MARCH in relation to the company "Evrotorg" - the owner of the largest chains of retail stores in Belarus "Evroopt", "Hit!", "Magiya" and others. The retailer was accused of violating antitrust law- pressure on their suppliers, who, in turn, had to provide more high level prices in other retail chains. Taking advantage of the information occasion, we decided to summarize what is known today about perhaps the largest private non-public company in Belarus.
MART investigation: Euroopt did not allow competitors to trade cheaper /
The company was founded in 1993, started with small wholesale deliveries of food products. Your first retail store opened in 1997. At the beginning of June 2019, the network consisted of 822 stores. The company is the absolute market leader, the closest competitor (Hippo + Belmarket), operating in modern forms trade area (SFT) lags behind it by 5 times with a market share of 8.2%.
Retail store "Euroopt" on the street. Kazintsa, 2017. A photo: Google Maps/ Ivan Radziankou
Retail sales bring up to 90% of the turnover of the group of companies, which, in addition to grocery stores, includes StatusBank, E-delivery and Hypermall online stores, Magic household chemicals stores, stores consumer electronics Technoplus. In addition, the group has production assets (Dzerzhinsky meat processing plant and Barentsevo fish packaging plant). The full list of controlled companies can be viewed here. Eurotorg, StatusBank, Eurooptavto, CityBattle, E-Market, Retorsia-Invest, Varminexpo, Yuline, BelRosCompany, Dzerzhinsky Meat Processing Plant, Techno Media Trade , PackHouse, Discount Club, Cooperation, Barentsevo, EurooptAgro, ElitePartner
The size statutory fund"Evrotorg" - $ 120 million. The ultimate beneficiaries of the group are Vladimir Vasilko (49.75%), Sergey Litvin (48.75%), Alexander Litvin (1%), Andrey Zubkov (0.5%). The majority shareholders of the company reside abroad. In the early 2000s, they were charged in absentia in a criminal case on non-payment of customs duties, after which they were forced to emigrate. In Belarus, the company is run by Alexander Litvin (Chairman of the Board of Directors) and Andrei Zubkov ( CEO).
The company estimates the Belarusian food retail market at 22 billion rubles, its share in it is 19%. According to Belarusian legislation, the share of one network should not exceed 20% for a single administrative unit. However, exceptions have been made for some regions - for example, in the form of an experiment in the Orsha district.
Vitebsk region is not ready to completely transfer trade to Euroopt /
The company positively assesses the growth potential of modern forms of trade, according to its calculations, in Belarus this segment now occupies less than half of the market and is at the level of Poland and Russia 10 years ago. The share of Euroopt in SFT exceeded 40% last year.
Eurotorg is the unattainable leader in Belarus in food delivery via online orders - it controls about 98% of the market of approximately 235 million rubles (3.6 million orders in 2018). The company has a powerful warehouse infrastructure and its own fleet of 0.5 thousand vehicles.
Last year, the group received a license to provide postal services.
The revenue of Eurotorg for 2018 amounted to 4.5 billion rubles, net profit - 66 million, the company's assets amounted to 2.4 billion rubles.
The main revenue of the company is generated by supermarkets with a trading area of about 200 square meters (44%) with an average number of warehouse commodity items of 9.5 thousand units.
A few years ago, Eurotorg changed its development strategy, changing its priorities from buying and building its own stores and focusing on renting small retail space. This was due, among other things, to the company's high leverage: at the end of 2015, the debt burden ratio (debt/EBITDA) reached 5.6x. This caused concern to lenders and suppliers. However, in recent years, Eurotorg has reduced its debt to 2.9x and now considers the level of debt and the payment schedule for them until 2022 to be “comfortable”.
One of the stores in the Krupsky district, built specifically for Euroopt. Photo: evroopt.by
Debt reduction remains among the company's priorities. She is looking for a buyer for her banking asset, her affiliated company sold a stake in the Dobronom network, the group began to get rid of the retail facilities that it owns.
