Suning Buys 80% of Carrefour China; Aldi Opens Pilot Stores in Shanghai

1 Carrefour

By John Saulnier, FFB Editorial Director

The Boulogne-Billancourt, France-headquartered Carrefour Group is the latest Western company to cash in chips in East Asia’s biggest and perhaps most highly competitive retail food market. Others waving goodbye or dramatically scaling back in China include Tesco and Marks & Spencer of the United Kingdom, with Germany’s Metro AG reportedly keen on selling off a majority chunk of its PRC assets. Meanwhile, Walmart remains solidly in place with about 400 supermarkets open for business, and Aldi recently inaugurated two pilot outlets in Shanghai.

Failure to respond quickly enough to China’s e-commerce boom and ever increasing demand for rapid home delivery services from mega-millions of online shoppers are among the reasons cited by market watchers for sales declines in recent years. It was not until last May, through a limited number of newly opened Carrefour Le Marche stores in Shanghai, that digital innovations applied with the support of tech giant Tencent’s WeChat smart retail payment app were implemented in earnest.

Nanjing-based Suning.com Co., which is paying cash to buy an 80% stake in Carrefour’s China enterprise announced on June 23 for RMB 4.8 billion (approximately €620 million or $698 million), figures it has what it takes to reinvigorate Carrefour sales in the PRC. The French company’s receipts slipped 10% in the PRC last year to approximately €3.6 billion, with earnings of €66 million posted before interest, tax, depreciation and amortization.

2 Carrefour Le MarcheCarrefour Le Marche “smart stores” in Shanghai allow customers to directly scan product codes or price labels on their phones via the popular WeChat social media app, add it to the E-trolley, choose to pay online and quickly exit the cashier line. 

Running the nation’s third largest B2C e-commerce platform and operating a network of 8,881 stores in more than 700 cities, electronics retail giant Suning.com is allied with online commerce titan Alibaba. The arch rival of Tencent bought a 20% stake its business via a $4.2 billion investment four years ago. In 2017 Alibaba purchased a 36% stake in China’s No. 1 supermarket chain, the Sun Art Retail Group.

With a presence in the PRC dating back to 1995, Carrefour China operates 210 hypermarkets and 24 convenience stores in the country, which equates to approximately 2% of the 12,300 retail shops flying its iconic red, blue and white banner in more than 30 countries around the world. Globally, it serves 105 million customers and employs over 360,000 people.

The Carrefour Group will retain a 20% stake in the enterprise and hold two seats out of seven on Carrefour China’s Supervisory Board. At any time during a 90-day period following the second anniversary of the initial transaction, Carrefour will have the right to sell the remaining 20% to Suning.com at a price equal to 20% of the equity value determined at closing of sale of the 80% stake. 

According to analysis from Lydia Ling of Citigroup Inc., Suning’s valuation of Carrefour China at 0.2 times sales posted in 2018, in comparison with the industry average of 0.8 times, is a “significant discount to peers likely due to poor financial results.”

Bloomberg News quoted Hong Kong-based Pascal Martin of OC&C Strategy Consultants sizing up the recent trend in downsizing of positions and exposure among certain European and American players in the PRC market as follows:

“The big problem for Carrefour and other Western grocery chains is that they have major challenges in their home countries and can’t afford to grow in China. In China, if you want to grow in the groceries space, you have to continue to invest capital in less developed cities.”

Aldi Tests the Water

Meanwhile, German discount chain specialist Aldi patiently waited two years before opening two outlets on June 7 in Shanghai’s Jing’an and Minhang districts. The pilot stores, which offer 1,300 products across 15 categories including frozen, can be customized and adapted specifically for the China market. 

3 Aldi pilot store in shanghaiAmong frozen products sold at Aldi’s Shanghai pilot stores are ice creams imported from Australia as well as exclusive locally produced flavors such as black sesame and ginger with white chocolate.

According to company’s website, this allows Aldi to “trial and test innovative retail strategies that bring better grocery shopping experiences to the local community, then nimbly adjust them according to data and feedback from customers.”

Takashimaya Calling it Quits

Elsewhere in the China’s largest city and financial hub, Japanese department store chain Takashimaya has announced that it will close its flagship outlet in Shanghai on August 25 discontinue all operations in the PRC.
 
