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 27,600 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.

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.

Volatility In Manufacturers’ Prices

Food distributors act as a “middleman” between suppliers and retailers, leaving companies vulnerable to changes in manufacturers’ prices, which can change as much as 9% in a single year.

Industry size & Structure

A typical food distributor operates out of a single location, employs 27 workers, and generates about $24 million annually.

    • The food distribution industry consists of about 27,600 companies which generate over $675 billion annually and employ about 757,000 workers.
    • Most food distributors are small, independent operators; 78% have a single location, and 65% employ fewer than 10 workers.
    • Customer segments include retailers (grocery stores, convenience stores, drugstores), foodservice (restaurants, hotels, schools, hospitals), and military commissaries.
    • Large food distributors include SuperValu, Sysco, C&S Wholesale Grocers, Wakefern Food Corp., and Associated Wholesale Grocers.
                                    Industry Forecast
                                    Food Distributors Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Nov 28, 2022 - 2023 Culinary Forecast
                                    • Chicken sandwiches, charcuterie boards, nontraditional nut and seed milks, and Southeast Asian fare are top trends for 2023, according to the "What's Hot" Culinary Forecast released by the National Restaurant Association in November. Fried chicken sandwiches remain a top trend in the lunch category, but enhanced with spicy and sweet-heat fusion flavors, according to the 500 chefs surveyed for the report. Not surprisingly, inflation is having an impact on consumer spending choices with the dinner category favoring less-expensive meat cuts, such as chicken thighs, beef chuck, and pork shoulder, while value meals lead the breakfast category. Restaurant chefs are responding by looking for ways to cut protein costs. For beverages, spritzes top the alcohol category, tapping into the consumer trend toward low- and no-alcohol cocktails. Alternative sweeteners like coconut sugar and maple sugar are trending in desserts.
                                    • The diesel fuel price premium is being felt throughout the supply chain, with food distributors paying more to transport products. A potential shortage of diesel fuel has driven the price to a record premium over gasoline and crude oil, The Wall Street Journal reports. While the price of gasoline is up about 14% so far this year, the price for diesel has risen by about 50%, to $5.35 a gallon, according to energy price data from AAA/OPIS. The gains widened the gap between the two fuels to an all-time high of $1.61, versus 23 cents a year ago. Dwindling stocks, the war in Ukraine, severe weather, and other disruptions to the global energy markets are behind the widening gap, according to WSJ. In November 2022, the Energy Information Administration reported the country had only 25 days of diesel in reserve, the lowest level since 2008.
                                    • Sysco – one of the nation’s largest food distribution companies – in October 2022 settled a nearly 3-week strike by truckers with a new labor agreement, the Teamsters union said. The five-year agreement includes an immediate $5 per hour pay raise, an $11 per hour raise over the course of the agreement, improved retirement benefits, and keeps drivers on the union health insurance plan, according to Teamsters Local 653. Some 300 workers at the Sysco facility in Plympton, Massachusetts went on strike Oct. 1. The new labor agreement follows a series of strikes by Sysco employees across the country, specifically with the company’s Arizona and Syracuse, New York branches. The deal was a big win for the drivers who have seen their bargaining leverage improve amid a severe labor shortage.
                                    • Amid higher prices for ingredients, packaging, and other inputs, some consumer packaged goods manufacturers have decreased product weight, quantity, or size to reduce costs. Known as “shrinkflation,” downsized products for the same price come at a time when inflation-pinched consumers are hypervigilant about getting the most for their dollar. According to a recent survey by Morning Consult, nearly two-thirds of shoppers are worried about shrinkflation. To cope with shrinkflation, nearly half of consumers say they’ve switched brands, and/or bought generic brands. A third have switched to buying in bulk, and 30% have stopped buying specific brands. Of all major grocery categories, snacks are most affected by shrinkflation, with 55% of shoppers reporting they have noticed the phenomenon in the snack space. Other food categories that have most affected consumers include pantry items, frozen foods, meat, bread and pastries, and beverages.
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