Optimism grows in the local food industry after supermarket deals
Food companies in Greece are feeling more optimistic after the recent developments in the local supermarket sector, believing the debts they are owed will be paid sooner and also that sales will start to recover. Both in public and in private, food companies make no secret of their relief from the buyout of Veropoulos by Metro AEBE, which controls the MyMarket chain, and the deal between Sklavenitis and Marinopoulos regarding the joint management of the latter’s 33 hypermarkets and its restructuring.
On the other hand, there is concern about the sector’s excessive concentration, which will empower the few retailers left to demand additional price discounts from suppliers.
Veropoulos’s new owner has already started to pay its debts, resulting in the shelves of Veropoulos supermarkets filling up with products again and the stores drawing their old clientele back. Metro has already paid back 42 million euros, or more than half of Veropoulos’s debts to its suppliers, estimated at 60-70 million.
Even more optimism has been generated by the restructuring moves at the Marinopoulos group. This week the group begins a series of meetings with its suppliers to present them with the new plan to overhaul the company and to make new commercial deals. The group’s main advantage is the agreement it has just reached with Greece’s four systemic banks concerning its financing and the restructuring of its existing loans. That deal and the money flow from its agreement with Sklavenitis are likely to strengthen Marinopoulos’s liquidity by over 200 million euros.
That amount may appear rather small in view of the group’s obligations to its suppliers (the aforementioned figure amounts to some 25-30 percent), but it will have a multiplying effect: When it starts paying its dues, shelves will start to fill up again and customers will start returning. The hypermarket deal with Sklavenitis also makes suppliers optimistic as for the first time in recent years they are seeing decisive moves by the Marinopoulos family that could help Greece’s biggest food retailing group to rebound.
The return of consumers to the two major chains is expected to drive the sales of the local food industry higher. For instance, many people in the dairy industry attribute the drop in sales to the fact that their products had remained off the Marinopoulos and Veropoulos shelves for a long period of time because the mounting debts had resulted in a halt in supplies.
It is that very phenomenon that is cited by dairy producers as the explanation for a bigger drop in turnover than the rest of the retail market in the second half of 2015.
