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

                                    Feb 28, 2024 - Labor Costs Rose in 2023
                                    • Employment costs for food distributors increased in 2023, data from the US Bureau of Labor Statistics show. Overall employment by food distributors grew 2.6% in December compared to a year ago extending an almost three-year steady climb. Meanwhile, average wages at food distribution companies rose 3.4% over the same period to $26.94 per hour in December, down about $0.30 from their all-time high in July, per the BLS.
                                    • Grocers are coming under increasing pressure from the Biden administration to lower their prices, The New York Times reports citing an analysis by the White House Council of Economic Advisers. An analysis of Census Bureau data shows that grocers have maintained the higher profit margins they began generating following the onset of the pandemic while at the same time, other types of retailers have reported lower margins. It indicates that the food and beverage sector is generating profit margins that are approximately 2% above where they were in early 2020, bringing them to a 20-year high, according to NYT. “There are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation,” the president remarked in late January. After hitting a 40-year high of 13.5% in September 2022, grocery inflation has steadily eased to a 1.3% annual rate in December 2023.
                                    • 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.
                                    • Food distribution companies can reduce the cost of fleet ownership by optimizing operational efficiency using advanced trailer telematics, according to fleet management provider Road Ready. Beyond location tracking, advanced trailer telematics (ATT) systems enhance fleet management, improve security and profitability, and stay ahead of maintenance issues. ATT systems use onboard hardware and software to collect, analyze, and interpret the data from the trailer, providing real-time insight into its location, condition, and performance. ATT systems use mobile-wireless networks to broadcast data from the trailer to the cloud via a mobile communications unit onboard each trailer. Sensor technologies monitor lights, brakes, and tires, including tire inflation and wheel-end temperature to ensure peak performance and prevent blowouts and failures. While installing ATT systems can be complex and requires investment, it isn’t a sunk cost considering the down-the-road payoff, per Road Ready.
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