Safeway, UNFI Ink 3-Year Distribution Agreement

Safeway Inc. and United Natural Foods Inc. (UNFI) have signed a three-year distribution agreement. Providence, R.I.-based UNFI will take over distribution to all of the grocer’s U.S. banners for non-proprietary natural, organic and specialty products in October 2011. UNFI anticipates incremental annual volume from the deal will boost annual revenues by about 4 percent in fiscal 2012.

“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,” noted UNFI SVP, national distribution Sean Griffin. “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.”

Kelly Griffith, Safeway’s president of merchandising, added that the deal would “provide the variety of specialty, natural, organic and regionally relevant products that will meet our customers’ needs.”

UNFI will incur around $1.5 million to $2.5 million in total startup expenses during the fourth quarter of fiscal 2011 and the first quarter of fiscal 2012 to transition this business. Approximately $0.5 million to $1.0 million in costs are expected occur in the fourth quarter of fiscal 2011, ended July 30, 2011, with the remaining costs to be incurred in the first quarter of fiscal 2012.

Safeway operates 1,692 stores in the United States and western Canada. UNFI carries and distributes more than 60,000 products to more than 23,000 customer locations throughout the United States and Canada. The company serves a wide variety of retail formats, including conventional supermarket chains, natural product superstores, independent retail operators and the foodservice channel.