Podemos’s proposal to create public supermarkets to try to stop the rise in prices of the shopping cart is giving a lot to talk about, but It is not new in Spain. Minister Ione Belarra, in charge of the Social Rights and 2030 Agenda portfolio, suggested last Sunday the creation of a public food distribution chain that could fight against the “food oligopoly” which, in his opinion, is carried out by the president of Mercadona, Juan Roig. “They are speculating with food, something that cannot be allowed,” the purple one also claimed in her speech, who suggested naming it with the ‘Fair Prices’ brand as part of her project to establish public companies in strategic sectors.
Belarra’s proposal has received the tacit rejection by stakeholders in the food sector. AECOC, the association that integrates food manufacturers and distributors and that acts as an employer, considers that the Spanish food chain is “very efficient” and has “a lot of competition”. In this “strongly balanced” model, the consumer “values price highly in their purchasing decisions”, so “the entire food chain, especially the final part of the distribution, are their great allies and seek to make food more affordable shopping basket in the face of such high inflation”, assured its general director, José María Bonmatí.
He recalled that “we have already had experiences in the past” where the supermarkets under state management “ended up being rescued by others in the sector.” Bonmatí explained that “it has been shown that they are working with very low margins” which, in order to maintain themselves, require significant volumes of purchases. “It is very difficult for there to be a contribution from the public sector that could lower the final price of the products”, concluding that “it would not contribute anything” in a sector “where we have all the commercial forms a few meters from each other” and with a consumer with “great choice”.
Dirsa, privatized after two years
The first of the two adventures of the public sector in the distribution business was the Aragonese DIRSA, an acronym for Distribuciones Reus SA. Established in 1981, it executed a broad expansion plan that led it to have more than 600 stores throughout Spain under its brand and that of its subsidiary “Sebastian of the Source“, many of them franchised. After reaching turnovers of more than 58,000 million pesetas (the equivalent of 350 million euros) and placing tenth in the ‘ranking’ of supermarkets in Spain, the public company Tabacalera decided to acquire 75% of its capital in exchange for 6,000 million pesetas (36 million euros) and changed its directive. The remaining 25% remained in the hands of until then President Juan Jesús González Cabrejas.
Although Cabrejas maintained the position of honorary president, Tabacalera opted from the outset to send its technicians to manage the chain. The changes in the management of the public matrix and the pressures of the public Treasury caused that barely lasted two years under public management. With the extinct National Institute of Industry mired in losses and the European Economic Community (European Union) demanding the opening to free competition of certain sectors, companies like DIRSA had all the ballots to end up being privatized.
At first, the previous president made an attempt to buy back 75% of the public capital, but the government of Felipe González opted for sell it in 1990 to a joint venture formed by Banco Bilbao Vizcaya (now BBVA), and the French groups Continent and Promodès. The operation was closed for 12,100 million pesetas (72 million euros) for the entire capital, although it did so in the midst of a great controversy for having signed a preliminary agreement with Centra, a second interested party associated with Bankinter to acquire the Aragonese chain. Soon after, BBV left the stores in the hands of Promodès, who implanted its brand Daypresent until today in many localities of the country.
Jobac, the acquisition that was going to fix inefficiencies
The second experience of supermarkets under public management was the Valencian jobac, an acronym for José Bacete Cardós, founder and owner of the chain. Created in 1959 as a small neighborhood establishment, its growth model led it to leading the market in the Levantine region during the eighties. Arrive to employ 1,300 workers in its 80 establishments of all kinds, from hypermarkets to supermarkets, including half a thousand local stores that operated under the “Bacfor” brand.
In 1988, shortly before leaving office due to retirement, Bacete decided to sell the family company to Mercasa, a public company that at that time was in charge of modernizing commerce throughout the country and that carried out different strategic operations to enter the retail level. The public was looking for companies that would consolidate marketing within their value chain, a stage that lasted for three years (between 1988 and 1991) with which they sought to resolve “security concerns in supply and competition.”
The adventure did not last long due to the increase in private competition, which was capable of solving many of the inefficiencies that, a priori, the public one came to solve. In 1991, in order to reduce Mercasa’s indebtedness, Jobac was sold and integrated into the Consum cooperative, which was in the midst of an expansion process in the Valencian Community and which welcomed a large part of its staff. The only legacy that remains is the design of some of its old buildings, which still retain their original marble façade today.