Couche-Tard And Walmart Ramp Up South African Expansion Plans

Circle K is expanding to its 25th market with the opening of its first store in South Africa (Photo ... [+] by Karol Serewis/SOPA Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Getty Images

Couche-Tard is set to open its first store in South Africa this week, after announcing a master license agreement with Millat Convenience in late September. The first store will open in Gauteng, operated by the Millat Group subsidiary under the Circle K name. The Circle K brand - acquired by Canada's Alimentation Couche-Tard in 2003 - offers fresh food, hot and cold beverages and other convenience products, alongside gas stations and electric vehicle charging.

It is one of the largest convenience retail brands in the United States with over 7,000 outlets - second only to c-store behemoth 7Eleven. Circle K vice president Pat Fitzpatrick said that South Africa presents Circle K with "compelling opportunities for growth" as the brand continues to expand in global markets, marking its 25th market entry. "Millat Group understands the South African consumer, has a strong track record of building retail, hospitality, and food service brands, and has exciting plans for the Circle K brand," he said.

With Circle K as its global brand, Couche-Tard's network consists of nearly 14,100 locations across 24 countries - including 1,900 franchise locations in Latin America, Africa, the Middle East, Asia and Oceania. "This deal shows Millat's strength in bringing willing international brands into South Africa to invest, creating job opportunities and economic growth," said Millat Group CEO Hamza Farooqui. "Bringing Circle K to South Africa aligns with our concept of introducing customer-centric brands, experiences, and compelling food service offerings."

Johannesburg-based Millat Group is a privately-owned, multi-national family business that has established a portfolio of assets across the hospitality and retail sectors. South Africa's convenience retail sector is dominated by offerings at gas station forecourts, including Engen Quick Shop, Shell Select, BP Express, Sasol Delight and Astron Energy Fresh Stop.

The sector is also increasingly being attacked by the larger retail brands, with Shoprite's OK Express, Pick n Pay Express and Woolworths Food stores also looking at opportunities at forecourts across the country.

Walmart To Buy Remaining Massmart Shares

However, Couche-Trad will no doubt be aware that the South African market has proven tough for U.S. giant Walmart WMT[4] , which acquired local retailer Massmart over a decade ago. On October 21, a proposal to delist and be taken over entirely by Walmart was approved by the required majority of Massmart shareholders.

Walmart is moving ahead with plans to fully acquire Makro owner Massmart in South Africa.

Walmart

Walmart will now move to acquire the 47% of the business it does not own in an attempt to reignite the ailing retailer, which has struggled amid a weakening South African economy, an increasingly competitive market and the impact of the pandemic.

During the first quarter of its 2023 fiscal year, which ended July 17, Alimentation Couche-Tard Inc. expanded its domestic network by building 30 new sites and also has 55 sites currently under construction, according to President and CEO Brian Hannasch. It announced net earnings of £872.4 million for the first quarter and Hannasch said of the results: "In the face of continued and historic inflationary conditions and high fuel prices, we are pleased to report strong results this quarter, especially in convenience where we had healthy same stores sales in our U.S. market. We also continued to generate robust fuel margins across all of our platforms."

During the quarter, the Laval-based retailer also completed its acquisition of Wilsons Gas Stops and Go!

Stores after signing a binding agreement to acquire the Wilsons network, which operates in all four Atlantic Canada provinces, in mid-2021.

The finalized deal included 179 corporate-owned and operated convenience retail and fuel locations, 147 dealer locations, and a marine fuel terminal in Halifax, Nova Scotia.

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