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.

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 fewer than 10 workers, and generates about $23 million annually.

    • The food distribution industry consists of about 27,300 companies, which generate over $639 billion annually and employ about 788,400 workers.
    • Most food distributors are small, independent operators.
    • 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

                                    Apr 30, 2023 - Food Distributors Electrify Fleets
                                    • Sysco is transforming a distribution center into an electric vehicle hub, Food Service Director (FSD) reported in April. Once completed, Sysco’s facility in Riverside, California will house 40 dual-port DC fast-charging stations, 40 electric vehicles (EVs) and 40 electric refrigerated trailers. The company wants to add 2,800 EVs to its US delivery fleet by 2030 to support its goal to reduce its direct emissions by 27.5% by 2030, according to FSD. Currently, Sysco operates 11 electric-powered tractors at the facility in Riverside and expects to deploy 20 total by this summer, according to a company press release. Sysco’s food distribution rival US Foods in February deployed the first five of an expected 30 electric semi-trucks as part of its goal to cut greenhouse gas emissions 32.5% by 2032.
                                    • The halving of diesel fuel prices from 2022’s record highs poses a warning sign for the US economy, The Wall Street Journal reports. Driven by a nationwide decline in demand for freight transportation, in late April the wholesale price of diesel fell to $2.65 a gallon in New York Harbor, down from $5.34 last May, according to WSJ. The slide in the price of diesel is a mixed bag for businesses like food distributors that rely on diesel to power their delivery fleets. While the lower price reduces transportation costs, a slowdown in the economy could result in decreased demand from customers including food retailers and restaurants. US GDP increased at an annual rate of 1.1% in the first quarter, down from 2.6% in the Q4 2022, according to the advance estimate released by the Bureau of Economic Analysis.
                                    • The US Department of Agriculture in March proposed new requirements that would allow labels on meat, poultry or eggs to use the phrases “Made in the USA” or “Product of USA” only if they come from animals “born, raised, slaughtered and processed in the United States,” The New York Times reports. Current policy allows voluntary use of such labels on products from animals that have been imported from abroad and slaughtered in the US and on meat that’s been imported and repackaged or further processed, according to NYT. The new regulatory requirements are designed to better align the voluntary “Product of USA” label claim with consumer understanding of what the claim means. Under the proposed rule, the “Product of USA” label claim would continue to be voluntary. About 12% of the beef consumed in the US is imported.
                                    • The Federal Trade Commission is seeking input from competing retailers and wholesalers on the proposed megamerger of Kroger and Albertsons and how it would change the market landscape, Supermarket News reported in March. FTC officials have reached out to grocery retailers and wholesalers of varying sizes across the US, to ask about their business models, which companies they see as competitors, and their view of the proposed Kroger-Albertsons deal, The Wall Street Journal reported citing people familiar with the matter. The regulatory agency is asking questions that involve product sourcing and pricing, online operations details, store labor dynamics, how the “own brands” program at Kroger and Albertsons work, and how shopper data is used. If the $20 billion deal is ultimately approved by regulators, the merger would “redefine what you buy at the grocery store,” to quote WSJ.
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