Distribution is one of the crucial factors between success and failure, whether you are delivering office supplies to small companies or computers to large ones. This is true in the supply of food to both foodservice and retail. But one of the key distinguishing features between these two sectors is the way in which distribution is implemented.
Delivered wholesaling, to be sure, has a role to play in the retail sector but it is more limited than in the foodservice sector, where the delivered wholesaler is the lubricant that makes the whole show go round.
Their sales account for over 50p in every pound;1 that caterers spend on food. Of course, delivered wholesalers are not the only game in town when it comes to distribution within the foodservice sector, where they are joined by cash and carries with a 12% share of all food purchased by caterers.
Contract distribution is also important to large operators and this channel accounts for 17% of caterers’ food spend. The balance – 18% or pound;1.7bn in 2005 – is made up of purchases bought from a wide range of other sources ranging from farms and fish markets to pie sales vans and even from retailers.
But unlike retail, direct delivery is not significant in foodservice except for some short-life products.
Delivered wholesaling is a versatile sector delivering pound;4.9bn of food (in 2005) at a range of temperatures. Perhaps surprisingly, ambient grocery (at pound;1.4bn) is not the largest; the crown goes to fresh food for the simple reason that fresh is the most popular food category among foodservice operators. So fresh food, purchased from delivered wholesalers, accounts for 31% of their total purchases and amounts to pound;1.6bn.
Frozen is also an important channel for delivered wholesalers who sold pound;1.4bn of food at this temperature to operators in 2005. Delivered wholesalers are also responsible for supplying pound;0.5bn of chilled foods, the fastest growing temperature.
So, delivered wholesalers are a versatile bunch and their services are appreciated by most sectors of the foodservice market. In fact, there is not one where their share falls below 40%. Last year, for example, operators in the education and public services sector (which encompasses operations such as prisons, meals on wheels and the military) bought almost 70% of their pound;820m spend on food from delivered wholesalers.
At the other extreme small, independent quick service operators rely on cash and carries for much of their supplies, while their big cousins in the mainstream burger, pizza and other fast food chains, make particular use of contract distributors. In overall terms, the quick service sector is less likely to use delivered wholesalers than any other sector.
While 3663 and Brakes dominate the delivered wholesale sector, they are joined in battle by a multitude of competitors ranging from multimillion pound turnover wholesalers such as Woodwards and DBC, through consortia like Country Range, Caterforce and Fairway, to small independent operators and even “white van man”, carving out viable business in niche markets such as ethnic takeaways.
The delivered wholesaling channel is set to gain from growth within the foodservice sector – because it is in tune with what the caterer actually wants. Indeed it is well positioned to take business from the cash and carry sector. The main threat to delivered wholesale comes from the contract distribution channel which offers the cost savings that are called for by the largest operators whether in fast food, restaurants, contract catering or any other sector.
Delivered wholesale is large – it accounts for over half of caterers’ food purchases and a similar proportion of their non-food consumables such as janitorial supplies and equipment. It is versatile, delivering a wide range of food at all temperatures and non-food lines. And it delivers to all sectors of the market. And despite the increasing pressure on costs, its future looks promising.