Scoop Confirmed: Sprouts Announces Acquisition of Sunflower Farmers Market

The Insider - Heard On the Street

Phoenix, Arizona-based Sprouts Farmers Market and Colorado and Arizona-based Sunflower Farmers Market decided to give the tens of thousands of attendees at the natural-organic products' industry's largest annual trade show on the west coast, Expo West, which began in earnest today in Anaheim, a little something to talk about on the show floor and in the always jam-packed area bars and restaurants this weekend.

It's also something the tens of thousands of you who've been reading my reporting about the deal between Sprouts and Sunflower since November 2011 have been waiting for - and which you learned about in Fresh & Easy Buzz months in advance of today because the publications writing about it today are doing so for the first time based on the press release - which is the announcement Sunflower Farmers Market is being merged into Sprouts, which will result in one farmers' market-style chain in the U.S. - Sprouts Farmers Market.

Today Sprouts and Sunflower announced they've reached a definitive agreement to merge Sunflower Farmers Market and its 35 stores into Sprouts Farmers Market, creating a chain of 139 stores with an estimated annual revenue of $2 billion, which is about the total annual sales amount I estimated in my past columns the combined chains would generate.

Like it did with the Henry's Farmers Market deal last year, Sprouts Farmers Market, which is majority-owned by private equity firm Apollo Global Management and has about 200 mostly individual investors, is essentially acquiring Sunflower Farmers Market, although the retailer's are using the term merged. Sunflower will become part of Sprouts. It's identity and name will go away. Apollo will remain the majority and controlling owner of the combined company, Sprouts Farmers Market.

In the announcement today, Sprouts CEO Shon Boney said the deal is expected to close, pending regulatory approval, in the second quarter of this year, which is soon.

He also said the 35 Sunflower Farmers Market stores will be re-branded under the Sprouts banner by the end of 2012, following the same strategy and about five-month time frame Sprouts used in re-branding the Henry's units to the Sprouts' banner in 2011.

Two stores in Temecula, California remain under the Henry's Farmers Market banner because an existing independent natural foods' retailer in the city, Sprouts Natural Market, has filed a lawsuit in Riverside County Superior Court seeking to prohibit Sprouts Farmers Market from changing the names of the two Henry's stores. Until a ruling is made by the court, Sprouts Farmers Market can't re-brand the two units in Temecula from Henry's to Sprouts.

Sunflower's headquarters operations in Colorado (Boulder and Denver) and Arizona (Phoenix) will also be folded into Sprouts corporate headquarters in Phoenix, as was the case with Henry's headquarters in Irvine, California. Like in the Henry's case, Sunflower's offices will remain open for a while but be closed before the year is out.

The combined chain also plans to open up to 13 new stores this year, as I've previously reported. Those stores will all be under the Sprouts Farmers Market banner, Boney said today.

Sunflower also extends Sprouts Farmers Market Farmers into Nevada, Utah, New Mexico and Oklahoma, states where Sunflower has stores but Sprouts' doesn't, along with adding units in California, Arizona, Colorado, where Sprouts currently operates its 104 stores.

Here's what Andrew S. Jhawar, a senior partner at Apollo and the co-head of its Consumer and Retail Industry Group, said about the deal in the announcement release today: "We feel incredibly fortunate to be able to bring together the management and operations of these two growth-oriented grocery retailers who focus on natural and organic products. In doing so, Sprouts will become an even better company offering more value to the nearly 1.5 million customers who regularly shop at the combined company's stores," he said.

"This is a combination that makes great sense given the rapid growth in demand for natural and organic products and the complementary nature of the geography of the two companies. Apollo is excited to support Sprouts' dynamic management team and to help the company prepare for continued growth throughout the United States," the Apollo Global Management senior partner added.

Jhawer played a key role in doing the deal, which is part of Apollo's plans to dramatically grow Sprouts Farmers Market, which is began doing in earnest last year when it merged Henry's, which it owned through its Smart & Final grocery retailing company based in Southern California, into Sprouts, gaining majority ownership in Sprouts Farmers Market as part of the deal.

Stan and Shon Boney, who remain investors in Sprouts and are two of its founders, will continue to be Sprouts Farmers Market's two senior-level executives. Stan Boney is chairman. Shon Boney, Stan's son, is CEO.

Doug Sanders is responsible for the day-to-day operations of Sprouts as its president. He remains in that position. Chris Sherrell, president and CEO of Sunflower Farmers Market, is expected to join Sprouts Farmers Market in a senior capacity.

When I first reported on the negotiations between Sprouts and Sunflower on November 6, 2011, I said the the Sprouts'-Henry's deal was roll up number one in terms of what were the then three competing farmers market-style grocery chains in the western U.S. The deal to merge Sunflower Farmers Market, which became Sprouts' only remaining identical-format competitor after the Henry's deal a year ago, into Sprouts Farmers Market is roll up number two, as I called it in my November 6, 2011 column here.

Sprouts Farmers Market has created a special website to announce the deal with Sunflower, which is identical to the site it set up to announce the Henry's Farmers Market deal.

That website is here. You can read the general announcement about the deal here. The press release statement distributed to the media today is here.

And, in case you're wondering, two of the founders of Sunflower Farmers Market, Libby Cook and Randy Clappnot, who are known only to those of us who work in the industry or who follow it very closely, were mentioned in the deal announcement today.

But that other co-founder, Michael Gilliland, the man who was the CEO and the public and media face of Sunflower Farmers Market from its founding in 2002 until early February 2011, when he resigned after being arrested February 10, 2011 and charged with one count of felony child prostitution as the result of a sting operation conducted by the Phoenix police department, was omitted, which is an omission one can hardly blame - or be surprised about - the board members and CEO's of Sprouts' and Sunflower from making.

Gilliland and Forman have filed motions for and received a series of continuances in his trial over the last year. In fact, the two appeared in the Maricopa County, Arizona Superior Court yesterday for a pre-trial conference, where he was granted a continuance. He was set to go to trial March 15. But it appears the trial has been postponed to April 12, as you can see here.

But considering from 2002, when Sunflower was founded, up until February 9, 2011, the day before his arrest, Michael Gilliland was that public face of Sunflower Farmers Market, it's a bit surreal, at least to those of us who work in the industry or who follow it very closely, to see no mention of him, for obvious reasons, in an announcement of this sort.

Perhaps there's an object lesson in it for the food retailing industry, which is: Avoid using an individual as the public face of your grocery chain or even of a major marketing campaign because the potential downside of doing so can be severely damaging, although in Sunflower Farmers Market's case its board and CEO Chris Sherrell have managed the situation well. Instead, let your stores be the face of the chain to the public.

I'll have more to say about the Sprouts-Sunflower deal in an upcoming column. But for now I'm going to bask in Fresh & Easy Buzz's scoop. Actually that's not true. Instead, I'm going to check in with a bunch of people at Expo West, so I can find out how the announcement is playing in those bars and restaurants tonight.

And although the focus at the mega-show is on healthy, natural and organic food and drink, those bars are always as packed as the show floor is. They're also the best place to pick up what might eventually become the makings of a good scoop. At least that's what I'm told.

- 'The Insider'

Suggested Reading - Sprouts and Sunflower: The Art of the deal coverage

~The first report (ever) - November 6, 2011: Roll Up Times Two? Sprouts Farmers Market In Talks With Sunflower Farmers Market About Possible Acquisition

~The follow up: A deal is done - February 7, 2012: Deal Announcement From Grocers Sprouts and Sunflower Farmers Market on Tap

~Most Recent: Bringing the elements of the deal together - February 13, 2012: Sunflower Farmers Market, Sprouts and Private Equity: The Art of a Soon to Be Announced Deal

Additionally

~Scoop de jour: Read past columns by 'The Insider', including those where he broke the news about the Sprouts-Henry's deal, here.

~Sunflower makes three: Also see these links - Apollo Management, Sprouts Farmers Market, Sunflower Farmers Market and Henry's Farmers Market - for more reporting, analysis and commentary in Fresh & Easy Buzz on the three farmers market-style chains that are now one.

