The biggest distributor of natural and organic food in the U.S., UNFI has big plans to stay on top.

Connor Link 1, Senior Editor

October 23, 2014

2 Min Read
UNFI expects to hit $10 billion in sales by 2017

Natural & organic foods distributor UNFI presented results and forecasts to financial researchers on Tuesday for its annual Analyst Day event. The company highlighted many of its recent wins--sales growth consistently between 10 and 15 percent, sales and earnings doubling since 2009, seven new centers opened in three years--and gave a view to the future.

What's in store for the company? According to its projections, $10 billion in annual sales by 2017.

How will UNFI get there? For one, it's in the right market. The natural products industry notches up consistent double-digit growth every year, and UNFI boasts the biggest piece of the distribution pie. (The company's next largest competitor is one-third their size.) According to Nutrition Business Journal, the U.S. nutrition and natural products industry (including dietary supplements, natural/organic foods, and natural/organic personal care and household products) reached sales of nearly $110 billion in 2013.

To maintain its hegemony, UNFI announced several initiatives designed to keep the company in growth mode, including customer and product expansion, development of internal talent, and mergers and acquisitions.

Customer expansion will be essential to the distributor's continued success. UNFI has one weakness -- which also happens to be its biggest strength: Whole Foods Market is its largest customer. As WFM goes, so goes UNFI. For example, after Whole Foods announced earnings below expectations in May and the company's stock price began to plunge, UNFI's stock felt a similar strain and sank nearly 15 percent over the course of the summer.

UNFI can also benefit from added product categories. While organic, non-GMO and gluten-free foods still enjoy outsized growth, other complementary categories would serve as well. The company has its eye specifically on the ethnic and gourment market, a category it expects could become a $5 billion long-term investment. According to its analyst presentation, UNFI controls about 12 percent of the natural and organic distribution market, but only 2 percent of ethnic and gourmet. And yet $4 billion worth of ethnic and gourmet food sales occur through the natural channel, where UNFI has its greatest prowess.

To retain and develop talent, UNFI has created several resources, such as UNFI U, the Supervisor Pipeline Program and the Human Resources Generalists Development Program. 

And as for acquisition, we can expect UNFI to focus its efforts towards technology in logistics and ecommerce. In 2012 the company acquired Honest Green, a fulfillment service for online retailers, which gives UNFI an edge in assisting brick-and-mortar retailers looking to start selling products online. And with new distribution centers opening on a constant basis, the company will need to stay up-to-date on modern mobile logistics.

These takeaways are just a few of the highlights of UNFI's push toward growth in the future. To see what else the company has in store, check out the analyst presentation on the company's website.

About the Author(s)

Connor Link 1

Senior Editor, New Hope Natural Media

 

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