery stores. The large chains and Wal-Mart Supercenters have driven the profit margins for the independent stores down to practically nothing. Independent stores have crumbled to roughly 3% to 4% of the total Florida market share. So why are a group of New York grocery owners dotting the Sunshine State with Bravo Supermarkets?

The answer is in the niche market: Bravo Supermarkets appeal to one of the state's fastest growing ethnic populations, Hispanics. In the Sarasota area, there was a 538% increase in the Hispanic population between 1980 and 2000, according to the Washington-based Pew Hispanic Center.

Mark Gallagher, for one, is impressed with the Bravo concept. Gallagher has made a living for 38 years analyzing and running groceries stores, most recently as co-owner of Florida Capital Business Brokers Inc., a brokerage that specializes in the sale and financing of independent grocery stores. Last year, he sold Rafael and Francisco Diaz, of New York, the 23,000-square-foot former Foodway Market location, at 2004 14th St., W., Bradenton, for a Bravo Supermarket.

"This (Sarasota-Bradenton) is one of the fastest growing Hispanic markets," Gallagher says citing Supermarket News, a national trade magazine. "You are getting more and more permanent Latin people, migrants and Mexicans. The Bravos have been making their way here by buying older stores that have kind of lost their life - that are near different ethnic communities and fixing them up."

Bravo Supermarket locations are run through what is called a grocery voluntary. Similar to a franchise, all the Bravo locations are independently owned and collectively marketed and merchandised through Beta II Marketing Inc. in White Plains, N.Y. The biggest difference between a voluntary group and a franchise is the owner's additional store control, no franchising fees and the ability to leave the Bravo network at any time.

Beta II Marketing is the offspring of Krasdale Foods, a century-old New York grocery distributor, which supplies all of the stores. Beta II Marketing was formed in the early 1990s because of the success of its older sister company Alpha I Marketing, which handles a similar grocery voluntary called C-Town Supermarkets.

Florida expansion

In Florida, Beta II Marketing and Krasdale Foods have a working relationship with Associated Groceries of Florida, a wholesaler with locations in Miami and Ocala, to serve the Bravo locations.

"Bravo Supermarkets are designed to meet the ethnic needs of the community surrounding the store," says Stan Sorkin, corporate director of marketing and government relations for Alpha I Marketing. "We give the stores help with marketing, including creating their circulars, store layout and design and merchandising. There are more than 150 C-Towns and about 45 Bravos. Most of these are located in the metro New York area."

In fact, all of the stores were located in the Northeast until early last year. Cesar Ramirez, Marino Abreu, and Luis Merejo, who had all operated C-Town and Bravo grocery stores in New York City, decided to test the Florida market. They opened a small Bravo Supermarket in a former convenience store location in Orlando.

From the success of that first Florida location, the Diazes, also C-Town owners in the New York market, opened the first full-size Bravo Supermarket in the state in Bradenton in October of 2003. A third full-size Bravo store opened, in a completely new facility in Orlando, in March.

Freddy and Engels Guzman plan to open a Bravo Supermarket in Tampa, at 7611 E. Causeway Blvd., in June.

"This really all started because some of the owners saw a need to expand down into Florida to meet the needs of the ethnic groups down there," Sorkin says. "We are very pleased with the way the stores are performing. (Beta II Marketing officials) are now actively soliciting potential sites and possible owners in the market."

Dried catfish to salted Mackerel

The stores are designed to provide for the local ethnic population - whether the consumers are from Puerto Rico or the Caribbean. But in Florida, judging from the Bradenton location, the Mexican-originating Hispanic market is the largest group served.

"I would say that 65% of our customers are Mexican," says Irving Giovanni Abreu, general manager of the Bradenton Bravo Supermarket. "Another 20% is a more Spanish mix and another 20% is Jamaican or Dominican. But we also get a lot of white customers too. We carry a variety of different foods for just about everybody."

The Bradenton site is in a cleaned up retail section of one of the city's more depressed areas, a thoroughfare to downtown called 14th Street. Abreu says the former Foodway Market was in a decline when the investors found the site in September of 2002.

"The neighborhood needed a store," he says. "So we bought it and started cleaning it up and remerchandising."

Aside from the different food types, the look of the store is similar to the large chain stores, but on a smaller scale. A quarter or more of the store is devoted to meats, breads and fruits that many Caucasians would not recognize. There are tropical fruits such as Boniatos, bins of salted Mackerel, dried catfish and multicolored pinatas swinging from the rafters above. Regular cuts of hamburger and chicken are next to beef tongue, frozen fish small intestine and whole cow heads. The stores have sections devoted to cuisine from South America, Jamaica, Puerto Rico, Mexico, the Dominican Republic and Cuba, plus an extensive selection of traditional Hispanic staples such as beans and rice. The entire 25-person Bradenton staff is bilingual in English/Spanish.

