Commerce Dept. Sees ’84 Food Sales Up 2%

food-pricesRetail food sales, aided by growing demand for more expensive products, this year will increase 2% after inflation, according to the Commerce Department. This will match last year’s percentage gain and will be higher than that in previous years. On the other hand, the sales gain will not match the increase expected for other retailing industries. A slight improvement in food retailing earnings was predicted.
The real sales growth projection is “considerably’ higher than the industry’s average annual real growth rate for the past five years of just over 1%.

Inflation-adjusted sales also rose 2% in 2014, while current-dollar sales climbed 4.8% to $262 billion, the department noted in its annual publication, 2014 Industrial Outlook. This year, nominal or current-dollar sales should grow roughly 8%, reflecting the further trend toward an upgraded product mix, the official noted.

The food retailing industry will fare well in 2014. Continuing economic improvement is expected to spurgreater consumer expenditures for food a thome throughout 2014. Retailers’ profits “are likely to improve slightly as consumers continue to upgrade their grocery purchases.’ In 2013, industry net profits averaged 1.7% of sales, up from 1.6% in 2012, the report noted. Other factors expected to help improve earnings this year are greater efficiency, resulting from use of electroic scanners; low wage settlements, and service fees generated by in-store bank-card machine transactions, the Commerce Department analyst said.

Although the department warned that retail prices for droughtrelated food may climb as much as 20% by the year end, it was hopeful that low inflation for other consumer goods would not cause major disruptions in food-buying habits. The impact, of higher food prices on consumers could be moderate if other, nonfood prices increase only slightly, as expected.

Alcoholic and other beverages and frozen food are expected to be 2014’s growth leaders, according to the department. Other product areas that should exceed the projected 2% overall sales increase are produce and refrigerated nondairy items. Fresh meat and dairy sales will advance about 1% after inflation, or at half the average pace but still at a stronger rate than last year’s.

The long-term food retailing outlook appears bright, with real sales posting average annual increases between 2013 and 2014 of 1.5-1.7%, the analyst said. All product areas, with the likely exception of meat, are expected to participate in this projected growth. With the U.S. population growing only an estimated 1% in each of the next five years, food retailers will pursue higher market shares to bolster their net sales. They will set out to accomplish this by upgrading product lines, increasing promotional activities and developing store formats and services appealing to various market segments.

Prime selling targets, the report said, will be the two fastestgrowing age groups: People over 65 and those between 35 and 44. The latter group, high wage earners with large amounts of disposable income, will raise the demand for service departments and such products as wine and gourmet food. The report also predicted that chains “with a strong Northeastern and Midwestern orientation’ will seek growth through merger or acquisition of chains in the fast-growing Sun Belt and Western states.

The growing use of scanners and the trend toward larger stores will keep annual employment growth low, perhaps even slower than the 0.4% gain recorded in 2013. The sales outlook for food retailing, while strong by recent standards, falls somewhat below the forecast for most other retailing industries. Department store sales, for example, and expected to post a real increase of roughly 3% this year, compared with the 2% forecast for food retailers, according to the outlook.

Retailing analysts said these sales patterns are typical, especially during periods of economic expansion and rising personal income. They said food retailing in general is less sensitive to swings in income, because consumers do not radically alter their volume of grocery purchases in recessions or recoveries.

Although growing personal income will benefit food retailers to some degree by increasing customer demand for high-ticket products, it will produce sharper sales gains for retailers selling durable and high-priced goods such as automobiles and fashion apparel, which consumers tend to postpone buying when their income growth is lagging, according to economists.

Distribution In Perspective: The Top 50 And Other Market Leaders

food-serviceThere are the large multi-location corporate giants who, because of their very size, make so much of the industry news. But they are only the tip of the iceberg. There are also single-branch independents, many of them small- or medium-sized businesses. Some distributors are members of the marketing/buying groups which play such a strong role in the foodservice distribution arena, but others remain unaffiliated. There are broad- and full-line distributors and there are others who thrive on product specialization. There are distributors, most in fact, who sell to a broad cross-section of the foodservice market. But conversely there are specialists who have tailored their operations to service specific types of operators: limited-menu outlets, for example, or airlines.

