Danish Dagrofa invests 1.3 billion in the value chain
In the coming three years, Dagrofa, owned by NorgesGruppen (57,5%) and KFI (42,5%) will invest big in store openings, modernization of stores and automation. If they succeed the target is to improve bottom line with approximately 200 million DKK.
[i] Dagrofa has just published the group's new, three-year strategy called 'Gro'27 – growth our way’. The investments shall primarily be used for new stores, modernizing existing ones as well as upgrading IT, automation, and logistics.
In three years,’ time we will see if 1,3 billion is enough or if Rema 1000 and other players will be even stronger. Neither Salling nor Reitan will sit idly by and watch Dagrofa grow without resistance. Danish Coop however, has enough to survive and sell off stores at high speed to reduce excessively high costs.
«Who are Dagrofa's strongest competitors in Denmark?
"When it comes to competitors, the entire Danish grocery market are our competitors. Salling Group is the largest in Denmark. Coop, Rema and Lidl are also big, and with MENY, SPAR, Min Købmand and Let-Køb we compete with them all," says Morten Vestberg, communications director at Dagrofa in an e-mail to NHH.
Morten Vestberg confirms that Meny Danmark does not currently offer home delivery, but Dagrofa expects this to be an area that will grow in the coming years.
Meny – Denmark's strongest grocery brand in the future
"We are currently number two, and we have an ambition to be number one in this strategy period. When Danes enter our stores, they must have a fantastic shopping experience with a wide range of products that they cannot find anywhere else. First of all, there is a really good tailwind for Meny. We are gaining market share and we are growing the business very well. So it is, firstly, about continuing the good development. We have some areas that we would like to strengthen. It is to be the best in terms of fruit and vegetables, ecology, Danish goods, local presence, and local producers,” says CEO Tomas Pietrangeli, in a press release.
According to the CEO, the acquisition of Aarstiderne[ii], which was announced in October, is an important part of the branding strategy:
“This is why we bought Aarstiderne, because we see a really good match with the ambition we have in Meny. In addition, Danes spend less and less time cooking themselves from scratch. Therefore, we have to be even better at making high-quality food that is healthy and inspiring in either semi-prepared or ready-made or take-away solutions, which you also get in the supermarket. Our goal is that when customers are at home and want take-away, they should think Meny!”
Acquisition in sight
“Are there further acquisitions in the pipeline?
"We are always looking for new opportunities, and we also have companies in our sights, but it also requires that there are some who want to sell on the other side. So, acquisitions it is not necessary to succeed with our strategy. However, we are always looking for opportunities,” Pietrangeli concludes.
Objectives in Gro'27
- Increase market shares and grow faster than the others in retail and foodservice
- Operating earnings more than DKK 600 (426 in 2023) million in 2027
- Menu Denmark's strongest grocery brand
- Dagrofa Foodservice will win 2,000 new restaurant customers
- Perceived as the best wholesaler in terms of ecology, local and Danish quality goods
- Create more earnings for the independent merchants
- More stores and modernization of existing stores
- Delivering Denmark's most innovative and easy meal solutions
- Use the seasons stronger as commercial lever in both retail and foodservice
Source: Dagrofa, Retail News, NHH.
[i] EBITDA 426 million in 2023. Turnover in 2023 19,4 billion DKK.
[ii] Aarstiderne is a web-based delivery of ecologically based food packages for making dinners at home (Økologiske måltidskasser, frugt, grønt og dagligvarer.) and has approximately 45,000 customers and a turnover of just under NOK 600 million. Profitability is however low.