According to a June 23 report published in the Nikkei Asian Review, the upscale, 40,000-square-meter store “has been losing money, and the Osaka-based company deemed a turnaround difficult as private consumption has slowed in China amid the trade war with the US. The focus of overseas operations will now shift to Southeast Asia, a region Takashimaya sees as more promising.”

4. Tskashima shanghai2xJapanese department store giant Takashimya will shut down its money-losing flagship operation in Shanghai this August.

McCain Partners with ‘Don’t be Chicken’ Nuggets Startup McCain Partners with ‘Don’t be Chicken’ Nuggets Startup
Florenceville, New Brunswick, Canada-headquartered McCain Foods has announced a new strategic partnership and lead investment in NUGGS, a New York City-based startup enterprise that has developed a

Friendly Summer Meal Deals at Friendly’s and Applebee’s Friendly Summer Meal Deals at Friendly’s and Applebee’s
Friendly’s Restaurants in the United States has added several indulgent offerings to its summer menu, while Applebee’s Neighborhood Grill + Bar outlets are now featuring shrimp on its “All You Can...

Burger King Debuts Crispy Taco for Buck in United States Burger King Debuts Crispy Taco for Buck in United States
The Burger King restaurant chain began serving $1 Crispy Tacos across the USA on July 9. Available for a limited time, the product features a crispy, crunchy tortilla filled with seasoned beef,...

Bolton Now Owns 100% of Tri Marine Tuna Supply Operation Bolton Now Owns 100% of Tri Marine Tuna Supply Operation
The global tuna supply business of Bellevue, Washington-headquartered Tri Marine has been sold to its longtime partner, Bolton Group. Terms were not disclosed. Workers at Tri Marine’s SolTuna ...

United States DOE Salutes Lineage for Energy Efficiency United States DOE Salutes Lineage for Energy Efficiency
Lineage Logistics is a winner of the 2019 Better Practice Awards presented by the United States Department of Energy’s (DOE) Better Plants Program (Better Plants). The Better Plants designation is

Thai Union Opens Preschool for Migrant Workers’ Children Thai Union Opens Preschool for Migrant Workers’ Children
Thai Union Group, the Bangkok-headquartered frozen and canned seafood producer and marketer, officially inaugurated its fourth preschool in Samut Sakhon to help the children of migrant workers obtain

Froneri to Acquire Nestlé Ice Cream Business in Israel Froneri to Acquire Nestlé Ice Cream Business in Israel
Leeming Bar, North Yorkshire, England-headquartered Froneri, Europe’s second largest ice cream manufacturer and third biggest worldwide, will enter the Israeli market in earnest with the pending...

300 Jobs to Melt Away at Closing Unilever Ice Cream Plant 300 Jobs to Melt Away at Closing Unilever Ice Cream Plant
Unilever plans to cease production on August 30 its ice cream factory in Henderson, Nevada, USA, and close the facility for good before the end of the year. The move will eliminate approximately

Pork Processor Karro Food Group Purchases Young’s Seafood Pork Processor Karro Food Group Purchases Young’s Seafood
Karro Food Group, a major UK pork producer owned by CapVest Partners LLC for the past two years, has acquired Grimsby, England-based Young’s Seafood. The company has been on the block since...

Private Equity Firms Positively Give a Hoot for Hooters Private Equity Firms Positively Give a Hoot for Hooters
Hooters of America (HOA), the Atlanta, Georgia-headquartered fast casual restaurant operator that bills itself as “delightfully tacky yet unrefined,” has been acquired by Nord Bay Capital and

Performance Food Group to Acquire Reinhart Foodservice Performance Food Group to Acquire Reinhart Foodservice
Richmond, Virginia-based Performance Food Group (PFG) has entered into a definitive agreement to acquire Reinhart Foodservice from Reyes Holdings in a transaction valued at $2.0 billion, or

Umami Ice Cream Cool Treat to Eat in Summertime Japan Umami Ice Cream Cool Treat to Eat in Summertime Japan
The “fifth flavor” of umami has been enjoyed among epicureans in Japan and beyond since Dr. Kikuane Ikeda of Tokyo Imperial University identified glutamate as the key ingredient in Kombu kelp more...

