CU Central Asia Signs Master Franchise Agreement
Establishing Locally Optimized Convenience Store Model and System
First Store Opening Next Year... Aiming for 500 Stores in 5 Years
CU has chosen Kazakhstan as its third overseas expansion country and is set to extend the territory of K-convenience stores.
(From left) Geonjun Lee, CEO of BGF Retail, and Andrey Shin, CEO of Shinlain, are posing for a commemorative photo after signing the master franchise agreement for CU's entry into Kazakhstan. [Photo by BGF Retail].
BGF Retail announced on the 20th that it will enter the Kazakhstan market by signing a Master Franchise Contract (MFC) with CU Central Asia, a newly established convenience store corporation by the local Kazakh company Shin-Line. The Master Franchise Contract is a method where the franchisor, BGF Retail, grants the local company the rights to use the brand, open stores, and operate the business, while receiving royalties.
With this, BGF Retail becomes the first domestic convenience store company to expand its reach to Central Asian countries. Shin-Line is the largest ice cream company in Central Asia, holding a 40% share of the Kazakhstan ice cream market. It has a distribution network throughout Kazakhstan and Central Asia and is currently expanding its business into products closely related to convenience stores, such as ramen, frozen foods, and dairy products.
Shin-Line has strengths in the storage and distribution of chilled and frozen foods, which are mainly handled in convenience stores, by maintaining a cold chain distribution network throughout Kazakhstan and Central Asia. With this expansion, BGF Retail has become the only global convenience store operator pioneering the convenience store market in Kazakhstan.
Kazakhstan's GDP per capita, calculated based on purchasing power parity, surpassed $30,000 last year, ranking first among the five Central Asian countries, indicating high consumer purchasing power. The youth under 30 years old account for 53% of the total population, suggesting significant growth potential for the convenience store industry. BGF Retail noted the explosive increase in demand for neighborhood shopping in Kazakhstan after COVID-19. Compared to large supermarkets, small retail store environments are still underdeveloped, leading to sufficient demand for modernized convenience store channels.
According to data released by Euromonitor in 2022, local distribution brands have also shifted from large-scale store strategies such as warehouse stores or supermarkets (SSM) to a significant increase in small and medium-sized stores under 300㎡ since 2020. The popularity of Korean culture, rapidly growing especially among the younger generation, is also expected to enable stable expansion of CU in Kazakhstan.
BGF Retail plans to open the first CU store in Kazakhstan in the first half of next year. It aims to operate more than 500 stores over the next five years. Subsequently, it plans to solidify its position as a global brand by expanding further into neighboring countries.
Lee Geon-jun, president of BGF Retail, said, "Korea’s CU is growing into a global standard, having secured an overwhelming number one position in the Mongolian convenience store market," and added, "With CU’s successful experience accumulated over the past 30 years domestically and internationally, we will demonstrate the strength of K-convenience stores in the global market."
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