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ID Top 50 Broadliners’ Growth Slows in ‘05

NEW YORK—The ID Top 50 broadliners' sales growth slowed in 2005, a year that saw seemingly contradictory tendencies among the country's leading foodservice distributorships.

The ID Top 50 Report, which appears in three sections in today's issue of ID Report, again demonstrated the volatility of the distributor's collective not only with the second appearance in two years of five new firms but with the startling $15.9 million jump in sales needed to finish in 50th place since the previous survey.

The ID Top 50 broadliners together rang up $77.03 billion dollars in business in 2005, up $3.9 billion or 5.4% from the previous year's reported (not adjusted as it appears on this year's chart) total of $73.09 billion.

Since the turn of the century, the group's growth rate has been somewhat of a roller coaster. In 2000, the ID Top 50 grew 16.8% from the previous year. The group's revenues then dropped for two consecutive years to 4.8% and 3.9% before increasing to 8.7% and 9.5% in 2003 and 2004, respectively.

10 Biggest $ Sales Increases
1. Sysco Corp. $1,400.0 MM
3. Performance Food Group $570.0 MM
7. Maines Paper & Food Service $350.0 MM
8. Ben E. Keith Foods $202.0 MM
9. Shamrock Foods Co. $200.0 MM
4. Gordon Food Service $200.0 MM
5. Food Services of America $200.0 MM
6. Reinhart Foodservice $170.0 MM
13. IFH Foodservice Distribution $88.0 MM
20. Cash-Wa Distributing Co. $61.0 MM

Perennial leader Sysco Corp., Houston, remained in first place with $31.4 billion in sales, an increase of $1.4 billion or 4.6%, a decrease from its 9.1% rate in 2004. U.S. Foodservice, Inc., Columbia, MD, again turned up in second place though it was among five ID Top 50 companies to record losses in the current report. U.S. Foodservice had $18.5 billion in sales, down $300 million.

Performance Food Group, Richmond, VA., remained in third place with $5.7 billion, up more than a half a billion dollars or 11% since 2004. Gordon Food Service, Grand Rapids, MI, was fourth with $3.7 billion, up $200 million or 5.7%. Food Services of America placed fifth with nearly $2.5 billion, up $200 million or 8.9%. (See accompanying chart for complete details.)

THE RICH KEEP GETTING RICHER
The ID Billionaire's Club of the nine pinnacle companies, which also includes Reinhart Foodservice, Inc., Maines Paper and Food Service, Inc., Ben E. Keith Foods and Shamrock Foods Co., remained unchanged in membership, though Ben E. Keith and Shamrock did change places. Otherwise, the subgroup of the richest in revenue distributorships recorded $68.4 billion in sales compared with $65.5 billion in 2004 — or 88.8% of all 50 companies' revenues. The 41 remaining firms divided $8.6 billion among themselves.

As a category, all foodservice distributorships' sales reached $217 billion, up $10 billion or 4.8%, according to Chicago-based Technomic, Inc., virtually matching the ID Top 50's growth rate. Broadliners' sales reached $122 billion last year; systems — $26 billion and specialists — $69 billion.

The ID Top 50's share of the entire foodservice distribution marketplace was 35.5% last year compared with 35.7% and 34.2% in the previous two reports. The group's share of the broadline market this year was 63.1% versus 66.0% and 54.5% in the previous two annual calculations.

The top three distributorships' share of the marketplace is also noteworthy. Sysco, alone, captured 40.8% of the ID Top 50's revenues and 14.5% of the entire industry. U.S. Foodservice had 24% and 8.5%, respectively, and PFG — 7.4% and 2.6%.

The loss sustained by U.S. Foodservice as well as the declines in revenues reported by Consolidated Companies, Inc. (#14), Cardinal Restaurant Supply (#39), Harker's Distribution (#32) and Costa Fruit & Produce, Inc., (#44) contributed in part to the group's overall slowdown. Only one company reported a loss in last year's survey.

Another factor was that the average dollar increase for all ID Top 50 distributorships dropped to $74 million last year compared with $126.3 million in 2004, while the average percentage gain last year was 10.3% versus 14.5% two years ago.

