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What does the future hold for Casino in Africa?

By Baudelaire Mieu, Mathieu Galtier, Nelly Fualdes

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Posted on July 14, 2023 09:35

jad20230707-eco-grande-distribution-casino-1256×628-1688981070 © Unlike its competitors, Casino (pictured in Brazzaville) suffers from a lack of clear strategic positioning. Baudouin Mouanda for TAR
Unlike its competitors, Casino (pictured in Brazzaville) suffers from a lack of clear strategic positioning. Baudouin Mouanda for TAR

Casino supermarkets are protected from the French retailer’s financial woes because of their franchised status in Senegal, Côte d’Ivoire, and Tunisia – but that doesn’t mean they aren’t on edge.

Until about 10 years ago, the supermarket chain Casino in Dakar was a must for anyone wanting to buy European food products. It was also an expensive alternative to local shops and markets.

But in the last few years, Mercure International of Monaco (MIM), the group behind the Casino franchise, has fallen behind its rivals French retail company Auchan, and CFAO Group (which owns the Carrefour and Supeco brands), both of which have drastically transformed the Senegalese market in the last 30 years.

This was long before its parent company, Casino Group, suffered its current setbacks in France.

In 1995, Adnan Houdrouge, founder of MIM, bought the Score chain from Société Commerciale de L’ouest Africain (SCOA). After a complete renovation, the chain’s flagship store, located between the Point E and Grand-Dakar districts, was inaugurated under the Casino banner in May 2007.

Since then, while other shops have opened their doors, notably in the Corniche and Médina shopping centres and in the Saly-Mbour region, the brand has not managed to establish itself with the general public, despite having seven outlets, “which paradoxically kept it alive and running during the recent riots in Senegal, during which Carrefour, and especially Auchan, were particularly targeted,” according to doctoral geography student Malick Mboup, who has dedicated his research to mass retailing.

Strategic positioning

According to the young researcher, unlike Auchan – which has opted for an aggressive pricing policy to capture working-class customers – or CFAO – which has separated its market between more well-to-do Carrefour supermarkets and modest-earner-friendly Supeco Cash & Carry stores – Casino suffers from a lack of clear strategic positioning.

“Because of its geographical location, the Grand-Dakar shop is frequented by middle-class customers, while the Corniche and Médina shopping centres tend to attract the wealthier sort,” Mboup said.

For Casino chains, the “upmarket” positioning is more clearly asserted, whether in Congo-Brazzaville, where the franchise is also owned by MIM; Djibouti, where it is operated by the Coubèche group; or Tunisia, where the Mabrouk group is in charge.

Remote management

Casino also manages the Monoprix chain, which has a strong presence across the country with 87 outlets. While the urban brand is, in France, the group’s “golden goose” as described by Frédéric Pérodeau, 5.5 Retail’s founding director, declared negative working capital of 87m dinars (€26m) in 2022. The chain, which shares the market with its competitor Magasin général, has seen the average shopping basket of its customers fall sharply as a result of inflation.

Throughout the rest of the continent, the brand has only established itself – under the Monop’Ivoire banner – in Cocody, Côte d’Ivoire. The shop, which opened in 2021, was to be the first in a long series – never completed – while Leader Price quickly abandoned the country, recalled Julien Garcier, Managing Director of Sagaci Research, a specialist in market research for the retail sector.

The expert believes the Casino group’s brands manage their African markets from a greater distance than Auchan, which has its own operations in Senegal and Côte d’Ivoire, or Carrefour, which works through CFAO. “Auchan and CFAO have a very good understanding of consumers and do not hesitate to adapt formats to their needs,” he said.

Bao, the Cameroonian exception

The only exception in Africa is Cash & Carry Bao, which Casino operates directly – and with some success – in Cameroon. Established in Douala in 2018, this low-cost chain, specific to Cameroon, has since expanded and now has seven shops, including two franchised to local investors. Casino also has two supermarkets in Cameroon (in Douala and Yaoundé) under franchise with MIM.

Apart from Bao, the shops carrying the group’s brands, because of their franchised status, are not suffering financially from the situation of the Jean-Charles Nouari-led group. With around €7.6bn in debt, the group is expected to announce a recovery plan by 27 July.

At the moment, two proposals were under consideration: one, a firm one, put forward by billionaires Daniel Kretinsky (Editis) and Marc Ladreit de Lacharrière (Fimalac, former reference shareholder in Fitch Ratings), respectively the second and third shareholders in the Casino group. The other is backed by Tunisian businessman Moez-Alexandre Zouari, a major shareholder in Picard and a Franprix franchisee, Free founder Xavier Niel, and banker Matthieu Pigasse.

The recapitalisation plans do not envisage “any specific changes to current franchise partnerships”, stated Casino’s communications department in response to our questions. “Apart from the two Bao franchisees, the group currently has 12 partners in 14 territories in Africa and the Indian Ocean (including Reunion Island), with 145 outlets under the Géant, Casino supermarket, Casino Mandarine, Leader Price, Monoprix, Monop’, and Naturalia banners.”

Plan B

On the other hand, “those who own Casino group brands or sell their products in Africa need to ask themselves some questions and think about a plan B,” says Julien Garcier. “It’s never good for a brand when consumers lose confidence in its name or its products” while private labels, which are more accessible than the big brands, are particularly present in African markets.

