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Lyfra-S.A./NV

Lyfra-S.A./NV

Kapelstraat 100
Wommelgem, B-2160
Belgium
Telephone: (32 03) 355 31 10
Fax: (32 03) 355 31 11
Web site: http://www.lyfra.be

Wholly Owned Subsidiary of Tabacofina Vander Elst
Incorporated: 1969
Employees: 222
Sales: EUR 620 million ($816 million) (2005)
NAIC: 424940 Tobacco and Tobacco Product Merchant Wholesalers; 424450 Confectionery Merchant Wholesalers

Lyfra-S.A./NV is Belgiums leading wholesaler supplier to the newsstand and convenience store sectors, and one of the countrys largest wholesalers in general. Lyfra supplies more than 4,000 newsstands, convenience stores, and other merchants throughout Belgium. The company, headquartered in Wommelgem, operates four regional offices in Wommelgen, Genk, Lot, and Liege. The Wommelgen, Genk, and Lot facilities also serve as integrated logistics, distribution, and warehousing centers, with a total area of nearly 11,200 square meters. The company operates a fleet of 71 vehicles, which travel nearly 1.9 million kilometers each year. Lyfra (which is part of Tabacofina Vander Elst, itself a wholly owned subsidiary of British American Tobacco [BAT] Belgium) is a major supplier of tobacco products to the Belgian markets, supplying BATs cigarette and cigar brand families, as well as other brands of cigars, cigarillos, cigarettes, and tobacco.

Distribution of tobacco products remains the companys largest sales category, accounting for 80 percent of its revenues. The company also supplies smoking accessories, including pipes, lighters, rolling papers, cases, and the like. Candy and confectionery is another important part of Lyras operations, as well as an extensive range of packaged snacks, chips, cookies, and other impulse food items. The company is a major beverages distributor in Belgium, delivering soft drinks, beer, fruit juices, milk, and wine packaged for the convenience sector. Each year, Lyfras total beverage sales top 7.5 million liters. Lastly, Lyfra is a major distributor of telephone cards and mobile telephone top-up (prepaid) cards, and, since 2006, also distributes postage stamps and prestamped envelopes in partnership with the De Post, the Belgian post office. Lyfras operations generate more than EUR 620 million ($816 million) each year.

MERGING WHOLESALERS FROM 1969

Lyfra resulted from a series of mergers and acquisition as part of the consolidation of the Belgium tobacco and wholesale tobacco distribution sector at the end of the 20th century. In particular, the company represented the bringing together of parts of the Belgian wholesale distribution operations of Rothmanns International and British American Tobacco (BAT), which merged their operations in 1999. Both companies had long been present in Belgium. BAT had entered the company in 1932, through the acquisition of majority control of Molenbeek cigarette maker Odon-Warland. That company brought BAT, the popular Boule dOr brand, a move that helped strengthen BATs distribution operations in Belgium. By the end of the 1960s, BAT had acquired full control of Odon-Warland. Rival Rothmann, in the meantime, had also made strong inroads into the Belgian market, in part through its acquisition of Antwerp-based cigarette manufacturer Tabacofina. That company was later joined by fellow Antwerp group Vander Elst, especially known for its cigar production. The U.K.-based Rothmann, later part of Luxembourgs Compagnie Financiere Richemont, had made strong inroads in the European market, and was especially strong in Belgium, where it controlled 40 percent of the market.

The ubiquity of tobacco products, sold from a myriad of outlets, had in the meantime led to the emergence of a highly fragmented wholesale distribution market. Large numbers of independently owned and operated wholesalers were created, generally focusing on local and regional markets, and catering to the specific needs of their clients. These included traditional tobacco shops and newsstands, and, later, a rising number of convenience stores.

While much of the wholesale market remained independent, the tobacco manufacturers had established their own presence in the distribution market. By the end of the 1960s, growing concerns over the healthissues relating to tobacco use pointed toward an inevitable decline in the tobacco market in Belgium, and elsewhere. Over time the declining market in turn led to a degree of concentration not only in the cigarette manufacturing sector, but in the wholesale and distribution markets as well. The move toward the future Lyfra began during the late 1960s, as the company made its first acquisition of an independent wholesaler, the Guenoun company, in 1969.

The wholesale business expanded its scope of operations significantly in the 1980s. A long series of acquisitions followed through the decade, enabling the group to claim a major share of the Belgian wholesale tobacco distribution market. The first of the new series of acquisitions came in 1982, with the purchase of the De Roch company. That acquisition helped expand the companys presence in the Walloon region, and the De Roch and Guenoun companies were later merged into a single business retaining both names.

The year 1988 marked a turning point in the groups formation as it stepped up its acquisition program. In that year, the company expanded into the Belgian southeast, acquiring two of that regions larger wholesalers, Marechal and Jonas-Monard. The company then turned its attention to expanding its reach to a truly national level. In rapid succession, the company acquired five more wholesalers, including Lyfra. Other companies acquired during this time included Kempische Tabaksgroothandel, Lecocq, Buntinx-Misotten and Vrancken-Stessens. The next step toward the future Lyfra came the following year, when the company added two more important wholesalers, Bosman, and especially Partagro. Through these acquisitions, the businesss operations had expanded to more than 16 distribution centers.

