Alliance Boots plans to buy two Latin American pharmacy chains - Farmacias Ahumada and sister company Farmacias Benavides. Retail Week speaks to Alliance Boots executive chairman Stefano Pessina.
What will the acquisition of the Latin American pharmacies mean for the group?
We’ve added another a piece to the puzzle. We have been waiting for many, many years. We’ve tried to do many deals in Latin America but they haven’t worked previously. We’ve been looking for at least nine or 10 years but, of course, there have been other deals that we have been focused on.
[After the merger deal with US drugstore Walgreens in 2012] we are back and looking at the two areas which have been our main focus – China and Latin America. We have taken the next steps in the right direction but the journey will never end.
Why did you choose these two chains, owned by parent Farmacias Ahumada?
When it was last up for sale we were interested, as they were a good chain but we were looking at other deals at that time. Now, it has had five years of good management. They have good pharmacies and they are a platform to introduce Boots products. I’m sure they will be highly successful in Latin America. Latin America has the highest use of beauty products per capita. It is a fantastic market in Latin America and it’s very strong in Chile and Mexico [where the chains are located].
What are your growth plans in the region?
In Mexico there is room for expansion and the market is consolidating. There are also many people there – 120 to 130 million people. Mexico is much larger than the UK and there is potential to double the stores and this is one of the reasons we like it there. Market growth is not huge but the potential for consolidation is enormous and there is the opportunity at the front of stores to sell products.
[Farmacias Benavides] already sells a variety of products and categories but we can really improve [that].
Chile is a different market. It’s more affluent, so the kind of stores are different. Farmacia Ahumada is an old brand there and so it’s very well positioned toward the top of the market. The local team will be able to expand and accelerate growth.
Will you open standalone Boots stores out there?
It’s too early to say. But it’s not impossible, particularly in Chile where the shopper is more sophisticated and well-travelled, so a lot of them know UK brands [like Boots].
What will Alliance Boots’ merger partner Walgreens’ influence be on this deal?
It’s very likely that in one year we will be one company. And Walgreens products might go there. Walgreens has a lot of Mexican pharmacists and so they have an understanding of the market.