Maxol renews wholesale contract with Spar owner for €340m

Maxol has renewed its wholesale contract with BWG Foods in a deal that will see the Spar owner continuing to supply the forecourt retailer’s food, alcohol and private-label goods ranges over the next four years.

BWG has also won the tender to supply Maxol’s range of baked and deli goods, bringing the overall value of the new contract to €340 million.

The McMullan family-owned fuel and convenience retail group said the agreement, which “followed a competitive tender process”, is the largest between the two companies in the 25-year history of their trading partnership.

“We are operating in a hugely dynamic sector and it’s both reassuring and exciting to have agreed a strategic supply and support agreement with BWG Foods, a partner who bring extensive experience and knowledge as a leader in the evolving Irish convenience market,” said Maxol chief executive Brian Donaldson.

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“The tender process was a competitive one, but in working with BWG Foods we can continue to provide our customers with the convenience products and service they want as we place a big focus on local produce, which is a key tenet for the company.”

Leo Crawford, chief executive of BWG, said the group was “extremely proud” to continue its relationship with Maxol.

In recent years, the forecourt retailer – which operates 242 service stations across Ireland, 112 of which it owns directly – has pressed ahead with efforts to move its core offering from fuel to convenience food to future-proof its business against an expected decline in hydrocarbon fuel demand over the coming years.

Profits at Maxol jumped by almost 60 per cent in 2021 to €26.9 million, some €10 million higher than pre-pandemic 2019 amid surging demand for both its food and fuel offerings. Mr Donaldson told reporters in November 2022 that the popularity of “staycation” holidays in the previous year had significantly boosted fuel sales over the summer months while the switch to remote working had increased demand for Maxol’s convenience offering.

However, he said preliminary figures for 2022 indicated fuel sales volumes had declined throughout the year because of changing demand patterns, belt-tightening by consumers and the prevalence of hybrid working.

“The slower recovering sites would be those that would be closest to Dublin city centre and that’s no surprise,” he said. “At best, people are probably commuting into the office three days a week. Most of our stores are in residential neighbourhoods. Those stores have actually got an extra two days’ trading because we are servicing people’s needs. That’s for breakfast, for lunch and for evening meals solutions. It’s even just to get out of the house.”

Mr Donaldson said he expected consumers to continue to tighten their budgets throughout 2023. “The next sort of 24 months I think could be fairly bumpy so it is going to be a very different period in 2023 and 2024,” he said.