Shifting fortunes in ex-Yugo retail

By bne IntelliNews February 26, 2013

Guy Norton in Zagreb -

Until fairly recently, the supermarket scene in the former Yugoslavia was almost boringly predictable, with each of the successor states having their own national champions, supplemented by a smattering of smaller domestic outfits and larger foreign players that had established small-scale operations in the region.

That all changed in March 2011 when Belgian retailer Delhaize shelled out a whopping €932.5m to acquire the supermarket chain Delta Maxi from Serbia's leading tycoon Miroslav Miskovic. The deal saw Delhaize take control of a total of 450 stores, some 350 of them in Serbia, but also including operations in Bulgaria, Bosnia-Herzegovina, Montenegro and Albania. At a stroke, Delhaize became the leading foreign food retailer in Southeast Europe. With the Delta Maxi purchase complementing the group's existing supermarket chains in Greece and Romania, it now had more than 800 stores in the region.

Commenting on the investment rationale behind the transaction, Delhaize's president Pierre-Olivier Beckers, said: "The southeast of Europe continues to be a very promising region in terms of economic and consumer spending growth, both supporting the roll-out of modern retailing," adding that in the coming years he expected Delta Maxi's markets would likely support growth of 5-7% a year, more than double the levels predicted for Western Europe.


At almost a billion euros, the Delhaize acquisition was not only one of the largest ever instances of foreign direct investment in Serbia, but also served to illustrate the scope for consolidation in the supermarket sector in the former Yugoslavia.

Delhaize's purchase instantly changed the rules of the game in the food retail markets in Serbia, with the Belgian retailer threatening to undermine its rival's market shares through a combination of expanding Delta Maxi's network by around a hundred stores by 2015 and implementing aggressive price-cutting on hundreds of basic grocery items. As a result, some cash-strapped firms such as Slovenia's Tus Holding immediately threw in the towel in Serbia, with Tus selling off all six of its Serbian stores in April 2011 to supermarket chain Idea, owned by Croatian food and retailing group Agrokor.

Delhaize's entry into Serbia has also peeked the interest of other major European retailers in the country. In mid-February, for example, it was announced that France's Carrefour, the second biggest grocery chain in the world, had signed a lease on a 10,000-square-metre plot in a new shopping centre in Belgrade, which should be opened by 2015. The planned store will be Carrefour's first in Serbia and follows in the wake of the opening of a hypermarket in Macedonia last October, which is operated by Greece's Marinopoulos Group under a franchisee arrangement.

Meanwhile, Croatia's Agrokor, which has been beefing up its operations in Serbia to cope with the challenge posed by the entry of Delhaize to the country, has also been looking, so far unsuccessfully, to further extend its overseas operations with the potential acquisition of Slovenia's leading food retailer, Mercator.

To date, Mercator has been put up for sale no less than nine times and Agrokor has made no less than five attempts to acquire its regional rival. Last year, it seemed that it was poised to finally land its prized catch, having offered €220 per share for a 53.18% stake in Mercator, which a consortium of shareholders, including Slovenian brewer Pivovarno Lasko and a group of Slovenian and foreign banks operating in the country, had put up for sale. Having offered much more money than a number of private equity funds, Agrokor seemed poised to finally achieve its long-cherished goal of acquiring Mercator, only to see its bid scuppered by fierce resistance from Mercator's then management and local politicians who claimed that a takeover of the firm by Agrokor would harm the interests of local agricultural producers for whom Mercator was the principal buyer of their goods.

A year on and Agrokor is once again favourite to buy Mercator, which has once again been put up for sale by the same consortium. This time around though, Agrokor's chances of acquiring Mercator look far rosier.

As the Slovenian economy has once again sunk into recession, local feeling against foreign takeovers of household names such as Mercator has considerably mellowed. Furthermore, Mercator's faltering financial fortunes means that Agrokor is likely to be able to snap up its prey at a much lower price than in 2012. According to Slovenian press reports, Agrokor has offered between €115 and €130 per share this time around, much lower than in 2012 but still apparently topping the bids submitted by private equity firms such as including KKR, Mid Europa, CVC Capital Partners, Bain Capital and Advent International. The lower purchase price reflects last year's downturn in Mercator's business, with the firm reporting an unaudited loss of €104m in 2012 on the back of falling sales and growing write-offs. The loss has sparked fierce criticisms of the former Mercator management team led by chief executive officer Ziga Debeljak, who resigned last year after falling foul of the firm's shareholders who objected to his resistance to the sale of the firm.

Current Mercator chief Toni Balazic has accused Debeljak of not implementing a focused strategy when it comes to overseas expansion, claiming that in countries such as Albania and Bulgaria, Mercator was misadvised by foreign consultants and as a result has ended up paying over the odds to acquire what have proved to be underperforming assets. The current management has announced that Mercator is to withdraw from Albania and Bulgaria, while it will seek to turn around the financial fortunes of its struggling Croatian subsidiary of Getro, which it bought in 2009.

Additionally, at home Mercator has been criticized for spending much-needed cash reserves on buying land plots in Slovenia at heightened valuations and then failing to build stores on them. The net result is that Agrokor now looks odds on to finally acquire its rival and firmly establish itself as the leading locally owned supermarket group in the former Yugoslavia.

Related Articles

Macedonia kept on hold as Balkans edges towards EU goal

Clare Nuttall in Bucharest -   Macedonia’s EU accession progress remains stalled amid the country’s worst political crisis in 14 years, while most countries in the Southeast Europe region have ... more

Austria's Erste rides CEE recovery to swing to profit in Jan-Sep

bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more

CEE leaders call for Nato troops to help deter Russian aggression

bne IntelliNews -   Central and Eastern European leaders blasted Russian "aggression" on November 4 and called for Nato to boost its presence in the region. The joint statement, issued at an ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.