Dive Brief:
- C&S Wholesale Grocers will acquire Olean Wholesale Grocery Co-op for an undisclosed amount. The acquisition is expected to close in early 2019, according to a company release.
- Olean’s CEO and President Robert Ketchner will continue to oversee company operations.
- Olean is a full-service grocery retailer that sells a variety of food and non-food products. The company provides goods to 270 independent food retail and convenience stores in New York, Pennsylvania, and northeast Ohio. Meanwhile, C&S is the largest wholesale grocery supply store in the U.S. It services 7,700 independent supermarkets, chain stores, military bases and institutions in the Northeast, mid-Atlantic, the Southeast and the West Coast.
Dive Insight:
While most wholesalers have reported growth, that hasn't deterred them from M&A as they look to expand access to more stores and increase efficiencies across a bigger network. Olean will give C&S greater access to the population-rich northeastern sector of the country. C&S already has multiple warehouse locations in the Northeast, the mid-Atlantic, the Southeast and on the West Coast.
Consolidation in the wholesale market is a reflection of changes taking place among grocery stores. As Aldi, Lidl, Amazon and Walmart increase their presence with a focus on low prices, grocery stores are under pressure to combine to stay competitive — all of which puts pressure on wholesalers who need to get together for scale in order to remain competitive. Just last month, UNFI completed its acquisition of Supervalu for $2.9 billion, a purchase that helped minimize its dependence on Amazon-owned Whole Foods.
C&S’s decision to keep Ketchner on to oversee Olean was a smart move as the company integrates the deal. It’s not uncommon for executives to stay on following an acquisition. UNFI kept Anne Dament, executive vice president of retail, marketing and brands; and Mike Stigers, executive vice president of wholesale, after the acquisition of Supervalu.
This purchase of Olean will enable C&S to expand its customer base. While the wholesaler now serves a diverse clientele, adding more independent stores should enable it to increase efficiencies in this segment. Olean also delivers products to convenience stores, a niche that may not already be served by C&S. As more changes take place in grocery, wholesalers will continue to look for ways to increase in size in order to remain competitive — with mergers the fastest and most efficient way to do that.