Morrisons has signed a wholesale supply deal with McColl’s, which operates 1,300 convenience stores and 350 newsagents. In time it could be worth up to £1 billion a year.
It recently resurrected the Safeway brand and will supply these products along with other branded goods to McColl’s shops in a phased programme starting in January.
It said that by the end of 2018, total annualised sales are expected to top £700m.
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 partnership will replace all McColl’s existing supply arrangements in time.
David Potts, Chief Executive of Morrisons, said: “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, said: “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.”