French Alliances : Carrefour and Système U/ Auchan and Casino
In the end, Système U chose Carrefour. On April 25, shortly after the announcement of an alliance between Auchan and Casino, Carrefour and Système U disclosed plans to conclude ‘a five-year cooperation that will focus on the negotiation of the purchase of the biggest national and international brands’. Yet, at the start of the month, Système U was still considering an alliance with Casino and Auchan.
The Carrefour/Système U alliance is due to be operational from autumn 2018, in preparation for the 2019 annual negotiations. According to the joint communication sent by the two companies, ‘the scope of this agreement, intended to strengthen the competitiveness of both brands, will expand, including non-market purchases.’ On the other hand, trade and promotional policies will remain separate.
But what is perhaps more interesting, is that both Carrefour and Système U announced at the same time their desire to begin a partnership with argicultural sectors as well as aims to strengthen their commitment to producers regarding fair payment to farmers.
The consolidation of the Carrefour/ Système U alliance will make it possible for a block leader to emerge in France. Including the sales of Louis Delhaize (Cora, Supermarket Match), already associated with Carrefour, the three partners together account for 34.3% market share on the PGC (Respectively, 20.4% for Carrefour, 10.6% for U, 3.3% for L. Delhaize (Kantar Worldpanel data)).
A market share of approx. 35% on food is also likely to obtain the best negotiations and deals when facing competitors such as the global giants of consumer goods like Coca-Cola, Unilever and Danone. However, the most important aim is to restore margins diminished by the continual price war. Of course, this is not the first time such alliances have taken place, and most certainly won’t be the last, as these alliances tend to come and go regularly within the market.