Understanding the UK Wholesale Market Webinar

Maresa Ronan – UK International Graduate

Bord Bia, in partnership with TWC Group hosted a debrief on the UK wholesale market on the 6th of September. This channel has a turnover of circa £30 billion per annum with approximately 48,000 convenience stores, of which 71% are independent, and 300,000+ foodservice outlets. Understanding this channel can be complex but the opportunity it affords for new and scaling brands is significant. The webinar, hosted by Tom Fender of TWC Group, offered a focused overview of the UK wholesale market, the main operators within the channels and recommendations of how Irish suppliers can operate and win in this market. Following this webinar, TWC Group and Orchid Marketing conducted deep dive trade interviews with their wholesale channel network which allowed them to identify clear opportunity areas for the Irish food, drink and horticulture industry and create potential new connections (Fender, 2023).

The UK Wholesale Market

The UK wholesale market is in growth and growing by a couple of percentage points each year. The wholesale market is a dynamic one, with strategic shifts currently taking place. Historically, wholesalers only focused on either the retail or foodservice channel, however as time has evolved this has changed and wholesalers are shifting their focus more and more towards both channels (Fender, 2023).

Retail Channel

The UK independent retail channel has a turnover of approximately £45 billion per annum and is made up of approximately 48,000 stores. Approximately 6 billion transactions go through UK convenience stores per year. Independent stores account for roughly 71%, or 35,000, of these stores. Of these independent retailers, unaffiliated independents account for roughly 19,000 stores, while symbol stores make up the remaining 16,000. On average, symbol stores, such as Spar, Londis, or Nisa receive a lot more support from the retail groups versus unaffiliated independent stores. Convenience retail is split into different categories. Value growth exists in each of these categories which has been significantly driven by inflation. However, almost all categories are in small volume decline this year, most notably due to factors like the cost-of-living crisis, the weather, and various global events in 2022. Most wholesalers or buying groups have an own-label range in retail. Some wholesalers are very supportive of own-label in the channel, while others are scaling back on their own-label ranges. The shifts are category dependent (Fender, 2023).

Foodservice Channel

Despite the cost-of-living crisis, over the last 12 to 18 months there has been a lot of momentum behind food-to-go in foodservice. According to TWC pubs are performing well. Own label in foodservice offers a different story from the retail channel. Most wholesalers and buying groups are focusing on own label and it does not appear to be a short-term trend. The industry is seeing good pricing, good quality and good margins on own label in foodservice. From a commercial perspective, companies need to offer as much support to get their products in front of consumers eyes because foodservice does not have a shop window like retail. This makes it important to support the push through of products in this channel (Fender, 2023).

Considerations/Opportunities

It is important that companies consider any current or ongoing issues in the UK wholesale channel. These could be business issues, public health related, or environmental considerations. Depending on whether your product is orientated to foodservice, retail or both, there would be different strategies and market dynamics to consider, such as who to target (e.g., independent outlets, independent wholesalers, corporate businesses, or corporate wholesalers). TWC has mentioned that a listing fee may be part of commercial negotiations if you are targeting the larger national wholesalers. There are greater opportunities in the foodservice channel for own label versus in the retail channel. The growth being seen in own label for foodservice is predicted to continue and requires different strategies from the retail channel, which companies would need to consider if entering this space. Sustainability is a popular topic of discussion with wholesalers currently, with many making big strides in the space. Pricing and margins are another big discussion topic with wholesalers. Margin expectations are up from where they were historically, largely due to the cost-of-living crisis (Fender, 2023).

Overall, there is a lot going on in the UK wholesale channel currently. The UK wholesale market is a very large and growing market. Yes, it is a fragmented market but over the past few years’ consolidation has been happening, with many suppliers saying they are putting more of a focus on the channel now than they did historically. Areas such as sustainability, pricing, and margins will continue to be big discussion topics for the wholesale channel going forward. Overall, the wholesale channel is going from strength to strength (Fender, 2023).

References:

Fender, T. (2023). Understanding the UK Wholesale Market - TWC.