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March 23, 2020

US foodservice supplier Sysco turns focus onto retail

Sysco, the US foodservice distribution giant, has turned its attention to a different business channel as a result of the Covid-19 outbreak.

By Leonie Barrie

Sysco, the US foodservice distribution giant, has turned its attention to the retail grocery market as a result of the Covid-19 outbreak.

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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

As so many foodservice outlets have been forced to close as a result of the outbreak, Sysco has been forced to look again at its business model.

It said it is now providing logistics services to retail grocery customers and becoming a supplier of products to them.

CEO Kevin Hourican said: “Due to the significant impact on the food-away-from-home business, we are pivoting our business to better support the surge in demand that is being experienced in the retail grocery store setting. We are establishing new customer relationships with retail grocers to provide them with logistics services and much needed product.”

In a market update, the New York Stock Exchange-listed company said: “This net new business will help off-set some of the declines in the food-away-from-home segment and also positions the company well to capitalise on growth opportunities after the Covid-19 crisis subsides.

Houston, Texas-based Sysco said its strong balance sheet provides “meaningful financial flexibility for the company to navigate current challenges in the ‘food-away-from-home’ market resulting from the spread of Covid-19 and subsequent actions taken across the country to increase social distancing”.

It revealed it has cash in hand of approximately US$2bn, including a recent $1.5bn withdrawal under its revolving credit facility, and no debt maturities for the next six months. 

Sysco said it is also taking “aggressive action to further strengthen liquidity by reducing variable expenses in response to reduced customer demand, aligning inventory to current sales trends, reducing capital expenditures to only urgent projects, and tightly managing receivables”.

Hourican said: “Sysco is operating from a position of financial strength and will weather this storm. We continue to prioritise the health and – of our associates, customers and communities around the world.”

Sysco is also supporting efforts by the National Restaurant Association to seek relief for America’s foodservice industry, including the establishment of a $145bn recovery fund to provide immediate liquidity and expanded access to federal small business loans, among other things.

Hourican added: “As the largest foodservice distribution company in the industry, we play a significant role in supporting the food supply chain.”

Sysco has more than 69,000 employees and operates more than 320 distribution facilities worldwide. The company, which owns European foodservice business Brakes, generated sales of more than $60bn in 2019. 

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Free Report
img

What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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