Perhaps more than most in the food distribution business, Rick Cohen could be characterized as a risk-taker.
As the longtime chief executive officer of family-owned C&S Wholesale Grocery, Keene, N.H., Cohen has taken the company along some unusual paths for a grocery wholesaler, striking distribution deals with some troubled chains like A&P and Marsh in addition to its traditional role of supplying independent grocers and more established chains.
“Marsh and A&P are companies trying to turn around, and C&S is taking some risks by distributing for them,” said Neil Stern, senior partner, McMillanDoolittle, Chicago. (Cohen could not be reached for comment.)
In A&P’s case, the retailer’s sales dropped by $1 billion from fiscal 2010 to 2012 as it filed for Chapter 11 bankruptcy reorganization last year, which A&P attributed in part to its long-term distribution contract with C&S. But C&S helped A&P emerge from Chapter 11 in March by renegotiating the contract.
C&S, still the nation’s largest grocery wholesaler with annual revenues estimated at $20.4 billion, helped make up for its A&P shortfall by adding Marsh as a customer last August and picking up the Foodtown cooperative as a wholesaler customer; it also increased its business with Ahold, according to sources. With Marsh as a base in the Midwest, C&S is also positioned to bolster its business with Target this year.
In fact, C&S’ strategy of enabling chains to outsource some or all of their distribution may be gaining momentum, Stern noted. “It seems to make sense for a number of [chains],” especially in regard to stores located in outlying areas. “What C&S has done is make it a dollars and cents analysis.”
Speculation now centers on whether C&S will absorb the distribution function for Winn-Dixie, following that chain’s merger with C&S customer Bi-Lo, or whether the reverse will happen — Winn-Dixie will handle distribution for Bi-Lo once its contract with C&S expires.
While benefiting both parties, retailers’ relations with outsourcing partners like C&S can sometimes become strained. “A couple of the more common issues that I have heard from retailers that outsource their procurement is ‘timely and accurate’ accounting and the dilemma of who owns the relationship with the brands, particularly when it comes to ‘deal money,’ promotions and other incentives,” former Marsh executive Mark Heckman, now president of Mark Heckman Consulting, Bradenton, Fla., told SN.
C&S has also rankled unions by closing warehouses and consolidating distribution at its own facilities. For example, last month C&S shuttered a dry-goods warehouse in Jessup, Md., that supplied Giant Food.
Meanwhile, C&S has shed some of its retail assets, selling Southern Family Markets to Belle Foods, Birmingham, Ala., in a deal that was completed this month. C&S will continue to supply Southern Family Markets’ 57 stores.
C&S also owns 26 Grand Union Markets in the Northeast, which industry sources have said are for sale as the wholesaler tries to exit the retail business.