Canberra independent supermarket chain Supabarn has sold its wholesale operations to a company seeking to become the country's biggest food and grocery wholesaler.
The family-owned Supabarn had nine supermarkets across the ACT and NSW and two development sites until last year.
![Theo Koundouris, general manager of Supabarn Supermarkets](/web/20170423145755im_/http://www.canberratimes.com.au/content/dam/images/g/t/w/x/f/t/image.related.articleLeadwide.620x349.grdrdf.png/1485156952003.jpg)
Supabarn sought to sell most of its stores to the country's No.2 chain, Coles, but last year the competition regulator rejected that deal in favour of allowing Coles to buy five Supabarn supermarkets: three in Canberra and two in NSW.
This left Supabarn with three supermarkets in NSW and one in the ACT plus two development sites. It said at the time it would "reposition and refresh" its stores.
But weeks ago, Supabarn sold its warehouse and stock to irexchange, which Fairfax Media revealed last year was seeking to challenge the listed Metcash by setting up an alternative wholesale operator to service Australia's independent retailers.
Wholesalers have all but died over the past 15 years as Metcash locked in contracts with independent retailers – such as IGA supermarkets and the Mitre 10 hardware chain – competing with Woolworths and Coles.
irexchange's business model is allowing retailers to order stock through a portal and receive their goods within 48 hours from logistics firm DHL.
It has told potential investors the $18 billion independent retail sector is "in need of change if it is to withstand aggressive competition from incumbents and new entrants.
"The inability to compete sustainably on price is a significant and growing problem for independent retailers.
"Australia has, for a long time, been captive to a relatively small, protected independent grocery market which has encouraged inefficiency and oligopolistic behaviour."
Supabarn managing director Theo Koundouris and irexchange chief executive Clive Yoxall did not respond to requests for comment.
It is unclear how much irexchange paid for the Supabarn business and how this was funded. irexchange sought to raise $50 million from sophisticated investors and professional investors last year through broker Henslow, but that raising did not proceed. A spokesman for irexchange said the company was "funded" and trading in NSW.
In documents for that raising, it said it would "go live" in March this year and predicted earnings before interest, tax, depreciation and amortisation in its first financial year – the year to June 30, 2018 – of $45 million and a cash balance of $471 million.
irexchange has told suppliers it plans to pick up between 60 and 70 per cent of Metcash's customer base, although irexchange denied these numbers.
It is also believed to have held discussions with a Melbourne fast-moving consumer good company about manufacturing and sourcing its private-label products as an alternative to Metcash's home-brand range.
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