Finally, margin pressure, as cited by the distributor executives in their supplemental answers, and hurricanes Katrina and Rita are additional culprits for the slowdown.

Despite this, the minimum amount of sales needed to become a member of this group jumped 22.6% to $86.5 million, which was reported by Ginsberg's, Inc., Hudson, NY.

Merger and acquisition activity as well as ID Access' discovery of distributorships with sufficient revenue to earn them a place in the ID Top 50 resulted in the elimination of five companies.

 

10 Biggest % Sales Increases
49. Frank J. Catanzaro 55.41%
46. Jacmar Foodservice Distrib. 39.73%
13. IFH Foodservice Distribution 33.89%
8. Ben E. Keith Foods 22.12%
7. Maines Paper & Food Service 21.88%
43. W.S. Lee & Sons 18.47%
21. BiRite Foodservice 18.23%
9. Shamrock Foods Co. 18.18%
8. Ben E. Keith Foods Co. 18.02%
29. Zanios Foods 16.33%

The new members of the ID Top 50 are: Perkins, Taunton, MA, (#16); Harker's Distribution, Le Mars, Iowa, (#32); Cardinal Restaurant Supply (formerly Berner Foodservice), Oxnard, CA; Jose Santiago, Inc., San Juan, PR, (#41) and Frank J. Catanzaro Sons and Daughters, Inc., Cincinnati, Ohio, (#49).

Catanzaro, a family-owned company, was one of few firms that specifically benefited from mergers and acquisitions to gain a place in the ID Top 50 or move up in standings. Consequently, the distributorship also recorded the greatest percent gain in sales last year with 55.4%. A possible conclusion could be that while sales increases help in growing business, mergers and acquisitions help more.

The gap that we pointed out last year between the ninth and 10th place distributors has become more pronounced in this report. Last year the difference between Cheney Bros. and Ben E. Keith was $591 million and this year the difference between Cheney Bros. and Shamrock widened to $708 million. As a result, it seems safe to state that the top nine, the billionaires, are secure behind their barrier until Florida-based Cheney Bros. abruptly boosts its annual sales by more than 50%.

DSR STAFFS GROW; FIRMS TO FOCUS ON TRAINING
Last year we reported that the ID Top 50 distributors employed 11,421 sales reps. Though the total for this survey is 21,140, it should be pointed out that Sysco listed its 10,222 MA's under a joint DSR/Sales Pro category.

Distributor executives who chose to respond to the question about DSR hiring, and nearly all did, indicated that they would increase their sales staffs this year. Along these lines, a noticeable number said DSR training was one of their notable accomplishments last year or it would be a major issue this year.

New for this year was a question about COP and specialty products. It seems that nearly all of the ID Top 50 inventory fresh meat, fresh fish, fresh poultry and fresh produce. Most of them also stock equipment and supplies, san-jan products and packaging items, making then truly one-stop shops for their operator-customers. Gourmet cheese also figure prominently in their responses.

In addition to dealing with rising fuel costs as well as business expenses such as energy, healthcare and insurance, America's leading distributors were also busy expanding their warehouses by adding storage space or building larger facilities, or dealing with M&A activity. A small group did specifically state that in addition to focusing on strengthening their margins this year, they would intensify growing their street businesses.

Technology was also a key consideration for executives of these companies, especially when it concerns reducing fuel expenses. Improving profit per case delivered was another thought. They listed installing a variety of GPS and routing equipment in the trucks and warehouses. On the low-tech side, executives said they would deal with the high cost of diesel fuel by giving their drivers incentives for shutting off their engines during downtimes.

As for the next survey, ID Access forecasts continuing volatility with none of the companies between 10 and 50 carved in stone. In addition to obvious upward and downward movement within that segment, with revenues of the distributorships that didn't make the cut this year within reaching distance of $86 million, the next roster could again eliminate five distributorships.

ID Access would like to thank all of the executives those who made the list and those who didn't — for taking valuable time from their busy schedules to respond to the 2006 ID Top 50 survey and contribute to this invaluable overview of foodservice distribution.