Applebaum set to return to grocery industry

  • Article by: ANN MERRILL , Star Tribune
  • Updated: January 7, 1997 - 10:00 PM

Sid Applebaum, the veteran Twin Cities grocer, is finalizing a deal to purchase all four Twin Cities Holiday Plus food stores from Bloomington-based Holiday Cos., according to people in the grocery industry.

The purchase, coming just weeks after Applebaum's last official day as president of Rainbow Foods, could signal increased competition in the discount food niche dominated by Rainbow and Cub Foods.

"Sid Applebaum is well-regarded, well-respected," said Nancy Christensen, executive director of the St. Paul-based Minnesota Grocers Association. "No matter what he chooses to do, he'll be a formidable competitor."

Neither Applebaum nor Ron Erickson, Holiday Cos. chairman, returned phone calls from the Star Tribune Monday or Tuesday.

Those familiar with the deal say Applebaum is buying only the grocery operation from Holiday, not its adjacent pet or sporting goods stores. Holiday recently expanded its sporting goods holdings, buying five Gander Mountain stores in July and all six Burger Brothers Outdoor Outfitters in June 1995.

Applebaum's interest in the Holiday stores comes as little surprise to those in the industry. When his departure from Rainbow was announced in September, Applebaum, then 72, made it clear he wasn't hungry for retirement. "I intend to do more," he said. "I'm pursuing several options."

Applebaum, known more for his merchandising skill than his financial resources, is expected to use outside financing for the Holiday acquisition.

In 1983, he paired with the late D.B. Reinhart to start Rainbow Foods from the ashes of the Applebaum chain.

Assessments vary on how big an impact Applebaum and Holiday could have on the local market. It's possible that the four-store chain represents little more than a nuisance to the big gunners Cub and Rainbow, which operate 50-some stores in the metro area, with about 60 percent of the grocery market.

Yet some retailers and suppliers predict that if Applebaum's unknown financial backers have deep pockets, Holiday could become more of a player in the $3.6 billion-a-year Twin Cities market, spiffing up its stores and spending more on advertising. It's also possible that Applebaum could entice former colleagues from Rainbow to work with him at Holiday.

"Sid is an excellent grocer. Only time will tell how it all shakes out," said Jon Vranicar, owner of GJ's Super Valu, a 13-year-old, five-store group. "The big guys keep battling each other. We focus on the neighborhood niche, with service and convenience," but the high level of competition makes it tough on independents, he said. "We gotta dance faster."

Like Cub and Rainbow, Holiday operates "big box" stores, typically in the 60,000-square-foot range. The warehouse-style stores stress low prices. Holiday's four food stores are in Bloomington, Burnsville, Fridley and Plymouth, with estimated annual sales of $100 million. The stores are under the umbrella of family-owned Holiday Cos., a holding company that has wholesale and retail food and gasoline operations, including dozens of Holiday gasoline stations and convenience stores around the metro area. Its annual revenues are estimated at $1.7 billion.

Few know the grocery industry as well as Applebaum. He grew up in the business, starting with bundling soap and bagging rice at the corner stand that his father, Oscar, owned in downtown St. Paul. By the time the Applebaum's Food Markets Inc. business was sold to National Tea Co. in 1979 for $18.8 million, it included about 30 metro-area stores and one in Duluth.

Four years later, Applebaum was a leader in creating Rainbow Foods. When National Tea floundered, D.B. Reinhart of Gateway Foods stepped in to buy the operation. Gateway was a food wholesaler based in La Crosse, Wis., and Reinhart was looking for strong retail customers. He put Applebaum in charge of the Twin Cities retail operation and agreed to back Applebaum's idea to launch Rainbow by converting some of the old Applebaum stores.

Rainbow was bought by Scrivner Inc. of Oklahoma in 1989. Rainbow's current owner, Oklahoma-based Fleming Companies Inc., took over in 1994.

Asked why Applebaum would want to take on a new venture at this point, one former colleague said, "He wants to die in the food industry." Fleming did not renew Applebaum's contract, which expired in December 1996. The company inherited the contract when it took ownership of Rainbow in 1994.

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