Acquisition of The Fresh Market could spell trouble for Publix

Mar 15, 2016, 2:44pm EDT

Ashley Gurbal KritzerReporterTampa Bay Business Journal

A private equity firm's plans to buy The Fresh Market Inc. (NASDAQ: TFM) could make it a more serious competitor to Publix Super Markets Inc.

The Fresh Market, based in North Carolina, said Monday that it has entered a definitive agreement to be purchased by New York-based Apollo Management Group for $1.36 billion.

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Publix Super Markets Inc.'s GreenWise store in South Tampa

NOLA LALEYE

Cincinnati-based Kroger Co. (NYSE: KR) was at one point said to be considering buying Fresh Market, which would have given it in an instant Florida presence.

Fresh Market has more than 40 stores in Florida, including locations in Tampa, St. Petersburg and Sarasota. While Fresh Market isn't nearly the competitor to Lakeland-based Publix Super Markets Inc. that bigger players are — like Walmart Stores Inc. (NYSE: WMT), its chief competitor in Florida — Apollo has plans to make it a bigger contender for grocery market share.

“We believe there is a significant opportunity to enhance the brand, merchandise offering and price-value combination to make The Fresh Market a primary destination for food shoppers, while at the same time being committed to social responsibility through partnerships with local vendors and communities,"Andrew S. Jhawar, senior partner and head of Apollo's retail and consumer group, said in a statement.

Fresh Market is much smaller than Publix; it has 183 stores in 27 states, while Publix has more than 1,100 locations in six — soon to be seven — states.

But if Fresh Market is able to put new products on the shelves and improve its prices, as Apollo suggests, it's yet another piece of the " multifaceted threat" that Publix faces each day — from other grocers to restaurants to Amazon. And Fresh Market's niche is an area where Publix has made great strides recently: upscale, specialty and organic items.

That end of the market is getting more competitive every day in Florida. Aldi, a German discount grocer, is increasing its selection of natural and organic products. A developer has confirmed the first Sprouts Farmers Market (NASDAQ: SFM) in the state of Florida in Palm Harbor. And while Whole Foods Market Inc.(NASDAQ: WFM) is struggling, Florida is getting one of its millennial-focused discount chains — a store has been confirmed in Gainesville.

What do you think? If Fresh Market adds new products and improves prices,