Sunflower Farmers Market, Sprouts and Private Equity: The Art of a Soon to Be Announced Deal

The Insider - Heard On the Street

In December 2007 Boulder, Colorado-based Sunflower Farmers Market announced it had raised $30 million in equity financing from La Jolla, California-based private equity firm PCG Capital Partners.

At the time, Sunflower Farmers Market, which was headed up by co-founder and CEO Michael Gilliland, who resigned in February 2011 after being charged by the Maricopa County, Arizona Grand Jury with one count of  felony child prostitution, operated just 13 stores in Colorado, Arizona, New Mexico, and Nevada, and had sales in the $100-$150 million range.

Today, Sunflower Farmers Market, which I've reported has agreed to a merger-acquisition deal with Phoenix, Arizona-based Sprouts Farmers Market, which is majority-owned by private equity firm Apollo Global Management, has 35 stores and about three times the annual revenues it had in December 2007, when PCG Capital Partners made its $30 million equity investment in the grocery chain.

According to my sources, in return for the $30 million equity investment it made in Sunflower Farmers Market over four years ago, PCG Capital Partners, who's managing director Timothy Kelleher is a member of the grocery chain's board of directors, received an approximately one-third ownership stake in Sunflower, the other about two-thirds being held by the founders, corporate officers and other private investors.

In 2007 PCG Capital Partners launched its Corporate Partners Fund, the vehicle it used to invest in Sunflower Farmers Market.

The fund is designed to provide equity growth capital for established businesses, which Sunflower was.

It's also a non-control fund, meaning the private equity firm takes a substantial equity interest in the companies it invests in - and in the case of Sunflower Farmers Market received a board seat for Kelleher as part of the deal -but allows the company's senior management to continue to call the shots on a day-to-day basis.

Back in December 2007 when the private equity firm made its $30 million investment in then 13-store Sunflower Farmers Market, co-founder and then CEO Michael Gilliland and Kelleher said the strategic goal of both parties was to build Sunflower into a chain of 50 stores over a five-year period.

Here's what Sunflower's then CEO Gilliland and Kelleher said (italics below) in a joint-statement on December 17, 2007:

Sunflower Farmers Markets, a Boulder, Colorado-based grocery chain founded and led by Wild Oats founder Mike Gilliland, announced today it has raised $30 million in equity financing from PCG Capital Partners, a private equity firm based in La Jolla, CA.

The funding comes in advance of a major expansion of the Company’s retail locations in both existing and new geographic markets.  Plans include doubling the number of stores by the end of 2009.  Sunflower will launch new locations at a rate of up to eight stores per year, creating a company portfolio of 50 stores throughout the west within five years.    

Sunflower, founded in 2002, currently operates 13 stores in Colorado, Arizona, New Mexico, and Nevada.  The Company’s increasingly popular format offers consumers a full-service farmers’ market-style grocery store featuring the highest quality natural and organic products at the lowest possible prices.

Mike Gilliland, Sunflower’s Founder and CEO, said, "Our value driven approach to the natural foods retailing sector has clearly resonated with consumers.  There is tremendous demand for an alternative to the high price format that has predominated in natural foods for so many years. PCG Capital Partners’ investment will enable us to make this differentiated retailing approach available to millions of consumers throughout the Western United States, including new markets in Utah and Texas.”

Tim Kelleher, Managing Director of PCG Capital Partners, said, "We are excited to partner with a proven entrepreneur like Mike Gilliland.  We believe that Mike and his team have built a model that uniquely combines value with quality in the natural and organic foods segment.  The concept has proven itself over 13 stores in four states.  We anticipate our capital will enable Sunflower to capitalize on its success by replicating the model across many additional markets."

As noted earlier, Sunflower Farmers Market has 35 stores. Current plans - before the talks with Sprouts started in earnest last fall - call for Sunflower to open 6-8 new stores this year, which means it would fall short of that five year, 50-stores goal by nine to seven or so units, making it difficult to hit the financial target set by PCG Capital Partners, Gilliland and Sunflower's board in the fall of 2007, when the private equity firm made its $30 million investment. The chain is well on the way to that goal though.

Why: Because 41-43 stores - give or take a couple either way - rather than 50 units are to be open by December 2012 (five years from December 2007). That many less stores opened can make a big difference in terms of revenue and profits for a grocery chain on the growth fast-track, which is what the plan has been for Sunflower Farmers Market since 2007.

PCG Capital Partners has an up to seven-year time horizon, in terms of getting a return on equity, in its $30 million investment in Sunflower Farmers Market. As of today, its about four years and four months into that up to seven-year time horizon. Five years is often a magic number when it comes to private equity investments in a company.

The deal with Sprouts, which will be announced soon, will change all that, however. I don't know all the specifics at present, but the private equity firm will either get paid-out fully in the deal with Sprouts or will take some equity in a combined Sprouts Farmers Market-Sunflower Farmers Market, to be controlled by Sprouts, making it whole either way.

Sunflower Farmers Market's equity partners have been angry at Gilliland since his arrest in February 2011, when he was charged with one count of felony child prostitution.

The grocery chain's board moved quickly to get the co-founder to resign, which he did, along with taking various measures, such as removing any references to Gilliland from the company's website and other media, as well as putting out a statement following his resignation saying he would no longer be involved in the company and that he is only a minor investor in the chain.

But the reality is that Gilliland was the driving force behind and public face of Sunflower Farmers Market since it was founded in 2002. Just look at the December 17, 2007 statement I quoted above if you either aren't aware of that fact or doubt it. It was a personality-driven retailer until February 2011 - and Michael Gilliland was that person and personality.

Overall, I think Sunflower has been much better off over the last year as a non-personality-driven grocery chain, just as I would suggest Whole Foods Market has become a much better operation since the company convinced John Mackey to be a bit more zen-like and a lot less the face of Whole Foods'-like.

There has been talk in the past of a possible acquisition of Sunflower by Sprouts or a merger of the two food retailing companies. But Gilliland's being charged with one count of felony child prostitution a year ago this month  - he has yet to go to trial, having asked for and received multiple postponements (current trial date is March 15, 2012) from the Maricopa County, Arizona Superior Court where the case is pending; his lawyer has also appealed the Grand Jury's decision to the Arizona State Court of Appeals (see here) - served as the catalyst for the talks and negotiations between the boards of Sprouts and Sunflower.

All that's left now is the announcement of the deal. And it's a deal that has as much to do with private equity firms - Apollo Global Management being the majority owner of Sprouts Farmers Market and PCG Capital Partners holding considerable equity in Sunflower - as it does about a merging of two grocery chains with similar farmers market-style formats.

- The Insider

[Read 'The Insider's' past columns here, including his scoop on the yet to be announced Sprouts-Sunflower deal and news-breaking reporting and analysis on the Sprouts Farmers Market-Henry Farmers Market acquisition-merger in January 2011.]

Related Stories

February 7, 2012: Deal Announcement From Grocers Sprouts and Sunflower Farmers Market on Tap

January 25, 201: Sprouts Farmers Market and Sunflower Farmers Market Ink Acquisition-Merger Deal

November 6, 2011: Roll Up Times Two? Sprouts Farmers Market In Talks With Sunflower Farmers Market About Possible Acquisition

January 5, 2011: Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards

January 7, 2011: Sprouts Farmers Market-Henry's Farmers Market Deal Negotiations Continue; End-Game Could Be Near

January 8, 2011: Smart & Final-Henry's Tell Employees About Deal Discussions With Sprouts Farmers Market; Confirming 'The Insider's' Reports

February 16, 2011: Breaking: Smart & Final Enters Into Agreement to Sell Henry's to Sprouts Farmers Market

Also see: The Insider,  Sprouts Farmers Market, Sprouts-Henry's Deal and Sunflower Farmers Market.

Deal Announcement From Grocers Sprouts and Sunflower Farmers Market on Tap

The Insider - Heard on the Street

It was in this November 6, 2011 column - Roll Up Times Two? Sprouts Farmers Market In Talks With Sunflower Farmers Market About Possible Acquisition - when I first broke the news that kissing cousin format grocery chains Sprouts Farmers Market and Sunflower Farmers Market were engaged in acquisition-merger deal negotiations, with Sprouts' either acquiring Sunflower Farmers Market outright or Sunflower being merged into Sprouts Farmers Market, with Sprouts' as the controlling entity.

