United Natural Foods Profile
United Natural Foods, Inc. (UNFI) operates as a distributor of grocery and non-food products, and support services provider to retailers in the United States and Canada.
The company is uniquely positioned to provide the broadest array of products and services to customers throughout North America. The company’s diversified customer base includes over 30,000 customer locations ranging from some of the largest grocers in the country to smaller independents as well. It offers approximately 250,000 products consisting of national, regional and private label brands grouped into the following main product categories: grocery and general merchandise; perishables; frozen foods; wellness and personal care items; and bulk and foodservice products. The company is North America’s premier grocery wholesaler with 55 distribution centers and warehouses representing approximately 30 million square feet of warehouse space.
The company is a coast-to-coast distributor with customers in all 50 states, as well as all ten provinces in Canada, making it a desirable partner for retailers and consumer product manufacturers. The company plans to continue to pursue new business opportunities with independent retailers that operate diverse formats, regional and national chains, as well as international customers with wide-ranging needs.
Segments
The company operates through two segments, Wholesale and Retail. The company also operates a manufacturing division and a branded product line division.
Wholesale segment
The company operates its Wholesale reportable segment through three U.S. geographic regions: East, Central and West, each of which is led by a separate regional president responsible for product and service strategy, execution, and financial results; and Canada Wholesale, which is operated separately from the U.S. Wholesale business. Product and service categories include grocery, fresh, private brands, wellness and personal care items, eCommerce, and foodservice. This operating structure includes regional sales organizations and distribution center networks, which offer a combination of conventional and natural products to the company’s customers as a consolidated supply solution. Territory managers in these regions sell the company’s complete lines of products, which allows it to anticipate and identify sales opportunities that result from its customers having a single point of contact for all of its products and services.
Operations
The company has established a national network of strategically located distribution centers utilizing a multi-tiered logistics system. The network includes facilities that carry slow turn or fast turn groceries, perishables, general merchandise and home, health and beauty care products.
The company offers Wholesale customers a wide variety of food and non-food products, and its own lines of private label products. The company also offers a broad array of professional services. As a logistics provider, efficiency is an important customer service measure. The company is in the process of optimizing its facilities to implement leading warehouse technology, ranging from radio-frequency devices guiding selectors to mechanized facilities with completely automated order selection for dry groceries that help it deliver aisle-ready pallets to Wholesale customers. Deployment of continuous improvement methodologies within the company’s supply chain is focused on delivering labor while also improving its ability to service its customers.
Retail segment
This segment includes 78 Cub Foods and Shoppers retail grocery stores. Its retail stores provide an extensive grocery offering and, depending on size, a variety of additional products, including general merchandise, home, health and beauty care, and pharmacy. The company offers national and local brands, as well as its own private label products. A typical retail store carries approximately 17,000 to 21,000 core stock-keeping units (SKUs) and ranges in size from approximately 50,000 to 70,000 square feet. The company’s retail banners have strong local and regional brand recognition in the markets in which they operate. The company’s Retail operations are principally supplied by five of its Wholesale distribution centers.
Product Offerings
The company’s extensive selection of products includes natural, organic, specialty, produce, and conventional grocery, and non-food products. The company offers nationally recognized brand name and private label products, including grocery (both perishable and nonperishable), general merchandise, home, health and beauty care, and pharmacy, which are sold through its Wholesale segment to wholesale customers and its Retail stores. The company offers the following main product categories: grocery and general merchandise; perishables; frozen foods; wellness and personal care items; and bulk and foodservice products.
The company’s owned brands portfolio is a collection of brands that offer high quality solutions for private label to its customers. ESSENTIAL EVERYDAY is the company’s leading national brand equivalent private label solution with nearly 2,500 items for departments throughout the store. It is complemented by SHOPPERS VALUE, which offers the budget conscious consumer quality alternatives to national brands. The company’s WILD HARVEST brand offers a full range of products made with simple, wholesome ingredients across multiple categories, including pet foods. The company’s Field Day brand is primarily sold to natural store / co-op retailers as a private label solution. The company’s category-specific brands, primarily including STONE RIDGE CREAMERY, EQUALINE, and CULINARY CIRCLE, also provide national brand equivalent products at a competitive price.
The company’s Blue Marble Brands portfolio is a collection of national brands that offer the United States Department of Agriculture (USDA) organic, non-GMO Project Verified, and specialty food and non-food items. The WOODSTOCK brand has been pioneering organic / non-GMO products for over 35 years and continues to launch innovative products.
The company’s subsidiary doing business as Woodstock Farms Manufacturing specializes in importing, roasting, packaging and distributing nuts, dried fruit, seeds, trail mixes, granola, natural and organic snack items and confections for its customers and in the company’s branded products. The company operates an organic (USDA and Quality Assurance International (QAI)) and kosher (Circle K) certified packaging, roasting, and processing facility in New Jersey that is SQF (Safety Quality Food) level 2 certified. Woodstock Farms Manufacturing sells items manufactured in bulk and through private label packaging arrangements with large health food, supermarket and convenience store chains and independent retailers.
Service Offerings
Professional Services
The company offers a broad array of professional services that provide Wholesale customers with cost-effective and scalable solutions. These services include pass-through programs in which vendors provide services directly to its Wholesale customers, as well as services and solutions it develops and provides directly. The company’s services include shelf and planogram management, retail store support, pricing strategy, electronic payments processing, advertising, couponing, store design, equipment sourcing, point-of-sale hardware and software, network and data hosting solutions, consumer convenience services, eCommerce, automation tools, sustainability services and administrative back-office solutions. The sales and operating results for these services are included within Wholesale.
