Morrisons has announced a new, long-term wholesale supply deal with convenience store chain McColl's.
The group will provide Safeway products and national brands to 1,300 McColl's convenience shops and 350 newsagents across the UK, with the new partnership replacing all McColl's existing supply arrangements in time.
Morrisons has been developing a new Safeway range since the end of 2016, when it reintroduced the brand. It now comprises more than 400 food products, and McColl's is to be given a one year period of exclusive access to Safeway products.
The supermarket said the tie-up is expected to lead to wholesale supply sales of more than £1bn "in due course".
By the end of 2018, Morrisons said it expects total annualised wholesale sales to all its partners to be in excess of £700m (including tobacco). "We expect this new initiative to make an initial profit contribution in 2018/19, and increase thereafter," the firm said.
Meanwhile, McColl's recently announced a 7.6 per cent jump in revenues after taking over almost 300 Co-op stores.
"We are very pleased to partner with McColl's, and look forward to developing a long and successful relationship together. We are also pleased to be reviving the Safeway brand which we know customers will enjoy," said David Potts, chief executive of Morrisons.
"This new partnership is a further example of Morrisons leveraging existing assets to access the UK's growing convenience food market in a capital-light way. Wholesale supply will help make us a broader, stronger business."
McColl's boss Jonathan Miller added: "In McColl's, Morrisons gains a long-term partner of significant scale with a growing neighbourhood convenience estate and in Morrisons we gain access to their best-in-class sourcing and manufacturing capabilities.
"This will enable us to provide our customers with the highest quality fresh food through the relaunch of the much loved and trusted Safeway brand. This is a defining moment for McColl's and builds on the transformational deal we announced last year to acquire 298 high quality convenience stores."
Shares in Morrisons were up 0.56 per cent at 242.6p in early morning trading.