Sainsbury’s has struck a deal to sell its own label groceries to Coles, Australia’s second-largest supermarket chain. The deal could also lead to Australian suppliers securing a presence in the UK.
The “strategic wholesale partnership” will give Coles access to Sainsbury’s supply chain, allowing the Australian retailer to select from a host of products to expand its own label range. These will include packaged groceries and household products that will bear the Coles brand name when they hit stores in Australia early next year.
Coles own label range currently accounts for around 30% of sales in its supermarkets and convenience stores. However, it has been expanding its range in the last few years as it battles against growing competition from Aldi.
“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,” said Greg Davis, Coles Chief Executive – Commercial and Express.
He highlighted that the Sainsbury’s tie-up will free up resources for its own product development team so that they can “drive further innovation and help us fulfil our strategy to make Coles an Own Brand Powerhouse”.
The deal is Sainsbury’s latest attempt to follow Tesco and Morrisons into wholesaling as it looks for new avenues of growth after its plan to merge with Asda failed. The retailer stated that the agreement with Coles marks a “key milestone” in its strategy to build its wholesale business, with a number of partnerships already in place in Asia, Europe and the UK.
Michael Luck, Director of Business Development at Sainsbury’s, said: “Great quality food, high standards and ethical sourcing are at the heart of both our businesses and we are delighted to work with Coles to bring more choice and innovation to Australian customers. We’re excited by the opportunity to offer more of our fantastic products to customers around the world through wholesale partnerships like this one.”
Coles stated that it will also work with Australian food and drink suppliers to explore opportunities to sell their products to Sainsbury’s through the partnership.
“Coles has been exporting Australian food for 20 years, selling Australian-grown meat, wine and other products across the Asian market – this partnership with Sainsbury’s has the potential for us to take even more Aussie food to international customers,” said Davis.
NAM Implications:
- Think eventual split of 50/50 brand/own label split for Coles, for starters…
- There has to be a reason why Sainsbury’s did not go the Sainsbury’s own label route in Australia via Coles…
- …or perhaps that is yet to come?