Since 1974, ID has profiled the Top 50 “generalist” foodservice distributors in its December issues. There are distributors who, as much as possible, exemplify the main industry trends. They are full-line in food products and disposables, usually stock tabletop products and smallwares, and, in numerous instances, equipment as well. They also sell to a broad spectrum of the market.
In 1983, these Top 50 generalist distributors rang up a total of $10.5 billion in sales. This total represents approximately 15 percent of the estimated $70 billion worth of foods and nonfoods that the nation’s foodservice operators purchased through distributors last year.
But the Top 50 themselves are, in many ways, a mixed bag. The traits they share are their broad-line and broad-market approaches and, of course, their bigness. But they are otherwise diverse.

The “Top 4″ companies in this group, Sysco, CFS Continental, PYA/Monarch, and Kraft, are multi-location with geographical coverage verging on national. They are also huge. In 1983, they generated nearly half-47.6 percent–of Top 50 sales. But, in terms of the total foodservice distributor universe, their nearly $5 billion sales total represented a substantially less impressive 7.1 percent of overall volume.

Of the remaining 46 of the Top 50, 38 are members of a distributor group. One of these companies (Sandler Foods) belongs to two, Nifda and F.A.B. Brands. Specifically, 14 are members of North American Foodservice Companies, eight belong to F.A.B. Brands, seven to CODE, five to Nifda, three to Parade, one to Nugget, and one to All Kitchens. These 38 Top 50 distributors who are group members rang up a volume of nearly $4.4 billion last year. This total accounted for 41.9 percent of Top 50 volume. Thus, the four “corporate giants” and the 38 group members between them generated 89.5 percent of total Top 50 generalist distributor sales.
Meantime, all group members small and large achieved a total of nearly $15 billion in sales in 1983. (See table on page 84). This represents 21.4 percent of total distributor volume.

But, although these generalists do account for by far the greater share of total distributor sales, there is a significant portion claimed by the specialist distributors. These companies are in the main systems distributors. Their operations are fine-tuned to meet specific customer requirements.

Thus, of the 15 biggest foodservice distribution specialists (see table on page 75), seven have developed systems geared specifically to the needs of limited-Menu chains. They are The Martin-Brower Company, Golden State Foods Corp., Proficient Food Co., Collins Foodservice, Worcester Quality Foods, The Southland Corp., and Interstate Distributors.

Another distributor specialist, Smart & Final Iris Co., specializes in servicing the opposite end of the market spectrum, small operators. For their benefit it specializes in cash and carry and, in 1983, rang up sales of $316 million doing so.
Aiming at still another type of operator, airline feeders, but also systems oriented is Sage Foods, Inc., with 1983 volume of $86.5 million.
Leprino Food Corp., with 1983 volume of $248.0 million is also a market specialist and the market it has pinpointed as its own is a natural outgrowth of its cheese manufacturing operations. Leprino services mainly pizza restaurants although it has recently broadened its customer mix with the addition of Mexican food operations.

Morco Industries began as the self-distribution organization of the Morrison’s Cafeteria chain. But in recent years it has begun to service outside customers, particularly hospitals, ringing up a volume of $227 million with operations other than its own. Finally, four of this group of distributors are product specialists. Monfort Distributing Company and Smith, Richardson & Conroy, Miami, specialize in distribution of center-of-the-plate products, principally meats and seafood. Wechsler Coffee Company is primarily, as its name implies, of coffee distributor. And Edward don & Co. is the nation’s largest distributor of supplies and equipment for foodservice.
Many of these distributor specialists ring up impressive volume. As the table on the facing page shows, four of the 10 biggest U.S. distributors are specialists. Nine of the 20 biggest are.

But, large as they are, the 15 biggest distributor specialists registered a sales total of $4.7 billion, or 6.7 percent of distributor sales.
To sum up, the 65 biggest distributors–50 generalists and 15 specialists, ring up a total of 21.7 percent of foodservice food, supplies and equipment sales. This includes the largest corporate distributors, group members, and independents. The remaining 78.3 percent is shared by several thousand other distributors in the still remarkably fragmented foodservice distribution universe.

