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Coop Danmark Invests in Catering

Coop Danmark has bought 50% of the shares in Catering Denmark, a company focusing on meal bags and catering to companies.  According to the retailer, the move is motivated by the fact that the foodservice market has seen significantly higher growth than grocery stores in recent years. The retailer even mentions this as a reason for its sales decreases and lower operating results in 2016. Its net sales decreased from DKK45.25bn (EUR6.08bn) to DKK44.67bn (EUR6bn), also affected by several discount store closures, and EBIT fell from DKK632mn (EUR84.89mn) to DKK254mn (EUR34.12mn).

The retailer writes in its press release that Catering Danmark has a turnover of more than DKK200mn (EUR26.86mn). In addition to the acquisition, Coop Danmark is also to continue rolling out its convenience meal concept to all stores.


Marginal Gains From Foodservice Growth

It makes sense for Coop Danmark to enter the catering market since it displays such high growth rates. It’s certainly a good way for the retailer to diversify its portfolio. It is also in line with its own focus on convenience meals and could realize synergies in this area. For instance, the prepared meal bags of Catering Danmark’s service Kokkens Hverdagsmad could also be offered in Coop stores and through its Coop Mad grocery e-commerce platform.

What it doesn’t help with directly is to let Coop in on restaurant growth, which is a segment currently not supplied by Catering Danmark. The retailer could therefore very well be planning on challenging the leaders in this segment like Dagrofa, Chefs Culinar and Eurocater by turning its newly acquired company into a full-out HoReCa supplier. This would require significant investment in logistics, which may be what the previous outright owner Færch & Co had been lacking to date.

Topics: Coop Danmark (DK)