Australian grocery and liquor wholesaler Metcash Trading Ltd has emerged triumphant from the Franklin’s stores sell down, revealing that it has signed a two-year distribution deal with South African retailer Pick ‘n Pay Stores Ltd. The deal, which will add a minimum A$480m to Metcash’s annual revenue, will automatically roll-over for another two years unless either party has cause for termination.
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Pick ‘n Pay has been heralded as the victor in the scramble for the Franklin’s stores, which were sold off by Hong Kong parent Dairy Farm after the beleaguered chain hit financial difficulties. Under the brokerage of the Australian Competition and Consumer Commission (ACCC) the surprise outsider beat off established giants Woolworths and Coles Myer to a large share of the outlets, and is set to buy 60 stores for A$125m, before acquiring another 20 from the independent Fresco Supermarkets group.
Already distributing to 1047 independent retailers around Australia, the new agreement will also bolster the competition in the grocery sector. In a statement, Metcash CEO Andrew Reitzer explained: “Metcash and Pick ‘n Pay are committed to building a strong relationship in order to gain maximum advantage in their fight against the chain stores.”
As well as cementing the Pick ‘n’ Pay supply deal, Metcash, which is around 73% owned by South African group Metro Cash and Carry Ltd, has also struck an alliance with Dairy Farm to oversee the sale of 105 outlets to independent grocers aligned under the IGA banner. The company will then also supply goods to these, the lion’s share of Franklin’s stores.
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By GlobalData
