FDBusiness.com

UK supermarket chain Morrisons has agreed a major new, long-term wholesale supply initiative with convenience retailer McColl’s, which will take wholesale supply sales to more than £1 billion in due course. Morrisons is to start supplying both Safeway products and national brands to 1,300 McColl’s convenience shops and 350 newsagents across the UK. The new partnership will replace all McColl’s existing supply arrangements in time.

Morrisons will supply McColl’s shops, with a phased programme starting in January 2018. By the end of 2018, we expect total annualised wholesale sales to all our partners to be in excess of £700m (inc. tobacco). We expect this new initiative to make an initial profit contribution in 2018/19, and increase thereafter.

Morrisons has unique food maker skills, 17 food manufacturing sites across Britain. Morrisons has been developing a new Safeway range since the end of 2016. It now comprises over 400 fresh, frozen and ambient food products, many of which are made in Morrisons food manufacturing sites. McColl’s is to be given a one year period of exclusive access to Safeway products.

The new wholesale supply initiative allows Morrisons to partner with a growing, centrally managed convenience retailer and helps McColl’s on its journey towards developing a broader convenience food offer.

David Potts, chief executive of Morrisons, says: “We are very pleased to partner with McColl’s, and look forward to developing a long and successful relationship together. We are also pleased to be reviving the Safeway brand which we know customers will enjoy. This new partnership is a further example of Morrisons leveraging existing assets to access the UK’s growing convenience food market in a capital light way. Wholesale supply will help make us a broader, stronger business.”

Jonathan Miller, chief executive of McColl’s, remarks: “As a large, leading multiple grocery retailer with its own outstanding food manufacturing capability Morrisons stands apart from the competition, and we are truly delighted to be entering into partnership with them. In McColl’s, Morrisons gain a long-term partner of significant scale with a growing neighbourhood convenience estate and in Morrisons we gain access to their best-in-class sourcing and manufacturing capabilities. This will enable us to provide our customers with the highest quality fresh food through the relaunch of the much loved and trusted Safeway brand. This is a defining moment for McColl’s and builds on the transformational deal we announced last year to acquire 298 high quality convenience stores.”