Palmer & Harvey is set to snap up PepsiCo UK’s van sales business as the wholesaling giant looks at ways to reduce its dependence on tobacco distribution, The Grocer can reveal.

Neither PepsiCo nor P&H would reveal details, but a deal, for an undisclosed sum, is expected by mid-May, following a 30-day consultation with employees, which kicked off this week.

The business being sold is understood to be Walkers Snack Services, which includes the van sales operation PepsiCo acquired from Golden Wonder in 2002. The business suffered a 92% drop in pre-tax profits to £155,000 and a 9% drop in sales to £27.9m in the year to 25 December 2010, according to the most recent accounts available at Companies House.

PepsiCo UK’s impulse sales director Jon Kyle said the sale would enable PepsiCo to be “100% focused” on the wholesale channel.

“Van sales remains an important route to market for Walkers, especially for our licensed customers, but it makes sense that we concentrate on what we do best - growing impulse by working closely with our wholesale partners,” he said.

Over the past three years PepsiCo had invested more than £5m in impulse, including £2.5m into doubling the size of its national field sales force across the UK. Its sales development representatives would also visit 20,000 indies this year - a 100% increase on 2011.

The purchase of the van sales operation by P&H would be a further step by the wholesaler in diversifying its portfolio from its reliance on tobacco sales, which accounted for £3.1bn of its overall £4bn turnover last year.

P&H has been traditionally strong at van sales. It already operates two impulse van sales operations - Snacksdirect and Sweetsdirect - and in September 2010 launched P&H Local, which targets the 3,500 indies that use P&H for only a small amount of their orders.

“This channel has played an important part in P&H’s recent success,” said CEO Chris Etherington. “The proposed acquisition will allow us to offer an even better service to our van sales customers.”

“When I started my career, van sales was the majority of the wholesale business. That died down and eventually bottomed out, but it’s coming back round again because people are looking for a personal service,” he told The Grocer in 2010.

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