Metcash has re-energised its South Australia business with the signing of a legally binding Heads of Agreement deal with Foodland Supermarket, the governing body for independent Foodland supermarket retailers in South Australia.
The deal is a boost for Metcash in the state, following the announcement earlier this year that it was losing Drakes Supermarkets as a customer, but that it was going ahead with a new purpose-built distribution centre.
In a statement about the agreement, Metcash said: “This includes the proposed form of a long-term supply agreement whereby Foodland retailers will commit to being supplied from Metcash’s proposed new distribution centre in South Australia for a period of 10 years.
“The supply agreement is conditional on Metcash entering into an agreement for lease for the new distribution centre by no later than 21 December 2018.
“Long-term supply agreements have now also been signed with Foodland multiple store owners such as the Romeo’s and the Chapley’s, as well as the remaining members of the Foodland Supermarket Board who are owners of Foodland supermarkets in South Australia.”
This deal as well as the existing agreements that Metcash has in place with Foodland and IGA supermarket retailers, means that Metcash has now secured long-term supply agreements with retailers representing the majority of its supermarket sales in the state.
Metcash confirmed that both it and Foodland Supermarket are now progressing the execution of the 10-year supply agreement with the remaining Foodland retailers in South Australia, who are predominantly single store owners.