C&S Wholesale Grocers is at the bottom of the food chain -- and likes it that way. The company is the second-largest wholesale grocery distributor in the US (after SUPERVALU), supplying goods to some 3,900 independent and major supermarkets (including A&P and Safeway), mass marketers, and wholesale clubs. C&S Wholesale, which serves about a dozen states (from Vermont to Hawaii), distributes more than 95,000 food and nonfood items. Its ES3 logistics unit provides warehousing and supply-chain management services. The grocery distributor is exiting the food retail business with the sale of its Grand Union and Southern Family Markets chains in 2012. Israel Cohen started the company with Abraham Siegel in 1918.
While its operations are concentrated in the Northeast, C&S Wholesale Grocers also has warehouse operations in the Southeast (Alabama and South Carolina), and western US, including California and Hawaii. Its ES3 logistics unit has facilities in New Hampshire and Pennsylvania.
The grocery wholesaler rang up $20.4 billion in sales in fiscal 2011 (ends September), up from $19 billion in 2010. Based on sales C&S Wholesale Grocers ranks as the ninth-largest privately-held company in the nation.
C&S is pulling out of retail to focus on its core wholesale supply business. The company sold its Southern Family Markets (SFM) division, which operated 57 grocery stores under the Piggly Wiggly, Bruno's, Food World, and Southern Family Markets banners to Belle Foods in mid-2012. (SFM's retail network spans Mississippi, Alabama, Georgia, and Florida.) However, it continues to supply the stores through its logistics unit. Previously, the company sold 10 SFM liquor outlets. C&S has also agreed to sell 21 Grand Union Markets it owns in New York and Vermont to Tops Friendly Markets. That deal is expected to close by the end of 2012.
C&S Wholesale is a giant in an industry known for moving high volumes of products and having narrow profit margins. Adding to that, price competition has heated up in recent years as smaller regional distributors have fought to stay competitive with industry leaders amid the recession and lingering tough economic times in the US. C&S Wholesale has taken its leading position by offering logistics services to retail chains (such as A&P, Safeway) and food manufacturers (Unilever), in addition to distribution. This diversification strategy not only offers a lucrative stream of revenue, but it has also helped to protect the company from bankruptcies in the retail grocery industry.
C&S appears to have weathered the bankruptcy of its customer A&P, which emerged from Chapter 11 as a smaller private company in 2012. (The chain's bankruptcy was precipitated by a looming $13 million interest payment due to C&S, which was unwilling to make concessions for the supermarket operator.) Indeed, C&S and A&P have negotiated a new supply and logistics agreement and the wholesaler has met with success adding new customers.
C&S has also been bolstering its ES3 logistics division. The company expanded its warehousing and distribution center in York, Pennsylvania, adding a 705,000-sq.-ft. tower. The cost of the project was estimated to be $200 million, and the state of Pennsylvania also kicked in a $3 million investment that includes job-creation tax credits and job training help. Some 650 jobs were added to the facility following the tower's completion.