São Paulo will be included, with the entry of its cash-and-carry brand Cestto in Brazil’s most populous state. Construction work is expected to start this year.

Of the total investment, R$430 million are in ongoing projects. “The idea was to allocate the investments in Rio Grande do Sul over the years, but we brought [the plans] forward. We know these are time-consuming projects, which require permits and funds, but we decided to move forward right now given the challenge faced by the state,” said Claudio Luiz Zaffari, a director at the group and member of the founding family. The 11 projects are expected to create 2,300 new direct jobs (almost 20% of the group’s current workforce) and 900 indirect jobs the company refers to as “partners.”

It is the largest concentration of investment funds in the shortest time in the company’s history—it will celebrate its 90th anniversary in 2025. The amount represents an annual average of around R$500 million. According to market calculations, typical annual investments would be some R$300 million, as the company typically carries out renovations and opens two to three stores per year.

The Zaffari family is known for a low-profile stance and tends not to disclose details or deadlines for its projects. However, it changed its usual behavior given the need to support Rio Grande do Sul. “We’ve been through difficult times, which brought sadness and torment for some, now it’s time to bring faith and hope.”

Data revealed by Valor on Wednesday (26) show that retail, wholesale, and pharmacy sales in Rio Grande do Sul grew by 25% in the volume of items after the floods. In the first week of June, the increase reduced the pace, to 9.4%, according to NielsenIQ, and sales value rose 16.3%—a sign of inflationary pressure in the region.

The company already has a property where it will begin, this year, the construction work for the Cestto cash-and-carry unit in the São Paulo state. It is located in Taboão da Serra, in the São Paulo Metropolitan Region, and is in the final phase of obtaining permits. The group currently has two big-box stores in the capital of São Paulo and is the owner of the Bourbon Shopping Mall. The Cestto chain is opening on Thursday (27) its second store in Brazil, in Porto Alegre, with an investment of R$114 million. The other unit is located in Gravataí, also in the state of Rio Grande do Sul.

According to Mr. Zaffari, the Taboão da Serra store could become a gateway for expansion in São Paulo, by setting up a local structure for new investments. That includes entering the supermarket segment in the region under the Zaffari brand. The executive did not mention any dates for the plan.

The group has 41 supermarkets and big-box stores, plus 11 shopping malls in Brazil.

With the move in the cash-and-carry segment, Zaffari is trying to set foot in a highly competitive business in the São Paulo state, which is the most profitable market in the country, in this segment. The announcement of the investment occurs in a scenario of greater inflationary pressure and increased construction costs.

The investments will be backed by the company’s cash flow, the group’s holding companies, and may be supplemented with loan facilities.

Asked about the decision to invest in São Paulo, regarded as a “war zone” for the cash-and-carry segment in Brazil, Mr. Zaffari said it is possible “to grow while being competitive and maintaining the service level.”

The executive said the group intends to bring to the wholesale segment the experience it has in retail. “This is our essence as a group,” he emphasized. He understands that the company is coming late to the segment in São Paulo but argues that a conservative stance is part of Zaffari’s culture. “They are slower, that’s their profile, but when they do it, it’s done well and they spend whatever is necessary,” says one Rio Grande do Sul retail consultant.

Regarding the pursuit of a balance between the costs of the initiatives and the need to be competitive in prices, Mr. Zaffari says some measures are being implemented to increase efficiency in the use of funds in new Cestto stores in Rio Grande do Sul. He says it is possible to bring such actions to São Paulo.

In the cash-and-carry segment, the two leading chains, Atacadão and Assaí, have an operating expenses-revenue ratio of 9% to 10% per year. Having this control is key to avoiding the risk of becoming an operation with an expensive structure and high prices. The Zaffari group does not disclose its ratio.

In addition to the Taboão unit, the group has other cash-and-carry stores to be opened throughout 2025 in the cities of Viamão, Canoas, and Novo Hamburgo, all in Rio Grande do Sul.

The group’s plans until 2026 also include delivering Bourbon Shopping Carlos Gomes, a new shopping mall in Porto Alegre. The plans also include the expansion of the Moinhos shopping mall, in Porto Alegre, and the completion of the “Cidade Nilo,” a project comprising one shopping center and one Zaffari store in the capital of Rio Grande do Sul.