On January 25, 2012 [See - January 25, 2012: Sprouts Farmers Market and Sunflower Farmers Market Ink Acquisition-Merger Deal] I reported that Phoenix, Arizona-based Sprouts, which operates 103 stores - a new store opens tomorrow in Yorba Linda, California - in Arizona, California, Colorado and Texas, and Sunflower Farmers Market, which is headquartered in Colorado and has its operations office in Phoenix Arizona, had reached a deal, pending the ironing out of a few details.

Sunflower Farmers Market, which like Sprouts Farmers Market is privately-held, operates 35 stores in Colorado (12), Arizona (7), New Mexico (6), Nevada (2), Texas (2), Oklahoma (1), Utah (3) and California (2).

Those details have now been resolved, according to my sources, and the two farmers market-style grocery chains are preparing to make an announcement about the acquisition-merger deal.

The announcement should come before the end of this week. However, there are some logistical and related issues that could result in the announcement coming a bit later.

Roll up: Sunflower makes two

It's been less than a year since the acquisition-merger deal between Henry's Farmers Market and Sprouts Farmers Market became final on April 18, 2011.

In January 2011, I broke the news in this column - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards - that Sprouts' and Apollo/Henry's were in acquisition/merger negotiations.

I continued to report extensively on the deal talks throughout January 2011 and into February. [See those reports and columns here and here.]

On Wednesday, February 16, 2011, the two grocers announced the deal. [See: Breaking: Smart & Final Enters Into Agreement to Sell Henry's to Sprouts Farmers Market. The day before, on February 15, 2011, I published this: Sprouts Farmers Market's Acquisition of Henry's to Be Announced This Week, As Early As Wednesday.

Henry's was owned at the time by private equity firm Apollo Global Management (through its Smart & Final food retailing company), which was founded by Leon Black, who remains its chief deal-maker.

Apollo and Sprouts' founders and part-owners merged the Henry's Farmers Market chain into Sprouts Farmers Market, with Henry's going away and Sprouts' in control of the combined chains.

The deal made Apollo Global Management the majority owner of Sprouts Farmers Market.

In addition to Apollo, Sprouts has about 200 investors, most of them individuals. The investors range from a few who hold a considerable amount of stock to others who hold a few shares. Sprouts Farmers Market is not a publicly-held company, however.

Stan and Sean Boney, the chairman and CEO of Sprouts respectively, and board members Scott Wing and Kevin Easler - the four men founded Sprouts Farmers Market in 2002 - have minority ownership stakes in Sprouts Farmers Market, along with the investors. The individual investors were in place before Apollo's involvement.

Doug Sanders is Sprouts' president. He's responsible for the chain's operations, reporting to Sean Boney. Jim Nielson, who was president of Henry's Farmers Market, joined Sprouts Farmers Market last year as part of the merger deal. He is Sprouts' chief operating officer, reporting to Doug Sanders.

Co-founders Stan Boney and CEO Sean Boney, who is Stan's son, had wanted to acquire the Henry's chain, which was founded by Stan Boney's father Henry, for many years.

Stan Boney was the chairman and CEO of the then family-owned Henry's chain until 1999, when it was sold to Wild Oats Markets, which was acquired by Whole Foods Markets in 2007. Three years later he started Sprouts Farmers Market with his son and the two partners/co-founders.

The deal with Apollo Global Management was a good one for Sprouts, not only because it brought Henry's in-house but because it also provides the chain with a constant source of investment capital, private equity firm and majority-owner Apollo, which is also something the Boney's were after to help fuel their growth plans for Sprouts Farmers Market.

Apollo has even more ambitious growth plans for the chain that the founders did, which of course is what private equity firms do - grow a business and then eventually sell it and make a profit.

The deal also took one of Sprouts' two farmers market-style kissing cousin format cousins out as a direct competitor. Instead, the kissing cousin, Henry's, moved into the same house, called Sprouts Farmers Market.

That other kissing cousin competitor is, of course - Sunflower Farmers Market.

And soon it will join its farmers market-style format kissing cousins; all three - Sprouts, Henry's and Sunflower - under the same roof, and the roll up will be completed.

- The Insider

[Readers: Go to these links - Apollo Management, Mike Gilliland, Sprouts Farmers Market, Sprouts-Henry's Deal, Sunflower Farmers Market, The Insider,  Henry's Farmers Market - for an extensive selection of related stories.]

Sprouts Farmers Market and Sunflower Farmers Market Ink Acquisition-Merger Deal

The Insider - Heard on the Street

In my November 6, 2011 column - Roll Up Times Two? Sprouts Farmers Market In Talks With Sunflower Farmers Market About Possible Acquisition - I reported that representatives of Arizona-based Sprouts Farmers Market and Colorado-headquartered Sunflower Farmers Market were engaged in negotiations regarding either an outright acquisition of Sunflower by Sprouts' or a merger-type acquisition of Sunflower Farmers Market into Sprouts Farmers Market, with Sprouts' and its majority-owner private equity firm Apollo Global Management absorbing Sunflower into Sprouts' corporate structure and operations, like it did with the Henry's Farmers Market deal last year.

Today I can report that, according to my sources, Sprouts Farmers Market and Sunflower Farmers Market have reached an agreement in principle for such an acquisition-merger, which they currently plan to announce no later than two weeks from today, assuming some additional details and specifics can be worked out between the two farmers market-style grocery chains.

My sources tell me representatives of both grocery chains have signed a memo of understanding or letter of intent to merge the two food retailing companies, with Sprouts Farmers Market in the lead role, and that those additional details and specifics are currently being negotiated on by the two chains.

Neither Sprouts Farmers Market or Sunflower Farmers Market has publicly announced they've been engaged in deal talks, nor have they confirmed or denied my November 2011 report. Additionally, based on my research using the major Internet search engines, no other publications besides Fresh & Easy Buzz have reported on the deal talks to date.

Sprouts Farmers Market currently operates 103 farmers market-style grocery stores in California, Arizona, Colorado and Texas.

The retailer closed three stores - Rollingwood, Sunset Valley and Anderson Lane -  in Austin, Texas, in December 2011. The store closings were the result of having too many units too close to each other in Austin, following the Henry's Farmers Market merger last year. Henry's had some Sun Harvest banner stores in Austin which were nearby existing Sprouts locations, resulting in the duplication issue. No other Henry's or Sun Harvest banner stores have been closed to date.

Sunflower Farmers Market operates 35 farmers market-style stores in eight states in the Western U.S. - Colorado (12), Arizona (7), New Mexico (6), Nevada (2), Texas (2), Oklahoma (1), Utah (3) and California (2).

The Sunflower format, as was the Henry's Farmers Market format, is virtually identical to Sprouts Farmers Market's format.

Based on information given Fresh & Easy Buzz by the chain late last year, along with my analysis of added sales from new stores open since then, I estimate that Sprouts Farmers Market currently has annualized sales in the $1.2 billion-to-$1.4 billion range.

Additionally, based on conversations with sources at Sunflower Farmers Market, I estimate the chain's current annual sales to be in the $600 million-to-$700 million range.

Neither grocery chain is publicly-held. Therefore Sprouts and Sunflower don't released annual sales publicly as a matter of record. However, senior executives of both chain's publicly mentioned annual sales numbers in interviews last year. I expect a mention of those metrics to be made again as part of any deal announcement.

Both Sprouts Farmers Market and Sunflower are expanding rapidly, focusing in large part on the same Western U.S. States.

For example, both farmers market-style grocery chains are putting a major new store opening emphasis in Northern California for 2012, where each plans to open numerous new stores this year.

Sprouts and Sunflower both also plan to open new stores (one each respectively) in Phoenix, Arizona this year, along with in Colorado.

Sunflower Farmers Market though, unlike Sprouts, has a wider geographical reach with its growth strategy, currently operating in eight states, compared to Sprouts Farmers Market's presence in four states, which are California, Arizona, Colorado and Texas.

