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H-E-B: King of the Valley

In 1905, H-E-B was founded by Florence Butt as the C.C. Butt Grocery Store in Kerrville, Texas. Her son Howard E. Butt took over the business in 1920, changing the name to H.E. Butt Grocery Company. In 1971, Howard passed the business to his son Charles, who remains CEO of the company.

PHOTO: Pamela Riemenschneider

Today, H-E-B offers a number of formats including foodie specialty store Central Market, Hispanic superstore Mi Tienda, discounter Joe V’s Smart Shop, and H-E-B Plus!, which sells food and general merchandise. In 2017, the grocery chain was voted Retailer of the Year by Supermarket News.

Headquartered in San Antonio, H-E-B currently operates 396 stores across Texas and Mexico, which raked in an estimated $24.6 billion in sales in 2017 (up nearly 7 percent from $23 billion in 2016).

Now the largest privately held employer in the Lone Star State, the company employs more than 100,000 workers, including many Valley residents. According to Metro Market Studies,
H-E-B owns the largest share of grocery turf in the Valley’s cities of Brownsville and McAllen.

The supermarket titan attracts customers by offering extremely affordable prices and high-quality food, much of which is locally sourced. The chain also offers a number of value-added services, including in-store cooking demonstrations, convenient meal kits, and curbside pickup in nearly 40 of its stores. The retailer has also partnered with on-demand delivery companies, Instacart and Shipt, which both serve the Valley.

“H-E-B is pretty much a monopoly—they don’t really have a competitor,” said Ruben Guadalupe Cavazos, manager of Ruben’s Grocery, a family-owned and operated independent grocery store in McAllen.

Cavazos said the chain can offer rock-bottom prices because the company buys direct. “It’s impossible for independents to compete with them on pricing because they’re a conglomerate.”

Pamela Mitchell, in sales for Empacadora GAB, Inc., a Laredo-based produce importer and shipper, echoes the sentiment.

“H-E-B is based right here in Texas, so they basically dominate the market,” she said. “Around here, you’ll find a Walmart and H-E-B across the street from each other on almost every street. But I have found them both to be very competitive and very good.”

While Walmart does hold a slice of the grocery pie in the Valley, the big box store struggles to contend with H-E-B.

“Walmart’s grocery stores are about half the size of an H-E-B, and they don’t really compete against H-E-B in pricing,” Cavazos said.

“With Walmart, it’s really more of a convenience,” he said. “You’re already there buying your clothing or your laundry detergent, so why not pick up some tomatoes and canned goods?”

This is an excerpt from the most recent Produce Blueprints quarterly journal. Click here to read the full supplement.