Musgrave's cash-and-carry division has signed a major new agreement to supply 30 Irish Shell petrol station forecourt shops with their total grocery requirements, a move that will add up to £15 million (€19.05 million) to Musgrave's turnover and which may pave the way for a similar arrangement covering Irish Shell's petrol stations in Northern Ireland.

Irish Shell retail director Mr John McDonagh said that the group plans to extend its chain of company-owned and company-operated (COCO) outlets to 60 by the end of 2000, and the supply agreement with Musgrave will apply to these new outlets. Musgrave has won the Irish Shell contract from BWG Foods, the Pernod Ricard distribution subsidiary in Ireland.

Mr McDonagh also said that discussions are in progress with Musgrave on extending the supply agreement to Irish Shell's 24 COCO outlets in Northern Ireland. He said that the supply agreement does not cover chilled products and newspapers/magazines, although this may change when Musgrave introduces a chilled foods division to its cash-and-carry business next year.

Mr McDonagh said that the agreement with Musgrave provides a "better overall package" for Irish Shell, which, like the other petrol companies, has been expanding its forecourt retail operations to counter the lower margins that the oil companies are getting on their petrol sales.

This is Musgrave's second major agreement with a petrol retailer - the group won a smaller contract to supply Texaco forecourt stores earlier this year. The managing director of Musgrave Cash and Carry, Mr Frank Coghlan, said that the arrangements with Irish Shell and Texaco do not preclude Musgrave from looking for other petrol station forecourt business, a market that has expanded by 60 per cent in the past three years to a forecast £280 million by the end of the year.

Statoil and Esso are the other two petrol companies with sizeable forecourt retail business, Statoil having about 40 stores and Esso over 50.