H.Y. Louie sells three IGA stores to Overwaitea, closes wholesaling division

Two Vancouver stores and one Burnaby IGA will become Save-On-Foods stores

The Marketplace IGA on Kingsway in Burnaby is one of three grocery stores that the Overwaitea Food Group has bought

One of B.C.’s oldest and largest companies, H.Y. Louie Co. Ltd., is shrinking operations by closing its wholesale division and selling several Marketplace IGA stores to Jim Pattison Group’s Overwaitea Food Group (OFG).

OFG will fill that wholesale void.

H.Y. Louie will continue to operate 28 IGA stores and has plans to significantly increase the number of stores in its new two-store Fresh St. Market grocery store chain, H.Y. Louie’s general manager of marketing and brand development, Mark McCurdy, told Business in Vancouver January 29.

OFG has bought two IGA stores in Vancouver: at 3535 West 41st Avenue (near Dunbar Street) and at 2949 Main Street (at East 13th Avenue).

It has also purchased the store at 4469 Kingsway Avenue (at Willingdon Avenue) in Burnaby.

“Those stores will close for a brief period of time, be upgraded and branded and merchandised under the Save-On-Foods banner,” OFG president Darrell Jones told BIV.

Jones explained that OFG has entered an agreement to supply all of H.Y. Louie's IGA stores with dry goods,  which comprise about 40% of grocery store sales and include canned products, cereals and flour.

It may also deliver dry goods to H.Y. Louie’s former wholesale customers, which include about a dozen smaller stores, such as Clayton’s Heritage Market in Sechelt.

"Our customers have been notified that we're out of the wholesale business and it is up to them to decide what to do," McCurdy said.

OFG’s wholesale operation already supplies its 151 stores, including 131 that are branded Save-On-Foods.

“We just opened a new warehouse in Edmonton both for fresh and for [dry goods,]” Jones said.

“We have a good amount of capacity in Western Canada to distribute more groceries and do it more efficiently. So, when the opportunity came up to partner with the folks at H.Y. Louie and support them, we thought it would be a good fit.”

OFG currently only operates stores in B.C. and Alberta although Jones said that he plans to open new Save-On-Foods stores in Saskatchewan and Manitoba later this year.

McCurdy said that H.Y. Louie used to operate three shifts per day at its wholesale division, which is based at a warehouse on Production Way in Burnaby until July 22.

That dipped to two shifts per day and then recently had fallen to only be one shift per day.

H.Y. Louie was founded in 1903 when Hok Yat (H.Y.) Louie opened his first grocery store in Chinatown. Soon afterward, he launched a wholesale division.

BIV estimated H.Y. Louie’s revenue at $4.6 billion in 2013.

The Louie family, which continues to own the venture, also owns the London Drugs chain, which has its own wholesale supply system and is operated separately.

H.Y. Louie is no longer on BIV’s list of the largest 100 private companies in B.C. because the list is now ranked by number of employees  and H.Y. Louie did not provide that information.

H.Y. Louie owns the rights to the IGA brand in B.C. and has some franchisees. Three franchisees, however, have closed their stores in the past year.

H.Y. Louie had also operated a string of Cash & Carry stores. One of those stores closed last year. Another shut earlier this year. Now, there is only one Cash & Carry store, in Chilliwack.

gkorstrom@biv.com 

@GlenKorstrom