On Nov. 30, United Natural Foods Inc. (UNFI) announced its focus on continued expansion in Canada along with its first quarter 2012 earnings. UNFI's recent acquisition of R.K. Sethi Distribution, a specialty food distributor in Vancouver and Toronto, primes the distributor to grow its Canadian business to 10 percent of the company's total sales. Steven Spinner, president and CEO, said UNFI will "take a breather" from pursuing growth among large supermarket chains in the U.S., reports Supermarket News.
The largest publicly traded wholesale distributor to the natural, organic and specialty industry in Canada and the United States reported that sales increased 15.6 percent to $1.2 billion over net sales recorded in the first quarter of 2011, ended Oct. 29. Newly acquired Whole Foods Market's inventory and distribution assets generated $25.4 million.
Profit decreased by 12.9 percent to $15.2 million, a result of adding new customers, freight costs and a restructuring of UNFI's specialty division, the company reported. "Looking forward, we'll have an enhanced focus toward driving efficiencies and expense control as we continue to adapt to higher growth in lower margin customers," said Steven Spinner, president and CEO.
What does UNFI's Canadian expansion mean for U.S. natural brands?
UNFI's Canadian expansion has been in the works for the last few years. In 2010, UNFI purchased SunOpta, Inc., the Canadian food distribution network, for $66.2 million. Natural distributor Tree of Life has long had a presence in Canada, and competition from an expanded UNFI Canada would benefit both retailers and manufacturers. "Anytime competition increases, generally service gets better," said Bill Crawford, director of retail publishing programs for New Hope Natural Media
UNFI's latest acquisition of R.K. Sethi Distribution also means more product options for retailers in Canada who traditionally work with one distributor. This is unlike U.S. retailers who may do business with multiple distributors.
While UNFI distribution in the U.S. isn't a meal ticket to Canada, the relationship will open doors for natural products manufacturers. Companies still have to abide by Canadian labeling and packaging laws, but Crawford said if brands are looking to expand it will be "less daunting" because the brand will already be familiar with the inner workings of UNFI.
Headquartered in Providence, R.I., UNFI distributes more than 60,000 items to more than 23,000 customer locations across Canada and the United States.