Conclusion

The top 50 generalist foodservice distributors accounted for 15% of sales to foodservice operators. Of these the top four are almost national multi-location companies; thirty-eight are members of distributor groups. Specialist distributors have claimed a significant portion of sales by fine-tuning their operations to the limited-menu chains, small operators, airline feeders, hospitals, etc. In summation, the 65 biggest distributors (50 generalists, 15 specialists) account for 21.7% of food service sales.

Kitchen Smallwares

Kitchen-SmallwaresKitchen smallwares are not known under than name universally by all foodservice operators or even distributors. Some call them “kitchen tools,” “implements,” or “utensils,” although for many cooks, utensils mean just pots and pans.
Whatever they are called, kitchen smallwares are the tools that the kitchen crew use to prepare food, from the can opener to the carving knife and serving spoon. Smallwares include a broad range of totally unrelated items, except that each is involved in the preparation of food in some manner.

Some are maintenance tools, such as griddle scrapers or oven brushes. Others are used only in certain types of operations, such as oyster knives and shrimp deveiners. Some are throught of as bakers’ tools: pastry tubes and bags, lard paddles or dough cutters.

Large Potential Market

Some of the first of man’s tools were for the kitchen. In middens (refuse mounds) at ancient human campsites throughout the wolrd are found crude chipped stones which were used for cutting food.

Today, more than 300 different specialized implements for use in foodservice kitchens have been cataloged over 100 different patterns and sizes of knives alone. Learn the Language
Before you can sell kitchen smallwares effectively, you must know what is available. Even more important, you must know what your customers use. The first challenge is overcome by going carefully through your company’s catalog or price list page by page. You’ll be surprised to find how many items your firm carries many of which you may never have really noticed before, in good part because they may have been scattered through your catalog.

No one manufacturer makes every different kitchen tool, although some provide extremely broad lines. There are some suppliers which provide a number of different manufacturers’ lines under one umbrella sort of what might be called “repackagers.” If your company has a catalog, and it most likely will if it is in equipment and supplies to stay, you may find the smallwares scattered around according to their function.
The bakers’ tools may be in a special section, the cooks‘ and chefs’ knives and related items in still another, and the maintenance tools, such as grill brushes and griddle stones, somewhere else. Potholders and oven mitts may be located a long way from salt shakers, and shrimp knives may be at the opposite end of the catalog from the citrus squeezers.

If you operate from product sheets supplied by the manufacturers, you may find duplications in different lines. You may also find that there are different prices for similar items from separate makers. You should be aware of all these things before you start your campaign to sell more kitchen smallwares supplies.

Become familiar with the terminology

Not every tool is called by the same name in each section of the country. Some of the older kitchen personnel, for example, will call an implement one name, while the younger ones and maybe your catalog will call it by a completely different one.

Here are some “for instances:”

  1. Why do some of the oldercooks refer to a large salt shaker as a “dredge?”
    • It’s because “dredge” means to cover food by sprinkling with something, usually salt, flour or sugar.
  2. Why does one chef refer to a large spoon with round holes in it as “pierced,” while another will call it “perforated?”
    • That’s because, in the last century, cooks made their own draining spoons by “piercing” the bowls–usually by driving a nail through it repeatedly, then filing off the burrs.

Today it’s done by machinery in the factory, which calls it “perforating,” and that’s the way many manufacturers list it in their product catalogs.
One chef will refer to a cheese “slicer,” while another will call the same tool with a roller and a cutting wire a cheese “cutter.” Some call the hand operated device to extract juice from citrus fruit halves a “juicer,” and other a “squeezer,” although the action is more like a reaming.

The key is to “learn the language!” Learn to listen and to remember what various kitchen smallwares are called. Then you won’t be at a loss when a customer asks for an ice cream “disher,” instead of what your price list calls a “scoop.”

Who Buys Smallwares?

One of the biggest surprises to the DSR who decides to pick up some of that extra business in kitchen smallwares is to discover just who actually stimulates the buying. In most cases, it’s not the manager, or dietitian, or head chef–the one who places the order for the food and supplies. In most operations, the order for smallwares will still be placed by them, but the request for the implement comes from the kitchen worker who must use it.

Like any other tools, kitchen smallwares wear out. It’s the grill man, responsible for cleaning up the grill at the end of the shift, who puts in the request for a new griddle stone when the old one wears down. The pastry chef is the one who needs a good supply of pastry brushes, and who lets it be known when he or she is running low.

