Russia’s biggest alcohol retailer Mercury Retail Holding Plc is seeking to raise $1.3 billion in an initial public offering. The company stated that the price range has been set at between $6 and $6.50 per global depositary receipt. That would value the company at $13 billion.
The company operates over 14,000 convenience stores that sell food and harmful products, such as alcohol and cigarettes under the Krasnoe & Beloe and Bristol brand.
Even at the low end of the price range, a successful placement would be the largest initial public offering held exclusively on the Moscow Exchange since 2013. This would make Mercury Retail the largest Russian food retailer by market capitalization.
Mercury Retail’s like-for-like sales in the third quarter increased by 14% compared to a year earlier.
Russia’s alcohol giant is expanding
Currently, Mercury Retail dominates the Russian alcohol retail market accounting for more than half the revenue among Russian alcohol retailers.
The IPO would enable the company to expand even further and monopolize the Russian alcohol retail market.
Monopolies that pursue profit maximization in alcohol retail are a serious public health concern. Market dominance to pursue profit maximization leads to a number of harmful practices that fuel the alcohol burden on society:
- Reducing prices to out-compete and eliminate smaller alcohol retailers,
- Investing more in marketing to solidify the market position and drive consumption, and
- Accumulating political power and influence to obstruct efforts of public health oriented policies.
Cheaper prices and more alcohol marketing increase alcohol consumption and result in growing alcohol harm in communities. And bigger power to interfere in alcohol policy making hinders the development of evidence-based alcohol policy solutions to prevent alcohol harm.
If the process of the public offering is successful, the mega alcohol retailer will face serious pressures to yield substantial profits for investors. That means incentives will be rising to engage in health harmful practices in the alcohol retail giant.