LONDON (Reuters) - Britain’s major supermarkets sought to reassure smokers on Wednesday that the collapse of Palmer & Harvey (P&H), the UK’s biggest tobacco distributor, would not lead to shortages of cigarettes.
P&H, which also delivers food and drink to supermarkets and convenience stores, went into administration on Tuesday after running out of cash, raising the possibility of tobacco shortages across the UK.
However, Tesco and Sainsbury’s, both said they had set in train contingency plans to ensure their stores were stocked with sufficient tobacco products.
“We can reassure Sainsbury’s customers that we have strong contingencies in place,” said a spokesman for the chain.
Similarly a Tesco spokesman said: “We will now work to ensure that we can continue to meet our customers’ shopping needs.”
Analysts said the stores of Britain’s major retailers would typically hold a few days tobacco stock. They said that as P&H had been teetering on the brink of collapse for several months the major retailers would have been talking to the big tobacco companies to work out the logistics of maintaining supplies.
Imperial Brands, maker of Kool, Winston and Gauloises cigarettes, said on Wednesday it did not anticipate any significant disruption to its UK operations.
P&H’s collapse would, however, cause problems for some smaller convenience store operators.
Analysts at Peel Hunt said nearly half of the 1,650 stores in the McColl’s chain were supplied by P&H. They speculated that Morrisons, Britain’s fourth biggest supermarkets operator, could begin a few months early a long-term wholesale supply deal it agreed with McColl’s in August.
Separately Britain’s Co-operative Group said on Wednesday it had agreed to become the exclusive wholesale supplier from next spring to Costcutter Supermarkets Group (CSG) which has a network of 2,200 Costcutter, Mace, Simply Fresh, Supershop and kwiksave convenience stores.
The Co-op was also examining ways to support independent retailers within CSG until the formal agreement begins.
“With P&H no longer able to supply our stores, we have activated our contingency plans that will see our retailers supported by the Co-op and other suppliers in the run-up to our deal with the Co-op,” said CSG CEO Darcy Willson-Rymer.
Though Tesco had earlier this year signed a new deal with P&H, analysts said its demise in part reflected Tesco’s proposed 3.7 billion-pound ($4.96 billion) takeover of Booker, Britain’s biggest wholesaler, a deal which earlier this month won provisional approval from the competition regulator.
Meanwhile the shopowner members of the Nisa Retail convenience store franchiser and wholesale group earlier this month accepted the Co-op’s 138 million-pound takeover offer.
Reporting by James Davey Editing by Greg Mahlich