First Research US Industry Profile

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Food Wholesalers
SIC Codes: 5141, 5142, 5143, 5144, 5145, 5146, 5147, 5148, 5149, 5153, 5159
NAICS Codes: 4244
Last Quarterly Update: 9/16/2019
Companies in this industry distribute food and related products on a wholesale basis. Major companies include C&S Wholesale Grocers, McLane Company, Sysco, United Natural Foods, and US Foods (all based in the US), as well as Loblaw (Canada), Kokubu & Co (Japan), and Metcash (Australia).
Rising global populations and demand for food are expected to drive growth in the food distribution industry, especially in emerging markets where disposable incomes are growing. Because of the perishability of many of the products they distribute, food wholesalers typically operate within a single country or region.
The US wholesale food distribution industry includes about 35,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $970 billion.
Competitive Landscape
Barriers to market entry for food distributors are low, and customers can change suppliers and channels easily. Companies must adjust product portfolios to keep pace with consumer trends, such as increasing demand for organic, fat-free, or gluten-free foods. Wholesalers may not be able to pass increased supply, labor, and transport costs on to customers during economic downturns.
While large distributors are advantaged by bulk purchasing and economies of scale in distribution, their primary competition comes from local and regional distributors. These smaller companies can compete effectively by specializing in certain products or territories, and can gain scale by forming marketing groups and purchasing cooperatives with other area operators.
Food distributors also face competition from suppliers that sell directly to retail stores and restaurants; retailers that operate their own distribution businesses; or club stores and e-commerce companies that can meet the needs of small businesses. Manufacturer-to-customer disintermediation is increasing, and retailers are forming more group purchasing organizations (GPOs) and other aggregation organizations.
Competitive Advantages:
Consumer Preferences — Food service and grocery store operators serve consumers who have heightened awareness of responsibly sourced, healthy foods. Wholesalers must secure organic, locally sourced, non-GMO products and other high-demand offerings to meet clients' needs.
Pursuing New Clients — The ability to attract new customers is essential, as existing clients may close, consolidate, or convert to self-distribution. Seeking out new service markets, such as meal-preparation kit delivery firms, can help expand a distributor's customer base.
Data Analysis — Companies are adopting modern resource management and data analytics tools that allow them to make better decisions about inventory, pricing, and customer preference, as well as to target markets and customers with high growth potential.
Companies to Watch:
Sysco is the top wholesaler in the US food service market. The company primarily supplies restaurants, including top customer Wendy's; it also serves hospitals, hotels, and schools. Sysco recently expanded in Europe.
WebstaurantStore is an emerging internet-based restaurant supplier. E-commerce suppliers are disrupting the food wholesaler industry as customers seek nontraditional sources of inventory.
Supervalu, purchased by natural-foods wholesaler United Natural Foods in 2018, is a leading wholesaler for the US grocery market. The combined companies distribute more than 110,000 products to over 40,000 customer locations. Supervalu also operates a chain of grocery stores and provides professional services to retailers.
Products, Operations & Technology
Major products distributed by companies in the industry are frozen, processed, and prepared foods; dairy items; poultry, fish, and meat; fresh produce; ... plus:
Sales & Marketing
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Finance & Regulation
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Regional & International Issues
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Human Resources
Also includes the following chapters:
Quarterly Industry Update
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Industry Indicators
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Business Challenges
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Trends and Opportunities
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Call Preparation Questions
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Financial Information
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Industry Forecast
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Industry Websites
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Glossary of Acronyms

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