UNFI’s recent conference call shows us more reasons why we wonder. The call suggests what we’ve said
all along, that the company’s acquisition of Millbrook Distributors, is going to be the smartest move Michael Funk did since starting Mountain People’s Warehouse way back when. Its the key to gaining increased entry into the conventional grocery channel, where growth and opportunity for increased sales is going to be strongest.
It also suggests that Dutch conglomerate owned Tree of life.
To read the transcript of the call check out SeekingAlpha here. If you don’t know Michael Funk from Michael Moore visit our Industry Top 50 List to see how UNFI CEO and President, Funk, made the grade.
As we’ve frequently written, supermarkets aren’t exactly an aggressive breed and unless you’re paying them lots of up front money for slotting fees they aren’t too creative. While they might pretend they want to gain access to higher margin natural and organic consumers they aren’t necessarily willing to do the leg work to get them.
When it comes to vendors the less the better. Of course that isn’t unusual. It’s an effective way to do business. Yet in the supermarket world too often the specialty distributors that know gourmet and ethnic aren’t up to speed when it comes to natural. In other words it doesn’t necessarily make sense to stick with one vendor when the one you’re dealing with puts products on your shelf that are as likely to sell as McCain for President buttons at a Stop the War in Iraq rally.
Since the acquisition of Millbrook, UNFI has created UNFI Specialty, a division geared towards providing grocers with all those products–gourmet, ethnic and other specialty items–that supermarkets need and that their current specialty vendors carry.
In other words this move means that more and more conventional chains who are serious about growing sales of natural and organic now have a greater incentive to go with a distributor that knows natural.
We heard at the Natural Products Expo that Winn-Dixie, gave UNFI thirty stores and are sure that this move, albeit from a struggling grocer, is a sign that notwithstanding challenges from fuel prices and commodity inflation, UNFI’s future should be blooming bright.
The company’s has also created a new branded products division, Blue Marble Brands which should also pump up the volume on its Woodstock Farms brand, as well as the wide range of small, high quality and steady range brands under its growing umbrella.
We’ve contacted UNFI to get more information on this move. Stay tuned.