Australian supermarket giant Woolworths has said it has formed a joint venture with oil company Caltex, in a move that is expected to further increase competition in the discounted petrol sector.
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Under the agreement, shoppers at Woolworths, Safeway and Big W stores will be able to buy Caltex discounted fuel at as many as 450 joint venture sites, reported Reuters.
Woolworths has sold petrol at its own branded outlets for around three years, but is facing increased competition since rival Coles Myer formed a joint venture with Royal Dutch/Shell in May and launched its discount fuel offer at the end of July.
Woolworths and Coles Myer are the two main competitors in the A$65bn (US$42.8bn) Australian food retail market, controlling 40% and 31% of the market respectively. Discounted fuel is the latest move by the two companies to try to win customers.
This latest joint venture is expected to see new outlets operating before Christmas and will be earnings-per-share positive for Woolworths and Caltex, the companies said.
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By GlobalData“We will increase our network at a stroke and so will greatly enhance the value of our petrol discount offer to more of our customers,” Woolworths chief executive Roger Corbett was quoted by Reuters as saying.
Initially, the joint venture will lease all the existing Woolworths/Safeway branded petrol outlets and add another 120 selected Caltex service stations to the network. All those outlets are to be co-branded.
