Agrokor Agrokor Creditors Agree to New Ownership Model
Agrokor, the biggest food-to-retail conglomerate in the Balkans, intends to restructure to a holding company fully owned by its creditors. As state-appointed Extraordinary Commissioner Ante Ramljak presented to the Provisional Credit Council the new entity would incorporate only profitable business units, while inherited creditor claims would be satisfied in part by equity shares. The final proposal will still have to be accepted by two-thirds of the company’s creditors.
As proceedings over the last months revealed, 5,700 creditors filed 12,000 claims with a value of EUR7.4bn, of which so far EUR5.5bn were recognised by Agrokor’s Extraordinary Administration.
Agrokor Group, including its Slovenian subsidiary Mercator, employs around 130,000 staff in Croatia, Slovenia, Bosnia, Serbia and Montenegro.
Sebastian Rennack (Senior Retail Analyst)
Opinion End of a Hegemony
In its five-year outlook Agrokor emphasises the need to optimise two thirds of its medium-sized Konzum outlets in Croatia. This would mainly affect Konzum Maxi stores, which size-wise are operating similar sales areas to Lidl. From the top-ranked Croatian grocery banners Lidl – according to LZ Retailytics data – showed the highest like-for-like growth of 3.8% in 2016 while all Konzum banners posted red figures for the same period. Has Agrokor been losing share of wallet against Schwarz Group’s discount banner in Croatia?
Lidl so far is the only discount operator present in Croatia. As in other countries, it positions itself as an inexpensive high-quality shopping choice for the modern, slightly more affluent but thrifty consumer. At the same time the retailer masterfully walks the thin line between broadcasting its international competence and demonstrating local orientation. For Croatia this tightrope walk is fulfilled by introducing the ‘Okusi zavičaja’ (‘Homemade Tastes’) brand and the ‘Winemakers of Croatia’ assortment, among others.
After rising to second place in our 2016 rankings, passing local supermarket chain Plodine, we now see the German discounter steadily closing the gap to the market leader. Thanks to Lidl's estimated growth of almost 9% in 2017, and to a lower extent Kaufland hypermarkets' development, Schwarz Group will become Croatian market leader in 2017. With market leader Agrokor’s financial manoeuvrability limited and proposed new ownership structure in all probability meaning more complicated decision processes than under a single owner, we believe that Lidl will continue to capitalise on Konzum’s phase of reinvention and increase its lead in the forecasted period.