Wholesale bypass has begun to pose an existential threat to industry distributors
New York, NY (PRWEB) July 16, 2014
Fresh bread and bakery goods wholesalers distribute breads, rolls, cakes, cookies, crackers and baking supplies to retail and food service customers across the United States. The staple nature of some of these products in the American pantry has historically protected the industry somewhat from fluctuations in consumer disposable income. However, in recent years, two major trends have significantly threatened the Fresh Bread and Bakery Goods Wholesaling industry. As retail and food service customers have increasingly consolidated and been able to take advantage of their large-scale operations, wholesale bypass, wherein these customers directly establish supply contracts with bread and bakery goods producers, has begun to pose an existential threat to industry distributors. At the same time, dietary trends discouraging the consumption of gluten and carbohydrates has reduced overall demand for the goods this industry wholesales. Due to this decreased demand and increasing competition, Fresh Bread and Baked Goods Wholesaling industry revenue is expected to fall an annualized 1.1% during the five years to 2014, to $29.8 billion. Dietary trends and wholesale bypass will contribute to revenue loss of 1.3% in 2014 alone.
According to IBISWorld Industry Analyst Jocelyn Phillips, “Profit margins, however, have increased slightly during the past five years, largely as a result of companies across the industry engaging in cost-cutting measures and reducing their spending on labor and wages accordingly.” Major industry acquisitions (such as industry leader Sysco acquiring its largest competitor, US Foods) have also buoyed industry profit, as merged companies are able to reduce redundancies, corner a larger share of the market and enjoy higher margins. Nonetheless, heightened pricing competition has made it increasingly difficult for smaller companies to survive, and the total number of industry enterprises is expected to fall 1.9% over the five years to 2014.
“Demand for bread and bakery goods is projected to grow somewhat in the five years to 2019, which is expected to drive slight revenue growth during the period,” says Phillips. A growing number of US households (who drive grocery consumption) and an expected uptick in wheat consumption are expected to contribute to this slow growth. Wholesale bypass will likely continue to plague industry operators, but margins are expected to continue slowly increasing, and industry revenue will likely grow 0.4% per year on average, to nearly $30.3 billion in the five years to 2019.
For more information, visit IBISWorld’s Fresh Bread and Bakery Goods Wholesaling in the US industry report page.
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IBISWorld industry Report Key Topics
The Fresh Bread and Bakery Goods Wholesaling industry includes firms that primarily perform merchant wholesale distribution of fresh bread and bakery products.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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