Caltex and Woolworths plan to lead market

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Caltex and Woolworth have announced a long-term strategic alliance across convenience, wholesale food, redemption, loyalty and fuel supply.

The businesses say they hope to create a “market-leading convenience offering”.

Under the agreement, they will roll out the co-branded offering across up to 250 Caltex sites. Fifty sites will be rolled out within the first two years.

The stores will be operated by Caltex and incorporate the key elements of Woolworths’ evolving Metro convenience offering. The fuel company will pay Woolworths a royalty for use of the banner.

The announcement comes just two weeks after BP confirmed it would not be proceeding with ACCC-opposed plans to acquire Woolworths’ fuel business.

Woolworths Group CEO Brad Banducci said: “While we were disappointed with the termination of the BP agreement, we believe the customer benefits of our (new) alliance … will allow us to deliver a compelling outcome for both our customers and our shareholders.

“Customers will have access to an extended redemption and loyalty network, and an exciting new convenience food format.

“The Woolworths Petrol business is in a good position to pursue its own growth agenda, supported by a highly competitive fuel-supply agreement and a strengthened management team, all underpinned by solid links to the Woolworths food business.”

The expanded partnership will see Woolworths start a long-term wholesale food supply to more than 700 existing Caltex convenience sites. The wholesale grocery-supply agreement will allow the fuel supplier to source products through Woolworths’ supply chain, providing benefits to Caltex’s network.

It will also become a core business partner in the Woolworths Rewards program. This will entitle eligible customers to earn and redeem Woolworths Rewards points on certain fuel and in-store merchandise purchases.

The existing redemption network will be expanded from 104 sites to 229 sites. These sites will offer the Woolworths’ fuel discount redemption under similar terms to current stores.

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.”

Woolworths Group has also signed a new 15-year wholesale fuel-supply agreement with Caltex. This ‘locks in’ a market-competitive cost of fuel that is expected to deliver a significant and sustainable earnings uplift to the Woolworths Petrol business.