Foodservice continues to drive growth for wholesalers, IGD reports

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The UK grocery wholesaling sector has experienced another year of growing sales, which is forecast to continue for the next four years thanks to the expanding out-of-home market.

According to figures from grocery research organisation IGD, UK grocery wholesalers saw sales in 2016 grow 0.3% on the previous year to just short of £30 billion. This increase was mainly driven by the development of more clients in the foodservice market, with this segment growing sales by 2.1%.

Furthermore, IGD research is forecasting the sector to reach £31.3 billion by 2021, representing a compound annual growth rate (CAGR) of 0.9%. This forecast projects a 2.5% CAGR for delivered foodservice, 0.5% for delivered grocery and 0.1% for retail-led cash and carry.

Speaking at IGD’s Wholesaling conference, IGD’s chief economist James Walton, said: “For another year, foodservice has lifted the wholesaling sector, representing the vibrancy of the expanding out-of-home customer. We’re also seeing growth in the chilled and fresh and beer, wines and spirits categories, demonstrating clear investment opportunities for wholesalers.

“One area of decline for the channel was tobacco (by -1.8%), but this is to be expected as new legislation brings in plain packaging and minimum pack sizes. Sales to the independent and convenience retail customer base also fell (by -0.6%). However, IGD’s recent survey indicates that four out of five (80%) wholesale suppliers remain optimistic about the future of the wholesale channel, including independent operators. Therefore, there is still plenty of opportunity for wholesalers wanting to drive growth in the independent market.

“Looking ahead five years, the sector still has plenty to play for, as not only is the growth of the foodservice segment set to continue, but according to new IGD research, more than two-thirds (67%) of suppliers to UK wholesalers are keen to continue investing in the channel. So there remains huge opportunity for success.”