Newsletter No. 45 – Item 5
Newsletter No. 20, Item 3, discussed the increasing power of the supermarkets and their impact on the agricultural market place.
Newsletter No. 45 focused on just 3 of the major International supermarkets to illustrate how they are developing globally and remembering that they purchase globally from the most efficient producers capable of supplying the volumes they require. The “green revolution” has made this rapid growth possible enabling production of food at significantly reduced costs in real terms and available to increasing numbers of people.
Republishing in 2013, we will include the original information and updates as appropriate. At the time of rewriting, we are experiencing a meat scandal in Europe where companies and authtorites have found horse meat in place of beef in a number of processed products. The scale of the problem is still to be established, but is vast. It indicates how few companies today are in the supply chain. The manufacturers producing the processed products supply several brands and brands supply many different countries. It is the reason why if wishing to start producing ostrich, the scale of operation to supply volume needs understanding.
WalMart, founded in 1962, is the largest retailer in the world and a US owned corporation. Outside the United States, they wholly own companies in Argentina, Brazil, Canada, Puerto Rico, and the United Kingdom but recently sold their retail operations in South Korea and Germany. They have joint ventures in Japan, Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica. The 2012 map illutrates their growth into Africa. Their web site to-day state: “Today, Walmart operates more than 10,000 retail units under 69 banners in 27 countries. We employ 2.2 million associates around the world — 1.4 million in the U.S. alone.”
Carrefour, founded in 1959, is a French owned supermarket chain, described as the leader in Europe and 2nd worldwide. According to their web site “As of December 2012, the Carrefour Group operates 9,994 stores in 33 countries”.
News item published on 20th November, 2006.
“Bharti ties retail knot with Wal-Mart
In a scoop appearing in NDTV, telecom major Bharti has finally tied the retail knot with the world’s largest retailer, Wal-Mart.
Carrefour, the other contender was left in the lurch as a result of aggressive bidding by the former. To get around archaic Indian FDI rules, Bharti will take up the front-end retail operations while Wal-Mart will power the back-end supply chain. For retailing rights, Bharti will pay a royalty to Wal-Mart. As a strategy, an agreement is being sought with a large foreign real estate group for large investments in real estate that will be required.
The deal seems to have the blessings of the Government and industry minister Kamal Nath even promised more liberalized norms for foreign companies investing in the supply chain. Wal-Mart already sources goods worth $1.5 billion. The deal is likely to change the face of modern Indian retailing. The news has already paled into relative insignificance, Reliance’s recent Hyderabad launch”. Source: http://www.rvgonline.com/ (as at Feb 2007)
Tesco, founded in 1919, is the largest British supermarket chain. The first map below illustrates their international growth. In addition, they are on target to enter the United States in 2007.
A news item published on 6th October, 2006
Quote: “Tesco & Carrefour exchange stores
In an unusual but astute business move, Tesco and Carrefour have agreed to swap stores and their operations located in Slovakia and Taiwan.
As part of the deal, 11 Carrefour stores in the Czech Republic and 4 stores in Slovakia will be transferred to Tesco for Euro189mil. In exchange, Carrefour will receive 6 Tesco stores and 2 sites in Taiwan for Euro132mil.
The swap provides Tesco with the opportunity to grow its businesses in the highly competitive Czech and Slovak markets and exit the Taiwanese market where it is lacking critical size. Source: http://www.rvgonline.com/
This information further illustrates how we are operating in a marketplace that is always changing.
The statement in Item 3 (smallholder agriculture) referenced small producers diversifying. Many diversified into Ostrich production before development of markets, before identification and development of performance genetics and with no clear leadership. As can be seen, this move into diversification came at a time of dramatic change in the global agricultural marketplace.
Foot note as at March 2013. Wikipedia has a page that illustrates the global scale that today’s supermarkets now operate.