Almost a year ago, it seemed like there was only one story in the international retail sector - the fight for ownership of CBD, Brazil's largest retailer.

The cast list in the battle for CBD - also known by its trading name of Grupo Pao de Acucar - included the Brazilian government, one of the country's most prominent business tycoons and French retail rivals Carrefour and Casino.

CBD shareholders Casino and businessman Abilio Diniz fell out after the entrepreneur attempted to merge the retailer with Carrefour's unit in Brazil without telling his fellow investor. Casino fought against the plan, pointing to a deal it had with Diniz to become the largest shareholder in CBD and, ultimately, succeeded in blocking the merger.

Casino said then its contract with Diniz gave it the right to become the sole controlling shareholder in CBD and, after fast forwarding 11 months, we can see that deal has, in the end, been followed. On Friday, Casino CEO Jean-Charles Naouri said he was "very happy and proud" the retailer was "taking this new role in a magnificent company". 

Diniz, who will remain as chairman of CBD, struck a different, reflective tone. "In recent months, I was accused of breaking contracts and of not complying with what was agreed. I am here to prove that those accusations were false," he said, although he said he would continue to work "for the good of the company".

An incident-free transition, then, for a retailer that last year was embroiled in one of the most bitter shareholder spats seen in the sector in recent years. And Casino now has full control of a retailer that is the largest in one of the world's more attractive emerging retail markets.

Carrefour will be hoping for a smooth transition for its new CEO, Georges Plassat, who made his first public speech last week at the retailer's AGM. The world's second-largest retailer faces a number of challenges. Plassat takes the helm at a company still struggling to revitalise its domestic business and suffering from having significant operations elsewhere in the eurozone.

Plassat, however, seems aware of the task ahead of him. "Have no illusions, there will be headwinds ... I cannot commit to short-term promises. It will take three years to relaunch the engine," Plassat told investors. 

Since Plassat took the job in May, Carrefour has announced the sale of its stake in its Greek venture and acquired a retailer in Argentina. The Carrefour chief says Latin America and China will be central to its international strategy and further disposals or market exits elsewhere could be in the offing, with Turkey or Poland countries the retailer could look to leave.

Analysts acknowledge it is far too early to come to firm conclusions about Carrefour's prospects under Plassat but one told just-food last week the "initial smoke signals are encouraging".

Carrefour has had problems in Spain and last week it emerged that fellow French industry giant Danone was also suffering from the country's economic woes. The Activia manufacturer issued a profit warning, citing a weak performance in southern Europe - particularly Spain - and higher commodity costs.

Danone CFO Pierre-Andre Terrisse pointed to the high unemployment and low consumer confidence in Spain but said the company would continue to "fight" for market share by investing heavily in brand support, price, and innovation. "This will obviously have a cost and this is the main reason for the adjustment of margins," he said.

The comments from Danone highlight perhaps the conundrum facing food manufacturers in tough Western markets. With sales volumes under pressure - and still falling in some markets - should a supplier spend money to chase sales and protect its market share or hold firm, maintain prices and protect margins?

Until next time...

Dean Best
Managing Editor
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