Dutch retailer Sligro Food Group has set up a joint distribution centre with wholesale business Groothandel Bergsma.

The Veghel-based facility for tobacco products, which will be named Vemaro, will be 60% owned by Groothandel and 40% by Sligro.

Vemaro will concentrate exclusively on the purchase and storage of tobacco and related products. Sales acquisition, supply contracts and distribution to customers will be handled by the shareholders themselves, acting independently.

The two companies believe the new arrangements will enable them to compete more strongly in the market.

In July Sligro Food Group predicted that economic conditions would continue to worsen in the remainder of the year after posting a 6% drop in first-half profits.

Profits dropped to EUR27m (US$38.2m) on relatively flat sales, which fell 0.7% to EUR1.08bn. The company said its lower profits were "due entirely to lower non-recurring book profits".