For example, in 2011 Sunflower Farmers Market expanded into Northern California and Oklahoma, where it plans to open at least one new store this year, which will be its second unit in the state.

Sunflower currently has two units in California, in Roseville near Sacramento and in Modesto, which is in the Northern Central Valley. It currently has plans to open four new stores in Northern California this year.

Sunflower Farmers Market has no current plans to open stores in Southern California, which is where Sprouts has the highest number of stores out of its total store base.

Sprouts Farmers market currently plans to open at least three stores in Northern California this year.

A deal with Sunflower Farmers Market (a combined Sprouts Farmers Market and Sunflower) will give Sprouts' an immediate presence in four additional states - Nevada, Utah, New Mexico and Oklahoma. All four of these states fit well geographically with where Sprouts Farmers already is geographically.

Additionally, Sunflower's growth focus in Northern California, which mirrors that of Sprouts Farmers Market - and the fact it has no stores in Southern California (no duplication) - is also synergistic in terms of a combined Sprouts' and Sunflower, as is the fact the two grocery chains operate stores of the same farmers market-style  of which are virtually identical to the Henry's Farmers Market chain. Sprouts' has now changed all the Henry's and Sun Harvest stores to the Sprouts Farmers Market banner.

To put is directly, a year ago there were three farmers market-style grocery chains in the U.S. - Henry's, Sprouts and Sunflower - all operating in the same Western U.S. states. Today there are just two - Sprouts (with the combined Henry's) and Sunflower Farmers Market. If all goes according to plan, there soon will be just one such chain, Sprouts Farmers Market (the combined Sprouts, Henry's and Sunflower), otherwise know as the house the Boney family built.

A little over one year ago I broke the news in this January 5, 2011 column - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards - that Sprouts Farmers Market and the owner of then Irvine, California-based Henry's Farmers Markets were engaged in talks involving an acquisition/merger deal between the two farmers market-style grocery chains.

In a series of follow-up columns - and in various news stories published in January and February 2011 in Fresh & Easy Buzz, we further reported and developed the story, adding new information about the deal talks between private equity firm Apollo Global Management, which owned Henry's through its Southern California-based Smart & Final LLC retail company and is now the majority-owner of Sprouts Farmers Market.

On February 15, 2011 Apollo Global Management announced through Smart & Final that it would merge its Henry's Farmers Market chain with Sprouts, in a deal that would give Apollo majority ownership of Arizona-based Sprouts Farmers Market (the combined Sprouts and Henry's chains), with Henry's being absorbed into Sprouts' existing corporate structure and operations.

On April 15, 21 I reported that the Sprouts-Henry's deal would be final on April 18. [See: Sprouts Farmers Market's Acquisition-Merger of Henry's Farmers Market to Be Final On Monday, April 18.]

On April 18, 2011, Sprouts Farmers Market announced the deal was final in a press release. [See: Sprouts Farmers Market Confirms Our April 14 Scoop: Sprouts' Acquisition-Merger of Henry's Farmers Market Final Today.]

The Devil is always in the details, as I carefully noted at the top of this column. But, according to my sources, where things stand today, what I've called the (farmers market-style food and grocery retailing format) "Roll Up Times Two" (Henry's being the first one) is on the way, unless the Devil messes with those details.

- The Insider

[Readers: Our extensive reporting, analysis and commentary of and on the Henry's Farmers Market-Sprouts Farmers Market deal in 2011, the Sprouts'-Sunflower deal talks, and much more can be found at these links: The Insider, Sprouts Farmers Market, Sprouts-Henry's Deal, Sunflower Farmers Market, Apollo Management, Henry's Farmers Market.]

Roll Up Times Two? Sprouts Farmers Market In Talks With Sunflower Farmers Market About Possible Acquisition

The Insider - Heard on the Street

Representatives of Arizona-based Sprouts Farmers Market and Colorado and Arizona-based Sunflower Farmers Market are engaged in discussions about a possible acquisition by Sprouts of Sunflower, which operates 35 farmers market-style grocery stores in eight Western U.S. states, according to my sources.

The talks and negotiations have been going on for slightly over a week, although perhaps longer, according to the information I have.

I stress ... What's going on are discussions of a real and serious nature, but a deal between the two grocery chains has not been reached as of today, according to my sources.

Sprouts and Sunflower operate very similar farmers market-style format grocery stores.

Both privately-held chains focus on offering value-priced natural and organic food, grocery (across all store categories) and related products in their respective stores, which also are about the same size, averaging about 28,000 to 33,000 square feet. Both chains also use fresh produce as a key proposition, building their store formats and product offerings, which are nearly identical, around large produce departments designed to look like an indoor farmers market.

It was just 10 months ago when I first reported (here) that representatives of Arizona-based Sprouts Farmers Markets and then Irvine, California-based Henry's Farmers Markets were engaged in talks involving an acquisition/merger deal between the two farmers market-style grocery chains, which share a common family tree.

In a series of follow-up columns - and in various news stories by Fresh & Easy Buzz published in January and February, we further reported and developed the story, adding new information about the deal talks between private equity firm Apollo Global Management which owned Henry's through its Southern California-based Smart & Final LLC retail company and is now the majority-owner of Sprouts, and Sprouts Farmers Market.

On February 15 of this year Smart & Final announced an agreement to sell Henry's Farmers Market to Sprouts, in a deal that would make the owner of Smart & Final and Henry's the majority-owner of Sprouts.

According to my sources, Apollo Global Management owns slightly more than 50% of Sprouts Farmers Market. The rest of the food and grocery retailing company, which currently operates 106 stores in four Western U.S. states, is owned by members of the Boney family (the founding family of what became Henry's Farmers Market) - Stan Boney is chairman and his son Shon is CEO - who founded Sprouts, two other co-founders, Scott Wing and Kevin Easler who also serve on the board, and nearly 200 investors, ranging from a few who own a good-sized stake in the grocer, to the majority who own small shares. The various investors existed prior to the Henry's Farmers Market deal with Apollo.

In my April 15 column I reported that the deal between the two parties would be final on April 18. [April 15, 2011: Sprouts Farmers Market's Acquisition-Merger of Henry's Farmers Market to Be Final On Monday, April 18.]  Also see: January 24, 2011: 'The Insider' - End-Game Could Be Near in the Sprouts Farmers Market-Henry's Farmers Market Deal Talks.

On April 18, 2001, Sprouts Farmers Market confirmed the deal was final in an announcement. [April 18, 2011: Sprouts Farmers Market Confirms Our April 14 Scoop: Sprouts' Acquisition-Merger of Henry's Farmers Market Final Today.] At that point the mainstream business and grocery industry trade press all wrote stories about the deal, although a couple publications picked up the reporting in Fresh & Easy Buzz prior to the April 18 public announcement by Sprouts and Apollo Global Management.

Sunflower Farmers Market was founded in 2002 by Michael Gilliland and some partners.

Gilliland is the former co-founder and CEO of Wild Oats Markets, Inc., which was acquired in 2007 by Whole Foods Market. Gilliland had left Wild Oats and started Sunflower Farmers Market before the Whole Foods acquisition of Boulder, Colorado-based Wild Oats, which at the time was the Austin, Texas-based chain's main competitor in the the natural-organic food and grocery retailing space.

He served as CEO and was the public and media face of Sunflower Farmers Market until February of this year, when he resigned that position and his seat on the board after being arrested in Phoenix, Arizona and charged with solicitation of a minor prostitute for the purpose of sex.

Gilliland has plead innocent to the charges. He was originally supposed to go to trial in Maricopa County Superior Court (Arizona) on August  9. However, he has requested and received three continuances from the court since then, for trial dates set for September, then October and now November 14, which is his current trial date.

The reason Gilliland and his attorney have given the court for the continuances, according to court documents I've seen, is that the co-founder and former CEO of Sunflower Farmers Market, who still owns shares in the chain, has been traveling out of state. He has a pre-trial conference set for tomorrow (November 7), in advance of his scheduled November 14 trial in Arizona.