Asked about the store's location, Abreu says there has not really been a crime problem and the store has a close relationship with the local police department. Further, Abreu says that at least half of the customers come from outside of the 14th Street location. He has seen people drive from Ellenton, Sarasota, Myakka City and even as far away as Tampa to visit the store. That doesn't surprise Gallagher at all.

"These stores are able to draw from a much larger area than the typical grocery stores," Gallagher says. "People are drawn to these specialty items from far way. People are willing to travel for what they like to eat."

Buying power

In addition, Gallagher says the ethnic super center concept has the possibility of delivering the one-two punch of both a wider variety of foods that the chains won't carry and lower prices, which could dislodge a significant group of consumers from the typical chain giants.

"Some of the chains are starting to put in specialty items but they have to a pay a premium price for them," Gallagher says. "Whereas these items aren't a specialty to a store like Bravo so they are able to buy in larger quantities. These storeowners also know their clientele. They speak Spanish so non-English speakers can communicate more easily with them. Also, if you look at the meat department, a lot of that is stuff that the chain stores don't sell.

"That is called the 'off alls' and butchers usually sell that at a very low price so the store would be able to make a much higher profit on those items. Things like pigs feet and salted fish ... in their (Hispanic) culture, these are delicacies. If you put a barrel of pigs feet in a Publix it would probably close the store down."

Sorkin says Bravo owners and managers know the specific ethnic need of their consumers better than their larger competitors. One key reason is that the Florida Bravo owners, experienced grocers in New York, are all Hispanic themselves. Some have relocated or they have their family members operating the business on a day-to-day basis.

"Store owners don't need that much marketing research to judge what they put in their stores," Sorkin says. "They have more hands on knowledge of what the surrounding areas' needs are. Chain stores may look at Hispanics as a group, but they don't know the specific needs of the area, which may be Cuban, Puerto Rican, Mexican or Caribbean."

'Hyper growth'

At the same time, the Hispanic market locally and statewide is growing quickly.

As of the 2000 U.S. Census, 16.8% of the Florida population was of Hispanic or Latin origin, roughly 2.7 million people up, from 12.2% in 1990. Between 1990 and 2000, the number of Hispanics grew by about 1.1 million at a growth rate of about 70.4%. Hispanics have now replaced African-Americans (15%) as the state's largest minority group.

According to an analysis of the 2000 U.S. Census by Science Data Analysis Network, the Sarasota-Bradenton area Hispanic market grew from 6,174 people, or 1.76% of the total population, in 1980, to 38,682 people or 6.56% in 2000. That was more than a 500% increase in the Hispanic population compared to a roughly 70% growth rate in the total population. The Pew Hispanic Center at the University of Southern California calls the area a "hyper growth" area.

As of the 2000 Census, Hispanics made up 4.3% of the Sarasota population compared to 4.2% for African-Americans, while in Manatee County the percentage was 9.3% for Hispanics, compared to 8.2% for African-Americans.

"This is a big, big growing population," Gallagher says. "I travel the state and get to see the population growth. I have kind of seen a migration of these shops from Miami to Tampa to Jacksonville. This concept is really huge in Miami with the small independent markets. We will probably see 15 to 20 stores like this in the state in the next two to three years."

Sorkin says that while the stores are all interdependently-owned the four Bravo markets "are in general doing far better than under previous ownership and the stores are exceeding original volume projections."

Abreu certainly agrees in regards to the Bradenton location. "We are doing better business here than I had expected us to do. The store is doing incredible and the people really appreciate it."

FASTEST-GROWING NEW LATINO DESTINATIONS

These markets are not historically Latino population centers, but showed the fastest growth in Latino population over a 20-year period.

Number % of Total Latino Growth

Rank Cityof Latinos Population 1980 to 2000

1.) Raleigh-Durham, N.C.72,5806%1,180%

2.) Atlanta268,8517%995%

3.) Greensboro-Winston-Salem, N.C.62,2105%962%

4.) Charlotte, N.C.77,0925%932%

5.) Orlando271,62717%859%

6.) Las Vegas322,03821%753%

7.) Nashville, Tenn.40,1393%630%

8.) Fort Lauderdale271,65217%578%

9.) Sarasota38,6827%538%

10.) Portland, Ore.142,4447%437%

Source: Supermarket News

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