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
Recent Developments
Aug 30, 2024 - Rising Prices and Payrolls
- Wholesale prices for food distributors 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 comparison, according to the latest US Bureau of Labor Statistics data. At the retail level, the Consumer Price Index (CPI) for food increased by 2.2% year over year and 0.2% month over month in July. Out of the six major grocery store food group indexes, three saw monthly increases, while three saw monthly declines. Notably, prices for meats, poultry, fish, and eggs rose 0.7% month-over-month, outpacing the broader CPI for food. Employment by the industry grew 2.1% year over year in June, while average wages at food distributors inched up 0.7% over the same period to $27.32 per hour, BLS data show.
- 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.
- As America has grown more diverse, so has the US grocery store landscape, with Asian grocery chains expanding and changing how Americans shop and eat, The New York Times reports. Once a niche business dominated by mom-and-pop establishments, Asian grocery stores are now billion-dollar businesses, according to NYT. Large Asian grocery chains include H Mart, with 96 stores and $2 billion in sales; Patel Brothers, with 52 locations in 20 states; 99 Ranch Market (62 stores in 11 states); and online Asian food store Weee!, valued at $4.1 billion, NYT reports. Asian grocery chains cater to America’s fastest-growing ethnic group – Asian Americans – and non-Asians who enjoy the cuisine. Despite their recent growth, Asian American grocers still represent less than one percent of the total US grocery business but exercise an outsized impact as they dictate which products traditional and big-box grocery chains stock, per NYT.
- Food price increases are expected to continue to decelerate in 2024 compared to recent years, according to the USDA’s Food Price Outlook for 2024 released in May. In 2024, prices for all food are predicted to increase by 2.2%, with a prediction interval of 1.2-3.2%. Food-at-home prices are predicted to increase by 1%, with a prediction interval of -0.4-2.5%, and food-away-from-home prices are predicted to rise by 4.2%, with a prediction interval of 3.6-4.8%. By comparison, in 2023, food prices increased by 5.8%, 9.9% in 2022, 3.9% in 2021, and 3.5% in 2020, per the USDA. Wholesale food prices were relatively flat in May, dipping by just 0.1%. Easing food price inflation should benefit food distribution companies whose margins have been squeezed by high prices charged by food manufacturers and demand for lower prices from retailers.
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