KeHE Distributors to acquire DPI Specialty Foods

Grocery wholesaler KeHE Distributors plans to acquire DPI Specialty Foods, a western U.S. specialty foods distributor, from food and beverage-focused private equity firm Arbor Investments.

Financial terms of the agreement and a timetable for finalizing the deal weren’t disclosed. Naperville, Illinois-based KeHE said Wednesday that both companies will operate independently until the transaction closes, pending regulatory approval and customary closing conditions.

An employee-owned, B Corp-certified company, KeHE supplies natural, organic, fresh and specialty food, groceries and other products to more than 30,000 natural food stores, supermarket chains, independent grocery stores, online retailers, retail pharmacies, convenience stores, foodservice providers and specialty retailers across North America.

KeHE said the addition of Ontario, California-based DPI will bring more than 1,000 customers across channels. Delivering products in a one-truck solution, the combined company will be able to provide high-touch support to all customers, backed by data-driven insights, business intelligence tools and more warehouse space to fuel scalable growth. DPI also will boost KeHE’s fresh food portfolio, enabling retailer partners to respond more quickly to consumer demand, the company added.

“KeHE is dedicated to being a source for good, and this expansion provides an opportunity to deliver enhanced experiences for customers, suppliers, and ultimately, consumers,” KeHE President and CEO Deb Conklin, who joined the distributor as chief executive earlier this year, said in a statement. “This year, we’re celebrating seven decades of serving and feeding America, and this acquisition continues to position KeHE as the preferred supply chain partner in North America.”

DPI supplies ambient, chilled and frozen specialty foods—including gourmet, natural, organic, gluten-free, local and ethnic foods—to 17 Western states through distribution centers in Henderson, Colorado (Rocky Mountain Division); Tualatin, Oregon (Northwest Division); and Ontario, California (West Division). The Denver-area warehouse totals 130,000 square feet and offers over 11,000 items, while the Portland-area facility spans 250,000 square feet and houses more than 18,000 products. DPI’s largest distribution center, the 424,000-square-foot Los Angeles-area warehouse, carries over 15,000 items.

“Both DPI and KeHE have built impressive networks, deep industry and category expertise, and value-added services over decades of operation,” according to Russ Blake, CEO at DPI Specialty Foods. “Combining our complementary strategies allows us to further capitalize on those strengths to offer superior value for the U.S. food industry.”

The acquisition of DPI continues KeHE’s expansion of its distribution network and customer base. In November, KeHE landed a primary distribution partnership with Midwestern convenience retail chain Kum & Go, adding to its share of the c-store space. That came about a month after KeHE opened a 1 million-square-foot, state-of-the-art distribution center—its largest DC to date—in Dallas.

A 124,000-square-foot expansion of KeHE’s DC in Aurora, Colorado, earmarked for new independent grocery clients, opened in August 2022. Also that month, KeHE extended its KeHE CONNECT Direct digital fulfillment network to include its DC in Chino, Calif., making the service available to West Coast retailers. The Chino facility joined three fulfillment centers supporting the CONNECT Direct service.

Earlier in 2022, KeHE added grocery retail cooperative Allegiance Retail Services as a primary distribution customer and expanded distribution of natural and specialty products with Publix Super Markets. And in December 2021, KeHE opened its 16th distribution center, a 500,000-square-foot facility in Goodyear, Arizona.