While China continues to dominate emerging market newsflow, there remain strong opportunities in other countries in the space. One example is Dino Polska, the Polish grocery retail operator.
The Company was established in 1999 and focuses its business on “proximity” supermarkets with smaller formats. Stores have net sales areas of 200-500sqm each and offer around 5,000 products of which 90% is typically food and 98% are domestic brands.
We have owned the stock since January 2018 and in that time, it has appreciated some 220%. A recent call with management in October reiterated our investment case that despite Covid-19 impacting consumer sentiment in the short term, Dino Polska is confident of their store expansion plan, leaving it well positioned to capture the premiumisation of Polish households in the medium term.
Management highlighted that the grocery market remains fragmented with the top 5 players accounting for 52% market share (vs 60% in the UK and 73% in Germany) Discounters have been the market leaders, but Dino Polska is gaining share, from 1% in 2014 to 3% in 2019, as consumers prioritise proximity and convenience purchasing. Given their store roll out strategy, our estimates suggest Dino Polska’s market share could double in the next 5 years.
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