UNFI extends Whole Foods distribution deal into 2032

Dive Brief:

United Natural Foods, Inc. (UNFI) announced Tuesday that it has extended its primary distribution deal with Whole Foods Market until May 2032. The agreement was previously set to end in September 2027.
“UNFI plays an important role in our supply chain as we continue to grow and serve more customers,” Whole Foods Vice President of Supply Chain David Garraway said in a statement.
The extension of its contract with Whole Foods marks a major move for UNFI even as it seeks to diversify its distribution partnerships beyond the Amazon-owned specialty chain.

Dive Insight:

News of the distribution agreement extension sent UNFI’s stock up nearly 5% in early trading Wednesday, highlighting the significance of extending a cornerstone partnership that’s boosting sales for UNFI.

This latest five-year extension is longer than the two-year extension UNFI and Whole Foods announced in 2021, indicating the companies have more confidence in each other these days.

UNFI has worked to diversify its retailer client base following its challenging integration of Supervalu, which it bought in 2018. In recent years, the wholesaler and grocery company has struggled with profitability woes and embarked on a “transformation agenda” to improve its supply chain operations.

UNFI’s net sales growth turned negative during its second quarter, which ended Jan. 27. The company recorded negative sales growth for its distribution business to chains and independent retailers as well as in its grocery business, which includes Cub Foods stores, but saw sales grow 5.5% year over year to nearly $1.8 billion for “supernatural” retailers, which Whole Foods falls under.

“We are proud to extend our longstanding partnership with Whole Foods Market to provide high-quality foods and other valuable items to consumers all across the country,” UNFI President of National Sales David Matthews said in a statement. “We look forward to supporting Whole Foods Market and remain firmly committed to working together to serve the evolving needs of their consumers.”

UNFI provides products to more than 30,000 locations throughout North America, including natural product superstores, independent retailers, conventional supermarket chains, e-commerce providers and foodservice customers.