Food Distribution Giants: Strategies for Revenue Growth in 2024

Market Expansion Strategies

Food distribution giants are focusing on reallocating resources to high-margin services, leveraging technology, expanding distribution channels, and integrating systems to enhance market reach and profitability.

"Our new strategy will reallocate and prioritize our resources to enhance the drivers of customer and supplier success including the expansion of our high-margin services portfolio, which we believe will result in a re-margining of our business, a significant increase in free cash flow, a reduction in our leverage and an overall strengthening of our balance sheet." --- (UNFI, earning call, 2024/Q3)

"We grew our business more than 1.75 times the overall market at industry-leading profitability metrics, and we exceeded the midpoint of our EPS guide for the year. Importantly, we have continued to advance our business strategy, making progress in important areas like improved technology and customer programs like Sysco Your Way and Perks!." --- (SYY, earning call, 2024/Q4)

"So for us, it's important that we continue to expand where consumers are going to try in our brands and why we have been so much focused on driving our improvements in terms of distribution in the dollar channel, whether that is with our Oscar Mayer businesses and making sure that we have the product they're looking for at that particular venue." --- (KHC, earning call, 2024/Q2)

"For example, we successfully completed a significant system integration in our Ricolino business this quarter, which boost our ability to fully leverage the expanded routes-to-market in Mexico, particularly in the traditional trade." --- (MDLZ, earning call, 2024/Q1)

"I will also preview our new multiyear plan, which will include a disciplined resource reallocation and prioritization to enhance the drivers of customer and supplier success, including the expansion of our high-margin services portfolio, which we believe will incrementally re-margin our business and drive a significant increase in free cash flow, a reduction in our leverage and an overall strengthening of our balance sheet starting in fiscal 2025." --- (UNFI, earning call, 2024/Q3)

Leveraging Technology for Efficiency

Sysco is focusing on modernizing operations and leveraging technology to work smarter and improve efficiency. They are also enhancing connectivity and global sourcing capabilities to optimize their supply chain.

"If you will, focusing on working smarter, modernizing things that needed to improve and maintaining and leveraging the best of our past, being smarter about the how we work." --- (SYY, Investor Day, 2024/05/22)

"Additionally, we are leveraging this common capability and better connectivity across borders to go after global sourcing opportunities. Kevin mentioned my shrimp example, so here it is." --- (SYY, Investor Day, 2024/05/22)

Supply Chain Optimization

Food distribution giants are focusing on supply chain optimization by ensuring continuity, enhancing productivity, maintaining stability, and achieving operational efficiencies. These strategies are crucial for mitigating risks and reducing costs, thereby driving revenue growth in 2024.

"Third, we remain confident in our supply chain. Continuity remains our top priority and we are confident in both our own team and our partners with robust work streams to minimize the risk." --- (MDLZ, earning call, 2024/Q1)

"So supply chain productivity will continue to be a beneficial contribution going forward." --- (SYY, earning call, 2024/Q3)

"able to respond to circumstances. Supply chain in general has been an area that we have a lot more stability." --- (KHC, conference, 2024/06/04)

"This increase was partially offset by lower transportation costs and other operational supply chain efficiencies." --- (UNFI, sec filing, 2024/Q3)

"We continue to take steps to mitigate impacts to our supply chain, operations, technology and assets." --- (MDLZ, sec filing, 2024/Q2)

Product Diversification

Sysco leverages portfolio diversification through national customers and structural advantages by diversifying across customer types, including recession-resistant sectors like education and healthcare, to drive revenue growth.

"And the last, national customers provide portfolio diversification, which is really important." --- (SYY, conference, 2024/06/04)

"to create compounding benefits for our shareholders. Our scale advantages are reflected in our industry-leading margins.Sysco's diversification as the industry leader across customer types with two-thirds in restaurants and one-third in recession-resistant categories, such as education and healthcare, is also a structural advantage." --- (SYY, earning call, 2024/Q4)

Sustainability Initiatives

Kraft Heinz, Mondelez International, and Sysco are driving sustainability through innovative solutions, sustainable agriculture, and organic research. These initiatives aim to create long-term growth and ethical impact, supporting global food needs responsibly.

""In the years ahead, we're embracing innovation and efficiency, and seeking new ways to create sustainable solutions for those in need." As a direct result of Kraft Heinz's support from 2021 through 2023, Rise Against Hunger supported 8.9 million people through meal donations and sustainable agriculture projects in 48 countries across Asia, Latin America and the Caribbean, Europe, and Africa." --- (KHC, press release, 2024/04/09)

"To continue this food philosophy at Organic Week 2024, CLIF BAR is advocating for initiatives that support agriculture land access and conservation and provide funding for organic research to invest in future sustainable food production. These advocacy efforts are strengthened by collaboration with CLIF" --- (MDLZ, press release, 2024/05/15)

"Furthermore, as Neil highlighted, we have both short term and long term programs that will also contribute to sustainable growth." --- (SYY, Investor Day, 2024/05/22)

"As global citizens, we're dedicated to making a sustainable, ethical impact while helping feed the world in healthy, responsible ways." --- (KHC, press release, 2024/07/31)

"agriculture land access and conservation and provide funding for organic research to invest in future sustainable food production." --- (MDLZ, press release, 2024/05/15)

Strategic Partnerships and Collaborations

Strategic partnerships and collaborations are pivotal for revenue growth in 2024. UNFI's strengthened commitment with Whole Foods, Sysco's cross-industry EV deployment, Kraft Heinz's strategic partner identification, Mondelez's expansion with Lotus Bakeries, and Kraft Heinz's Heinz REMIX collaboration with BurgerFi exemplify how these alliances drive growth and market expansion.