WHOLESALE LEADER FOR THE CONVENIENCE SECTOR IN THE NEW CENTURY

The member companies of the wholesale operation retained their independent identities through much of the 1990s. In 1997, however, the companies were brought together under a single company, called Lyfra-Partagro S.A./NV. The companys operations were then restructured into five subsidiaries, including Lyfra Partagro-KTG, based in Wommelgen; Guenoun-De Roch, in Lot; Buntinx- Vrancken, in Genk; Monard Partagro in Liege; and Lyfra Patrgro Oostende.

COMPANY PERSPECTIVES

The newsstand operator is a precious partner for us. That is why we make an effort to respond to their expectation in an innovative way, notably through support in the computer technology, telecommunications and category management.

By the end of the decade, Lyfra Partagro had established itself as a major force in the wholesale distribution of tobacco and tobacco-related products, as well as a steadily expanding line of confectionery, beverages, and a range of other items for the convenience sector. In 1999, the company continued its expansion, entering the cash-and-carry market through the purchase of Delcart. In this way, Lyfra Partagro was able to extend its operations to cater specifically to retailers who preferred to shop directly for their merchandise. In the meantime, Lyfra Partagro, which had become part of Tabacofina Vander Elst, now found itself part of one of the worlds largest tobacco groups, when Rothmann International was merged into British American Tobacco. As a result, Tabacofina Vander Elsttogether with Lyfra Partagrowas brought under BAT Belgium.

Backed by BAT, Lyfra Partagro maintained its own expansion into the 2000s. The company made a new acquisition, of Quaregnon-based Dupont Guy S.A., in 2000. The following year, Lyfra Partagro expanded its operations again, acquiring Verloo. The company then acquired the tobacco products distribution operations of De Leval in 2002. Also that year, the company reached an agreement with retail and wholesale group Tabavin, which also had operations in the distribution of wine and spirits, to take over its wholesale tobacco and convenience-sector products business.

Lyfra Partagro continued to seek new expansion opportunities into the second half of the decade. In 2005, the company reached a distribution agreement with Helsen, giving Lyfra access to Helsens client base in the region around Wommelgem. By 2007, the company had located its next acquisition, with the addition of the Vavema distribution group. That company had itself been created only in 2000 as a merger among several independent wholesalers in the Saint-Trond region.

By then, the company had grown to annual sales of more than EUR 620 million, with a client base topping more than 4,000. In 2007, the company shortened its name to Lyfra-S.A./NV. The company by then had grouped its operations around three distribution facilities, which combined for a total of nearly 11,200 square meters of logistics and warehousing space. The facilities were operated by the groups branches in Wommelgem, which also served as company headquarters, and in Genk and Lot, while a fourth office provided additional administrative and sales support for the groups operations in the region around Liege. With a fleet of 71 vehicles, the companys deliveries spanned nearly 1.9 million kilometers each year.

Even as it pursued its acquisition and expansion strategy, Lyfra had also been developing its range of products and services. The company developed its own suite of software-based tools for its retailer clients. These include Seline, the companys electronic and online ordering service, enabling clients to place their orders and communicate with the companys sales staff. The Seline suite was extended to include Seline Shop Manager, which provided cash register, scanning, and inventory management functions. Lyfra also teamed up with Verifone to provide the Card Manager system, featuring a wireless device that allowed retailers to offer prepaid telephone cards to their customers. The alliance with Verifone was then extended with the incorporation of Verifones Omni 3750, which offered electronic-based, top-up services for à la carte mobile telephone subscribers. After a trial run of the device, Lyfra rolled out the service across its client network, with an initial order of 650 devices.

In addition to providing a range of business support products to its clients, Lyfra also continued to expand its range of products. While tobacco remained the largest part of Lyfras operations, accounting for 80 percent of its revenues at mid-decade, the company sought to buffer the steady declines in tobacco consumption by bolstering its other product lines. The company developed a strong range of convenience snack foods, and especially so-called impulse foods, including candy and confectionery, soft drinks, and the like. In the middle of the first decade of the 2000s, the company added a number of other products and services, including the aforementioned prepaid telephone cards. In 2005, the company teamed up the De Post, the Belgian post office, to provide stamps and prestamped envelopes and other postal products. A similar partnership was formed with public transport operator De Lijn in 2006, enabling Lyfra to distribute tram and bus tickets, schedules, and related products and services through its customer network. Backed by the worlds second largest tobacco company, Lyfra appeared certain to remain a leader amid the continuing consolidation of the Belgian wholesale market.

M. L. Cohen

PRINCIPAL COMPETITORS

Ets L Lacroix Fils S.A./NV; Lyfra-Partagro S.A./NV; Sitagro S.A./NV; Heidpark S.A./NV.

KEY DATES

1969:
Acquisition of Guenoun wholesale group forms basis for future Lyfra.
1982:
Company acquires De Roch in order to expand operations in Walloon region.
1989:
Establishment of ten-member wholesale group following series of seven acquisitions, including Lyfra and Partagro.
1997:
Reorganization of wholesale distribution operations into Lyfra Partagro.
2007:
Company shortens name to Lyfra.

FURTHER READING

Bell, Jonathan W., Antwerp Confirms Status as Cigarette Distribution Hub, Tobacco International, July 15, 1989, p. 43.

Reynaerts, Guy, Naamsverandering Wil Imago Lyfra Verjongen, Radar, April 2007, p. 5.

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