TOP 75 VAGARIES

David Merrefield

This issue contains SN's annual ranking by sales volume of North America's 75 largest food-distribution companies.

The annually published Top 75 list always makes for good reading because abstracting into list form an industry as complex as is food distribution casts new light on a year's worth of industry change, and sparks thinking about change. The Top 75 list, on Pages 24 and 25, combines all types of distributors onto a single list, whether the distributors are primarily retailers or primarily wholesalers. SN has used the combined-list approach in recent years.

The use of a single list -- as opposed to listing retailers and wholesalers separately -- is done under the theory that the distinction between wholesaling and retailing is becoming blurred, and is likely to become more so in the future. The distinction is blurring largely because wholesalers are driving more of their volume through corporately owned retailing. But to some extent, the reverse may prove to be true in upcoming years. Some mainline retailers such as Safeway, Pathmark and Kroger have demonstrated lately that they are open to the possibility of supplying outside accounts. The move of wholesalers into more retailing is a trend that can be verified by consulting this year's Top 75 list and comparing it with the list that ran during the like week a year ago. Both editions of the list included an estimate of the percentage of wholesalers' total volume represented by corporately owned retailing in instances where retailing made a significant contribution. First let's look at a number of companies considered to be primarily wholesalers to see what portion of their top lines come from retailing: Fleming now does 16% of its volume in corporately owned retailing, Supervalu does 25% of its volume in retail, Provigo 37%, Oshawa Group 18.4%, Super Rite Corp. 20% and Alex Lee 25%.

In each of those instances where it's possible to draw a direct comparison with the previous year's list, the share of volume contributed by retailing increased. The list published last year showed Fleming at about 8% retail. This year's retail share was driven up to 16% through the effect of the wholesaler's acquisition of Scrivner. Scrivner, off this year's list because of the acquisition, had a retail share of volume at 33% last year. Supervalu's share of retail increased 5% and Oshawa's increased just under 1%. Other direct comparisons can't be drawn.

Meanwhile, it's also instructive to see which companies rank higher or lower on the current list as compared with the previous year's, and to figure out why. Some of the reasons are obvious: Fleming went from No. 5 to No. 2 on the wings of the Scrivner buyout. But according to research by SN reporter and list compiler Elliot Zwiebach, Richfood made the biggest move -- from No. 61 to 50 -- because of its buy of B. Green and because some of its retail customers were in a strong growth mode. Penn Traffic moved up five slots to No. 22, also because of an acquisition. Provigo dropped a place, to No. 16, because of the sale of its California operations. Other moves have to do with the interacting sales performance of various entities. Jitney Jungle went up 10 places, to No. 55, because of financial struggles weighing on some intervening companies. Jitney Jungle's own sales volume was essentially flat. Albertson's moved up to No. 6, from No. 8, partially because A&P, last year's No. 7, had declining sales, owing to its protracted labor troubles in Canada, and dropped a slot.. Albertson's volume grew too.

Naturally, some companies also went up or down for the most obvious reason of all -- their top lines changed quite a bit. Here are a few examples: Dominick's Finer Foods rose nine slots, to No. 30, because of the success of its Omni format. Harris Teeter also moved up nine slots, to 40, because of remodeling and expansion programs. Loblaw fell three places, to No. 12, because of a strike it took in its New Orleans operations. Grand Union fell five places, to No. 31, on sluggish sales, especially in upstate New York and New England.

Incidentally, SN's Top 75 list itself would rank quite high if we were to compile a popularity ranking of projects we publish on an annual basis. Another very popular list is that of upcoming industry events. That list too is in this issue, on Page 28.

So if you're a list user, be sure to tuck this issue away for future reference. Last year, quite a few readers apparently forgot to do that because we got calls all year from readers seeking copies of this pair of lists.