Safeway returns as Morrisons resurrects brand following McColl's deal

Supermarket giant Morrisons has unveiled plans to bring back the Safeway brand in the shape of a new range of products for wholesalers and independent retailers.

Britain's fourth-largest supermarket, which acquired Safeway's UK operations in a £3bn deal in 2004, has struck an agreement with grocery chain McColl's, which will see the supermarket supply Morrisons and Safeway branded products to 1,300 convenience stores and 350 newsagents starting from January 2018.

"In McColl's, Morrisons gain a long-term partner of significant scale with a growing neighbourhood convenience estate and in Morrisons we gain access to their best-in-class sourcing and manufacturing capabilities," said Jonathan Miller, chief executive of McColl's.

Miller added the deal could prove to be a "defining moment" for the company, which recently expanded its estate by securing approximately 300 Co-op stores.

Morrisons said the deal will take its wholesale supply sales to more than £1bn "in due course", with a phased programme beginning in January. By the end of next year, the FTSE 100-listed supermarket expects its annual total sales from its wholesale partners to exceed the £700m threshold.

"We are also pleased to be reviving the Safeway brand which we know customers will enjoy," said Morrisons chief executive David Potts.

"This new partnership is a further example of Morrisons leveraging existing assets to access the UK's growing convenience food market in a capital light way. Wholesale supply will help make us a broader, stronger business."

Safeway was established in the UK in 1962 by US namesake and parent company Safeway, before being sold off to Argyll Foods for £681m in 1987 and then to Morrisons. Following the acquisition, the latter converted most Safeway's 479 stores into Morrisons shops, while others were sold off.