The confidence of UK wholesaling appears at an all-time high following a series of mega-deals in the past fortnight, culminating in Bestway’s £620m acquisition of the Co-Operative Group’s pharmacy business.
Another wholesaler expanding its service offer was Scottish wholesaler Dunns Food amp; Drinks, which bought out craft beer specialist Dameck on July 31; and last week specialist bakery wholesaler BFP was sold to private equity (PE) consortium Zimt Holdings for an undisclosed sum.
The latest buyouts follow on-trade wholesaler Matthew Clark’s buyout of events marketing agency Elastic Productions in June; Bestway’s acquisition of Glasgow’s Sher Bros in April; Blakemore Wholesale’s acquisition of BA Cash amp; Carry’s branches in Wales; and Newcastle-based Kitwave Wholesale Group’s acquisition, also in March, of specialist frozen food and ice cream wholesale and distribution Features > Business, Eden Farm, taking its portfolio of companies to seven. The Kitwave purchase was funded by PE firm NVM,
Mergers and acquisitions expert Tony Walford, partner at corporate finance and advisory practice Green Square, commented: “This looks like a sector brimming with confidence. It’s interesting that so many wholesalers are not just expanding their depot networks, but also widening their service offer.
“It’s also interesting that PE houses, as well as banks, are helping to fund these deals, as PE firms do not invest their money lightly, and are quite demanding in terms of getting a return on their investment. Despite wholesaling having a reputation as a low-margin Features > Business, it is clear that these guys are adding value – and therefore margin – to the supply chain and this is being recognised by investors. The fact that so many UK wholesalers are family-owned, and therefore stable and in it for the long term, makes them an attractive prospect for funding.”
David Visick, communications director at FWD added: “Our members are using their skill in distribution and their experience of working with independent small businesses to invest and expand into new market areas. There are opportunities in foodservice, hospitality and the on-trade, not only for the wholesalers themselves but also for the suppliers for whom this diversification opens up new routes to the consumer.
“In recent years we’ve seen the lines between traditional channels becoming increasingly blurred, and consumers are starting to expect a choice of eat-in, take home or top-up from a variety of outlets. There are obvious synergies between convenience and pharmacy, or convenience and fast food, which haven’t yet been fully exploited. Distributing a greater variety of products through our members’ networks simplifies the supply chain while offering small businesses the option to build innovative combinations in their offer. Ultimately that means a better choice to the consumer, tailored