Private equity firm Apollo Global Management is exploring the sale of its Hispanic grocery chain, Heritage Grocers Group, for approximately $1.5 billion. The company, which owns chains like Cardenas Markets, El Rancho Supermercado, and Tony’s Fresh Market, generates over $2 billion in annual revenue and about $150 million in EBITDA. Apollo acquired Tony's and Cardenas in 2022, combining them, and then added El Rancho in 2023. The sale process is being handled with the assistance of investment bank UBS.
The motivation behind the sale stems from several headwinds impacting Heritage Grocers Group's performance. Weak consumer spending and uncertainty around tariffs led to ratings agencies downgrading the company's credit earlier this spring. A significant factor highlighted by sources familiar with the matter is the fear of immigration raids and mass deportations, which has made Heritage’s core Hispanic shoppers more cautious about their shopping habits, leading to reduced foot traffic and softened consumer demand.
This trend is not isolated to Heritage Grocers Group. Surveys by retail consultancy Kantar indicate that Hispanic consumers are visiting stores less frequently across various categories, with self-reported visits to mass retailers falling 14.7% year-on-year between April and June, compared to a 4.5% decline among non-Hispanic groups. Some major corporations, including Heineken and Walmart, have also noted similar pressures on sales in Hispanic-heavy areas, with Walmart's online sales seeing a 26% rise as Hispanic shoppers increasingly turn to online purchasing to avoid in-person interactions. This shift to online shopping, while benefiting companies with strong e-commerce platforms, is hurting businesses that lack an online presence.