Marketing Services
The company offers a variety of marketing services designed to increase sales for its customers and suppliers, including consumer and trade marketing programs, as well as programs to support suppliers in understanding its markets. Trade and consumer marketing programs are supplier-sponsored programs that cater to a broad range of retail formats. Retail marketing programs offer web and digital marketing services, including websites, mobile applications and eCommerce capabilities; circular programs for the company’s customers and vendors; and allow its suppliers to purchase advertising space on its trailers. Supplier marketing programs include information sharing programs designed to provide heightened transparency to suppliers through demand planning, forecasting and procurement insights. All of the company’s programs and services are designed to educate consumers, profile suppliers and increase sales for retailers, many of which do not have the resources necessary to conduct such marketing programs independently.
The company also offers its customers:
Trends reports in the natural and organic industry: Product data information, such as best seller lists, store usage reports and catalogs; assistance with store layout designs, new store design and equipment procurement; planogramming, shelf and category management support; in-store signage and promotional materials, and assistance with product display planning and set up; shelf tags for products; and a robust retailer portal with product information, search and ordering capabilities, reports and publications.
Distribution Network
Logistics
The company selects the sites for its distribution centers to provide direct access to the markets it serves and configures them to minimize total operating costs. Products are delivered to the company’s distribution centers primarily by its fleet of leased and owned trucks, contract carriers and the suppliers themselves. Additionally, the scale of the company’s distribution network provides it with the flexibility to shift volume amongst distribution centers in the case of volume spikes, unique customer needs, temporary inbound fill rate challenges and weather-related events, as well as the capacity to support future sales growth.
The majority of the company’s trucks are leased and are maintained by third-party national leasing companies, which in some cases maintain facilities on its premises for the maintenance and service of these vehicles. The company also has facilities where it operates its own maintenance shops.
The company ships certain orders for supplements or for items that are destined for areas outside of regular delivery routes through independent carriers. Deliveries to areas outside the continental United States and Canada are typically shipped by freight-forwarders through ocean-going containers.
Organic Certification
The company’s ‘Certified Organic Distributor’ certification covers 26 of its distribution centers in the United States. Two of the company’s California locations are certified as Organic by the state of California Department of Public Health Food and Drug Branch, and another California location is registered with the California Department of Food and Agriculture Organic Program as an organic handler. In addition, the company’s two Canadian distribution centers in British Columbia and Ontario each hold an organic distributor certification from Quality Assurance International (QAI).
Strategy
The key elements of the company’s strategy include enhancing its distribution network to drive efficiency and improve the customer experience; enhancing analytical insights for its customers and suppliers; integrating and enhancing the functionality of the digital platforms it offers and expanding the actionable intelligence it provides through these platforms; addressing legacy integration issues and continuing investments to upgrade and simplify it digital infrastructure; and optimizing its stock-keeping unit (SKU) assortment, as well as reviewing commercial contracts in collaboration with its customers and suppliers.
Customers
The company serves over 30,000 unique customer locations, primarily located across the United States and Canada, which it classifies into five customer types: Chains; Independent retailers; Supernatural; Retail; and Other.
The company has been the primary distributor to Whole Foods Market for more than 20 years. It continues to serve as the primary distributor to Whole Foods Market in all of its regions in the United States pursuant to an amended distribution agreement with a term through September 27, 2027. Whole Foods Market is the company’s only customer that represented more than 10% of total Net sales for the year ended July 29, 2023.
The company’s international Net sales primarily reflect UNFI Canada, Inc. (UNFI Canada), which represented approximately 1% of its Net sales in for the year ended July 29, 2023.
The company continues to invest in technology and systems with the intent of improving the efficiency of its operations, enhancing the customer experience and growing its services platform, including its eCommerce and innovation businesses. This includes sales to eCommerce companies, as well as business-to-business sales to non-traditional customers. For the year ended July 31, 2021, the company launched Marketplace by UNFI, a business-to-business digital eCommerce solution for emerging brands looking to expand distribution with UNFI customers. Through this virtual marketplace, suppliers gain immediate access to UNFI’s digital infrastructure to promote and sell their products to UNFI’s broad customer base while UNFI customers gain access to an even broader assortment of unique and local items with flexible order sizes and the convenience of ordering from multiple sources online in one place.
Government Regulation
The company’s operations and many of the products that it distributes in the United States are subject to regulation by state and local health departments, the United States Department of Agriculture (USDA) and the United States Food and Drug Administration (the FDA), which generally impose standards for product quality and sanitation and are responsible for the administration of bioterrorism legislation. In the United States, the company’s facilities generally are inspected at least once annually by state or federal authorities. For certain product lines, the company is also subject to the Federal Meat Inspection Act, the Poultry Products Inspection Act, the Perishable Agricultural Commodities Act, the Packers and Stockyard Act and regulations promulgated by the USDA to interpret and implement these statutory provisions. The USDA imposes standards for product safety, quality and sanitation through the federal meat and poultry inspection program.
The Surface Transportation Board and the Federal Highway Administration regulate the company’s trucking operations. Its facilities are subject to regulations issued pursuant to the U.S. Occupational Safety and Health Act by the U.S. Department of Labor and similar regulations by state agencies. These regulations require the company to comply with certain health and safety standards to protect its employees from recognized hazards.
The company is also subject to the National Labor Relations Act, which provides employees the right to organize and bargain collectively with their employer and to engage in other protected concerted activity; and the Fair Labor Standards Act, which establishes minimum wages and overtime standards, among other requirements.
The company’s international business operations are subject to various laws and regulations regarding the import and export of products and preventing corruption and bribery (including the U.S. Foreign Corrupt Practices Act).
Seasonality
The company’s working capital needs are generally greater during the months of and leading up to high sales periods, such as the buildup in inventory leading to the calendar year-end (year ended July 29, 2023) holidays.
History
United Natural Foods, Inc. was founded in 1976. The company was incorporated in 1994.
