British supermarket Morrisons agrees wholesale deal with McColl's

By Emma Rumney

LONDON, Aug 1 (Reuters) - British supermarket Morrisons said it had agreed a long-term supply deal with local retailer McColl's which will take wholesale sales to more than 1 billion pounds ($1.3 billion) in due course.

Starting in Jan. 2018, the firm will become the sole supplier to 350 McColl's newsagents and 1,300 convenience stores, it said in a statement on Tuesday.

"This new partnership is a further example of Morrisons leveraging existing assets to access the UK's growing convenience food market in a capital light way," Chief Executive David Potts said.

Morrisons said that by the end of 2018 it expects its wholesale sales to top 700 million pounds including tobacco, with that figure rising above 1 billion pounds in "due course".

The deal also marks the revival of the Safeway brand after more than a decade, with McColl's to be given exclusive access to its more than 400 fresh, frozen and ambient food products for a one-year period.

Morrisons announced it would resurrect the brand in August 2016. It disappeared in 2004 when Morrisons acquired it and converted its remaining stores.

Its revival is part of Potts' drive to broaden Morrisons' business, targeting 50-100 million pounds of additional profit in the medium term from areas such as online business, wholesale and manufacturing.

($1 = 0.7568 pounds) (Reporting by Emma Rumney; editing by Jason Neely)