Grocery wars: Tampa's Sweetbay sold to Winn-Dixie parent

TAMPA — Will Sweetbay become Winn-Dixie?

It's possible after the Jacksonville parent of Winn-Dixie announced Tuesday that it will buy what remains of the tattered Sweetbay Supermarket chain.

Bi-Lo Holdings wants to purchase Sweetbay and two additional chains from their Belgian owner Delhaize Group for $265 million in cash. The deal calls for Bi-Lo, which acquired Winn-Dixie in 2011, to buy 72 Sweetbay stores, plus leases for 10 prior Sweetbay locations.

In addition, Bi-Lo will purchase 72 Harveys stores and 11 Reid's stores for a total of 165 stores with about 10,000 employees throughout the southeastern United States. In 2012, those 165 stores generated revenues of about $1.8 billion.

Delhaize, which will retain Sweetbay's distribution center in Plant City, has been under severe pressure to cut grocery costs in its U.S. operations.

"The transaction will further increase the financial flexibility required to execute our strategic priorities," Delhaize CEO Pierre-Olivier Beckers said in a statement.

Sweetbay's sale, rumored last week, signals a last gasp in the chain's nearly decade-long attempt to revitalize itself. What remains unclear is whether the Sweetbay chain over time will be closed and converted to Winn-Dixie stores or adopt some other name.

Until the deal is completed, Sweetbay, Harveys and Reid's will continue to operate independently from Bi-Lo Holdings and its subsidiaries. The transaction should close in the fourth quarter of 2013 and is subject to regulatory approval.

"This (acquisition) does allow us to go into different areas of the Southeast," Bi-Lo and Winn-Dixie spokesman Brian Wright told Jacksonville's Florida Times-Union newspaper. "It's going to allow us to extend our products to more customers . . . . There's a lot of positives for our company."

Wright said it's not clear yet if the company would close any of the stores acquired in the deal.

"We have a lot more to work through before we get into that information," Wright said. "We've just announced this agreement."

Sweetbay's announced sale comes four months after the chain said it would cut 2,000 jobs and shut 33 weak stores. Those cuts left 72 locations to fight an uphill battle, mostly in the Tampa Bay area and south to Fort Myers. The closings included the much touted Tangerine Plaza Sweetbay location in St. Petersburg's Midtown district that was opened in 2005 as a foundation business in a city-led neighborhood revitalization.

Sweetbay was squeezed from above by Florida's dominant supermarket and one of the country's best run grocery chains, Lakeland-based Publix Super Market. And it was hounded by low-priced competitors like Wal-Mart (No. 2 in Florida market share), Costco, Target and Aldi.

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Adrift, Sweetbay lacked the capital support from parent Delhaize to build new stores near Florida's high-growth neighborhoods. And it never convinced enough customers that it offered cheaper pricing.

It did not help that the Sweetbay overhaul started in 2004 ran into one of the worst recessions in decades. Other grocery chains in Florida also suffered.

Albertsons stumbled in those years and was sold off in pieces in 2006 and 2008. Once prominent in Florida, Winn-Dixie fell on hard times and declared bankruptcy in 2005. The company later emerged from Chapter 11 protection and attempted a comeback with freshened stores. That rebound failed, too, and a diminished Winn-Dixie was ultimately sold to Bi-Lo

Sweetbay's inability to find a profitable niche in the lean-margin supermarket business mirrored Albertsons and Winn-Dixie's earlier struggles.

Sweetbay's latest ad campaign, featuring a beef-loving butcher vowing Sweetbay should really be called Meatbay, apparently fell on deaf consumer ears.

"We would like to thank the associates of Sweetbay, Harveys, and Reid's for their ongoing commitment and accomplishments throughout the years," Beckers said.

Bi-Lo Holdings, which owns both the Bi-Lo and Winn-Dixie grocery stores, is the country's ninth-largest traditional supermarket chain. It employs nearly 60,000 employees in 686 grocery stores and 482 in-store pharmacies in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.

After 42 years, Tampa's Kash n' Karry Food Stores announced in 2004 that it would change its name to Sweetbay as part of a plan to revamp the chain's appeal to customers.

"We aren't just getting a new name," Shelley Broader, who back then had recently arrived as president of the 103-store chain, said at the time. "We are inventing a whole new company."

What had damaged Kash n' Karry then ultimately hurt Sweetbay, too. As the Times reported in 2004: "After running through four owners and just as many new looks in the past 15 years, the company found Kash n' Karry's image is so mixed in the minds of shoppers that it is time to start with a clean slate."

Contact Robert Trigaux at trigaux@tampabay.com.