Volgograd, 26 March 2024 – X5 Group (“X5” or the “Company”, LSE and MOEX ticker: FIVE), a leading Russian retailer, announces the start of its cooperation with an agricultural logistics operator to sell farm produce in the Volgograd Region. The opening ceremony at the operator’s site in the Gorodishchensky District was attended by Sergey Klyuyko, leader of Pyaterochka’s Aggregator project; Stanislav Bogdanov, Government Relations Director at X5 Group; as well as Russian senators, regional authorities and local agricultural producers.
The agro-aggregator is a hub that collects regional farm produce, where products from small farms are put together in batches for centralised delivery to X5’s Pyaterochka proximity stores. This enables local farmers who do not produce volumes large enough to qualify for a supply contract from a major retailer to come together under the operator’s umbrella and set up a permanent sales channel to supply their products to retail chain stores.
The aggregator is responsible for arranging product collection as well as for sorting, packing, grading, washing and labelling the products, while also providing temporary storage and transportation to the chain’s distribution centres and stores. In addition, the aggregator provides comprehensive legal and accounting support for sales, along with quality control in collaboration with X5. In turn, Pyaterochka guarantees purchasing volumes for farmers in line with the stores’ needs and coordinates the pricing policy.
The storage and sales hub measures 2,000 square metres and expects to support the delivery of at least 6,000 tonnes of local farm produce to Pyaterochka in 2024. Farmers will set up a sales channel for soup vegetables and a number of other crops.
This engagement model will help X5 to partner with farmers who are not yet able to start supplying the Company’s retail chains on their own while also boosting the share of local products on X5 store shelves. The first pilot agri-aggregator was launched in the Lipetsk Region in 2023. In 2024, X5 has already opened an agri-aggregator in the Sverdlovsk Region and plans to scale up the project by launching up to 10 similar hubs in various regions and adding the Perekrestok supermarket chain to the initiative.