The acquisition of a premium grocery chain in São Paulo still requires approval from Brazil’s competition regulator and remains subject to several closing conditions.
Cencosud, the Chilean group that is one of Latin America’s largest retailers, has agreed through its Brazilian arm to acquire 100% of a premium supermarket chain in São Paulo. Financial terms of the transaction were not disclosed.
The acquired chain operates 32 stores in and around São Paulo and is known for its fresh produce offering and carefully selected product range aimed at affluent consumers.
The chain generated more than 1 billion reais ($216 million) in sales in the 12 months to March. It is regarded as one of the most prominent players in São Paulo’s upscale grocery market, thanks to its strong service standards and loyal customer base.
The acquisition marks a clear shift in Cencosud’s strategy in Brazil. Earlier this year, the group sold a chain of cash-and-carry stores in the state of Minas Gerais and is using the proceeds to fund the purchase of a higher-margin asset. In effect, the company is moving away from the low-margin mass market and increasing its exposure to premium retail.
The move is notable given Cencosud’s weaker performance in Brazil. The company’s sales in the country declined sharply in the first quarter, while Brazil’s contribution to total group revenue fell to less than 10%. Rather than expanding its footprint, the retailer is focusing on improving profitability.
São Paulo’s upscale grocery sector continues to be dominated by Pão de Açúcar, the flagship banner of local retailer GPA. The acquired chain is considered one of its main competitors in the premium segment. For Cencosud, the deal offers a faster route into a niche market than building a premium brand from scratch.
The transaction depends not only on regulatory approval. The seller is currently undergoing a court-supervised debt restructuring following financial difficulties. According to local media reports, the company’s problems stemmed from rapid expansion during the pandemic and rising interest rates, which made its debt burden increasingly difficult to manage.
Source: The Rio Times