Sunflower Farmers Market, which although it maintains its corporate headquarters in Boulder, Colorado where the chain was founded also has an operations-oriented headquarters facility in Phoenix, Arizona where Sprouts is headquartered, hasn't let the controversy surrounding Gilliland's arrest and resignation prevent it from carrying on its operations and rapid growth strategy, which has been in place for a few years.

Immediately following Gilliland's resignation as CEO and from the board on February 10, 2011 - which was two days after his arrest - Sunflower's board began distancing the grocery chain from Gilliland. Two days later on February 12, Sunflower's board, which is headed by Bennett Bartoli, named then-president Chris Sherrell acting CEO. In late April the board made Sherrell permanent CEO of Sunflower Farmers Market.

Along with naming Sherrell as acting CEO on February 12, Bartoli and the board said in a statement that Gilliland would no longer have any involvement with the chain he co-founded and up until his arrest has been the public face of.

The board also said in the announcement that Gilliland and the board said in a statement that Gilliland would no longer have any involvement with the chain he co-founded and up until his arrest has been the public face of. The board also said in the announcement that Gilliland was now a  "minor investor" in Sunflower Farmers Market. All past articles featuring Gilliland - and there were many - posted on the Sunflower Farmers Market website, for example, were removed the day he resigned, as part of disassociating him from the chain and its image.

Since Gilliland's resignation and Sherrel's taking over as CEO in February, Sunflower Farmers Market has launched into two new market regions, opening two stores in Northern California and one unit in metro Tulsa, Oklahoma.

Sunflower opened its first store in Northern California, which was also its first unit in the Golden State, in Roseville near Sacramento on May 11. The second Sunflower market opened last month in Modesto, California. Modesto is in the Northern Central Valley, about 100 miles from Sacramento.

The farmers market-style format grocery chain so far plans to open four additional stores in Northern California next year (in spring and summer) - one unit in Sacramento, two stores in San Jose, and one unit in nearby Mountain View. It's been looking for additional store locations in Northern California as well, with a focus on the San Francisco Bay Area and metro Sacramento regions.

On August 21 Sunflower Farmers Market opened its first store in Oklahoma. That store is in Oklahoma City.

Oklahoma City has recently become ground zero for natural-organic food retailing chains. For example, in July the Natural Grocers' chain opened a store in Oklahoma City. And on October 12 Whole Foods Market opened a store there. The new 35,000 square-foot Whole Foods market is about a mile from the about 28,000 square-foot Sunflower market opened in August.

Sunflower currently has a second store scheduled to open in Oklahoma in early 2012. That unit is in Edmond.

With the addition of stores in California (all currently in and planned for the northern part of the state) and Oklahoma this year, Sunflower Farmers Market now operates 35 stores in eight states in the Western U.S. - Colorado (12), Arizona (7), New Mexico (6), Nevada (2), Texas(2), Oklahoma (1), Utah (3) and California (2).

The grocer also currently has a few planned new stores in the pipeline in its existing market regions. For example, Sunflower announced in late October that its planning a 28,000 square-foot store in the Rimrock Crossing Shopping Center in Grand Junction, Colorado.

Sunflower already has plans to open its thirteenth store in its home state next year. That store, at East Colfax Avenue and Garfield Street in the Denver area, is currently set for a late 2012 opening, CEO Chris Sherrell said in the October press release.

I also know from my sources that in addition to searching for numerous future locations in Northern California, as I've noted, Sunflower also has been looking for more additional store sites in all eight states but most particularly and aggressively in Oklahoma and Utah, along with Northern California.

Until fairly recently Sunflower was focusing on searching for numerous new locations in Texas, where Sprouts has been opening and has added numerous stores with the acquisition of Henry's Sun harvest markets in the state, which were part of the deal this year.  But more recently Sunflower has switched that focus and emphasis to next door Oklahoma.

Sprouts Farmers Market currently has 106 farmers market style grocery stores in four western states - Colorado, Arizona, California and Texas.

Assuming the price was right, An acquisition of Sunflower Farmers Market would be fairly positive from synergistic standpoint  for Sprouts and Apollo, which as I've said in my previous columns earlier this year wants to grow the chain rapidly.

For example, Sprouts has no presence in four of the Western U.S. states where Sunflower has its 35 stores - New Mexico, Utah, Nevada and Oklahoma.

While Sprouts could enter these states fairly rapidly if it wanted to because its decentralized distribution system makes doing so easier than for a self-distributing chain - Sprouts uses a natural-organic foods wholesaler to distribute the majority of products to its stores - an acquisition of Sunflower would obviously make that entry immediate, giving it six stores in New Mexico, three units in Utah, two stores in Nevada and one unit plus more on the way in Oklahoma.

Acquiring such an existing store base makes it easier for a grocer to locate and open additional stores at a faster pace then entering from scratch does.

It also immediately adds sales to the bottom line.

Another plus for Sprouts is that Sunflower has no stores in Southern California, where the majority of its stores now are because of the Henry's acquisition. Therefore, there would be no duplication in Southern California, a key market for Sprouts, with an acquisition of Sunflower Farmers Market, and therefore no need to close any existing stores.

Another plus is Northern California, where both Sunflower and Sprouts are expanding rapidly. Sprouts currently has four stores in the region - one each in El Grove and Roseville near Sacramento, and two in the San Francisco Bay Area, in Sunnyvale (South Bay area) and Dublin, which is in the East Bay Area.

So far Sprouts Farmers Market has two stores set to open in the region next year. Those stores are in Walnut Creek, which isn't far from Dublin in the East Bay Area, and Citrus Heights, which is in the Sacramento metro area, just like El Grove and Roseville are.

Sprouts is also currently in the approval process with the city for a store in Santa Rosa, which is in the North Bay Area. Additionally, the farmers market format grocer is looking for numerous additional store locations in Northern California.

The four stores Sunflower Farmers Market plans to open next year in Northern California are all potentially good fits - and locations - for Sprouts. The two units in San Jose and the one store in Mountain view are near the existing Sprouts market in Sunnyvale, for example, and Sprouts Farmers Market currently doesn't have stores in any of the two cities.

Further, the two stores Sunflower Farmers Market plans to open in Sacramento next year fit into Sprouts' focus on the Sacramento metro region. At present it has no stores set to open in 2012 in Sacramento proper. The two planned Sunflower units would give it two such stores. Citrus Heights, where Sprouts will open a store in early-to-mid-2012, is right next door to Sacramento, and Elk Grove and Roseville, where Sprouts and Sunflower both have existing stores, are nearby.

The Sunflower store in Roseville is far enough geographically from the Sprouts unit that I think Sprouts Farmers Market could probably keep it in operation, were an acquisition to become reality. It could even operate it under the Sunflower name, which might not be a bad idea if it were to keep it open.

Regarding Colorado and Arizona, Sprouts' top two states in terms of store-count along with California - which also are where Sunflower Farmers Market has 19 of its 35 stores (12 in Colorado with 2 more planned, and 7 in Arizona - there is some location duplication but it's actual fairly limited, according to my analysis.

A few Sunflower Farmers Market units in each state may need to be closed. Some of the stores might also be able to be operated under the Sunflower banner, although I think Sprouts would eliminate it like they've done with the Henry's banner. But the minimal duplication is manageable as I see it - and far from a deal stopper.

Earlier this year Sprouts' said the acquisition-merger with Henry's would create a food and grocery retailing company with about $1-$1.2 billion in annual sales. I estimate, adding in new stores opened since the deal was finalized, along with those units planned for the first half of 2012, that Sprouts Farmers Market is on-track to have about $1.5 billion in annual sales soon.

Sunflower Farmers Market has annual sales of about $600-$650 million, based on information I've obtained from sources at the retailer over the last year.

Therefore, were a deal to be done between Sprouts and Sunflower - and I stress the two parties are only talking at this point - I estimate it would make Sprouts Farmers Market a grocery chain with about $2 million in annual sales, which is more than double Sprouts' annual sales before the Henry's deal happened this year.

What I know is that Apollo Global Management has the capital available to do a deal.

I also know it wants to grow Sprouts rapidly. Acquisitions make such rapid growth happen much faster than an organic growth-only approach does.

