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ID Top 50 Broadliners Grew 9.5% in '04

NEW YORK - The ID Top 50 broadliners grew 9.5% in sales volume in 2004, reaching $73.1 billion, which was slightly more than double the growth rate for the entire foodservice distribution industry.

The ID Top 50 Report again underscores the volatility of the fraternity of leading broadliners with the appearance of five newcomers, which precipitated in forward and backward movements for many of the traditional participants. Displacements notwithstanding, 49 distributorships registered revenue gains last year while one company, The IJ Co., Knoxville, TN, had negative growth due to its intentional disassociation with one account, according to a company spokesman.

Nonetheless, virtual rock-solid stability was demonstrated by the returning top five companies.

Sysco Corp., Houston, once more placed first among U.S. distributorships with $30 billion in sales, growing 9.1% or $2.5 billion. Beleaguered U.S. Foodservice, Columbia, MD, was second, with $18.8 billion, expanding by 5.62% or $1 billion.

Performance Food Group, Inc., Richmond, VA, in a move that perhaps reflects the excessive scrutiny that foodservice companies are under in the wake U.S. Foodservice's troubles, surprisingly announced on Feb. 15 that it is delaying release of its annual statistics for 2004. Its decision was due to investigations prompted by anonymous allegations questioning accounting practices at one of its broadline divisions. Nonetheless, in cooperation with a Wall Street securities analyst, ID Access estimates that last year its foodservice broadline sales were about $5.2 billion, leaving it as the third largest distributorship in the country.

Gordon Food Service, Grand Rapids, MI, was fourth with $3.5 billion, an increase of $200 million or slightly more than 6%; and Food Services of America, Seattle, was fifth with $2.25 billion, an increase of $250 million or 12.5%.

Overall, foodservice distributors' growth last year almost matched that of the operators. The country's distributorships, which number some 17,000 companies, registered $204.6 billion in sales in 2004, growing by $8.6 billion or 4.4%, according to Technomic, Inc., Chicago.

Broadliners recorded $110.7 billion or 6.5% more than in 2003. Their share of the distribution marketplace was 54%.

Systems distributors rang up $32.7 billion in business or 5% than in 2003 and captured 16% of the market. Specialists brought in $61.1 billion in sales or 0.5% more than in the previous year and held on to one-third of the business, the Chicago analyst reported.

The 2005 ID Top 50 Report also shows that compared with the foodservice distribution industry as a whole, the big companies are continuing to get bigger and the pinnacle is grabbing a larger share of commercial and noncommercial operators' purchases. The 50 largest broadliners constitute slightly more than 66% of all broadline revenue and 35.2% of the industry's sales - slight increases in both categories compared with adjusted 2004 ID Top 50 results.

This trend is furthermore illuminated when looked at from a five-year perspective. The foodservice distribution industry grew 25% in 2000-04, from $163 billion to $204 billion. Sales of The ID Top 50 expanded 29.6% at the same time, growing from $56.4 billion to $73.1 billion. (See chart above for year by year growth.)

 

10 Biggest $ Sales Increases
1. Sysco Corp.
$2,500.0 MM
2. U.S. Foodservice
$1,000.0 MM
3. Performance Food Group
$546.0 MM
6. Reinhart Foodservice
$360.4 MM
5. Food Services of America
$250.0 MM
4. Gordon Food Service
$200.0 MM
7. Maines Paper & Food Service
$200.0 MM
9. Ben E. Keith Foods
$185.0 MM
8. Shamrock Foods Co.
$160.0 MM
10. Cheney Brothers
$150.0 MM

The pattern is more pronounced when examined from the very summit. The top three distributorships grew in the same period from $35.6 billion to $53.9 billion or 52.8%, while Sysco expanded from $20.6 billion to $30 billion or 45%. Last year, the top three also recorded the biggest dollar increases (see chart).

At the other end of the spectrum, the minimal amount of sales needed to be included in the latest ID Top 50 roster of broadliners increased by $8 million to $70.5 million, which was registered by Cirelli Foods, Inc., Middleborough, MA.