Pumpkin Cheesecake Latest Vegan Treat from Central Foods Pumpkin Cheesecake Latest Vegan Treat from Central Foods
Collingtree, England-based frozen food distributor Central Foods has extended its free-from range with the launch of a vegan, gluten-free pumpkin cheesecake. It defrosts in just two hours in the

Orkla Buys CBD Specialty Fudge and Toffee Maker in UK Orkla Buys CBD Specialty Fudge and Toffee Maker in UK
Oslo, Norway-headquartered Orkla Food Ingredients has sealed a deal to acquire British fudge and toffee manufacturer Confection by Design Ltd (CBD) through its NIC Enterprises Limited subsidiary at

Lamb Weston to Purchase Ready Meals Pty in Australia Lamb Weston to Purchase Ready Meals Pty in Australia
Lamb Weston Holdings has entered into an agreement to acquire Ready Meals Pty Ltd, a frozen potato processor in Australia situated about 34 kilometers southeast of Melbourne, for an undisclosed

Amy’s Kitchen Breaks Ground for Plant in Upstate New York Amy’s Kitchen Breaks Ground for Plant in Upstate New York
Petaluma, California-headquartered Amy's Kitchen, a manufacturer of value-added organic frozen food products, has broken ground for construction of a 389,000-square-foot specialty frozen food plant

Contamination Concern Prompts Andouille Sausage Recall Contamination Concern Prompts Andouille Sausage Recall
Elon, North Carolina-based San Giuseppe Salami Co. by Giacomo is recalling approximately 832 pounds of ready-to-eat frozen Andouille Sausage products that may be contaminated with extraneous

ASDA Fires Up Oumph! Range Just in Time for BBQ Season ASDA Fires Up Oumph! Range Just in Time for BBQ Season
Mjölby, Sweden-headquartered Food for Progress is broadening its distribution of meat-free frozen products in the United Kingdom with the planned rollout of Pulled Oumph!, Kebab Spiced Strips,...

Lamb Weston Opens Expanded Operations in Oregon Lamb Weston Opens Expanded Operations in Oregon
Eagle, Idaho, USA-headquartered Lamb Weston Holdings, Inc. (NYSE: LW) joined with community and civic leaders on June 13 to celebrate the completed expansion of its operations in Hermiston, Oregon....

Yorica and Paramount 21 Win BFFF Product Year Top Honors Yorica and Paramount 21 Win BFFF Product Year Top Honors
Yorica UK Ltd scooped the British Frozen Food Federation’s (BFFF) Retail Product of the Year award for its double chocolate cookie frozen dessert, which is free from 14 allergens. Paramount 21 Ltd...

Frozens to Heat Up Summer Fancy Food Show in New York Frozens to Heat Up Summer Fancy Food Show in New York
New York City-based Babeth’s Feast will highlight its Beef Bourguignon and other French cuisine-inspired frozen entrees and ready meals at the Summer Fancy Food Show in Manhattan, which kicks off

Recall of Breakfast Wraps, Spinach and Raspberries in US Recall of Breakfast Wraps, Spinach and Raspberries in US
The US Department of Agriculture’s Food Safety and Inspection Service (FSIS) has announced that Denison, Texas-based Ruiz Foods Products is recalling approximately 246,514 pounds of frozen, not...

Kloosterboer Inaugurates State-of-Art Lelystad Coldstore Kloosterboer Inaugurates State-of-Art Lelystad Coldstore
IJmuiden, Netherlands-headquartered Kloosterboer officially opened its fully-automated, multi-user high-bay coldstore in Lelystad on June 13. Featuring 40,000 pallet positions, the facility has

New Forest Rolls Out Candy Floss Ice Cream for Summer Fun New Forest Rolls Out Candy Floss Ice Cream for Summer Fun
Endeavoring to bring back fond childhood memories of the fun fair in Britain, New Forest Ice Cream has launched a Candy Floss flavor. This pastel pink novelty joins the Lymington, Hampshire,

Central Foods Debuts Vegetarian, Gluten-free Cheesecake Central Foods Debuts Vegetarian, Gluten-free Cheesecake
British frozen food distributor Central Foods has launched a vegetarian and gluten-free Ruby Chocolate and Raspberry Cheesecake for the foodservice sector. The Menuserve offering features a dark