CUPERTINO, CA-Owners of one of the oldest names in the California grocery business, the 122-year-old Oakville Grocery Co. in the Napa Valley wine country, think food shopping ought to be fun and to that end have introduced one of the state’s newest specialty grocery stores. The 13,000-sf Oakville Grocery & Marketplace opened its first store here in mid-September and plans about two dozen of the new format locations over the next several years. The idea behind the budding new chain is to “bring the best-prepared foods in the industry to the consumer in an urban farmer’s market setting, along with great wine, great cheese, fresh produce, and primarily organic and natural products,” says Ciaran Byrne, CEO and president of the Oakville Grocery Co.

Byrne resists comparing his company’s new format to any of the existing specialty and gourmet grocery chains, saying that Oakville Grocery & Marketplace may resemble other stores in some respects, but it will not be exactly like any of them. The Marketplace stores will carry “unique products that tie to the local community as much as possible,” Byrne says, explaining that “In California, we have micro brands being born every day in local communities, and we want to create a marketplace that allows these entrepreneurs to come to us to deliver their products.” The Oakville CEO says the Marketplace shopping experience is designed to be “like a treasure hunt, where shoppers can see products they’ve never seen before,” including “special culinary treats, staples and one-of-a-kind packaged foods.”

Byrne’s Northern California-based company already operates three Oakville Grocery Co. stores in addition to the new Marketplace format in Cupertino. Whereas the Oakville Grocery Co. locations are high-end specialty gourmet food and wine stores of about 2,000 sf to 3,000 sf, the Marketplace stores will be 10,000 sf to 12,000 sf. Byrne explains that the newer, larger format stores take the authenticity of the original Oakville Grocery Co. and surround it with micro brands and “value-priced” products. “We think we can open 25 Marketplaces in the next three to five years without leaving California to do it, and maybe without even leaving Northern California,” he says.

Byrne was one of about a dozen San Francisco investors who bought the Oakville Grocery Co. in March 2003 from Napa Valley winery operator Joseph Phelps with the idea of building a chain of gourmet food and wine stores. Their Marketplace format is the latest entry in a growing number of specialty and gourmet grocery retailers in California, where Boise, ID-based Albertsons supermarkets recently acquired the Carson, CA-based 11-store Bristol Farms chain as its entry into the specialty grocery world. Other specialty chains growing in the state include Austin, TX–based publicly held Whole Foods, which has been reporting record sales and profits of late; and Monrovia, CA-based Trader Joe’s, which is privately held.

“There has been an explosion of the last decade of all kinds of specialty retail concepts, including the gourmet foods and other higher-end shopping experiences,” says Bob Toomey, an analyst with RBC Dain Rauscher in Seattle. Toomey and others who follow supermarket companies see the specialty grocery stores capturing a growing portion of the higher-end grocery business while Wal-Mart, warehouse club stores and other low-price specialists eat into the lower end.

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