Portugal Billionaire Sells Lollipops, Champagne in Poland

In 2003, Luis Amaral bought Eurocash SA, a Warsaw-based grocery business, for 120 million Polish zlotys ($30 million). The operation was losing money. Competitors were taking market share. Its owner, Jeronimo Martins SGPS SA, the Lisbon-based retail operation controlled by billionaire Alexandre Soares Dos Santos, wanted nothing to do with it.

Today, Eurocash is Poland’s biggest distributor of non-durable goods, with 19 percent of the market. The company’s value has surged more than 15-fold since selling shares in an initial public offering in 2005, helping Amaral, the 51-year-old chief executive officer and Portugal native, amass a $1.1 billion fortune, according to the Bloomberg Billionaires Index.

Amaral’s 44 percent stake in Eurocash, which sold about 7.8 million lollipops and 3 million bottles of champagne last year, is valued at about $910 million. He has collected about $220 million in dividends and stock sales since the public offering, according to data compiled by Bloomberg, and has never appeared on an international wealth ranking.

“He’s a visionary who created a custom-built business for the Polish market,” said Jakub Krawczyk, a Vienna-based analyst at Raiffeisen Centrobank AG in a phone interview on Jan. 9. “Eurocash has helped traditional retailers to survive against the onslaught of giant supermarkets.”

Community Grocers

The value of publicly traded food retailers have surged in the past six months on better-than-expected sales. Retail fortunes on the Bloomberg ranking rose 19.5 percent on average in 2012. The four heirs to the Wal-Mart Stores Inc. fortune -- Jim Walton, Christy Walton, Alice Walton and Rob Walton --gained a combined $13.5 billion. Stefan Persson, the chairman of Swedish clothing retailer Hennes & Mauritz AB, added $2.7 billion during the year.

“We don’t comment on his personal wealth,” said Jan Domanski, the company’s head of investor relations, in a phone interview on Jan. 9. “He is a very private person.”

Eurocash, whose wholesale stores sell grocery items, alcoholic beverages and other supplies, saw revenue increase 68 percent to 12.4 billion PLN in the first nine months of 2012 from a year earlier. About half of Eurocash’s sales are generated from independent grocery stores, an important element of most Polish communities.

‘Hypermarket Invasion’

The company’s growth comes amid increased competition from international hypermarket chains such as Tesco Plc, the biggest food retailer in the U.K., and Carrefour SA, the world’s second-largest food seller. Carrefour, which has 248 supermarkets and hypermarkets in Poland, announced plans to build 200 smaller stores in the country in July.

“The large chains are non-Polish owned and mom-and-pops are very frightened of the hypermarket invasion,” Charles Allen, an analyst for Bloomberg Industries in Princeton, New Jersey, said by phone. “Eurocash is listed in Poland and offers a defense.”

Eurocash also operates its own retail stores. Many Poles are loyal to their corner shop, preferring to buy milk, vegetables and other household goods there instead of at the larger hypermarkets.

Amaral is not the first wholesaler to become a billionaire serving independent grocery stores. South African Nathan “Natie” Kirsh, 81, owns 63 percent of Jetro Holdings, a wholesale grocer that operates about 100 stores in the U.S.

Accounting Software

After acquiring Jetro in 1985, Kirsh targeted small grocers under-served by large distributors, then expanded to supplying independent restaurants. He controls a $5.4 billion fortune, according to the Bloomberg ranking.

Amaral moved to Poland from Portugal in 1995 to work for Jeronimo Martins, where he helped establish Biedronka, now the country’s largest discount retail chain. He left moved to South America in 2000, eventually settling in Brazil, where he became a partner in a private equity firm.

In 2003, Amaral returned to Poland to buy Eurocash. Jeronimo Martins was struggling to recover from a faulty implementation of productivity and accounting software that threatened to destroy its business, and sold Eurocash to focus on its expanding Biedronka chain, Allen said.

“The whole of Jeronimo Martins was in bad shape,” he said. “A lot of people didn’t think Eurocash would survive.”

Financing Acquisitions

Eurocash had 48 stores when Amaral purchased it in a management buyout. He focused on expansion, using the company’s profits to finance acquisitions, buying Premium Distributors, the biggest alcoholic beverages distributor in Poland, in 2010 from Warsaw-based Central European Distribution Corp.

A year later, Amaral paid 1.1 billion PLN for the Tradis distribution unit of Warsaw-based retail distributor Emperia Holding SA. The company opened its 150th Eurocash Cash & Carry store in Poznan, Poland this month.

Amaral is expanding beyond food. In September, Eurocash agreed to buy at least 25 percent of cosmetics maker Polbita-Interchem Group for an undisclosed sum from Warsaw-based private equity firm Resource Partners Holdings.

The Bloomberg Billionaires Index takes measure of the world’s wealthiest people based on market and economic changes and Bloomberg News reporting. Each net worth figure is updated every business day at 5:30 p.m. in New York. The valuations are listed in U.S. dollars.

Before it's here, it's on the Bloomberg Terminal.