Key Food cooperative taps UNFI as primary grocery distributor

United Natural Foods Inc. (UNFI) has landed a primary grocery wholesale agreement with Key Food Stores Co-Operative Inc. that will bring an estimated $10 billion in sales over 10 years.

Under the long-term supply deal, announced Tuesday, Providence, R.I.-based UNFI will supply Key Food stores with conventional, natural and organic grocery products, along with a range of international items. The pact spans all food categories — protein, produce, frozen, bakery and deli — plus general merchandise and health and beauty care. Products supplied also include private labels from both companies, such as Key Food’s Urban Meadow brand and UNFI-owned brands like Essential Everyday and Woodstock. 

The Key Food cooperative, based in Matawan, N.J., encompasses more than 315 independently owned and corporate supermarkets in New York, New Jersey, Connecticut, Massachusetts, Pennsylvania and Florida, generating about $3.2 billion in annual sales. Its grocery store banners include Key Food, Food Universe, The Food Emporium, SuperFresh, Food Dynasty and Gala Foods Supermarkets.

Dean Janeway, CEO of Key Food, cited UNFI’s one-stop supply capability and scale as key factors behind the distribution deal. Those benefits were among the linchpins of UNFI’s 2018 acquisition of Supervalu, which made UNFI the nation’s largest public grocery wholesaler and expanded its customer base in natural, organic and specialty foods to conventional grocery and independent supermarkets.

Related:UNFI’s 2020 sales surpass even recent expectations

Along with Key Food, the cooperative's grocery store banners include The Food Emporium, Food Universe, SuperFresh, Food Dynasty and Gala Foods Supermarkets.

“We are excited about our relationship with UNFI,” Janeway said in a statement. “Their unique ability to service the entire store on a single delivery in addition to their industry expertise and buying power gives Key Food members an advantage in the marketplace. We are thrilled to partner with the UNFI team, and our members look forward to offering UNFI’s full line of products to their shoppers.” 

With the new business, UNFI also is expanding its distribution network. The company said it’s now building a state-of-the-art Class A distribution center in Lehigh County, Pa., that will add 1.3 million square feet of capacity for current and new customers in the Northeast and surrounding areas, including Key Food. Plans call for the new facility, which will create over 500 local jobs, to open in fall 2021.

UNFI Chairman and CEO Steven Spinner noted that the addition of Key Food brings UNFI a bigger slice of the lucrative metropolitan New York market. That includes stores in all five New York City boroughs, Long Island, upstate New York, New Jersey and Connecticut.

Related:UNFI CEO Steven Spinner to retire, search for successor under way

“Key Food, whose members operate more than 315 stores, is a rapidly growing organization with a large market share in the New York market,” Spinner stated. “We have recently begun to service their Florida stores and are excited to expand service to their Northeast stores toward the end of 2021. We believe our unmatched product variety and knowledge of today’s consumer will benefit Key Food and its retailers, and we look forward to driving value to their operations.” 

Overall, UNFI’s wholesale business operates 59 distribution centers and warehouses offering more than 250,000 national, regional and private brand products (grocery, produce, perishables and frozen, general merchandise, nutritional supplement and sports nutrition, bulk, foodservice and beauty/personal care) to natural product superstores, independent retailers, traditional supermarket chains, e-commerce retailers and foodservice operators.