2H 2019 Distribution & Logistics M&A Report
Perhaps as much as any sector, the food distribution industry is experiencing a seismic shift as the entrenched distribution path from farm to retail is challenged by technology, consumer tastes, and today’s need-it-now sentiment. While still delivering perishable items, distributors are being pushed to find ways to expand beyond rail car delivery and large-scale wholesale distribution to reach all the way to the ultimate destination: the consumer.
THE SUPPLY CHAIN SPROUTS NEW LINKS
Traditionally, food distribution ran down a one-way stream. From the farms and ranches of agribusiness, food flowed to processors and manufacturers who converted raw materials into consumer packaged goods (CPG). From there, transport companies delivered individual goods to a food distribution warehouse where they were carved into smaller shipments destined for retail outlets including supermarkets, convenience stores, and restaurants for sale to the consumer. But consumer behavior is changing. Customers want more – more variety, more specialty foods, and more delivery options. Everything from the rapid growth of farmer’s markets to technology is challenging the food distribution model. Consumers have come to expect they can make an online grocery order at Whole Foods and have it delivered in two hours or order a box of perfectly measured raw ingredients for a week’s worth of homemade meals. Even restaurants that typically didn’t deliver now do, thanks to meal-delivery platforms such as GrubHub and DoorDash. Annual digital meal delivery is expected to grow to $467 billion over the next five years, a 31% increase…