Because the usual purchasing authority doesn’t use the tools, someone else usually has to bring the need for replacement or replenishment to his or her attention. And that means that the question, “Do you need any kitchen tools this trip,” falls on deaf ears when asked of the usual buyer.
That doesn’t mean, of course, that your usual buyer doesn’t order kitchen smallwares. It’s to the buyer that you show your new samples, or your new catalog, and that may result in the operation buying something it has never used before–or a better version of something it’s now using. When you’ve got something new to sell, hit your usual contact.

But for replacement and replenishment, make sure you speak to the kitchen workers who actually use the tools. Selling Smallwares
Get to know the kitchen crew at each one of the locations you call upon. Keep your eyes open. Note worn, broken or inadequate tools. Go over your catalog frequently to remind yourself of what it is you have to sell. Then notice where those things are used in your customers’ kitchens.
It won’t take long before you can spot a worn griddle stone, notice that the scullery man is opening clams with an old paring knife (often by the bloody fingers), or find the warped spatula with nicks in the blade. Or maybe the sandwich person is spreading mayonnaise with a thin bladed regular dinner knife instead of a sandwich spreader.

From working with the worn or inappropriate tools so long, the average worker may not even notice that something is wrong. But bring it to his or her attention, and you may well have a new implement on your order blank before you leave.
Be prepared to discuss the difference in quality between two different types of the same product. In general–although there are exceptions–for most tools, stainless steel is the preferred choice, with aluminum second and plastic last.
Of course, a wooden spoon is the ideal implement for certain jobs. And plastic has the advantage of lightness in many applications. But, in general, metal lasts longer than plastic, is les affected by heat, offers sanitary advantages and stainless steel is longer lasting and tougher than aluminum.

Chrome plated steel may be all right for a home kitchen, but it won’t stand up long on a heavily used tool in a foodservice operation. Wooden, or plastic impregnated wood handles (required in many health department jurisdictions), usually last longer with less deformation or cracking than inexpensive plastics, although some of the newere plastic handles have both a good grip and a high resistance to splitting, chipping or deformation. One clue is whether the particular material is used in its top lines by a manufacturer known for its high quality work.

Make your kitchen smallwares strategy a two-pronged one. First, show samples, or at least your catalog, to the buyer to introduce new smallware items for which you justify a need in your customer’s operation. Second, make sure to identify needs for replacement in the kitchen, both by looking and by asking the individual members of the kitchen crew if they need new tools to work with.

It all boils down to asking for the order! The only difference is that you have to recognize that the buying influence usually lies with someone other than your usual contact. Once you get in the habit of looking around for what’s needed and asking the kitchen crew, there’s a good chance that you’ll start selling more than your share of the high markup kitchen smallwares supplies in your firm.

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The Top 50 In Nonfoods

nonfoodWith over $200 million sales reported by 25 of the Top 50 distributors in the country in tabletop and/or equipment lines in 2013, it can no longer be said that such items are the prerogative of the specialist. Indeed, the nation’s largest broadline distributors have carved out a substantial share of the foodservice market in these lines. Among the Top 50 distributors of 2013, 35 carry nonfood items other than disposables and/or chemicals: 35 stock tabletop and/or small wares, 33 inventory light equipment and 16 have heavy equipment.

Also, 23 of these firms boast showrooms for the lines.

Several of the 10 distributors that did not report their 2013 volume in tabletop and equipment were either new to the lines or as yet doing only limited business with them. These included American Fruit & Produce Co., Inc., Institutional Food Distributors, Inc., S.M. Flickinger Co. and Alfred M. Lewis, Inc.

For the 25 Top 50 distributors who reported their tabletop and equipment volume for 2013, those sales added up to $217 million, or 4 percent of the total sales of those distributors in 2013. And for the 26 Top 50 companies that reported their combined nonfood volume for 2013 (includes disposables, chemicals, tabletop and equipment), those figures came to $765 million, or 14 percent of their total 2013 sales.

While some Top 50 distributors still do an as yet modest job with tabletop and equipment, many others are getting better established with them.
The No. 1 distributor in the country, Sysco Corp., for instance, rang up $74 million sales in tabletop and equipment, or 4 percent of its total 2013 foodservice sales of $1.850 billion.

