Jerónimo Martins Launches Colombia Operations
Jerónimo Martins , Portugal's largest retailer, has opened its first five Colombian stores in the city of Pereira. Signalling the retailer's commitment to diversification beyond maturing European markets, it aims to have approximately 40 stores under its Ara banner by the end of 2013. As the country's political risk profile continues to improve, we expect Colombia to rapidly evolve into one of Latin America's most promising consumer markets. Presenting ample opportunity for Jerónimo moving forward, the launch of its Latin America operations reflect a wider pattern of European retailers entering developing markets, prompted by a subdued consumer outlook and slowing domestic growth at home.
Jerónimo Martins, owner of the Pingo Doce supermarket chain in Portugal, has seen impressive growth with its Poland based discount chain Biedronka which currently accounts for 61% of sales. However, with EUR400mn to be invested in Colombia over the next two years, increasing diversification beyond Europe is likely to help to counter difficulties in Portugal (where sales only increased 0.3% last year) and ease reliance on its Polish operations. Not historically present beyond Europe, the retailer's choice of Colombia as a future location of growth points to the potential offered by the country, in line with our positive outlook for its mass grocery retail sector .
Key Colombia Views
Mass grocery retail local currency sales for 2013 = +8.34%; forecast compound annual growth rate (CAGR) to 2017 = +9.92%
2013 per capita food consumption local currency = +6.61%; forecast CAGR to 2017 = +8.12%.
Spending power to increase; income per capita is forecast to grow from roughly US$7,100 in 2007 to about US$11,200 by 2017 (strong growth along with anticipated population growth).
Population of approximately 50mn leaves considerable room for mass grocery retail penetration, unlike slowing developed European markets.
|Opportunities In Both|
|Colombia and Poland Total Mass Grocery Retail Sales (US$bn) - Historic & Forecast|