Price war and small margins
Both distributors, worth 59 billion euro in purchases (48.5 billion euro for Casino alone), “have decided to join forces internationally to boost their competitiveness relative to major suppliers of national brand food products”, a press release states. They will be “combining their expertise and the synergies that exist between their geographic locations and store formats”.
Both groups will also “coordinate purchasing negotiations for their private-label brands in Europe, with the aim of ultimately pooling around 50% of volumes”. The Goal is to create a huge European platform for private labels “to open up additional markets to existing suppliers and also improve the product offering available to consumers.”
A never-ending price war and ever-smaller margins in the European distribution sector have forced both companies into this alliance. Other companies have already bundled their forces internationally as well, like Auchan – Metro and E.Leclerc and Rewe (which reinstated their previously annulled alliance). Back in August, Intermarché, Colruyt, Conad and Coop announced their agreement to become Europe’s largest purchase alliance, Alidis.