Eurotorg sold a large mall in Minsk to Korona /
Eurotorg is one of the most active borrowers and is constantly looking for new forms of financing. In 2017, it was the first among Belarusian firms to borrow on open international financial markets by issuing Eurobonds worth $350 million.
In 2018, Eurotorg tried to enter an IPO, being ready to list about 30% of the companies' shares on the stock exchange and expecting to raise up to $250 million for them. However, the demand from investors did not live up to expectations, and the company postponed its IPO plans until the situation improved.
Eurotorg is also trying to attract funding from the Russian market.
At the same time, Eurotorg's borrowing strategy is based on reducing debt in foreign currency. Belarusbank is now its largest national creditor (the total amount of loans is more than 677 million rubles).
Autoshop "Euroopt". Photo: evroopt.by
The company has the largest loyalty program in the country: 2.6 million customer cards have been issued, more than 100 partners owning more than 1.4 thousand units participate in the discount program. outlets. More than 2.3 million people have taken part in the Eurotorg lottery "Luck to boot" since the start.
Eurotorg has already become a symbol of the development of big capitalism in Belarus, in front of which small and medium business turns out to be powerless. From time to time, the company is attacked by SME lawyers and suppliers and is forced to come up with explanations of its positions.
Obviously, it is very difficult for small and medium-sized businesses to compete with international companies operating in local markets. One has only to remember that the Belmarket chain, which has been built in Belarus since 2007, could not stand the competitive race with Euroopt Russian investors and which eventually merged into Hippo. By the time of the sale, the network consisted of 71 stores, what can we say about smaller networks that own only a few points in narrow locations?
And it would be naive to expect that a major player will not use the so-called. "purchasing power" in relationships with suppliers - he directly points to this in his presentation materials, describing the investment attractiveness of the company. Another thing is when the use of this force exceeds the limits outlined by the national legislation on fair competition (we also recognize that it is a very young concept for Belarus). The question is rhetorical, and, unfortunately, MART this time could not clearly answer it.
We have built 4 graphs that show that commercial network Euroopt is an exponentially growing business. Growth began suddenly.
The history of Eurotorg, which owns the largest private retail chain in Belarus, can be divided into two stages. The first one looks like this.
- 1993 - the beginning of the company's work on the wholesale of food products.
- 1997 - opening of the first Euroopt store in the format of small wholesale trade for retail buyers.
- 1998-2008 - opening of 8 stores and the first hypermarket.
From 2009-2010 the second stage begins retail business Eurotorg is growing impressively fast.
Explosive network growth
Every year the number of Euroopt employees increases by 6-8 thousand
Annual revenue is approaching $2 billion.
Net profit is growing steadily
Source: Eurotorg LLC data, own calculations based on the current exchange rate In 2011, the ruble devalued. In dollar terms, Eurotorg's profit grew slightly. But then it grew rapidly - just like revenue.
Over the past five years, about $700 million has been invested in the development of the network, of which $500 million has come from loans.
At the end of last year, in terms of retail trade Eurotorg was second only to the state-owned Belkoopsoyuz, which has more than 9,000 retail facilities throughout the country. Judging by the charts and statements of the Eurotorg management, the company intends to be the number one retailer.
But neither the top management nor the founders of Eurotorg have yet revealed the most important mystery of the company: what exactly happened in 2009-2010, after which the company began to grow so rapidly?
Foundation date: 1993
CEO: Andrey Zubkov.
Owners: Sergey Litvin, Vladimir Vasilko.
Business model: Prices for some products in the Euroopt network are lower than in other retail chains.
Businesses that are associated with the Euroopt network and its owners: JLLC "Minsk Melkombinat", CJSC "Minsk Grape Wines Plant", Eurotorginvestbank, sausage factory, production of preserves, dumplings ("Economy Market") in Minsk and Minsk region, Eurotorg chain of stores in Russia, Fresh Market retail chain in Lithuania.
The Public Advisory Council under the Ministry of Antimonopoly Regulation and Trade (MART) at a meeting on June 13 did not support the proposal of the largest retailer in the country JLLC "Evrotorg" ( trademark Euroopt) on increasing the permitted market share for one legal entity. The majority of council members voted against the proposal.
