Delivering the goods: How to compete in US food and beverage distribution (Alex Abdelnour, Duncan Miller, Steve Reis, Chris Turner, McKinsey)

With annual revenues exceeding $600 billion, the food and beverage (F&B) distribution industry is a sizable sector of the US economy. It is a mature industry that has historically operated behind the scenes: F&B distributors serve as intermediaries that buy products from multiple manufacturers and then sell them to retailers, restaurants, catering companies, and other establishments with food-service operations (such as hospitals and schools). According to the US Department of Labor, F&B distribution is a highly fragmented industry, with a handful of large distributors and a “long tail” of more than 100,000 small to medium-size wholesalers.

Sales in F&B distribution are strongly correlated with leading economic indicators. Since 2010, sales have been growing at or near GDP levels. But business is tough and getting tougher. A number of factors (beyond those that almost every industry has to deal with, such as fluctuating commodity prices) threaten both revenue growth and profitability. In this article, we discuss the challenges that F&B distributors confront as they seek to grow sales and margins, as well as the strategies that successful companies have employed to overcome those challenges.

http://www.mckinsey.com/Insights/Consumer_And_Retail/Delivering_the_goods_How_to_compete_in_US_food_and_beverage_distribution?cid=other-eml-alt-mip-mck-oth-1602