Supermarkets tapping promise of the Western Balkans

The Western Balkans region is beginning to look like the new El Dorado for large supermarket chains, both Greek and multinational. A fast economic recovery from the 2008 crisis, a rise in the standards of living and a very low concentration of organized food retailers make the countries of the region ideal investment targets.

Veropoulos and Delhaize infiltrated the market a year ago and are continuing to expand their presence there, while Carrefour-Marinopoulos made its first foray a few months ago.

As far as Greece is concerned, these developments will have both positive and negative impacts. The downside is that such moves mean supermarket companies are investing less in Greece. The upside is that the development of supermarket chains outside the country will contribute to the viability of auxiliary businesses within it.

Veropoulos is evening out its losses in the domestic market with expansion in the Former Yugoslav Republic of Macedonia (FYROM) and Serbia, while also forging new synergies. According to a recent statement by the chairman of the group, Nikos Veropoulos, the decision to invest abroad has significantly reduced the negative impact of the crisis in Greece and has also ensured suppliers access to both the domestic and foreign markets.

Turnover for the Veropoulos group for the January-September 2011 period increased by 25 percent compared to 2010. Profits for its subsidiary in FYROM are expected to reach 9 million euros for the end of 2011 from 7.5 million in 2010, while its Serbian subsidiary is estimated to have generated profits of 2.9 million euros for 2011 compared to 1.9 million for the previous year. In FYROM, which Veropoulos entered in 2002, the Greek company now has a total of nine stores, with two more on the cards for the capital Skopje. In Serbia, the company operates five stores and is ready to open another in Belgrade.

According to Delhaize, Southeastern Europe is the engine for growth. The Belgian group entered the Greek market via Alfa-Beta Vassilopoulos and the Romanian market via Mega Image. Last year, meanwhile, it bought out Serbia?s Maxi, which has stores in Serbia, Bulgaria, Albania, Montenegro and Bosnia-Herzegovina. Presenting Delhaize?s plan for Southeastern Europe to a meeting of analysts in the United States a few days ago, Costas Macheras, CEO for the region, stressed the potential lies there and attributed it to positive growth rates and a low concentration in the supermarket sector.

The three biggest chains active in the region have a concentration of just 29 percent in Serbia and 19 percent in Romania, while even Greece is low compared to other countries in Western Europe, with the three largest chains here holding just 38 percent of the market. It is estimated that Greece?s Alfa-Beta Vassilopoulos will also benefit from the takeover of Serbia?s Maxi, mostly through synergies that will reduce operational costs.

Carrefour-Marinopoulos is also looking at infiltrating the Balkans, with a deal for a consortium signed in late November between the Greek and the French group inaugurating the first hypermarket in Tirana through franchising. The goal of the consortium is to open stores in Bosnia, Croatia, FYROM, Serbia, Slovenia and Montenegro.

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