Hilton Food Group meat

Tesco has struck a new five-year deal with meat supplier Hilton

Meat packer Hilton Food Group has struck a five-year deal to supply fresh meat to Tesco, extending the two companies’ relationship until February 2019.

Hilton said the new deal would see it supply greater volumes of packed fresh meat to Tesco from its plant near Huntingdon. To achieve this, it would invest in boosting capacity at Huntingdon as well as introducing “new state-of-the-art technology” at the site, it added.

“The agreement means a substantial increase in volumes supplied to Tesco from the Huntingdon facility, the full benefit of which will be obtained in 2015 and subsequent years,” the company said. It did not disclose the value of the deal.

CEO Robert Watson hailed the Tesco deal as an “exciting development” for Hilton. “We are proud to have formed a strong, long-lasting partnership with Tesco, and we will continue to work closely with them to supply products of the highest quality to their customers.”

Hilton also gave a brief update on its performance elsewhere in Western Europe, saying it now expected growth to be slightly slower than expected. However, this would be “wholly offset” by the new Tesco deal.

Hilton plans to invest a total of about £30m at Huntingdon and in Sweden, where it will upgrade its facilities, which it said would be financed primarily from banking facilities and “internal cash resources”.

In early November, Hilton announced it had returned to growth in the UK after overcoming the impact of the horsemeat scandal and benefiting from improvements in the economic climate. The company was not itself implicated in the scandal, but Tesco - its only UK customer - was, leading to Hilton having a tough first half of the year.

This was story updated at 10.21 on 3 December to clarify that the deal was a five-year deal.