Tesco's Fresh & Easy division has taken over the US operations of two of its major suppliers, Wild Rocket Foods and 2 Sisters Foods, which supply fresh produce and meat to the group respectively.
Tim Mason, who heads up the Fresh & Easy business for Tesco in the US, told the Financial Times that the transaction involved "tens of millions of dollars", and added that the move highlighted Tesco's commitment to the US market.
Both suppliers, who followed Tesco to the US five years ago, provide products from facilities located near Fresh & Easy's distribution centre 50 miles East of Los Angeles. Wild Rocket is owned by the retailer's main UK produce supplier Langmead.
Mason told the publication the retailer's expansion had been slower than anticipated and said that the two suppliers had underperformed, but he added that the move would lead to "synergies and economies by putting the management teams of the units together...that we think will be very beneficial for the business."
Tesco intends to combine fresh produce buying for the chain with its overall purchasing of fruit and vegetables from California through a new global sourcing office.
Mason added that Fresh & Easy's small neighbourhood stores were continuing to gain customers and establish a strong brand, despite the challenges of the economic downturn, and that sales at its oldest stores were growing at the same rate as the rest of the chain.
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