UK – British supermarket group, Sainsbury’s has signed a major deal to supply private label products to Australia’s second largest retail chain Coles.

The arrangement, which Sainsbury’s says is its biggest wholesale deal yet, will see Coles sell a new range of groceries and packaged foods from pre-made meals, to health food and icecream among others.

Coles chief executive, Greg Davis said that the partnership with Sainsbury’s will “accelerate the introduction of innovative products to Coles Own Brand” by opening up “a range of food and groceries that are already proven in the international market but not yet available in Australia.”

Private label products currently make up 30 per cent of Coles’ sales equivalent to US$10 billion. Sainsbury’s, the UK’s second largest supermarket chain behind Tesco, generates half its annual sales (US$17.7 billion) from its private label range.

In 2019, Coles added 1200 private label products to its range including the “I’m Free From” range of products aimed at customers with food intolerances, vegan and vegetarian ranges under the Nature’s Kitchen, Herb & Sons and Wellness Road brands, and Coles Special Burger Sauce.

However, the supermarket says that a majority of its private label range is grown and made in Australia, a position that will not change as the retailer is still working with suppliers to further add Australian-made products.

“This deal will free up resources for our own product development team so that they can drive further innovation and help us fulfil our strategy to make Coles an Own Brand Powerhouse,” Davis explains.     

Sainsbury’s business development director Michael Luck said, “Great quality food has been at the heart of our business for 150 years and we’re excited to bring Sainsbury’s fantastic products to Australia, offering Coles customers a range of high quality, innovative products that they won’t be able to find anywhere else.”

Sainsbury’s is stepping-up its pursuit of wholesale business after its botched attempt to take over rival supermarket group Asda for £7.3 billion (US$9.3 billion). However, the deal was blocked by the competition regulator in April.

The UK’s second largest grocer said pretax profits dived more than 90% to £9m (US$11.55 million) in the six months to 21 September after the one-off property write-down, compared with £107m (US$137.31 million) in the same period a year before.

Sainsbury’s and the other traditional supermarkets, including Tesco, Asda and Morrisons have all had to slash prices on basic groceries while trying to improve service, as discounters including Aldi, Lidl, B&M and Home Bargains have all expanded rapidly in recent years.