Food Distributors Industry Profile

The US wholesale food distribution industry includes about 33,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $670 billion. Major companies include McLane Company, SUPERVALU, SYSCO, and US Foodservice. The industry is concentrated: the 50 largest companies generate about 50 percent of revenue.

COMPETITIVE LANDSCAPE

Demand is driven largely by demographic shifts, particularly trends in population and age, working women, race and ethnicity, household size, and levels of disposable income. The profitability of individual companies depends on a good product mix and efficient operations. Large distributors are advantaged by bulk purchasing and economies of scale in distribution. Smaller companies can compete effectively by specializing in certain products or focusing on a geographical area. The industry is capital-intensive: average annual revenue per worker is about $900,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products are frozen, processed, and prepared foods; dairy items; poultry, fish, and meat; fresh produce; and baked goods.

Distributors are classified as "broadline," meaning that they sell a comprehensive range of products to multiple customer segments; "specialty distributors," which focus on a certain product category or customer segment; or "systems distributors" that sell to chain restaurants or multi-tenant operators. Only about 120 large companies are broadline; the remaining wholesalers typically specialize in a specific market. Foodservice customers have surpassed grocery stores as the largest customer base for food wholesalers. Both SYSCO and US Foodservice sell mainly to foodservice institutions and chain restaurants; ...