United Natural Foods Inc (Nasdaq: UNFI) has signed a three-year distribution agreement with Safeway Inc (NYSE: SWY). A brief transition period from Safeway’s current distributors is expected, which will coincide with termination of current distributors’ distribution agreements.
UNFI will assume distribution to all of Safeway’s banners in the United States for non-proprietary natural, organic, and specialty products effective October 2011. It anticipates incremental annual volume from this contract will increase annual revenues by about 4% in fiscal 2012.
Sean Griffin, UNFI’s senior vice-president, national distribution, said, “We are in the process of finalizing a transition plan with Safeway in order to provide them with excellent service levels and support, while ensuring there are no disruptions to any of our existing customers.”
“We are looking forward to our new partnership with UNFI to provide the variety of specialty, natural, organic, and regionally relevant products that will meet our customers’ needs,” said Kelly Griffith, Safeway’s president of merchandising.
UNFI will incur approximately $1.5 million to $2.5 million in total start-up expenses during the fourth quarter of fiscal 2011 and the first quarter of fiscal 2012 to transition this business. It is anticipated that about $0.5 million to $1.0 million in costs will occur in the fourth quarter of fiscal 2011, ended July 30, 2011, with the remaining costs being incurred in the first quarter of fiscal 2012.
Carrying and distributing more than 60,000 products to more than 23,000 locations throughout the United States and Canada, UNFI serves a variety of retail formats including conventional supermarket chains, natural product superstores, independent retail operators, and the foodservice channel. Access www.unfi.com for more information.
Safeway operates 1,692 stores in the United States and western Canada and had annual sales of $41.1 billion in 2010. For more details, visit www.safeway.com.
