Costcutter could be the subject of the next big deal in convenience, The Grocer can reveal, with owner Bibby Line Group indicating to its retailers that a deal is imminent.
In a letter to Costcutter members, seen by The Grocer, Bibby Line managing director Sir Michael Bibby suggested that it would shortly be in a position to make a formal announcement on its plans.
“When Tesco announced its acquisition of Booker back in January, it took the entire market by surprise, Since then, businesses across the grocery and convenience sectors have been open to having discussions that would not have seemed imaginable just one year ago,” said Sir Michael.
“Bibby Line and Costcutter Supermarkets have been working together to ensure we are at the forefront of these conversations, exploring all available opportunities.”
Sir Michael went on the explain that, along with Costcutter chief executive Darcy Willson-Rymer, he was looking to ensure that any future collaboration must “resolve the supply chain issues you have been facing, continue to build volume through great prices and promotions and strengthen our own-brand offering.”
Costcutter, which has an annual turnover of £707m, is currently supplied by Palmer & Harvey, with which it still has three and a half years to run on its contract. However over the summer P&H has been beset by availability and service issues that have impacted Costcutter retailers and other independents. P&H put the problems down to the impact of hot summer weather.
The Bibby letter continued: “I am optimistic and excited about the opportunities for growth within the convenience sector, although we must be extremely diligent to ensure we truly provide a high quality long-term solution to get the right products, for the right price, at the right time to your shops. I believe we are making real progress on a number of fronts, which will allow you to unlock significant growth for your business. To achieve this, Costcutter Supermarkets Group will continue to position itself as a central player in the convenience sector by building on its strengths.
“The good news is that the market is moving quickly. There are exciting opportunities on the table right now, which mean that Darcy and I hope and expect to be able to make a formal announcement soon. Due to confidentiality agreements we are unable to give a running commentary on progress until any changes are confirmed.”
He concluded the letter by outlining that Bibby was continuing to support Costcutter to resolve the immediate availability issues.
In recent months Costcutter has been linked with a reunion with Nisa as well as interest from the Co-op.
Last week Sainsbury’s shelved plans to make a formal bid for Nisa until at least the end of October while the Co-op is understood to have reaffirmed its interest in the buying group. Meanwhile Nisa’s current biggest member McColl’s has signed a major supply deal with Morrisons.
The Grocer also understands that cash & carry giant Bestway is keen to pursue further consolidation in the wholesale and convenience sector.
A spokeswoman for Costcutter said: “As we have informed our retailers, we are active in the market to explore all available opportunities. We will update our retailers when there is news to share.”