Pandemic forces Toronto wholesalers to be quick on their feet, consultant says

Wholesalers and distributors in Toronto continue to adjust to changing business realities, said Mike Mauti, managing partner for Execulytics Consulting, Milton, Ontario.

“There's been a lot of consolidation in the grocery business, so (distributors and wholesalers) have really had to kind of figure out a way to work around that and work within that, as well,” Mauti said. “You have seen a lot of branching out on the types of services that some of these wholesalers get into. There is a little more partnering on import programs, getting a little bit more involved in that and providing better service.”

Other ways that distributors have adjusted include services such as bagging or quality control service.

Distributors have also provided direct-store deliveries for some of the smaller chains that don’t have their own distribution facilities.

Dealing with COVID-19 hasn’t been easy for foodservice operators, and that reality persists nearly two years after the start of the pandemic, Mauti said. 

“It is a bit of a double-edged sword when it comes to produce distributors,” he said, noting that produce distributors handling both retail and foodservice business have seen increased retail sales, while at the same time coming up short with foodservice sales compared with pre-pandemic levels.

For foodservice operators, Mauti noted in January that Ontario restaurants had been in “lockdown” mode since the day after Christmas, with no indoor dining. Those restrictions are set to ease early this month, allowing restaurants to open to 50% capacity, he said. 

Restaurants have adjusted to periodic lockdowns, with expansions in carryout and delivery business. “I think guys like SkipTheDishes and Uber Eats are really making hay on this,” Mauti said.

Produce distributors really aren’t attempting to go direct to consumers with fresh produce, he said.

“I think it is difficult for them to try and reinvent themselves in that format,” Mauiti said. On the other hand, there are a few nontraditional distributors getting into direct-to-consumer business.

Meal kit operators, which are going direct to home anyway, are starting to offer groceries. 

“It would take a complete overhaul of a wholesaler logistics plan and cost structure to manage such small-scale deliveries for homes,” he said.

Still, he said wholesalers and distributors are always changing.

 “I think, sort of the ongoing theme, probably for the last 15 to 20 years, has just been a broadening of offerings, which is not all that much unlike the retail industry, where the retail giants of the industry are launching new formats, consolidating into new parts of the business, expanding into new areas, just really trying to capture more of that consumer wallet,” he said.

Wholesalers are broadening in a similar way, Mauti said.

“Whereas (wholesalers) might have specialized in certain products in the past, now they are expanding their offerings, going into other products hoping to get a larger share of, or maybe to protect their share of, the retail dollar, while also grabbing other areas of the industry,” he said.

Organizations may move into the import business, add value-added capabilities or even invest in the farming end of the business, Mauti said.

Some wholesalers expand into juicing or other niche services to capture more of the industry dollar, he said. “While you see consolidation on the retail side, you also see consolidation on the wholesale side.”