The largest distributorship earlier had declared its intention to reach $50 billion in sales by 2008, an increase of 66% from last year's total. That would mean increasing sales by $5 billion every year for the next four years. On the other hand, if it repeated its current 9% growth rate over that time, it would be slightly less than $8 billion short of its goal.

The ID Billionaire's Club has grown to nine members, with the addition of Ben E. Keith Foods, Fort Worth, Texas, which earlier this year crossed that milestone. It finished the year with $1.1 billion in sales, up 19.8% from the previous year. Revenue for these nine companies totaled $65.5 billion, leaving $7.6 billion of the ID Top 50's total revenue share to be divided among 41 companies.

A significant gulf appears between distributors' revenues at the ninth place, one that seemingly will not soon be overcome. The dollar difference between Ben E. Keith and the 10th largest distributor, Cheney Brothers, Inc., Riviera Beach, FL, is $591 million. Cheney Brothers rang up $530 million in 2004, up a hefty 39.47% from the previous year.

Newcomers to the ID Top 50 are: Costa Fruit & Produce Co., Boston; Pocono Produce Co., Inc., Stroudsburg, PA; Sutherland's Foodservice, Inc., Forest Park, GA; Appert's Foodservice, St. Cloud, MN; and Jacmar Foodservice Distribution, Irwindale, CA. While two of the firms prominently feature fruit and produce in their names, since their establishment, they have evolved into broadline companies with DSRs or comparably named sales associates calling on operators.

10 Biggest % Sales Increases
21. Pate Dawson Co.
52.62%
34. HFM Foodservice
40.91%
10. Cheney Brothers, Inc.
39.47%
32. Banta Foods, Inc.
34.0%
13. Institution Food House
29.13%
6. Reinhart Foodservice
23.36%
19. Merchants Foodservice
21.43%
38. Dierks Waukesha
20.37%
18. Glazier Foods Co.
19.8%
9. Ben E. Keith Foods Co.
19.76%

The addition of these companies as well as the significant double-digit growth rates of nearly two-thirds of ID Top 50 firms caused almost all to move up or down in standings compared with last year. Pate Dawson Co., Goldsboro, NC, grew faster than the others did, increasing sales 52.6% to $196.8 million and moving up 11 places in the standings. HFM Foodservice, Honolulu, recorded the second highest growth rate, 40.9%, ringing up $124 million due to an acquisition, rising eight places in rank. (See chart)

This year's ID Top 50 Report also reveals that of the several hundreds of thousands of SKU's in the warehouses, seven out of 10 of the products display national brands. As for revenue sources, two-thirds of the companies said street accounts constituted at least a plurality of their sales compared with all other categories (commercial, non-commercial, street and chain), two indicated an even split, six didn't respond while the remainder gave nods to chain accounts.

With rising fuel charges being one of the leading challenges facing the industry, distributors offered several suggestions on how to deal with the problem. Ten companies out rightly replied to our inquiry that they did not add fuel surcharges to their invoices while a dozen included surcharges. Others indicated a combination of approaches including purchasing fuel in bulk amounts, buying fuel-efficient trucks, monitoring their routes, adjusting drop ratios, increasing order sizes, reducing deliveries and installing GPS equipment.

However, financial and monetary issues superceded fuel costs as the top distributor challenge. Without a doubt, the respondents said margin management, cost controls and inflation need to be tamed before all other matters if they hope to grow their businesses.

Technology also occupies a top of mind place with distributors as a large number of them said they are planning to adopt some form of computerized technology for their warehouses or office operations. Nearly half of them also said they are considering plant or geographic expansion this year while seven said they are targeting acquisitions, which shows their confidence in the national economy, in foodservice business and their individual ability to take advantage of positive trends in the industry.

Another interesting statistic gleaned from the 2005 ID Top 50 Report is that these companies employed 11,421 sales reps last year.

ID Access would like to thank all of the executives who responded to the 2005 ID Top 50 survey for their participation in the preparation of this year's report.