Nisa and Palmer & Harvey will lose billions of pounds of business following the McColl’s announcement that it is moving all of its supply partnerships over to Morrisons.

The news scuppers Nisa’s £2bn revenue target by 2019, further damages P&H’s position in the market and will disrupt the Competition and Markets Authority’s investigation into the Tesco-Booker deal.P&H played down the loss of the contract, with a spokesperson describing McColl’s decision as “disappointing”, but adding that the McColl’s contract “has been loss-making for some time”.

They added: “We are encouraged by the discussions we are having with a number of existing and potential customers.”

From January, Morrisons will begin to supply fresh food and grocery products to 1,650 McColl’s convenience stores and newsagents.

This will include exclusive access to Safeway branded products for 12 months. In a year’s time, Morrisons will also take over the supply of tobacco from P&H.

Describing the deal as “a defining moment for McColl’s”, Morrisons CEO Jonathan Miller highlighted the scale, quality and “outstanding food manufacturing capability” of Morrisons as key reasons behind McColl’s decision.