Geest has formally announced plans to join forces with another supplier to exclusively supply Asda with imported produce.
The move will see the UK’s second largest retailer sourcing its imported produce through a sole importer.
In a statement, Geest said it was in discussions to combine the current import activities of its Asda dedicated subsidiary English Village Salads with Thames Fruit, another Asda-dedicated importer of citrus fruits and melons.
The new organisation will be called NewCo. Geest said its purpose was to simplify the supply chain for Asda.
The deal is expected to be finalised by January 2004 and the company up and running in the second half of the year. The structure of NewCo will see Geest take a 76% share. Thames Fruit owner Emilio Teresa will hold the remaining 24%.
Geest said it would not transfer any assets to the the new company, but Thames Fruit will transfer an estimated £1m.
NewCo is set for an estimated annual income of £29m and pre-tax profit of £1.6m in its first year of trading.
The company will operate from two sites in Yorkshire and Kent and EVS will continue to supply Asda separately with produce sourced domestically.
Geest said should Asda wish to terminate the relationship, it would give two years’ notice to buy out NewCo at net asset value and assume all employee responsibilities.
An Asda spokesman said: “We’re in the process of speaking face-to-face with all our growers to clarify our plans and ensure they understand these changes.
“We believe this is the right thing to do and is simply the next step in our evolution of getting closer to our growers. The move will enable us to plan more effectively with our growers, improving service and quality for our customers.”
Ed Bedington