The privately-owned Musgrave group has become the biggest supplier of food in the State following an agreement with Roches Stores which sees nine Roches supermarkets become part of Musgrave's SuperValu chain of franchised stores.
The link-up also puts paid to speculation that the Roches outlets in Dublin, Cork, Limerick, Galway and Waterford might be sold to a British multiple. Earlier this year, The Irish Times reported that Sainsbury was a likely bidder for the Roches supermarkets as an entry into the Irish market.
It is understood, however, that the recent decision by the Minister for the Environment, Mr Dempsey, to cap new superstores at 32,000 square feet has dulled Sainsbury's interest in the Irish retail market.
While Roches will retain ownership and management of the nine stores, they will be rebranded as SuperValu stores and - as part of the franchise arrangement - will source their supplies from Musgrave depots in Dublin, Cork and Galway.
The Roches food stores had sales of £100 million last year and have 200,000 square feet of selling space. There are four stores in Dublin - Henry Street, The Square at Tallaght, Blackrock and the Blanchardstown Centre - two in Cork in Patrick Street and Wilton and one each in Limerick, Galway and Waterford.
While the food stores will be rebranded as SuperValu, Roches will continue to sell clothing, hardware and household goods under its own name.
SuperValu's chief executive, Mr Eoin McGettigan, said that the Roches stores will operate exactly as the SuperValu franchisees who own their own stores and source their supplies from Musgrave. "The Roches stores are larger than the typical SuperValu store, but the average size of our stores has increased to 10,000 square feet from 5,000 square feet a few years ago," he said.
Mr McGettigan said the addition of the Roches stores would give SuperValu 20 per cent of the Irish food market, and 25 per cent when Musgrave's other symbol group Centra and its cash and carry operations are included. He said the Roches stores would bring to 203 the number of SuperValu outlets in the Republic.
"There are still a few places where we are not represented but I think 210 or 215 stores is the maximum we could have in the Republic," he said. In the North, where the acquisition of 21 Wellworth stores last year has increased the number of SuperValu outlets to 27, Mr McGettigan said he would aim to have a chain of about 50 franchised SuperValu stores.
Roches' chief executive, Mr Stephen Barry, said the link-up would mean that Roches would share in the benefits of Musgrave's £1.2 billion purchasing power.
"This is an excellent coming together of the resources of two Irish private companies in a franchise arrangement which has the potential to enhance the business and profitability of both. My management team has fully evaluated the benefits to the Roches Stores' business and to the company's staff and, on the basis of that evaluation, were happy to promote this agreement," he said.
He added the link-up will be good for Irish suppliers as Musgrave and Roches are strong supporters of branded products, which account for 90 per cent of sales compared to the 50 per cent own brands in British multiples. Most of SuperValu's own brands are sourced in Ireland.
