The wholesale grocery business continued to be more challenging as the number of independent grocers dwindled and food distributors faced rising infrastructure costs – labor and fuel in particular. Pressure also came from inflation moderation as prices have somewhat stabilized after two years of benefiting from price hikes which wholesalers told us helped produce higher gross margins.
The Mid-Atlantic market leader remained member-owned Wakefern Food Corp., the largest wholesale grocery co-op in the country. The Keasbey, NJ-based co-op rang up a record $15.1 billion in wholesale volume (up from $14.4 billion last year) which was generated primarily through the success of its nearly 400 retail supermarkets operating under the ShopRite, Price Rite Marketplace, The Fresh Grocer, Dearborn Market, Fairway Market and Gourmet Garage banners. Wakefern’s market area covers New Jersey, New York, Connecticut, Pennsylvania, Delaware, Maryland, Massachusetts, New Hampshire and Rhode Island, and includes dominant positions in the large Metro New York and Delaware Valley markets. Internally, changes continued at the big wholesaler, led by the appointment of Mike Stigers as president. The former Safeway and UNFI executive joined Wakefern in June, replacing Joe Sheridan, who will be retiring at the end of the year after serving Wakefern for nearly 48 years, the past 14 as president. Also stepping down after 18 years as chairman of Wakefern was Joe Colalillo, owner/operator of five high-volume ShopRite stress in New Jersey and Pennsylvania. Replacing Colalillo will be Sean McMenamin, whose family operates two ShopRites in Philadelphia.
C&S Wholesale Grocers, the nation’s largest privately-owned voluntary wholesaler, ranked second among all retail distributors in the Mid-Atlantic region with estimated annual sales of $12.1 billion. It was another active year for the Keene, NH-based distributor on the executive level. Chief executive Bob Palmer retired after more than 30 years at C&S, the past three years as the company’s day-to-day leader (he will remain on the board of directors). Replacing Palmer was Eric Winn, who joined the national wholesaler in 2004 and was promoted from COO to CEO, taking the helm in October. Externally, there was equally big news – C&S agreed to acquire 413 Albertsons and Kroger stores in 17 states and Washington, DC. The deal was fueled by divestiture requirements after the two big chains announced an agreement to merge more than a year ago. Also included in the deal were eight distribution centers, two office complexes and the licensing rights to the Albertsons name in several markets for $1.9 billion. That deal is not yet finalized and another 237 Albertsons and Kroger stores could be added, depending on divestiture demands from the Federal Trade Commission.
There is no way of sugar-coating this: UNFI had a poor year, particularly in its past two operating quarters. And next year promises to be no better with CEO Sandy Douglas predicting more red ink. Nationally, that manifested a corporate restructuring where longtime president Chris Testa (a holdover from the Steve Spinner regime) departed and Douglas assumed both titles. Also leaving was the aforementioned Mike Stigers (president of the company’s retail unit consisting of Cub Foods and Shopper Food) who joined Wakefern as its president. Last month, former Rite Aid executive Andre Persaud was named to lead UNFI’s retail operations. Other executive changes in 2023 include the hiring of Erin Horvath as COO and Kelly Sosa as president of the company’s Atlantic division earlier this year. A few months later, Sosa, a former C&S exec, was named president of UNFI’s newly created Eastern division which includes oversight of 22 distribution centers ranging from Maine to Florida to as far west as Tennessee. While UNFI’s balance sheet issues can be tangibly assessed, its intangibles also suffered, particularly in the eyes of some in its prolific independent retailer base which includes Key Food, Redner’s, B. Green, Karns, Associated Supermarket Group (ASG), Graul’s, Murphy’s and McCaffrey’s. Owners at several of those companies have noted that over the past 18 months UNFI has underperformed in many of aspects of its business – warehousing and logistics, private label execution and customer service. Still, UNFI remains a powerful distribution force with estimated annual sales of $10.4 billion.
Two of the largest national convenience store wholesalers – McLane and Core-Mark – dominated c-store distribution in the region. McLane’s 12 warehouses serving more than 6,000 stores (including many 7-Elevens) amassed estimated regional sales of $3.15 billion; and Core-Mark, which became a division of Performance Food Group in 2021, supplied nearly 3,000 c-stores and amassed estimated annual wholesale sales of $3.1 billion in the region.
Family-owned wholesale grocers, the genesis of virtually all grocery distribution, remained an important part of the landscape, despite continuing industry consolidation on a national basis.
Bozzuto’s, owned by the Bozzuto family, continued its tradition of strong customer service and innovation. The Cheshire, CT-based wholesaler serviced 1,180 independent stores, many of which fly the IGA banner, and rang up wholesale sales of $2.6 billion in 2023.
Merchant Distributors, Inc. (MDI), another family-owned distributor, remained the leading wholesaler in the Southeast, serving more than 700 stores (including Lowes Foods, the regional chain of nearly 100 stores that parent firm Alex Lee owns). Annual wholesale volume is estimated at $2.16 billion for the Hickory, NC-based firm which in recent years has expanded its independent retailers bases deeper into the Mid-Atlantic.
Two metro New York based distributors – Krasdale (owned by the Krasne family since 1908) and General Trading (owned by the Abad family) – also showed positive growth during 2023.
Krasdale Foods, based in White Plains, NY (with a distribution center in the Bronx), supplied many independent retailers under such banners as AIM, Bravo, C-Town, Market Fresh, Shop Smart and Stop 1 – whose combined sales paced all independent retailers in the five boroughs of New York City. All told, the company serviced approximately 3,050 stores in the metro New York and Philadelphia markets and accrued estimated sales of $1.7 billion this year.
General Trading, based in Carlstadt, NJ, also serviced many independent merchants doing business in the areas in and surrounding New York City. Of the company’s nearly 3,500 stores it supplied, many were ethnic and specialty customers. Annual wholesale revenue is estimated to be $686 million.
Of all the classes of trade, nobody performed better than the three large club operators, which performed well nationally and regionally. We have broken out store counts and estimated sales for those units which operate in our coverage area. The nation’s largest club store operator – Costco – once led the pack in the Mid-Atlantic with 78 stores and an estimated $7.5 billion in annual sales (extrapolated to include only food and related products). Although its financial progress has begun to slow, BJ’s Wholesale had another strong year. The Marlborough, MA club merchant operated the most wholesale clubs in the region – 109 – which produced annual estimated extrapolated sales of $6.6 billion. BJ’s also gave CEO Bob Eddy expanded duties, naming him chairman, too. Former CEO and chairman emeritus Chris Baldwin will remain on the board. Second-ranked nationally club store retailer Sam’s Club’s 45 stores amassed $2.06 billion in estimated extrapolated volume this year.