Multimillion pound investment agreement gives supermarket company exclusive selling rights for struggling firm's products

Prince Charles struggling Duchy Originals food company was today thrown a financial lifeline when the supermarket firm Waitrose announced a multimillion pound investment deal.

The new partners unveiled the terms of a licensing agreement that will give Waitrose – the largest and longest-standing stockist of Duchy Originals – the exclusive right to manufacture, distribute and sell its products in the UK.

The organic food and farming company, founded by the prince in 1990, has seen profits slump in the last two years as cash-strapped shoppers have shunned its highly-priced biscuits, jams and other luxury food products in the recession.

Waitrose is pledging to expand the current range of 200 "quintessentially British products" to around 500, and will pay a fixed percentage royalty to Duchy Originals on all wholesale and retail purchases.

The collection is expected to become Waitrose's luxury range but will also be sold wholesale through independent and niche retailers.

Both companies said they were confident that increased investment in the development of Duchy Originals would trigger sufficient sales growth over the next 10 years to generate a substantial increase in the royalties going to charity.

Through the Prince's Charities Foundation, Duchy Originals supports a wide variety of projects ranging from the environment to arts and education.

The company has so far donated almost £7m to the prince's favourite charitable causes throughout the UK and overseas, but donations have slowed because of the recession.

Charles set up Duchy Originals to promote organic food and farming, a cause he championed even when it was unfashionable.

The first product in its range was the oaten biscuit, made from oats grown on Home Farm, the organic farm on his Highgrove estate, in Gloucestershire.

Royal aides said the prince was "delighted" by the agreement, which he sees as an endorsement of the well-established and prestigious Duchy brand.

He will retain a "key hands-on supervisory role", while Duchy Originals will remain an independent company wholly owned by the Prince's Charities Foundation.

"This is a match made in heaven, creating a partnership with a shared passion for quality food, sustainable farming, excellent relationships with suppliers and for charitable giving," Mark Price, the managing director of Waitrose, said.

"Duchy Originals products have always been firm favourites with our customers, and we now have the opportunity to develop the range into the definitive premium, sustainable British food brand."

Andrew Baker, the chief executive of Duchy Originals, said the deal was "a hugely important moment for Duchy Originals".

"This new partnership will take our pioneering company to the next level, accelerating the growth of the brand and amplifying its voice as a champion of sustainably grown and produced food from the UK," he added.

He said that because of its constitution and charitable status, Duchy Originals "has never been able to build up reserves for investing in future growth" and said now was "the time to make the next step and this agreement is the best way for us to realise our growth ambitions".

Sir Michael Peat, Charles's principal private secretary, said the joint venture was "all to do with moving to the next level".

"You know Waitrose aren't in some way bailing out or rescuing Duchy Originals because we are not staying as we are – we're fine as we are, they are helping us to move to the next level."

The Guardian 10/9/09