2 Southland Businessmen to Buy Liquor Barn Chain

Two San Diego area businessmen on Wednesday said they have agreed to buy the 68-store Liquor Barn chain, which filed for bankruptcy protection last year.

The agreement to acquire the assets of the San Leandro, Calif.-based chain must still be approved by Liquor Barn’s creditors and the U.S. Bankruptcy Court in Oakland. No purchase price was disclosed.

The buyers, Lewis Silverberg, a San Diego attorney, and Harvey W. Rosen of Rancho Santa Fe, said in a statement that they were seeking an equity partner. Silverberg and Rosen were not available for further comment. Liquor Barn President John Thompson was also not available for comment.

Financial Problems

A former Safeway Stores subsidiary, Liquor Barn grew into a 104-store chain with $332 million in sales on a no-frills, discount-price strategy. But the chain’s financial troubles began after Safeway sold the chain in 1987 to London-based Majestic Wine, a small British wine retailer. Majestic hoped to boost sales by replacing Liquor Barn’s discount image with an upscale wine merchant approach. Employees were trained to advise customers on wine selection, and periodic wine tastings were planned.

But the plan backfired as old customers stayed away and the new, upscale shoppers never materialized. Industry analysts also said Majestic may have paid too much--an estimated $110 million--for a chain that never turned a profit.

Lost Control of Firm

Majestic reversed its policy but was unable to attract former customers. Last year, Majestic lost control of Liquor Barn to American and British bankers who acquired 66% of the chain.

A company turnaround would be both expensive and difficult, say industry observers.

“They must try and regain the image and identity they had originally,” said Max Kerstein, publisher of Beverage Bulletin. “They are going to have to compete against the heavyweights, like Price Club, that have taken the play away from them.”