Sunflower Farmers Market is also in a state of flux, with the resignation of Gilliland, which is something it's managed well. The post-Gilliland Sunflower is open more to change than the chain was while he was still CEO, for example.

It also has investors in the company who when they made the investments a few years ago were then looking at an about five-year time horizon to get some pay back.

Sunflower is also growing rapidly, which takes a lot of cash - new stores, new employees, ect. Some of that growth can come out of cash flow and previous loans and investments. But the rapid new store growth plan Sunflower Farmers Market is following is also going to take new money, in my analysis and opinion.

So, based on what I've laid out above, the stage is set rather well - synergies, cash available, common needs - for an acquisition of Sunflower by Sprouts Farmers Market. But of course, the Devil is always in the details.

Most important, the farmers market style formats are near-identical, as was the case between Henry's and Sprouts. Apollo wouldn't have likely done a roll up of Henry's with Sprouts were the formats not virtually the same.

As such, a second roll up, this time of Sunflower, is the next logical step for Apollo/Sprouts.

It also eliminates the only remaining significant farmers market-style format competitor.

Many operators and investors attach significant value to this element alone when considering a deal. For example, a considerable amount of the motivation behind Whole Foods Market's acquiring Wild Oats in 2007, which was performing poorly but was its leading competitor in terms of directly related formats, was to remove it as a competitor, which is something co-founder and co-CEO John Mackey has stated publicly.

As of today what's going on between the representatives of Sprouts and Sunflower, who all know each other, particularly at the board and senior executive levels, is a real and serious discussion of a possible acquisition of the latter by the former. Executives at neither chain are confirming it, which is wise and as you would expect to be the case.

Stay tuned. I may have more soon.

- 'The Insider'

[Readers: Click here to read all past columns by 'The Insider' about the Sprouts'-Henry's deal. Also, click the following links - Sprouts Farmers Market and Sunflower Farmers Market - for related stories about Sprouts Farmers Market and Sunflower Farmers Market.]

Sprouts Farmers Market Plans to Close Henry's Farmers Market's Corporate Office in Irvine, California July 9

The Insider - Heard on the Street

It's nearly all over in Irvine accept for the sweeping, mopping and locking up.

Sprouts Farmers Market plans to close the Henry's Farmers Market corporate office in Irvine, California July 9, as it completes its consolidation of Henry's headquarters operations into its corporate offices in Phoenix, Arizona, according to my sources.

And since July 9 happens to be a Saturday, there will be time to do some sweeping and mopping up before turning the key in the lock of the Irvine office doors for the very last time.

Sprouts Farmers Market hasn't announced when it plans to close the Henry's Farmers Market's corporate office - just that it will do so at some point. Additionally, a closing date hasn't been reported by any other publication to date, at least based on a search of the three major Internet search engines I did before writing my column.

All the Henry's headquarters employees remaining employed by Sprouts Farmers Market have either moved into their respective jobs at Henry's stores in Southern California or out in the field, or to the grocer's corporate headquarters offices (just a handful of workers) in Phoenix, as the consolidation process that began immediately after Sprouts' and its new majority-owner, private equity firm Apollo Global Management, got the green light from U.S. government regulators on April 18, 2011 that the deal to merge Henry's into Sprouts Farmers Market was approved and final, is nearly completed.

The Henry's corporate headquarters employees not remaining with Sprouts Farmers Market, which include most of the category managers/buyers and other support staff like finance, marketing, administration and human resources, have been laid off, the last remaining batch having completed their tenure in Irvine last week, according to my sources.

The Henry's Farmers Market Stores in Southern California will continue to fly the Henry's banner for most of this year. However, by mid-2012 or earlier all of those units should be re-branded to the Sprouts Farmers Market banner, my sources tell me.

Sprouts has already changed the name of the single Henry's store in Northern California to Sprouts Farmers Market. That store is in Elk Grove, near Sacramento. Sprouts has a store in nearby Roseville. The combining of the two farmers market-style grocery chains, which share a family history, gives Sprouts Farmers Market a little better brand recognition in the Sacramento area, where it will open a third store in Citrus Heights in early 2012 and is looking for numerous other locations.

Phoenix-based Sprouts is starting the re-branding process with Henry's nine Sun Harvest banner stores in Texas. Sean Boney, CEO of Sprouts Farmers Market said in April the Sun Harvest stores should all be flying the Sprouts banner before the end of this year.

The closing of the Henry's Farmers Market headquarters in Irvine will be the end of long era of the chain's being based in Southern California, where it was founded by members of the Boney family, who also are he founders of Sprouts Farmers Market, despite being bought and sold twice over the last couple decades.

For example, Henry's remained headquartered in Southern California through two corporate ownership changes - Wild Oats Markets Inc., which bought the chain from the Boney family - and Commerce, California-based Smart & Final, Inc.

Smart & Final, which is also owned by Apollo Global Management, bought Henry's Farmers Market from Whole Foods Market, Inc. in 2007. Whole Foods Market obtained Henry's in its 2007 acquisition of Wild Oats Markets. The hybrid conventional-natural foods farmers market style chain didn't fit Whole Foods' plans so it sold it to Smart & Final.

Apollo Global Management bought Henry's Farmers Market from Whole Foods Market in 2007 because it wanted a growth vehicle to combine with its Smart & Final chain.

Smart & Final, which operates mostly small-format non-membership warehouse stores, along with some Smart & Final Extra smaller-format style grocery stores, has historically relied on food-service customers - mom and pop grocers, restaurants and the like - for a significant percentage of sales.

However, Apollo's strategy since owning the chain has been to become more of a consumer-focused food and grocery retailer, which led to the start-up of the Extra format stores, the acquisition of Henry's in 2007, and last year's ill-fated launch of five SmartCo Foods stores in metropolitan Denver, Colorado which were closed a few months later. [See - December 11, 2010: Smart & Final's Not So Marvelous SmartCo Foods' Misadventure in Denver and here for details and analysis.]

(Smart & Final's future post Henry's becoming part of Sprouts Farmers Market is the topic of a follow-up column coming soon. Stay tuned.)

Meanwhile Sprouts Farmers Market opened its newest store today. The store is in Dublin, California, which is in the Easy Bay Area, no more than a stone's throw from Safeway Stores' corporate headquarters in Pleasanton.

The Dublin market is Sprouts' third store in Northern California. It also has stores in Sunnyvale (South Bay Area), Roseville and Elk Grove (the former Henry's unit).

It's also one of seven new stores Sprouts Farmers Market plans to open between April and December of this year. In addition to the Dublin store, five of the seven stores are in Southern California, in the following cities: Redondo Beach, Westlake Village, Costa Mesa, Lakewood and Granada Hills. The remaining store is in Carrollton, Texas.

Back in Northern California, which is Sprouts' newest market region and a major focus for the retailer because it plans to open numerous stores in the region over the next few years, the farmers market-style grocery chain is set to begin renovation and expansion in July of a former Co-op grocery store in Walnut Creek(East Bay Area), which it plans to open in early 2012, along with the store in Citrus Height mentioned earlier.

The Walnut Creek store was planned by Henry's prior to the deal. It fit Sprouts' Northern California plan well, so it decided earlier this year to move forward on the location.

