Sainsbury’s announces supply deal with Australian grocery giant Coles

Date of publication: 11.11.2019

Sainsbury’s reveals new supply partnership deal with Aussie grocery giant Coles

UK shoppers could soon start seeing more Australian products on supermarket shelves after Sainsbury’s signed a new partnership with Coles, one of the two grocery giants down under.

Bosses at Sainsbury’s said the company is exploring options to “bring a distinctive proposition to UK customers” as they signed up to a new wholesale arrangement with the Australian grocer.

However, initially Sainsbury’s will start offering its own products to Coles as it attempts to catch up with rivals Tesco, Morrisons and Co-op, which already have significant wholesale divisions.

Tesco bought wholesaler Booker last year, Morrisons increased its wholesale operations in a deal with Amazon, and Co-op now sells its own-branded products via Nisa convenience stores.

The Sainsbury’s deal will allow bosses to supply white-labelled own-brand products, including groceries and household essentials, which will be packaged under the Coles name.

Coles has more than 2400 stores – including 800 supermarkets and 700 convenience stores – across Australia, serving 21 million customers a week.

Sainsbury’s said: “The agreement with Coles marks a key milestone in Sainsbury’s strategy to build its wholesale business, with a number of partnerships already in place in Asia, Europe and the UK.”

It added: “The partnership will also investigate Australian groceries and alcohol which Sainsbury’s could source through Coles to bring a distinctive proposition to UK customers.”

Coles chief executive of commercial and express Greg Davies said: “We want to accelerate the introduction of innovative products to Coles own brand, and this partnership allows us to do that with a range of food and groceries that are already proven in the international market but not yet available in Australia.”

According to reports, Coles wants to increase its range of own-brand products, which typically have better profit margins, from 25 per cent to 40 per cent.

It has a 27 per cent share of the Australian food market, making it the closest rival to Woolworths, which has a 34 per cent of the market down under.

However, both of the grocery giants are facing stiff competition from Aldi, the German discounter that has been equally aggressive in taking customers away from bigger rivals in the UK.

It’s also not the first time Coles has struck a deal with a UK grocer.

Earlier this year, it partnered with Ocado, which will see it use Ocado’s technology and software to develop Coles’ online grocery business in Australia.

Two robotic distribution centres will also be built and go live within four years, one in Sydney and one in Melbourne.