Food and drink wholesale distribution sector generated £33.6 billion of turnover in 2023-24 with £17.5 billion coming from sales to mainly independent retailers, reveals an industry report released today (5).
Wholesalers body Federation of Wholesale Distributors (FWD) released the report titled "Going for Growth: The Impact of Food and Drink Wholesale Distributors", highlighting the crucial role wholesalers play in the supply chain as well as in overall economy.
The report was launched in the Houses of Parliament in the presence of Daniel Zeichner, Minster for Food Security and Rural Affairs.
Zeichner said, " “This report highlights just how important the wholesale sector is. These are really significant numbers. Economic growth is absolutely central to wholesale businesses, as is breaking down the barriers to opportunity.
"Our pledge to you is to work with you as we begin to develop our policies. Our stated goal is to try and help change the way the supply chain operates to make sure there is a fair distribution of resources through the supply chain, and I really look forward to working with the wholesale sector on this.”
Retail businesses account for 52 per cent of food and drink wholesalers' revenue, while foodservice and caterers account for 29 per cent and 10 per cent respectively.
Delivery remains the most common route to customers with 58 per cent of sales value fulfilled through deliveries. 40 per cent of sales value fulfilled through cash and carry and 1.3 per cent of sales are made through click and collect.
In total, wholesalers spent £27 billion on stock to be sold to retailers and foodservice providers. The largest product categories were tobacco, vaping and alcohol, followed by soft drinks, frozen food, confectionery, crisps, snacks and biscuits.
The report states that food and drink wholesale distributors directly contributed £3.5bn to national output in terms of gross value, employing 77,000 people. The overall value chain that it supports employs a total of 1.5 million people, about 4.8 per cent of the UK workforce.
The sector faces a series of challenges going ahead, highlighted the report through a recent survey of FWD's members. Some of the main concerns among the wholesalers are inflation, increase in transportation costs, labour and skill shortage and regulations.
Wholesale warehouse
iStock image
AI and automation hold significant potential to positively impact the sector like in identifying the wallet share gaps and predicting reorder needs . However, the report states that companies are yet not fully embracing these technologies, saying "no distributor has integrated AI into its operation to a great extent".
60 per cent of the respondents indicated they have incorporated AI into supply chain management.
FWD reiterates in the report to reach net zero Scope 1, 2 and 3 emissions by 2040, which will require 90 per cent reduction in emissions and coordinated actions across value chains.
Furthermore, the sector is facing labour shortage stemming from ageing workforce, Brexit, images issues and competition.
"The sector's image poses a challenge in attracting new recruits as over 90 per cent of people never consider a career in logistics", states the report, mentioning terms like "demanding" and "boring" associated with warehouse work.
Speaking at the launch, FWD head of external affairs Lyndsey Cambridge said, “Wholesalers are the lifeblood of the nation – from supporting high street restaurants to supplying hospitals, schools and local retailers with food, the FWD membership is delivering for people across the length and breadth of the UK.
"This groundbreaking research provides a comprehensive economic impact of food and drink wholesale, demonstrating the value and importance of the sector in improving consumer choice through its support for retailers and caterers.
“Given its reach and contribution, our sector has and will play a pivotal role in driving economic growth in the coming years. We look forward to partnering with policymakers across the UK to grow our industry further while meeting the everyday challenges our members face in areas such as increased transport costs and labour shortages.”
