Food Distributors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 27,300 food distributors in the US consolidate products from multiple suppliers for delivery to retailers, foodservice providers, and other customers. Distributors may offer a wide variety of food products or specialize in one or more categories. Major categories include dry grocery, frozen and refrigerated foods, dairy, poultry, seafood, meat, fresh products, or baked goods.
Volatility In Manufacturers’ Prices
Food distributors act as a “middleman” between suppliers and retailers, leaving companies vulnerable to changes in manufacturers’ prices, which can rise (or fall) by double-digit percentages in a single year.
Direct Selling And Buying
Major food manufacturers, looking to optimize their own supply chains, are selling directly to large retailers and eliminating food distributors’ role as the middleman.
Industry size & Structure
A typical food distributor operates out of a single location, employs fewer than 10 workers, and generates about $23 million annually.
- The food distribution industry consists of about 27,300 companies, which generate over $660 billion annually and employ about 828,600 workers.
- Most food distributors are small, independent operators.
- Customer segments include retailers (grocery stores, convenience stores, drugstores), food service (restaurants, hotels, schools, hospitals), and military commissaries.
- Large food distributors include Sysco, US Foods, C&S Wholesale Grocers, Performance Food Group (PFG), and Associated Wholesale Grocers.
Industry Forecast
Food Distributors Industry Growth
Recent Developments
Mar 30, 2024 - Training Teen Drivers
- Congress in March removed a safety requirement that the trucking industry says discouraged participation in a pilot program to train younger drivers, the International Foodservice Distributors Association (IFDA) reports. The Safe Driver Apprenticeship Pilot Program was intended to bolster long-haul trucking by allowing drivers 18 to 20 years old to operate in interstate commerce provided participating motor carriers register their apprenticeship programs with the Department of Labor and equip their trucks with inward-facing cameras, a provision the IFDA and American Trucking Association say sharply limited enrollment in the program. The March appropriations bill contains a rider blocking the camera requirement. According to the IDFA and ATA, its removal restores Congress’ original intent, which was to strengthen US supply chains by ensuring the trucking industry has the drivers it needs to meet growing demand. Currently, federal law requires interstate truckers to be at least 21 years old.
- About 100 drivers for wholesale distributor United Natural Foods (UNFI) in Atlanta, Georgia joined the local Teamsters union in March, bringing to more than 1,000 UNFI workers who have joined a union over the last year or so, Supermarket News reports. Overall, the International Brotherhood of Teamsters represents over 4,000 UNFI workers. Outsourcing, along with improved wages, better benefits, a pension, and job security, are among the reasons drivers at the company say they voted to join Teamsters Local 728. The unionization drive at UNFI in Atlanta is among the latest labor actions taken by drivers for food distributors in recent years. Last year, drivers for SYSCO and US Foods went out on strike to win better contracts.
- Grocers are coming under increasing pressure from the Biden administration to lower their prices, The New York Times reports citing an analysis by the White House Council of Economic Advisers. An analysis of Census Bureau data shows that grocers have maintained the higher profit margins they began generating following the onset of the pandemic while at the same time, other types of retailers have reported lower margins. It indicates that the food and beverage sector is generating profit margins that are approximately 2% above where they were in early 2020, bringing them to a 20-year high, according to NYT. “There are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation,” the president remarked in late January. After hitting a 40-year high of 13.5% in September 2022, grocery inflation has steadily eased to a 1.3% annual rate in December 2023.
- Consumers are planning to spend more money on groceries and less on dining out at restaurants in 2024, according to a new report by Kroger’s in-house consumer research firm 84.51°, Supermarket News reported in January. The Kroger survey showed that nearly one in five (19%) respondents said they plan to spend more on groceries over the next 12 months, and 53% said they’re going to increase their contributions to savings and investments. Meanwhile, more than half (57%) plan to spend less this year on dining out, carry out, and food delivery services. Also, of those surveyed, more than half (58%) said they plan to follow a diet in 2024.
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