Photo euroopt.by
Since 2014, the legislation on trade has a norm that limits the presence of one legal entity to 20% of the turnover in a particular region. When this share is reached or exceeded, it is prohibited to open new food retail facilities in the region. The management of "Evrotorg" this share to 35% or completely remove this norm.
“We believe that in the first place it is necessary to take care of the interests of the population. In this case, we can say that the 20 percent barrier today affects the interests of the population of small towns up to 50 thousand people and villages. These are 23 thousand villages and 168 cities. And today they live without a modern trading format. At the same time, prices in traditional shops in the villages are 30% higher than in the city. That is, people who earn less are forced to buy products more expensive.- said the general director of Eurotorg LLC Andrey Zubkov.
According to him, the barrier prevents the retailer from developing in small towns and rural areas.
Zubkov considers claims against Euroopt regarding its monopoly among other retail chains unfounded, since, in his opinion, about 20% of the turnover of all trade organizations - "this is not a monopoly yet".
“We do not want to stick out only our interests in this situation,” he declared. - In fact, we just plowed three times more than the rest, and acted five times faster. Nobody threw us anything from the sky - neither God, nor the state. Everything that we have done, we have done with our own hands, working every day in the sweat of our brow.
The CEO of the company said that its annual sales are about $2 billion. At the same time, large-scale marketing campaigns carried out in recent years have led to an increase in turnover by only 2-3%. Zubkov also confirmed that the profitability of Eurotorg, including the wholesale link, exceeds 25%.
According to the Minister of Antimonopoly Regulation and Trade Vladimir Koltovich, in a situation where the proposal to adjust the barrier comes only from the market leader and is not supported by either business unions or the relevant Association retail chains, the majority of whose members opposed this idea, its implementation will not lead to the development of competition, but, on the contrary, is capable of causing a monopoly on the part of one player with powerful market power.
“We are for the development of trade networks and infrastructure, but against monopolization. Our figures for the shares of retail chains are closed, but I can say that the only chain that has come close to the threshold of 20% is Evrotorg. Next comes the Korona network, which has an eight times smaller share. From this we can conclude that it is unlikely that today a change in this norm will contribute to an increase in the shares of other networks and increase competition in the market,”- says the head of MART.
In addition, Koltovich emphasized that the monopolization of the retail market carries risks for the banking sector, which is a retail creditor.
Koltovich recalled that within the framework of the presidential decree of September 22, 2017 "On the development of trade, Catering and consumer services” local councils of deputies have the right to decide that the 20 percent restriction on the territory of their region does not work.
According to the co-chairman of the Republican Confederation of Entrepreneurship Viktor Margelov, the business community opposes "dimensionless development of some subjects at the expense of others."
"We respect large chains and we believe that such enterprises should be in this country, the only question is measures and responsibility. But it is necessary to make such decisions taking into account an integral strategy for the development of trade, where there is a place for everyone,” he stressed.
Director of the Entrepreneurship Department of the Ministry of Economy Irina Babachenok said that in May the proposal of Eurotorg had already been considered by the public advisory council under the Ministry of Economy and was not supported.
However, for its part, the ministry proposes to leave the maximum share of the presence of one trading entity in Minsk and regional cities the same - 20%, and increase it to 25% for the regions in order to completely abandon such restrictions in favor of general norms antitrust laws.
Following the meeting, Zubkov said that the trading network intends to adhere to the norms of the current legislation, if its potential in the development of regions "not needed". “We are not going to fight either with society or with the state. If you don't need our potential - no, no. he concluded.
According to the trade register as of May 30, since 2014 the number of Euroopt stores in the country has more than quintupled to 626, or 3.5% of the total number of grocery stores. At the same time, only 96 of them (15.4%) are located on the territory of rural settlements. General trading area chain stores account for more than 12% of the area of all grocery stores. Euroopt is the leader in terms of retail turnover. In 2016, the share of the network's turnover exceeded the threshold value of 20% in 56 districts and cities, as well as three regions.
