Russian supermarket operator Magnit buys premium-segment competitor Azbuka Vkusa

Russian supermarket operator Magnit is consolidating its position in the sector by acquiring premium-segment competitor Azbuka Vkusa. 

Magnit, whose largest shareholder is the Russian investment firm Marathon, has been transforming itself into a conglomerate in recent years. It is currently purchasing a controlling stake in Azbuka Vkusa. 

That will add a high-end segment to Magnit's already thriving business, covering a wide range of the food retail market. Azbuka Vkusa is similar to premium grocers Whole Foods in the U.S. and Waitrose in the UK. 

"The acquisition of Azbuka Vkusa gives us an opportunity to substantially strengthen our retail positions in Moscow and enter into a principally new segment for us, premium retail, which will enable us to cover practically all consumer objectives in food retail," CEO Yevgeny Sluchevsky said in a statement.

Magnit already has a vast presence, with more than 31,000 stores in Russia and nearby Uzbekistan. It opened a total of 2,350 stores last year, according to a company earnings report. 

The company had strong growth last year. Net retail sales grew by 20.3% compared with the previous year, driven by a combination of 8.8% selling space growth and 11.2% like-for-like sales growth, the company said in its report. 

Meanwhile, the online segment skyrocketed, with e-commerce gross merchandise value (GMV), the total value of merchandise sold, more than doubling last year to RUB 100.6 billion (USD 1.23 billion).

In 2023, Magnit completed its acquisition of the Kazan Express marketplace and has since transitioned it into its self-branded Magnit Market, which has more than 4,600 pick-up points across 275 cities.

The current acquisition of Azbuka Vkusa is awaiting Russian government approval and the fulfillment of some terms agreed upon by the parties, according to a press release. 

The deal worth is estimated at 35–40 billion rubles ($428–490 million), the RBC news outlet reported Wednesday, citing three sources familiar with the talks.

"The Azbuka Vkusa brand is well known for its wide range of high-quality and exclusive products, as well as its high level of service and loyal customer base," Sluchevsky said. 

"A strong point is Azbuka Vkusa's ready-made food," Sluchevsky emphasized. "This expertise will help improve and expand the offerings of Magnit Group stores in a segment that is currently the fastest growing in retail."

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