On Feb. 1 Lenta, a major Russian retail group listed in both Moscow and London, announced it completed the acquisition of online-retailer Utkonos from Severgroup.
Lenta will finance the 20 billion-ruble ($246 million) transaction by an additional issuance of its shares, which will be placed by closed subscription to Severgroup.
As reported previously, preemptive rights may be exercised by other shareholders to acquire additional shares, bringing Lenta’s total share issuance to 25.6 billion rubles ($345 million).
“The acquisition of Utkonos will enable Lenta to significantly expand its online market share and strengthen Lenta’s ability to compete in the Moscow online market, especially within the upper-middle and premium segments. As a result of the acquisition, Lenta will have a total online market share of approximately 11% in Moscow,” Lenta stated.
Controlled by Russian billionaire Alexey Mordashov, Severgroup is the owner of both Lenta (78%) and Utkonos (100%). Its other properties include Severstal, Nordgold, TalentTech, TUI AG and TUI Russia, to name a few.
A pioneer of Russian e-grocery, Utkonos claims more than 330,000 customers as of Sept. 2021, with deliveries in Moscow — where it claimed a 10% marketshare in 2020 — Kaluga, Tver, and Tula. The platform generated 14.3 billion in revenues in 2020 ($192 million at the average exchange rates of the year). In the first half of 2021, the company’s total sales increased by 11% year-on-year.
With more than 85,000 SKUs — the largest fresh food assortment in Russia — Utkonos operates four dark stores in Moscow and Moscow region, as well as a fleet of 920 vehicles. It employs some 5,200 people.
The company is particularly well positioned in the Russian capital, especially within the upper-middle and premium segments. However, Utkonos is not number one on the Russia e-grocery market.
E-grocery market boom
This market, which amounted to 135 billion rubles ($1.86 billion) in 2020 according to Statista, has been growing fast since the beginning of the pandemic. X5 Retail Group reported the largest food e-sales volume at roughly 22 billion rubles ($303 million), followed by SberMarket (20 billion rubles or $276 million).
Another study by AliExpress Russia and the Center for Expertise and Integrated Models (CEIM) puts Russia’s e-grocery market volume at some 300 billion rubles (around $4.1 billion) in 2021. Russian e-grocery could jump to 500-600 billion rubles by 2023 and to 1 trillion rubles ($13.6 billion at the current exchange rate) by 2025.