- The Insider

Fresh & Easy Buzz's 'The Insider' on the Apollo/Sprouts/Henry's Deal + Related Stories

April 18, 2011: Sprouts Farmers Market Confirms Our April 14 Scoop: Sprouts' Acquisition-Merger of Henry's Farmers Market Final Today

April 14, 2011: Sprouts Farmers Market's Acquisition-Merger of Henry's Farmers Market to Be Final On Monday, April 18

~February 16, 2011: The Sprouts-Henry's Deal: New Website Reunites the Two Grocery Chains As 'One Farmers Market'

~February 16, 2011: Breaking: Smart & Final Enters Into Agreement to Sell Henry's to Sprouts Farmers Market

~January 5, 2011: 'The Insider' - Will 2011 See Sprouts Farmers Market Acquiring Henry's Farmers Market? 'The Insider' Says it Could Be in The Cards

~January 7, 2011: 'The Insider' - Sprouts Farmers Market-Henry's Farmers Market Deal Negotiations Continue; End-Game Could Be Near

~January 8, 2011: Smart & Final-Henry's Tell Employees About Deal Discussions With Sprouts Farmers Market; Confirming 'The Insider's' Reports

~January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April

~January 11, 2011: 'The Insider' - A 'New York State of Mind': 'The Insider' On Walmart, Apollo Global Management, Tesco's Fresh & Easy and the NRF in New York City

~January 24, 2011: 'The Insider' - End-Game Could Be Near in the Sprouts Farmers Market-Henry's Farmers Market Deal Talks

~January 30, 2011: 'The Insider' - The Sprouts & Henry's Deal Talks: Smart & Final is Looking Like A Retailer That Wants to Make A Deal

Also see:

~December 11, 2010: Smart & Final's Not So Marvelous SmartCo Foods' Misadventure in Denver

~November 17, 2010: Smart & Final Pulls the Plug On All Five SmartCo Foods Stores in Metro Denver After Being Open Less Than Five Months

Plus, read more about Sprouts Farmers Market, Henry's Farmers Market, Smart and Final and Apollo Management by clicking on the green links. Use the "older post" and "newer post links at the bottom of each linked page for additional pages/stories.

In Front of and Beyond the Release: Sunflower Farmers Market's New Website and its Journey to the Promised Land

We are the first publication we're aware of to have reported on April 28 that Colorado and Arizona-based Sunflower Farmers Market had just gone live with a major makeover of its website, enhancing its design, along with adding a number of new features to the site. We published our story just a short time after the website went live.

You can read our story here - April 28, 2011: Sunflower Farmers Market Goes 'Live' With New Website - First California Store Opens May 11.

A week later, on May 3, 2011, Sunflower Farmers Market and Grocery Shopping Network, the company that designed and maintains the website for the 33-store farmers market-style grocery chain, announced  the "newly enhanced [Sunflower Farmers Market] consumer website" in a press release. You can read the May 3 press release here.

Some of the enhanced features of the website Sunflower Farmers Market and Grocery Shopping Network touted in the press release are "interactive tools for shoppers that include a digital circular that allows shoppers to search by department or brand; a recipe center that includes wine parings; access to in-store specials and sales items; as well as the ability to create a master shopping list and a record of previous shopping lists."

In our April 28, 2011 story we point out some additional features Sunflower added in its website makeover.

The joint Sunflower Farmer Market-Grocery Shopping Network May 3 press release generated a considerable amount of ink in the press following its publication and distribution on May 3.

But as a reader of Fresh & Easy Buzz, you didn't have to wait for the press release to be issued on May 3 by Sunflower and Grocery Shopping Network in order to learn about the fast-growing grocery chain's website makeover. Instead, you learned about it a full week earlier, on April 28.

Sunflower on the move

Sunflower Farmers Market will open it first store in California, in Roseville near Sacramento, on Wednesday, May 11. It's second store in California - also in the north -  in the Northern Central Valley city of Modesto, is set for an October 2011 opening, according to the grocer.

Competing farmers market-style grocery chain Sprouts Farmers Market opened a store last month in Roseville, its second unit in Northern California. 100-store Sprouts, which now includes Henry's Farmers Market as part of its operations, opened its first store in Northern California, in Sunnyvale near San Jose, on June 10, 2010.

Sunflower Farmers Market is also close to closing on a location either in San Jose or Mountain View, California (or both), according to our sources, as we've previously reported. Sunflower hasn't publicly commented on its future plans in either of the two Bay Area cities. Mountain View is next door to Sunnyvale.

The grocer is also looking at additional locations throughout Northern California, from the Sacramento region and the Bay Area, to the Central Valley and south coast.

As we've also previously reported, Sunflower Farmers Market plans to open at least 5 -6 new stores each year over the next 4-5 years, which is similar to the number of new stores its been opening over the previous few years. This year and next, about half of the 5-6 new stores will be in Northern California, according to our sources.

In addition to Northern California, which Sunflower enters on May 11, the grocer is also entering another new market region soon. As we reported in our April 28 story, Sunflower Farmers Market says it plans to open its first store in Oklahoma City, Oklahoma in September 2011.

Sunflower currently has 33 stores in Colorado, Arizona, New Mexico, Nevada, Utah and Texas. At 7 a.m. on Wednesday of next week it adds California and store number 34 to the list.

We estimate Sunflower Farmers Market currently has annual sales in the $500-$600 million range. The privately-held chain isn't required to and doesn't regularly release its sales figures.

To the promised land

Sunflower Farmers Market is now headed by CEO Chris Sherrell, who took over as interim CEO on February 12, two days after co-founder and CEO Michael Gilliland resigned was arrested in Phoenix, Arizona on the charge of soliciting sex from a female undercover police officer, who was posing on a website as an underage (17-year-old) prostitute as part of a sting-type operation. Gilliland has been indicted on the charge and is set to stand trail in Phoenix August 9.

Sunflower Farmers Market's board of directors announced last week it's made Sherrell, who's 34-years- old, the chain's permanent CEO.

Sherrell has held numerous positions with Sunflower Farmers Market, including president and before that chief operating officer.

Sunflower's store-count has tripled over the last three years, during which time he served as president and was responsible for day-to-day operations of the chain, reporting to Mike Gilliland.

Since stepping in as CEO in early February, Sherrell's done a "yeoman-like" job of keeping Sunflower Farmers Market on track in the aftermath of Gilliand's arrest and resignation, along with overseeing the implementation of a number of new initiatives between then and now, including the launching of a redesigned Sunflower logo (at top), the website makeover, and on Wednesday, the opening of the chain's first store in California.

Sunflower Farmer's Market's board chairman, the other members of the board and investors, are counting on Sherrell, in Michael Gilliland's absence, to achieve what for sometime has been and remains the strategic sales goal they set for Sunflower - which is about $1 billion in sales by around 2015. The chain was founded by Gilliland and partners in 2002.

Gilliland, who according to Bennett Bertoli is now a "minor investor" in Sunflower Farmers Market, used to talk (some say brag) about the $1 billion in sales goal at various natural products industry conventions and in other venues.

Based on its current strategy of opening 5-6 new stores a year between now and at least 2015, which would nearly double its total store count, along with increasing sales at its existing stores, achieving that sales goal is doable for Sunflower Farmers Market, unless it runs into some very major hiccups.

But so far it's seemed to have weathered about the most severe hiccup that could happen to any business, it's CEO being arrested and set to go on trail for solicitation of an underage prostitute, although in fairness we emphasis that under our system of justice Gilliland is innocent until proven guilt or until he pleads guilty.

Having so far righted a potentially sinking ship and provided a steady hand at the helm since taking over as CEO in early February, 34-year-old Sherrell just might be the guy to take Sunflower Farmers Market to that $1 billion promised land, like Bennett Bertoli and the others believe he is.

Related Stories

December 9, 2010: Launching Sunflower Farmers Market Into Northern California is a 'Second Act' of Sorts For Founder-CEO Mike Gilliland

December 7, 2010: Sunflower Farmers Market Confirms Our Report It's Headed to Northern California; Roseville Store to Open April 2011

September 28, 2010: Grocer-Entrepreneur, Sunflower Farmers Market Founder & CEO Mike Gilliland Honored By Hometown Chamber of Commerce

September 22, 2010: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville

January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April

Sunflower Farmers Market Goes 'Live' With New Website - First California Store Opens May 11

Breaking Buzz

Boulder, Colorado-based Sunflower Farmers Market just went "live" with a fresh and redesigned website [view here] which is part of the farmers market-style grocery chain's new graphic design makeover.

The makeover began with a recently debuted new logo (at top), is now followed by the new website launched today, and will soon be seen in the form of redesigned labels on all the private brand products offered in the 33 Sunflower Farmers Market stores in Colorado, Arizona, New Mexico, Nevada and Utah, a process vice president of marketing and IT Steve Black says the grocer has about 50% completed.

