KUALA LUMPUR (Jan 5): A new premium grocery player will be entering the fray this month at the height of the Covid-19 pandemic as the demand for selected grocers continues to rise, several sources say.

“Qra, backed and led by one of the co-founders of Ben’s Independent Grocers (BiG) — David [Tseng] — is slated to open its doors this month,” one source said. “David was part of the core team that started BiG in 2011 and continued to lead the operations when BiG merged with Village Grocer in 2017 for a few years, where he held the chief operating officer position for the BiG and Village Grocer supermarkets. He is no longer with the group today.”

“The first branch of the new premium grocer will be in Kenny Hills and there are more branches planned in strategic locations around the Klang Valley vicinity in the coming year, with one location earmarked to be in Damansara Heights,” said a separate source familiar with the plans.

Going against the tide, business for selected grocery players had jumped in 2020 as people started to panic buy and stock up after a lockdown was imposed in several countries following the quick spread of Covid-19. 

Over in the UK, grocery sales hit near £11 billion in November as the return of the lockdown in England drove supermarket purchases of food and alcohol. 

Closer to home, Singapore’s supermarket operator Sheng Siong posted a net profit of S$31.8 million for the third quarter ended Sept 30, up 54% from a year earlier, on the back of strong revenue growth.

Revenue for the three months climbed 29% to S$327.3 million, “mainly due to elevated demand arising from the Covid-19 pandemic”, Sheng Siong said in its announcement to the Singapore Exchange.

“For the first half of 2020, consumers loading up their pantries and the Circuit Breaker (lockdown) restricting movements, thereby compelling working and cooking at home were the main reasons for the elevated demand. In 3Q20, demand was still strong even though the Circuit Breaker was lifted as consumers’ behaviour were still cautious and working from home continued to be encouraged,” the company added. 

At home, Retail Group Malaysia managing director Tan Hai Hsin told The Edge in September 2020: “A very interesting development in grocery trade took place after the Movement Control Order was imposed. The pandemic actually revived the businesses of many struggling grocery retailers that had physical stores.”

“Suddenly, some of these grocery operators were enjoying double-digit growth,” he added.

Also in September, a source told The Edge that for the April to June period, a grocer backed by a private equity fund saw its profit surge multiple times to RM22 million, on the back of RM350 million in sales.

Navis Capital Partners owns Village Grocer and BiG while Jaya Grocer is backed by CIMB Group Holdings Bhd and Mitsubishi Corp’s Asean Industrial Growth Fund.

There had also been rumblings last year of potential M&A activity in the grocery space. 

Bloomberg, citing people with knowledge of the matter, reported in October 2020 that the owners of Jaya Grocer were weighing selling a controlling stake in a deal that would value Malaysia’s biggest high-end supermarket chain at more than US$200 million.

The newswire reported that the Teng family, who founded the supermarket, and the Asean Industrial Growth Fund, are working with an adviser on the potential stake sale.

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