Pierre-Olivier Beckers, president and CEO of Delhaize Group: "We believe that local consumer needs are best met with the right assortment of products and services, of which an important potion is from local origin. This acquisition is also a great opportunity to enable consumers from other countries to discover products from Serbia, and the other way around. This ensures the optimal balance of local as well as international brands. In the coming months we will develop an assortment strategy that will definitely include a very important part of local goods".

Delhaize Group, international retail chain from Belgium, which is present at eleven countries, on three continents, closed the acquisition of Delta Maxi Group, after receiving all necessary approvals from authorities. Delhaize bought Delta Maxi for € 932,5 million, including € 318 million of net debts and other common corrections. 450 Delta Maxi’s stores and 7 distribution centers in Serbia, Bulgaria, Bosnia and Herzegovina, Montenegro and Albania will be incorporated in Delhaize Group’s business system. It is expected that Delta Maxi’s retail network in these countries will reach 500 stores by the end of this year. Delta Maxi’s business results are included in Delhaize Groups results from 01.08.2011, as part of Southeast Europe and Asia operating segment. At the end of quarter 1 in 2011. Delhaize Group’s retail network consisted of 2.816 stores. In 2010. Group’s revenue was € 20,8 milliard and the group’s net income was € 574 million. About closing the transaction, Pierre-Olivier Beckers, president and CEO of Delhaize Group speaks for Progressive magazine.

The crisis and difficult business conditions in Serbia have not prevented you from acquiring Delta Maxi. Why have you chosen this particular moment?

We have expressed our interest in the Southeast European market for a number of years now. Serbia and Southeast Europe have undoubtedly huge growth potential that fit into our strategic plans and we will do our best to achieve our targeted goals. Furthermore, they are a good fit with our existing businesses in Romania and Greece.

Delhaize Group has acquired Delta Maxi for EUR932.5 million, including net debts. Could you tell us which of the debts are the highest and when can they be settled?

When you buy a company, you also buy its obligations. This includes financial debt to banks and trade payables to suppliers. Our Group has a history of respecting payment terms and local practices and we will do exactly the same in Serbia.

Which changes will be introduced in Delta Maxi in regard to management, workforce, organisational structure, company name...? Who will lead Delhaize in Serbia?

We will build on the existing management teams and strengthen it further with members of the international team of Delhaize Group. These will bring their expertise and facilitate the alignment of Delta Maxi strategy with the choices made in the Delhaize Group strategy. As with other acquisitions that Delhaize Group has done in the past, we plan to preserve the local identity by building further on the strong brand name of the local banners. Now how that will be done is too early to tell. Over the next quarters we will develop a format and brand strategy for Delta Maxi, thereby capitalizing on the strong local brand of both groups and create synergies with some of our other successful brand names. Kostas Macheras Delhaize Group’s Executive Vice President and a member of the Executive Committee of Delhaize Group, will be in charge of Delhaize Group’s business in Southeastern Europe. David Vander Schueren will be the Chief Operating Officer responsible for Serbia and reporting to Kostas Macheras.

It has been announced that immediately upon closing the transaction Delhaize Group will start fully integrating operations of Delta Maxi, in line with strategic guidelines of the New Game Plan. What does it actually mean?

Our New Game Plan strategy aims at accelerating profitable growth. To achieve this, we have focused on three strategic priorities: growth, efficiency and sustainability. Growth will be achieved through a combination of network expansion and organic growth through combining a high quality assortment and very competitive prices, a combination we call value leadership Of particular importance for Delta Maxi is the fact that the New Game Plan includes ambitious targets for growth coming from high growth markets like Southeastern Europe. Efficiency improvements need to fund the growth initiatives while respecting our long standing history of sustainable operations. We will do exactly the same at Delta Maxi. Over the next couple of quarters, our Delta Maxi team will work on defining how to implement this Group strategy at Delta Maxi. Over time, we will align the operations of Delta Maxi group on the same best-in-class IT and other systems used throughout Delhaize Group.

Since you are a large international retail chain with a high number of suppliers, what will be the ratio of local and foreign goods in stores?

We believe that local consumer needs are best met with the right assortment of products and services, of which an important potion is from local origin. This acquisition is also a great opportunity to enable consumers from other countries to discover products from Serbia, and the other way around. This ensures the optimal balance of local as well as international brands. In the coming months we will develop an assortment strategy that will definitely include a very important part of local goods.

What can Serbian suppliers who so far have had contracts with Delta Maxi expect? Which conditions will they have to fulfill in order to continue cooperating with Delhaize as well?

We already had the opportunity to meet and establish first contacts with some of local suppliers at the Supply Fair in Belgrade in May 10. We believe that there are strong foundations to further develop a constructive relationship with suppliers on the Serbian market.

Will your arrival provide Serbian producers with an easier breakthrough to the markets where you are present? Which Serbian brands do you see on Delhaize shelves at other markets and which are those markets?

We believe there may be opportunities for Serbian suppliers to export their products since Delhaize Group will significantly increase its footprint in the Southeast of Europe. In the coming months we will further investigate the opportunities.

Will you continue developing the private brand concept and with which producers? Will you retain the existing categories, introduce any new ones and in which groups of products?

Private brands are an enabler to achieve value leadership, the combination of a quality assortment and competitive prices. As such, private brand assortments are an important tool in the New Game Plan. We see a lot of opportunity to grow private brand revenues in Serbia both through the continuation of Delta Maxi brands and leveraging the existing and very successful private brands of our other operating companies. Over the next several quarters we will define our concrete plans in this area.

What will Delhaize’s entry to Serbian market mean for Serbian consumers?

In line with its New Game Plan strategy, Delhaize Group will develop a completive pricing strategy and clear assortment and branding strategy to support further growth of Delta Maxi. The pricing strategy included in the NGP will serve as an example of how to define Delta Maxi’s’s price position compared to local competitors per market. We will also develop an assortment strategy that will address how we can use private brands and how to leverage our existing private brand ranges elsewhere in Europe. The combination of price and quality, or value leadership, will be a great win for Serbian consumers.

How do you see Serbian retail scene?

There exists already a vibrant competitive environment in Serbia. At the same time, we fully intend to further modernize and strengthen the existing banners of DMG.

What are your plans for Serbia? Are you planning further expansion of the retail network and how? Will you develop all the existing formats or open stores under Delhaize banners?

We want to grow the Delta Maxi business in all the countries where it is present now. However, over the next several quarters we will finalize our plans on how to achieve that growth. But we will live our DG Vision. We want to bring the best of Delhaize Group in a sustainable way.

Are you considering any other acquisition and what could it be?

As said earlier, we believe Southeastern Europe will be an important engine of growth for our Group. In order to fully capitalize on that opportunity, organic growth can be supplemented with more acquisitions. At this moment it is too early to comment on that. All our management focus now goes to the integration of Delta Maxi and turning that into a success.

Ana Filipovic, Marija Smit

PROGRESSIVE Serbia