Scandinavian retailers forge Baltic venture
they were to form a new joint venture in Latvia, Lithuania and
Estonia prior to those three countries joining the EU in May next
year.
Kesko Food of Finland and Sweden's ICA group are to merge their operations in the three Baltic countries, each taking 50 per cent of the combined business.
In a joint statement, the companies said that the venture met their shared desire to strengthen their operations in the Baltic states, the aim being to garner a market leading position and a 25 per cent market share over the next three years.
The companies said that they planned to increase the number of stores they operate in each of the three countries, offering a wider selection of products and more affordable prices. The joint venture is expected to bring synergy benefits in purchasing, store network development and logistics.
Kesko Food currently has a 23 per cent share of the Estonian market, while ICA is a major player in Latvia with a 17 per cent share. The two companies currently operate around 140 hypermarkets, supermarkets and discount stores in the Baltic region, with combined sales of around €550 million and an overall market share of 15 per cent.
Kesko Food owns six Citymarket supermarkets in Estonia, as well as Säästumarket, Estonia's biggest discounter chain with 45 stores, and a SuperNetto cash and carry outlet and a logistics centre in Tallinn. In Latvia, Kesko Food has five Citymarkets and 11 SuperNetto discount stores.
For its part, ICA has five RIMI supermarkets in Estonia and 33 in Latvia, as well as four RIMI hypermarkets and a logistics centre in the capital, Riga. In Lithuania, ICA has a total of 32 supermarkets and hypermarkets, most of which also operate under the RIMI logo, as well as a logistics centre in Vilnius.
The joint venture is not expected to begin operations until next summer, and will be headed by Antonio Soares (the current head of ICA Baltic) and Seppo Hämäläinen (vice president of Kesko Food's Baltic operations.