"And I think both Whole Foods and we saw the opportunity to make an even stronger strategic commitment to each other." --- (UNFI, earning call, 2024/Q3)

"We're grateful to the numerous manufacturers, government officials and community partners who collaborated with us to get to this important moment. The scale of our EV deployment today is the result of years of planning and tremendous levels of cross-industry collaboration." --- (SYY, press release, 2024/05/14)

"And I think it starts with the fact that we can see how with a clear strategy, we can look at what are the partners out there that can help us achieve the strategy faster." --- (KHC, conference, 2024/05/30)

"This partnership provides new opportunities for both companies to accelerate their growth ambitions in the attractive cookie and chocolate categories, with potential options to expand into additional markets and/or adjacent segments." --- (MDLZ, press release, 2024/06/13)

"our Heinz REMIX machine, and we're actually using that and planning it to work in the partnership that we have with BurgerFi, which is now our first restaurant to debut through Heinz REMIX, and that we're going to see that expanding as we go into 2024." --- (KHC, earning call, 2024/Q1)

Financial Strategies for Growth

Sysco's financial strategies for growth include expanding international operations, adding new distribution centers, implementing a new compensation model to align sales incentives with profitable growth, and executing share repurchases and dividends. These initiatives are guided by a financial algorithm aimed at driving top-line and bottom-line growth.

"But we will grow international top and bottom line at a faster rate, which mathematically what that means is that EBIT as a percent of sales internationally is going to be growing during the life of this financial algorithm that Kenny will cover with you later this morning." --- (SYY, Investor Day, 2024/05/22)

"Those 10 new distribution centers will enable us to profitably grow and deliver against the financial algorithm that Kenny will talk about in just a moment." --- (SYY, Deutsche Bank dbAccess 2024 Global Consumer Conference, 2024/06/04)

"We will go deeper into each component of our business strategy and Kenny will present a financial algorithm for Sysco to deliver against for the next three years." --- (SYY, earning call, 2024/Q3)

"The new compensation model will tie all of this together, the behaviors and results and it will align profitable growth with how a sales professional is paid." --- (SYY, Investor Day, 2024/05/22)

"This was done through $1.2 billion of share repurchases and $1 billion of dividends. Despite the current macroeconomic landscape, we are poised to grow both top-line and bottom-line results in FY '25, in line with the financial algorithm range." --- (SYY, earning call, 2024/Q4)

Customer Engagement and Retention

Sysco emphasizes the importance of customer engagement and retention for revenue growth, highlighting opportunities through customer penetration and retention programs. They report increased customer retention and engagement via self-service ordering, with key programs expected to grow significantly. Retention remains a core focus, with ongoing improvements and pride in their retention metrics.

"Customers. They offer a lot of opportunity for us in terms of current value and growth through that penetration and retention that we can offer them through the program." --- (SYY, event transcript, 2024/05/22)

"So it's obviously a very important customer set for us. They're large customers of ours. They're profitable customers of ours and they're highly engaged customers of ours." --- (SYY, event transcript, 2024/05/22)

"Due to these increased capabilities, we are seeing higher click through rates to conversion, we're seeing higher customer retention, and we have increased the percentage of customers placing their order themselves from 34 years ago to over 80 today, and that number will go up further over time." --- (SYY, conference, 2024/06/04)

"This program, think about retention of these key big important customers. This program is going to grow at 11% per year through FY 'twenty seven as a contribution to the algorithm Kenny will walk you through." --- (SYY, Investor Day, 2024/05/22)

"We know that it all starts with retention. So we're most proud of our retention numbers within our organization and the improvement and there's still a long ways to go with retention." --- (SYY, Investor Day, 2024/05/22)

Competitive Analysis and Positioning

Sysco leverages item-level pricing tracking to maintain market competitiveness and is confident in expanding operations in France. Kraft Heinz focuses on deploying agile scale beyond North America. United Natural Foods balances market conditions and aims to capitalize on economies of scale.

"We have the ability at the item level to track pricing in the market and we know at any given time Cisco's relative competitiveness." --- (SYY, Investor Day, 2024/05/22)

"And part of my view of what you're going to see change from our strategy as we go forward is, how do we deploy that agile scale as a company, not just in North America." --- (KHC, conference, 2024/05/30)

"And as I mentioned, I think we're in a good position to manage it. But I think the headwinds and the tailwinds are balanced at this point." --- (UNFI, conference, 2024/06/10)

"We have a stable operation, we have a stable systems platform and we're ready to put the accelerator down in France and we are very confident in our ability to be successful." --- (SYY, Investor Day, 2024/05/22)

"And so, we see opportunities to take better advantage of economies of scale within the business and obviously more specifics to come." --- (UNFI, earning call, 2024/Q3)