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 4,000 independent and major supermarkets (including A&P and Kroger), chain stores, 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 exited the food retail business in 2012 to better focus on its wholesale operation. Israel Cohen started the company with Abraham Siegel in 1918.
While C&S's operations are concentrated in the Northeast, the wholesaler 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.
Sales and Marketing
C&S supplies products to a number of leading grocery chains including A&P, Ahold USA, Bi-Lo Holding, Demoulas Market Basket, Kroger, Marsh Supermarkets, Save Mart, Target, and Top Friendly Markets.
The grocery wholesaler rang up $21.4 billion in sales in fiscal 2012 (ended September), up from $20.4 billion in sales in fiscal 2011 and $19 billion in 2010. Based on sales, C&S ranks as the 10th largest privately held company in the US (as ranked by Forbes magazine).
C&S has abandoned retail to focus on its core wholesale supply business. To that end, C&S has agreed to acquire the wholesale distribution and supply business of Houston-based Grocers Supply Co. (GSC). The pending purchase will expand C&S distribution footprint to the Southwest where GSC supplies more than 900 independent grocery stores, including Hispanic-themed Fiesta Mart.
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. Also in 2012, C&S sold 21 Grand Union Markets in New York and Vermont to its customer Tops Friendly Markets.
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 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. Still, the company isn't immune to ongoing turmoil in the supermarket aisle. The combination of the bankruptcy of Belle Foods and the defection of Rouses Supermarkets to another supplier is leading to layoffs and the possible shutdown of C&S's warehouse and distribution center in Birmingham, Alabama.
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.