TOP 75: HOW THEY CHANGE

Many top executives of the food-distribution business gathered for the weekend in Scottsdale, Ariz., for the Food Marketing Institute's Midwinter Executive Conference. One of the chief conversational topics at the meeting is sure to center on how the industry has changed in the wake of two years of so of seemingly nonstop consolidation.It was with that in mind SN editors prepared this year's edition

Many top executives of the food-distribution business gathered for the weekend in Scottsdale, Ariz., for the Food Marketing Institute's Midwinter Executive Conference. One of the chief conversational topics at the meeting is sure to center on how the industry has changed in the wake of two years of so of seemingly nonstop consolidation.

It was with that in mind SN editors prepared this year's edition of the Top 75 listing of the food-distribution industry titled "Transitions at the Top." You'll find the list, presented as a separate 16-page publication, inserted against Page 15.

In addition to a listing of companies, ranked according to sales volume, you'll also see a chart of deals done during the past year, and of deals still pending. There are no fewer than 33 transactions accomplished or pending as a result of last year's activities. The count includes a couple of deals in Canada and in Europe.

You'll also find a chart showing market concentration of each of the industry's largest 20 players, measured as a function of the aggregate volume of the Top 75. Looking at just the largest 10 alone, those companies together possess a market share of 60.2%. All 20 combined have a market share of 77.6%. Last year's ranking showed the largest 10 with a combined market share of 56.3% and the 20 with a share of 72.8%.

Observe again that in all cases, market-share figures presented in this column, and in this week's Top 75 publication itself, are shares of the 75, not shares of all food retailing. The effect of that is to somewhat overstate market-share calculations. SN editors present market-share data in this way because it's impossible to determine precisely the net value of food retailing in North America, and because the Top 75 list includes the vast bulk of supermarket food retailing. It's also important to observe that total-market calculations include business attributable to non-food dollars. That fact affects market-share data more and more each year, and will no doubt continue to do so in coming years, but retailers with a substantial amount of nonfood volume are too important to ignore. These include Kroger Co., Wal-Mart Supercenters, Loblaw Cos. and others. Calculations are also thrown off a little by the inclusion of wholesalers' non-retailing sales volume. Wholesalers are included since the retailer-wholesaler distinction continues to blur. But, with those caveats in mind, the market-share numbers clearly and vividly demonstrate the degree of market concentration that occurred in 1999.

Another salient fact to notice in this year's list is the continued upward march of Wal-Mart Supercenters. Last year's list showed Wal-Mart with an estimated top line of $32.0 billion, or the third largest. This year's list shows it with an estimated $45.0 billion, or second largest, just behind Kroger. There can be no doubt that unless Kroger makes another large acquisition this year, Wal-Mart Supercenters soon will become the nation's largest food retailer, assuming it isn't already. Indeed, should Wal-Mart's food volume attributable to its non-supercenter channels be added, it is now the nation's largest food retailer, and has been for some years.