Caltex and Woolworths have entered into a new fuel supply agreement, and expanded their partnership to include the co- creation of a market-leading convenience offering in addition to long term wholesale grocery supply, loyalty and redemption arrangements.
Caltex’s new long term wholesale fuel supply deal with Woolworths, will ensure the safe and reliable supply of high quality fuels to Woolworths for the next 15 years. Caltex will make a one-off payment of approximately $50 million in July 2018, in consideration of Woolworths entering into the new wholesale fuel supply agreement. The new pact will allow Caltex to continue to realize benefits from its integrated supply chain, including the value created by sourcing volumes through its Ampol Singapore business, higher utilization levels of infrastructure and distribution networks, and by serving customers through the largest site network in Australia. Ampol is enabled to continue its growth as a major regional fuel supplier, maintaining Caltex’s position as the leading provider of transport fuel in Australia.
Caltex and Woolworths, under the new convenience agreement, will co-create and rollout a co-branded market-leading convenience offering under the Metro banner across up to 250 Caltex sites, with 50 sites rolled out within the first two years. Caltex, by partnering with Woolworths, will draw on the scale and capabilities of the Woolworths’ fresh food business, while at the same time, capitalizing on the success to date of its Foodary rollout.
With Caltex paying Woolworths a royalty for use of the Metro banner, all stores will continue to be operated by Caltex as part of the Caltex network. A range of agreements in relation to wholesale grocery supply, Caltex’s participation in the Woolworths Rewards program as a core partner, and an expanded redemption program have been entered into by Caltex and Woolworths. A platform to accelerate growth of Caltex’s convenience retail business will be created by these agreements.
Caltex will be allowed to source products through Woolworths’ supply, as a result of the wholesale grocery supply agreement chain providing benefits to Caltex’s network. Enabling eligible customers to earn and redeem Woolworths Rewards points on eligible fuel and in-store merchandise purchases, Caltex will become a core Petrol and Convenience (P&C) business partner in the Woolworths Rewards program. With these sites offering the Woolworths’ fuel discount redemption under similar terms to current stores, the existing redemption network will be expanded from 104 sites to 229 sites.
Caltex MD and CEO, Julian Segal said “The alliance with Woolworths will allow Caltex to provide a very competitive convenience retail offering to its customers, along with an expanded redemption and new loyalty offering. It represents a significant milestone in the transformation of Caltex. Not only do these agreements secure the long-term supply of quality fuel to the Woolworths sites, but they accelerate our Freedom of Convenience Strategy and confirm Convenience Retail as a core business alongside Fuels & Infrastructure.” PWKD06072018
Editors Note: This announcement follows quickly after the recent breakdown of the BP Woolworths talks in the face of ACCC and other opposition. It is also a significant move by both Woolworths & Caltex intentions to lead the market. Australia has also witnessed Viva Energy announcement to float the company which is the biggest IPO in Australia for 4 years. The implications of these key news items are important for the Australian fuel retail market.