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 27,400 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 $32 million annually.

    • The food distribution industry comprises about 27,400 companies, which generate over $875 billion annually and employ about 817,000 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
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Oct 30, 2024 - Prices Rising Amid Falling Sales
                                    • Sales for food distribution companies declined 1.3% in June compared to a year ago and were down 6.8% compared to May, according to Census Bureau figures. Still, wholesale prices continue to climb, with producer prices for grocery and related product merchant wholesalers up 5.5% in July after rising 11.3% in the previous July-versus-July annual comparison, according to the latest US Bureau of Labor Statistics data. Employment by the industry grew 1.5% year over year in July, while average wages at food distributors inched up 0.3% over the same period to $27.33 per hour, BLS data show.
                                    • Grocery prices are expected to increase by just 1.2% in 2024 and 1.6% in 2025, according to the USDA’s October 2024 Food Price Outlook forecast. By comparison, in 2023 and 2022 grocery prices rose 5% and 11.4%, respectively. Beef prices are expected to rise 5.5% this year and 2.2% in 2025. Pork is forecast to increase 1.7% this year and 2.2% next year. Egg prices continue to show volatility, with 2024 costs projected to rise 8.8%. The 2025 egg price increase was revised even higher, to 10.5%, a sharp jump from the 4.7% projected in September. The USDA noted highly pathogenic avian influenza outbreaks have significantly reduced the US egg-layer flock, contributing to the surge in price.
                                    • The Federal Motor Carrier Safety Administration in August announced awards totaling nearly $3.5 million to 27 colleges and other commercial driver’s license (CDL) training programs through its Commercial Motor Vehicle Operator Safety Training (CMVOST) Grant Program. The new funds are intended to improve roadway safety by providing additional training for current CDL holders and creating career opportunities for drivers in the commercial motor vehicle industry. Specifically, the grants look to boost the driver population by providing opportunities for current or former members of the US Armed Forces and certain family members to enter the trucking or busing industry as drivers and to help increase training opportunities for candidates from rural, refugee, and underserved communities. According to the American Trucking Association, there is a shortage of roughly 60,000 drivers in today’s market, which is expected to grow to 82,000 by the end of 2024.
                                    • The food industry is pushing back against Democratic presidential nominee and VP Kamala Harris's call for a federal ban on “price gouging” in food and groceries, The Wall Street Journal reported in August. Harris has called out the meat processing industry, which she claims is highly consolidated and contributes to rising grocery prices – a primary source of concern for voters. So far, Harris has declined to detail what her administration would consider “excessive” price gouging and how they would target companies, appearing to leave much of those decisions up to the Federal Trade Commission. The meat industry has rejected Harris’s point that meat and poultry prices are central to food inflation, asserting that prices are based on supply and demand and that the livestock and poultry industries have faced avian influenza and a shortage of cattle, along with higher energy costs and a tight labor market.
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