PYA/Monarch, Inc., with $1.100 billion in foodservice sales for 2013, is still phasing those lines into its branches. But that volume has grown to $22 million, or 2 percent of total 2013 sales. Smelkinson Brothers Corp., for instance, just got into tabletop and equipment in 1982, but the company now does 2 percent of total volume in those lines. Skly Bros., Inc., which took on tabletop and equipment five years ago, now does 2.7 percent of total sales in those categories and opened its first showroom in 2013.

Still other Top 50 distributors are placing heavier emphasis on tabletop and equipment lines. Associated Grocers Food Service, which has a subsidiary that sells equipment and supplies, has started to get its broad-line sales force involved with them for the first time. The distributor established an incentive program in 2013 in these lines and provided reps with a catalog.

S.S. Pierce Co. augmented its equipment capability with the addition of a design and installation department in 2013, and L.M. Sandler & Sons, Inc., cited significant growth in tabletop and equipment business in 2013. These lines now constitute 2.5 percent of sales for Sandler.

Another Top 50 distributor, Interstate Restaurant Supply Co., also pointed to significant increases in that business in 2013, in contract sales in particular, which amount to 7 percent of the company’s overall 2013 sales.
Shamrock Foods, which does 8 percent of volume at its Phoenix branch in tabletop and equipment, introduced those lines, complete with new showroom, at its Denver division in 2013.

In addition, there are three Top 50 companies not yet in tabletop and equipment but with plans to add them in the foreseeable future. They are Ben E. Keith Co., Inc., Ritter Food Corp. and S. Schaffer Grocery Corp.

Non-Electrics Still Key In Wok Sales

woksThe high sales volume woks raked in in 2011 continues to climb in 2012. Not only are sales in the electric category climbing, but manufacturers of both electric and non-electric woks agree that non-electrics remain an important factor in the market.

A more health conscious public and nationwide promotions by manufacturers have seen sales of electrics skyrocket. There are many cooks who are serious about Chinese cooking and would never consider using an electric wok, sales are climbing because of electrics’ duarability, their most important advantage over non-electrics.

Price Resistance

But there has been some resistance to the higher price points of our electric wok. To counter this resistance, we are attempting to more widely educate consumers by making its products the star of a Chinese cooking show currently airing on PBS stations nationwide. The company is also offering a lifetime warranty on its electric woks.

We’re extending sales coverage into major markets. Our predictions look good for spring, and we’re hoping for nationwide sales coverage by the April.

Farberware, too, holds great expectations for its electric wok in 2012. We have shipped a higher amount than we had forecasted. Strong sales at the end of 2011, when we had promotions for the Chinese New Year.

Chinese cooking is becoming more popular, and woks will soon become a standard kitchen utensil. The wok uses less oil than traditional frying pans, and the food remains more nutritious when it’s stir-fried or steamed.

At West Bend, Tom Kieckhafer, vp/sales, agreed that woks are gaining in sales, it’s one of the fastest growing categories in electric appliances. Woks have become popular cooking for at-home entertainment, they’re such a versatile cooking utensil, and the cooking method retains important nutrients

Promotions, like West Bend’s recipe book offer with its new 5-1/4-quart wok, are also moving sales, up 20% for the first half of 2012 over the same period in 2011. The black and red wok, West Bend’s fourth electric model, is packaged with Better Homes and Gardens Wok Recipe Book.

Growth Area

At Meyer Housewares, sales are continuing to skyrocket. Woks look to be an important growth area for Meyer in 2012. Sales in 2011 were 40% more than projected. For 2012, sales are at least up to forecast for the first half, and up to over 1983 for the same period.

Sales for the company have been so encouraging that in April it will introduce a low-end electric wok that will be sold on a volume basis. The 14-inch, 1100 watt unit is black with a SilverStone interior. April will see the re-introduction of a stainless steel wok. Also a 14-inch, 1100 watt unit, it is a high domed wok with a phenolic base and handles.

Meyer’s spokesperson was not as jubilant about market growth, as were other manufacturers HOUSEWARES interviewed. The expectation is that the market will continue to grow, but not be completely saturated by any means. Consumer demands will be met only by a small amount of manufacturers.