By Kimberley Donoghue PBN Web Editor Twitter: @kydonoghue
PROVIDENCE – United Natural Foods Inc. said Monday it signed a three-year distribution agreement with Safeway Inc. that is expected to boost annual revenue by 4 percent, or approximately $150 million, in fiscal 2012.
UNFI said it will assume distribution to all of Safeway’s “banners” in the United States for non-proprietary natural, organic and specialty products beginning in October.
It will take a $1.5 million to $2.5 million hit in startup expenses during the fourth quarter of fiscal 2011 – estimated between $500,000 and $1 million - and the remainder in the first quarter of fiscal 2012.
“We are pleased to establish a distribution relationship with Safeway and are excited about the opportunities this agreement provides,” said Sean Griffin, senior vice president of UNFI’s national distribution. “Our ability to continue to gain market share reflects the ongoing efforts by all of our associates to service our customers’ needs and further strengthens our position as the nation’s leading distributor of natural, organic and specialty products. 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.”
Safeway is a Fortune 100 company and one of the largest food and drug retailers in North America, a news release said. UNFI did not disclose the terms of the agreement.
In June, UNFI announced it was divesting its nonfoods and general-merchandise division after signing an asset-purchase agreement with L&R Distributors Inc.; the transaction is slated to close sometime in the first quarter of fiscal 2012.