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
Jun 30, 2024 - Wages Climb to New High
- Employment by food distributors grew 1.5% in April compared to a year ago, while average industry wages rose 3.1% over the same period to a new high of $27.45 per hour, according to the latest US Bureau of Labor Statistics data. Rising wages at food distribution companies, which have been trending steeply and steadily upward since early 2020, are supported by sharply higher producer prices for grocery and related product merchant wholesalers, up about 33% over the same time.
- Food prices 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.
- The unionization effort among truckers for natural foods distributor UNFI is picking up speed, with drivers in Pompano Beach, Florida, voting unanimously to join Teamsters Local 769, Supermarket News reported in May. The 74 drivers cited concerns over wages, benefits, and working conditions. It was the second time in as many weeks that UNFI drivers voted to unionize and the third time since the start of the year. In February, about 100 drivers in Georgia joined Teamsters Local 728 in Atlanta, and earlier in May, over 80 Sarasota, Fla. workers became part of Teamsters Local 79 in Tampa. That move defeated an attempt by UNFI to outsource jobs, according to SN. In related news, UNIF announced in May that it had extended its wholesale partnership with its largest customer, Whole Foods Market, until 2032. Under the extended agreement, UNFI will serve as the retailer’s primary distributor.
- Congress removed a safety requirement in March 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.
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