After a number of tough years, do Costcutter retailers now have something to look forward to after the group was acquired by Bestway Wholesale in the week before Christmas?
By Antony Begley
December is normally a relatively quiet period on the news front as the sector gears up for the madness of Christmas, but after a year like no other, it was hardly surprising to end 2020 on a tumultuous note as Bestway Wholesale announced it had acquired Costcutter Supermarkets Group just a few days before Christmas.
Formerly owned by Bibby Line Group, the addition of Costcutter takes Bestway Wholesale’s annual turnover to almost £3bn and takes its symbol, franchise and company-owned retail estate to more than 3,795 stores in total. Of those, 2,682 are fascia stores and 195 are company-owned.
It’s a major move by any standards and takes Bestway up another level or two, while also offering the potential of a brighter future for Costcutter retail customers.
The deal still requires FCA approval but, should it go through, 2021 will be a very different year for both groups, now merged into the UK’s largest independent food and drink wholesaler. It will also become the 11th largest independently owned multi-national conglomerate of any description in the UK.
The acquisition follows an improvement in Costcutter’s financial performance over the last couple of years. During the 12 months to 31 December 2019, CSG’s sales rose by 10% to £426m with sales and profitability continuing to rise throughout 2020 as consumers increasingly shopped locally as a result of the Covid-19 pandemic.
Bestway expects to complete the acquisition in the first quarter of this year but says that, while Costcutter will become part of Bestway Wholesale’s retail division, it will “continue to operate as normal” – although without the services of Darcy Willson-Rymer, Costcutter’s CEO of nine years who will leave the business following the acquisition.
Bestway Wholesale has highlighted that the existing Costcutter supply contract with Co-op/Nisa is not affected by the acquisition and Nisa will continue to supply Costcutter stores. Costcutter retailers will retain access to the same range they have today, including the Co-op Own Brand range.
Approximately 1,500 stores currently branded as Costcutter, Mace, Supershop, Kwiksave, and Simply Fresh, will join Bestway Wholesale’s retail brands: Bargain Booze, Best-One, Wine Rack, Select Convenience and Central Convenience. Bestway says “it is committed to ensuring retailers continue to enjoy all the benefits they currently enjoy with Costcutter”.
Founded by Sir Anwar Pervez in 1976, the family remains at the helm of Bestway with his nephew, Lord Zameer Choudrey CEO of Bestway Group, and Sir Anwar’s son, Dawood Pervez, as Managing Director of Bestway Wholesale.
Speaking of the acquisition, Dawood Pervez says: “Costcutter is a great brand with a long heritage and a history of success alongside industry-leading and loyal retailers, with some of the best in-store execution in the business. The acquisition by Bestway Wholesale enables us to further build on our solid foundations in independent retail, allowing us to expand on our already established, and highly respected, fascias and national network of stores. Clearly, there will be benefits of joining forces for our retailers, for shoppers, and for suppliers.”
“Independent retailers are vital hubs within their local communities that have become increasingly valued and appreciated by consumers – and government – for their services during the Covid-19 pandemic. We will continue to support and champion this sector and will be investing for its future alongside range, service excellence and technology. Our message to all our retailers is that ‘together we are stronger’ at a time of economic uncertainty, both with Covid-19 and Brexit ahead.”
John Cresswell, CEO of Bibby Line Group, commented: “Over the last two years, Costcutter has transformed itself into a profitable and much stronger business, and I’d like to thank the team for their unstinting commitment and passion for helping independent retailers thrive. We hope Costcutter will continue to prosper and grow as it becomes part of a larger business with deep retail expertise.”
With increased buying power, the larger group should now be well positioned to enhance its offer to both retailers and shoppers in 2021 and beyond.