Houston-based Fiesta Mart to be acquired by El Super grocery chain

People shop at Fiesta Mart Sunday, March 25, 2018 in Houston. People shop at Fiesta Mart Sunday, March 25, 2018 in Houston. Photo: Michael Ciaglo, Houston Chronicle Photo: Michael Ciaglo, Houston Chronicle Image 1 of / 23 Caption Close Houston-based Fiesta Mart to be acquired by El Super grocery chain 1 / 23 Back to Gallery

A Hispanic food retailer is buying Fiesta Mart in a $300 million deal that will infuse new capital into the Houston-based grocer’s fight to remain relevant in the increasingly competitive grocery landscape.

The Fiesta Mart acquisition would make the California-based Bodega Latina Corp and its Mexican parent company Chedraui, one of the largest Hispanic food retailers in the country. They are expected to acquire the 63 Lone Star State stores, including 32 in the Houston area, by the beginning of the second quarter.

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"The acquisition of Fiesta allows us to meaningfully expand into Texas via an established, well-known supermarket operator,” said Carlos Smith, CEO of Bodega, which currently operates 59 El Super stores in the Southwest U.S. “Through the combination of the strengths of our two organizations, we will be well positioned to significantly accelerate our vision of efficiently offering high quality products at the lowest possible prices.”

Fiesta Mart, founded in Houston 46 years ago to cater to the Hispanic population, has struggled in recent years to maintain its customer base amid mounting competition from larger grocers eyeing the fast-growing consumer segment.

Although Fiesta Mart has revamped some stores to broaden its appeal, the grocer has been outgunned by well-capitalized giants H-E-B, Kroger and Walmart and newcomers such as Aldi, who have been aggressively courting Hispanic customers with competitive prices and a more international selection of produce, meats and canned foods.

“Spanish-speaking shoppers are the most coveted market in the country, with Texas being the No. 1 market,” said Burt Flickinger III, managing director of Strategic Resource Group, a New York retail consulting firm.

Flickinger, whose firm has conducted competitive pricing analyses for major retailers in Texas for 25 years, said he expects Bodega CEO Carlos Smith to maintain the Fiesta Mart brand in Houston, but likely renovate and remodel stores to capture new customers by the busy holiday season. The new owner will likely use its broad procurement power to buy food products at lower prices and pass them on to consumers, Flickinger said.

Smith will also likely bring a more personal touch to Fiesta Mart, Flickinger said. The CEO is often found personally overseeing El Super stores regularly, and knows what customers of all backgrounds want in terms of meat cuts and seasonings, Flickinger said.

Fiesta Mart employs 8,000, with 4,500 of those based in Houston.

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“What (Carlos Smith) will do is rebuild that great Fiesta heritage and make it better,” Flickinger said.

This is the latest ownership change for Fiesta Mart over the past decade. In 2004, Fiesta Mart was acquired by Grocers Supply, a wholesale groceries distributor. In 2015, the grocer was acquired by Acon Investments, a Washington, D.C.-based private equity firm.

Acon’s founding partner Ken Brotman said the Fiesta Mart sale will likely close in 30 to 45 days, pending regulatory approvals, but declined to give a statement with further comment.

After the deal closes, Bodega will have 122 stores across the southwest U.S. with revenues of approximately $3 billion. More than half of the nation’s Hispanic population live in the five states Bodega will have a footprint in: California, Arizona, Nevada, New Mexico and now Texas.

Houston, with its growing Hispanic population and young families, represents a growth opportunity for Bodega. As more Californians move to Texas seeking lower cost of living, Bodega likely sees a future in Texas, said David Littwitz, a retail broker with Houston-based Littwitz Investments.

“The Hispanic population in the Houston metro area is still growing,” Littwitz said. “This is fighting for every last inch of territory and last inch of market. They’ve done their research. They see Houston as a market to grow and make money.”