Mettcah-Food for thought, page-4

re: Metcash-Food for thought From todays AFR

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Independent grocers look to new supply agreements
Apr 26
Sue Mitchell

Independent grocery retailers are hopeful of signing new supply agreements without incurring major disruption to their businesses after Woolworths' decision to pull the plug on its wholesaling arm, Australian Independent Wholesalers.

Woolworths' chief executive, Roger Corbett, said Woolworths had discussed selling some of AIW's warehouse assets to its independent customers to enable them to set up their own operations. This would ensure that a degree of competition was maintained in the wholesaling market, which Mr Corbett described as the most concentrated in the grocery industry.

But the independent grocers, including banner groups Food Way, Spar and Five Star, appeared more confident that existing wholesalers Metcash Trading, Foodland Associated or a new player would step into the breach.

Food Way's chief executive, Steve Sellars, said several companies had approached the banner group in the past week to discuss supply contracts and Food Way was confident AIW's demise would not be a major hurdle.

"We are an incredibly attractive proposition - after all, we are Australia's largest independent grocery chain with combined sales in excess of $500 million," Mr Sellars said.

The biggest beneficiary of AIW's staged exit from the market will be Metcash, which stands to add another $350 million to its distribution volume at little additional cost if the remaining AIW customers (excluding those in Tasmania) sign up.

Only last week, AIW's largest customer, the Victorian-based FoodWorks banner group, switched allegiance from AIW to Metcash, boosting the South African-controlled wholesalers' annual volumes by at least $180 million.

Metcash's chief executive, Andrew Reitzer, said Metcash had so far made no approaches to Food Way or Five Star but would do so and would welcome their business.