The refreshed and redesigned Sunflower website offers a number of new or expanded features, including: added nutritional information, meal ideas, recipes and coupons; additional information about the grocer's offerings and activities; and a special focus section for Sunflower's "Silly Savings Club."

And in two weeks, the Sunflower Farmers Market brand and banner will fly for the very first time in the Golden State, when the Colorado-based grocer, which also has corporate offices in Arizona, opens its first store in the Northern California city of Roseville, near Sacramento, on Wednesday, May 11.

The store is in the Roseville Square shopping center, at 424 Roseville Square in the city.

The opening of the flagship store in Roseville - and Sunflower Farmers Market is brewing up a big grand opening for May 11 - will be followed by the opening in October 2011 of a second Sunflower market in Northern California - in Modesto. Modesto is in the Northern Central Valley, about a two hour drive from Roseville.

Tesco's Fresh & Easy Neighborhood Market opened its first store in Modesto on March 23. [See - March 23, 2011: Tesco Opens First Fresh & Easy Neighborhood Market Store in California's Northern Central Valley Today - in Modesto.

The Modesto Sunflower Farmers Market store will be in the city's popular and busy McHenry Village shopping center, at McHenry Avenue and Briggsmore Avenue, located in a vacant building currently undergoing renovation by the grocery chain.

We first reported, as part of our April-through-December 2010 Northern California Special Report, that Sunflower Farmers Market was planning to open a store in Modesto. The retailer confirmed our story earlier his year, which we reported in a piece on March 24, 2011: Sunflower Farmers Market is Headed to Modesto as Part of Northern California Push.

The 28,000 square-foot Sunflower Farmers Market store will be the anchor grocery market in the busy shopping center.

The building became available as the result of its most-recent tenant's (Philips Lighting and Home) decision to move from it to a smaller building in the shopping center, which it did this month. But it has a multi-decade history of housing grocery stores.

Prior to the lighting and home retailer moving into the building in 2002, it housed a New Deal supermarket, which closed in 2002. Prior the the New Deal store, a Lucky Supermarket operated in the building for many years.

The New Deal supermarket in McHenry Village was part of what at its peak was a chain - New Deal Markets - of about 18-stores, owned at the time by Canada-based Provigo's Market Wholesale Grocery Company, a then-major wholesale grocer in Northern California.

New Deal Markets was founded in 1933 in Modesto by Walter and Charles Heckendorf. The brothers named the chain after President Franklin Roosevelt's depression-era "New Deal" economic assistance and social reform program. The Hekendorf  family owned and operated New Deal Markets, which had stores in Modesto and a number of surrounding cities, for over five decades.

Canada's Provigo acquired New Deal Markets in the 1990's, shortly after it bought Market Wholesale Grocery Company, which at the time was one of the leading wholesale grocers in Northern California.

New Deal, along with the family-owned Petrini's chain in the San Francisco Bay Area, which Provigo also bought in the 1990's, were at the time Market Wholesale's top two customers, accounting for over half its sales. Provigo's Market Wholesale had "right of first purchase" options with both New Deal Markets and Petrini's, which it exercised when the owners of the chains decided to retire and sell.

Market Wholesale sold and closed what were the 19 Petrini's stores in the Bay Area, after completely changing what was once, under the Petrini's multi-decade ownership, a very successful upscale supermarket chain, with a specialty food and grocery-oriented focus.

In the 1990's, Provigo hired Trader Joe's founder Joe Coulombe, who had by then sold TJ's, to turn the Petrini's stores into a cloned version of the Trader Joe's format, which included cutting all the gondola shelving down to about four-feet high, along with offering a very limited assortment of mostly specialty, natural and organic food and grocery products in the stores.

The format flopped. Provigo then sold off as many of the Petrini's stores as it could, and closed the rest. "Trader Joe's II" was far from a successful second act for Coulombe.

Provigo ended up selling some of the New Deal stores and closed others. It then sold off what it could of the remaining assets.

It also sold the assets of Market Wholesale to United Grocers (UG), a cooperative wholesaler in the Pacific Northwest which at the time had a facility in Medford, Oregon near the border with Northern California. UG later merged with Southern California-based Unified Grocers.

New Deal Markets, Petrini's and Market Wholesale, all once-significant players and names in the grocery business in Northern California, no longer exist.

Interestingly, Tesco's Fresh & Easy stores in California, Nevada and Arizona  look very much like the Petrini's stores did after Joe Coulombe took over and changed the interior design to a bare bones, utilitarian look. The limited assortment product mix and merchandising model and style of the Fresh & Easy Neighborhood Market stores is also very similar to what the Trader Joe's founder did in the 1990's with the once full-service Petrini's supermarkets.

The similarities between Coulombe's 1990's Trader Joe's clone - Petrini's - and Tesco's Fresh & Easy aren't surprising though because Tesco borrow liberally from Trader Joe's physical design and overall format, which was created by Coulombe, for Fresh & Easy Neighborhood Market.

As we've reported since last year, Sunflower Farmers Market has been and is looking for numerous future store locations in Northern California. For example, according to our sources, the grocer is close to closing on a location in San Jose and another in nearby Mountain View. Both cities are in the famed Silicon Valley, in the Bay Area. Were told no deals have been signed yet though.

The grocer is also looking at additional locations throughout Northern California, from the Sacramento region and the Bay Area, to the valley and the coast.

When Sunflower Farmers Market opens the doors of its first farmers market-style food and grocery store in California, at 7 a.m. on May 11 in Roseville, its planning a number of special events to mark the day and kick off its arrival in the Golden State.

Among the grand opening events planned for May 11 include: Free food and drink samples offered at a variety of booths set up by Sunflower's vendors and suppliers; prize drawings and giveaways in the store throughout the day; and scores of grand opening specials. In addition, the first 50 shoppers at the opening will receive Sunflower Farmers Market reusable shopping bags filled with $50 worth of free groceries.

We first reported on Sunflower Farmers market's plans to enter Northern California in September, 2010, in this story: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville. In December 2010, Sunflower confirmed our September report. [See - December 7, 2010: Sunflower Farmers Market Confirms Our Report It's Headed to Northern California; Roseville Store to Open April 2011.]

Roseville has become a popular location for farmers market-style grocers. Sprouts Farmers Market, which now includes Henry's Farmers Market, having finalized it acquisition-merger of the competing chain on April 18, opened it second store in Northern California earlier this month -- in Roseville.

We broke the news on January 5, 2011 that representatives of Sprouts and Henry's Farmers Market were in talks to potentially do an acquisition-merger deal.

We also reported exclusively, before the two parties announced it, that such a deal would be done, along with reporting again exclusively on April 14 that the acquisition-merger would be final on April 18. On April 18 Sprouts Farmers Market announced just that. [Read our full January-to-April 2011 coverage of the Sprouts-Henry's deal and related issues here.]

In addition to California, Sunflower Farmers Market is entering another new state and market region this year. On April 18 the grocery chain announced it will open its first store in Oklahoma. The store will be at Northwest 63rd Street and North May Avenue in Oklahoma City. The 28,00 square-foot store is will open in September, according to Chris Sherrell, Sunflower's CEO. Sunflower operates stores in next door Texas.

As we've previously reported, Sunflower Farmers Market also has longer-range plans to open stores in Southern California. However, at present the farmers market-style grocery chain is focusing on the northern portion of the Golden State, starting with the Roseville store set to open May 11.

Related Stories

March 24, 2011: Sunflower Farmers Market is Headed to Modesto as Part of Northern California Push

December 9, 2010: Launching Sunflower Farmers Market Into Northern California is a 'Second Act' of Sorts For Founder-CEO Mike Gilliland

December 7, 2010: Sunflower Farmers Market Confirms Our Report It's Headed to Northern California; Roseville Store to Open April 2011

September 28, 2010: Grocer-Entrepreneur, Sunflower Farmers Market Founder & CEO Mike Gilliland Honored By Hometown Chamber of Commerce

September 22, 2010: Sunflower Makes Three: Sunflower Farmers Market's First Northern California Store Will Be in Roseville

January 10, 2011: Sprouts Farmers Market to Open Second Northern California Store in Roseville No Later Than Mid-April