This crisis is only temporary, because Auchan has a whole development plan for Africa, and won’t give up at the first hurdle.

“In the supermarket sector, many brands like Mammouth, Continent, and Champion have disappeared without leaving too many after-effects in the minds of consumers. For consumers, the brand has changed, but not their habits. Since private label products are essentially made by third parties, it’s a question of packaging,” according to Pérodeau, not ruling out the potential disappearance of the Casino or Géant brands anywhere.

For some players, such as MIM, which also owns the Système U franchise, the change of direction could be a foregone conclusion. In Côte d’Ivoire, Prosuma (which operates the supermarkets and of which MIM is a shareholder) has in its portfolio, in addition to Monop’, Casino and U, the Hayat hypermarket, Sococe and Cash Center supermarkets, and the Bonprix chain.

The Ivorian retail giant, owned by the three powerful Kassam, Fakhry, and Houdrouge families, is not yet ready to turn the page on the Casino adventure, according to a source close to management.

Launched in the country in 2016, the chain, which originally planned to open 10 Casino Mandarine stores in Abidjan over a two-year period, at a cost of €10m, finally has six in the Ivorian economic capital, mainly in the upmarket districts of Cocody and Marcory, which together account for half of the portfolio.

But Prosuma has also opened a hypermarket and two Casino supermarkets. To support its development, the retail giant has even set up a “Mandarine Academy” designed to train its staff to better master the brand.

Competitors in ambush

In Senegal, Mboup is convinced that “if there is one player with the capacity to take over its competitors, it is Auchan, which has already taken over Citydia.” This is despite the fact that the recent riots in the country have somewhat disrupted the company’s development plan, delaying the opening of the first shop in Ziguinchor. “This crisis is only temporary, because Auchan has a whole development plan for Africa, and won’t give up at the first hurdle,” according to the doctoral student.

Other players could also be interested: in addition to CFAO and Système U, which took over the 10 supermarkets of South African retailer Shoprite in Madagascar at the end of 2021, the French players include Intermarché, which announced in June 2022 that it would soon be opening a supermarket in Cameroon with the Arno and Duval groups, and which has already committed to taking over a quarter of the Casino supermarkets in France.

But Africa exists within the crosshairs of other groups, such as India’s Mahima, which already has a presence in Cameroon, as well as local players Dôvv (Cameroon) and Senchan, EDK, and Elydia (Senegal).

International disposals

Monoprix, whose name is unlikely to disappear from the French retail landscape regardless of the outcome of restructuring, seems less threatened. In Tunisia, the Mabrouk group carried out a capital increase of almost 11m dinars in the second quarter of 2023 (i.e., a quarter of the previous capital), in order to restructure financial charges and develop the chain to return to “an acceptable level of profitability within three years”, according to an internal source. However, the Mohamed Ali brothers, Ismaïl and Marouane Mabrouk, are said to be interested in selling the property assets of their shops, which analysts say are very attractive.

As one of Casino’s assets, Bao is in a more uncertain situation. In order to recoup cash, the group is selling off its successful international subsidiaries, particularly in Latin America. After selling its stake in the Assaí Atacadista chain in Brazil at the end of June, it is now looking to sell its 40.9% stake in Grupo Pão de Açúcar (GPA), which would signal its departure from the country.

If only to simplify its organisational chart, it would be in Casino’s interest to part company with Bao.

The group is also set to divest its assets in the Colombian group Exito, which operates in Colombia, Uruguay, and Argentina. Faced with these divestments, which represent thousands of shops and have generated EBITDA of €1.19bn and an operating profit of €677m in 2022, the five Bao shops held directly by the group do not carry as much of a burden. As a result, their fate has not been mentioned in Casino’s immediate future plans, the group confirms.

“If only to simplify its organisational structure, it would be in Casino’s interest to sell Bao,” said Garcier. Pérodeau, for his part, said: “If there were to be a sale, it would probably be to a group close to the current management, while keeping the brand and the projects underway, because they are working”.

“The group’s intention is to continue to develop this Cash & Carry model, which is particularly relevant on the continent,” confirmed Casino.

Meanwhile, franchise holders are keeping a low profile. “The group’s policy is not to communicate on these issues for the time being,” according to a source. “As long as the recapitalisation project and the disposal plan have not been finalised, there are too many uncertainties for them to provide a coherent opinion.

A not-so-simple transfer in the Indian Ocean 

In addition to Bao, from 2005 to 2019, Casino also held the retailer Vindémia, which owns the Jumbo and Score shops in the Indian Ocean region, including Madagascar. This asset was sold on 21 July 2019 to Groupe Bernard Hayot (GBH) for €219m. 

But the transaction, finalised in 2020, was the subject of legal action by ECP Africa Fund IV LLC and ECP Africa Fund IV A LLC, two funds managed by Emerging Capital Partners (ECP) and based in Mauritius. Unsuccessful bidders, they accused the French company of breaching a preference agreement, abruptly breaking off negotiations and acting in bad faith. 

 The case was not concluded until last June by the Paris Court of Appeal. The court dismissed the Mauritian funds’ claims, but ordered Casino to compensate them to the tune of €1.3m for the costs they incurred in the negotiation process, in accordance with the pact concluded between the two entities, as reported by Africa Business+.

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