Caltex Australia and Woolworths yesterday announced that they have entered into a long-term strategic alliance across the areas of fuel supply, convenience wholesale food, redemption and loyalty.
The new fuel supply agreement will ensure the safe and reliable supply of fuels to Woolworths for the next 15 years.
In consideration of Woolworths entering into the new wholesale fuel supply agreement, Caltex will make a one-off payment of approximately $50 million in July 2018. The new fuel supply agreement is on terms that represent an $80 million reduction in annual EBIT to Caltex, relative to the current contract.
Under the new convenience agreement, Caltex and Woolworth will also co-create and rollout a co-branded, market-leading convenience offering under the Metro banner. This will extend to up to 250 Caltex sites, with 50 sites to be rolled out within two years.
All stores will continue to be operated by Caltex as part of the Caltex network, with Caltex paying Woolworths a royalty for use of the Metro banner.
Woolworths’ popular four cents per litre fuel redemption offering will also be expanded across 125 new sites within the Caltex network, in addition to the 104 redemption sites that exist today.
Customers will also earn Woolworths Rewards points on fuel and merchandise purchases at over 700 Caltex sites across Australia.
Caltex and Woolworths have also entered into commercial arrangements covering wholesale grocery product supply, redemption and Caltex’s participation in the Woolworths’ Rewards program that will further enhance Caltex’s convenience offering.