The value of the grocery wholesaling industry was up 0.3% in 2016 – and the upward trend is forecast to continue for the next four years because of the growth of the foodservice sector.
According to new figures from research body the Institute of Grocery Distribution (IGD), wholesale sales last year grew to almost £30bn – mainly driven by the development of more clients in foodservice, where sales were up 2.1%.
IGD research forecasts the business will be worth £31.3bn by 2021, representing a compound annual growth rate (CAGR) of 0.9%. It predicts a 2.5% expansion for delivered foodservice, a 0.5% increase for delivered grocery but only a 0.1% rise in retail-led cash & carry business.
Speaking yesterday (September 6) at IGD’s Wholesale conference in London, the organisation’s chief economist James Walton said: “For another year, foodservice has lifted the wholesaling sector, representing the vibrancy of the expanding out-of-home customer. We’re also seeing growth in chilled, fresh, beer, wines and spirits, demonstrating clear investment opportunities for wholesalers.
“One area of decline for the channel was tobacco, which was down 1.8%, but this is to be expected as new legislation brought in plain packaging and minimum pack sizes. Sales to the independent and convenience retail customer base also fell by 0.6%. However, our recent survey indicates that four out of five (80%) suppliers remain optimistic about the future of the wholesale channel, including independent operators. Therefore, there is still plenty of opportunity for wholesalers wanting to drive growth in the independent market.
“Looking ahead five years, the sector still has plenty to play for, as not only is the growth of the foodservice segment set to continue, but according to our research, 67% of suppliers are keen to continue investing in the channel. There remains huge opportunity for success.”
More on this story in the September issue of Wholesale News – out next week!