DEG financing will boost retail trade in Azerbaijan

Long-term loan to Araz Supermarkets LLC

Consumers in Azerbaijan will soon be able to benefit from an improved range of retail products. Araz Supermarkets LLC (Araz), one of the country’s leading operators of supermarkets, is expanding its warehouse capacity. DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH is providing a long-term loan totalling EUR 5 million to Araz to fund this investment. The European Bank for Reconstruction and Development will be investing a further EUR 5 million as co-investor.

Warehouse capacity expanded and improved

Araz will use the loan proceeds to build a central distribution centre to the north of the country’s capital Baku and to expand its warehouse capacity from 12,600 m2 to 42,600 m2. It also plans to install a cold-storage facility for fresh and frozen products and a bakery at the same location. The aim is to increase overall profitability by improving the potential to influence the supply chain and short-term working capital.

Araz intends to have the new warehouse certified in accordance with a system that assesses environmentally friendly construction, such as the recognised British sustainability certification BREEAM. Its categories evaluate, among others, energy savings, water efficiency and recycling of building materials.

Important employer with more than 4,000 employees

The first Araz supermarkets opened in Azerbaijan in 2011, initially in Baku. The company now operates more than 120 supermarkets in all parts of the country, both under its own name and as a franchisee under the “SPAR” brand. With around 4,000 employees, Araz is a significant employer in in the country at the interface between Europe and Central Asia. Additional direct and indirect jobs will be created during the course of the upcoming expansion.

With approximately 80,000 m2 of retail space nationwide, Araz is an important sales partner for major international brands in Azerbaijan. The supermarkets offer fast moving consumer goods. In a country that is still largely dominated by so-called bazaar economy, consumers will have more choice in future, even in rural areas. Furthermore, they will benefit from price transparency, higher standards of service and quality as well as safety of food and other goods.

DEG has been operating in Azerbaijan since the early 2000s and has financed investments in the local financial and manufacturing sectors.