Lyndale Retail Bakeries, a long-standing supplier of bakery products to Kwik Save, has begun a 90-day consultation with unions and staff at its Sayers site in Liverpool, which could result in the loss of 140 full-time and 40 part-time jobs.
The Kwik Save contract accounted for 50% of Lyndale's output at the site.
Michael Quinlan, MD of Lyndale Retail Bakeries, added: "We will do all we can to reduce the impact on our workforce, but we cannot pretend that the loss of Kwik Save will not have a huge effect on our business."
Last month The Grocer reported that more than 1,400 staff could lose their jobs following the sale of Kwik Save. Somerfield has already confirmed that at least 500 jobs could go at its Bristol HQ.