Industry Structure
Size and Number of Firms in the Industry
In the United States, there are approximately 6,349 firms in general line grocery merchant wholesaler industry. As stated in the Census Bureau, the largest four firms generated 38.2% of the revenue in the entire industry (Classification Development Branch, 2010). The top four firms in the United States are Gerber Products, Abbott Nutrition, ConAgra Foods, and Tyson Foods (Classification Development Branch, 2010). According to IBIS, “Revenue tends to fluctuate with variable fuel costs, food product prices, and consumer spending. The most pressing threat to the industry’s overall growth is wholesale bypass. As demand for ethnic food increases, it will provide an opportunity for grocery
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As retailers became larger through growth and acquisitions, they have purchased more of their produce directly from grower-shippers and less from produce wholesalers. To survive, produce wholesalers have increased the services they provide, diversified their customer base, and expanded their product mix. The produce wholesalers have taken on fresh cut services to meet new market demands for convenience and fresh-cut produce and been primary suppliers of emerging products, such as organics, before they become mainstream items” (McLaughlin, E. & Park, K., n.d.). In addition to price competition, there are also some examples of non-price competition in the wholesale grocery industry. Almost every product faces these non-price competition issues. Nevertheless, tomato sauce usually runs for the same price. How do you know which brand is better unless you have previously tasted it? Even when a product is the same price, people still look at other attributes that make products stand out from one or the other. Personally, I like the look of the Hunt’s sauce better so I choose that one every single time. Another form of non-price competition in this industry is the simple placement of the goods in the store. If someone is in a hurry, they may not walk all the way to the back of the store for frozen broccoli. They would potentially settle for fresh broccoli and rationalize this decision by the convenience of placement, and the fact that fresh is always a better choice over