Grocery jewel: Albertsons buyers gain entry into upscale sector.

When Supervalu Inc. and two other companies bought separate pieces of Albertsons Inc. for $9.8 billion this month, the Eden Prairie, Minn., grocer scored it big with its acquisition of 311 Southern California supermarkets.

The real jewel, though, may be hidden inside the mammoth acquisition.

Supervalu is also getting 11 area Bristol Farms stores, the chain that Albertsons bought for an estimated $135 million just two years ago as part of its attempt to penetrate the region's growing high-end, specialty food market, now dominated by Monrovia-based Trader Joe's Co. Inc. and Austin, Texas-based Whole Foods Market Inc.

"Supervalu was very impressed with Bristol Farms and the management in place there," said Lloyd Greif, chief executive of Greif & Co., a Los Angeles-based investment bank specializing in mergers and acquisitions that helped broker the deal. "There's a lot of wealth here in L.A. and this is an extremely un-developed market here."

Supervalu owns and operates more than 1,500 stores across the country, from wholesale operations to organic stores to high-end retailers, including a chain similar to Bristol Farms called Farm Fresh that it operates in Virginia.

Haley Meyer, a spokeswoman for Supervalu, said the company has no plans to import the Farm Fresh brand into Southern California. "(Bristol Farms) is a strong brand with a strong presence in Southern California and we have no plans to change anything about that," she said.

One thing that may change, though: the speed at which Bristol Farms expands in the region. A year ago, Albertsons said it wanted to open as many as 10 of the high-end stores in 2005, but the expansion never materialized because of Albertsons' buyout talks.

Jason Whitmer, an analyst with FFN Midwest Securities Corp., which has a favorable rating of Supervalu's stock, said the company is well positioned to expand Bristol Farms faster.

"The Bristol Farms' portion of the deal was the most value-added portion, but it's still early and no strategy has been laid out yet," he said.

However, Greif said he thinks that Supervalu might open as many as 40 of the stores over the next two years, including converting some of its Albertsons locations to Bristol Farms--a strategy that Albertsons also planned to deploy.

"With the amount of Albertsons stores they have available, the areas they're in, and with the entrepreneurial nature of Supervalu, I wouldn't be surprised to see them go after expansion full speed," he said.