Family-owned supermarket chain Northgate Gonzalez Markets completed its purchase of the Pacoima-based El Tigre markets in late February, solidifying a presence locally that is poised to compete for the growing Hispanic market.
Branded as a Mexican-products supermarket, the Anaheim-based Northgate Gonzalez opened its 43rd Street store in San Diego’s Southcrest neighborhood in 2006 at the former site of an Albertsons grocery store.
By adding El Tigre’s five San Diego County stores, all located in cities with large Hispanic populations such as Chula Vista and Escondido, Northgate brings its store count to 30 in Southern California and six locally. All El Tigre stores are being converted to Northgate stores, according to the company.
Northgate Vice President Carl Middleton did not disclose the purchase price, citing a confidential agreement, but said it was upward of $10 million. The company does not disclose sales figures.
“Our first priority is to integrate the El Tigre stores with the look and products of Northgate, and then we’ll move forward with the several communities we’ve been looking at for future stores,” said Middleton.
Middleton says that he has been working with a developer to open a store at a site in the Barrio Logan area soon.
The 28-year-old chain will retain all of El Tigre’s estimated 450 employees as Northgate workers, Middleton says. The company now employs about 4,000 people.
Hey, Big Spenders
According to Lloyd Greif, president and chief executive officer of Los Angeles-based investment bank Greif & Co., the best question to ask is: How attractive is the Hispanic market to the supermarket industry?
“The answer is ‘very,’ ” Greif said.
“Latino shoppers typically spend 25 percent more at the supermarket over a few months’ time than the typical Caucasian family, so Northgate should be more interested in dominating the Hispanic market rather than directly competing with the major mainstream players , Vons, Albertsons and Ralphs,” he said.
The Hispanic food industry is projected to grow from $5.7 billion in 2006 sales to about $8.4 billion by 2011, according to a Greif & Co. report.
Hispanics are more likely to live at home among a large family and more likely to eat in than out, focusing on fresh foods, Greif says.
Between 2000 and 2002, mainstream manufacturers made more than 1,800 products that cater to the Hispanic market, according to the report.
Affordable pricing remains a focus for Northgate, he says, despite the chain lacking the purchasing power of the “big three” that dominate the local market.
As consolidation continues to be the name of the game for the grocery industry, Greif says Northgate will likely face competition from other grocers that cater to the Hispanic market, such as Santa Fe Springs-based El Tapatio Markets and Los Angeles-based Big Saver Foods, which operates 16 stores in Southern California.
“There are lots of independent operators in this region, so it’s not surprising to see Northgate trying to buy other people’s market share,” said Greif, adding that he expects the company to keep growing in the coming months.