Top executives of food retailing companies from some 45 countries are to converge on Boston this week for the 40th annual Executive Congress of CIES: The Food Business Forum. CIES is an international trade association based in Paris.
The theme of this year's congress is "The Next Frontiers," a motif that is apropos not just because the meeting is to be in the United States for the first time in several years, but because much of the business of food retailing involves crossing international frontiers.
One quick way to gauge the scope of the internationalization of the food trade around the globe is to take a look at the chart on Page 21 that lists the Top 20 worldwide food retailers. The chart is toploaded with huge companies such as Metro Group, Switzerland; Tenglemann, Germany; Spar International, the Netherlands, and several others that derive most of their sales revenues from countries other than those in which they are based. Companies on the list generate at least substantial portions of their sales revenues from food, although many international companies tend to be far more horizontally integrated than U.S. companies.
Etienne P. Laurent, CIES president and chief executive officer, told SN in a preconference interview that the nations of Europe increasingly are casting their nets afar to capture additional business because of new restrictions on store construction in several nations. Restrictions on store development have long been a feature of the European business landscape, but the legal limitations have grown in the last couple of years, Etienne told SN. The interview is on Page 19. There are also several other pages of news articles about international food retailing in this issue.
How do U.S. companies fit into the worldwide retailing blueprint? The first U.S. company to make an appearance on the world list is Kroger Co., ninth largest despite its plump top line of more than $25 billion. Three other U.S. companies are on the list: Safeway-Vons, American Stores Co. and Wal-Mart Stores' supercenters. Except for the last, none of the four generate revenues from operations outside the United States.
Most likely, U.S. food retailers will continue along the lower-risk route of growing domestically -- and growing chiefly by acquisition -- for quite some time before they take a look at any significant amount of international expansion.
But that day will certainly come, as the experience of the membership clubs in the United States foretells: After club stores saturated the U.S. market, club executives didn't hesitate to export the concept to other nations. Indeed, it's probably Wal-Mart's ownership of Sam's Club that first drove it to dip a toe into the waters of international expansion -- and the waters weren't too bad.
And the time will come when the food retailing business in the United States becomes controlled by so few players that companies will be inspired to look outside the domestic market. That time is being speeded by the acquisition activities of European companies in the United States. (Actually, there are fewer European players in the United States now than there were a few years ago, but those present are successful and growing.)
So, while the "next frontiers" notion may seem remote to many food retailers on these shores, it is right at hand for most of the world, and internationalization may become an important aspect of business here sooner than many would predict.
