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.

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 $23 million annually.

    • The food distribution industry consists of about 27,300 companies, which generate over $660 billion annually and employ about 828,600 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

                                    Apr 30, 2024 - Wholesale Prices Up Sharply
                                    • The Producer Price Index for grocery and related product merchant wholesalers jumped 14.2% in March compared to a year ago after rising 3% in the previous annual comparison, according to preliminary data from the US Bureau of Labor Statistics. Employment by the industry grew 2.1% in January compared to a year ago, while in 2023 annual employment was 2.8% higher than in the pre-pandemic year 2019, according to the BLS. Meanwhile, average wages at food distribution companies rose 1.6% in January year over year to $27.03 per hour.
                                    • Food inflation “remained stubbornly high” in the first quarter of 2024, although lower compared to Q1 of last year, according to data analytics company Catalina. According to the Catalina report, the overall food inflation rate was 3% in Q1 2024, down substantially from the 16% recorded for the same quarter a year ago. Categories experiencing significant year-over-year declines in price increases in the first quarter included cereal (up 5% vs. 21%), yogurt (3% vs. 21%), and coffee and frozen and prepared foods (both up 1% vs. 16%). The Catalina report contained some bad news for value shoppers, finding that value brands increased in cost faster than their premium counterparts. For example, the price of value brand bath tissue was up 6% for the quarter, while its premium counterpart was down 2%. Value detergent was up 2% compared to premium detergent, which was down 1%.
                                    • Congress in March removed a safety requirement 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.
                                    • Consumers are planning to spend more money on groceries and less on dining out at restaurants in 2024, according to a new report by Kroger’s in-house consumer research firm 84.51°, Supermarket News reported in January. The Kroger survey showed that nearly one in five (19%) respondents said they plan to spend more on groceries over the next 12 months, and 53% said they’re going to increase their contributions to savings and investments. Meanwhile, more than half (57%) plan to spend less this year on dining out, carry out, and food delivery services. Also, of those surveyed, more than half (58%) said they plan to follow a diet in 2024.
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