Dayville, Conn. — United Natural Foods here will broaden its customer base and diversify its product offerings through the acquisition of Millbrook Distribution Services, a specialty-product wholesaler based in Leicester, Mass.
United, whose two largest customers, Whole Foods and Wild Oats, recently merged, will gain more distribution opportunities with conventional supermarkets through the acquisition of Millbrook, Michael Funk, president and chief executive officer of United, told SN last week.
“This initiative is designed to significantly expand our supermarket business with the addition of specialty products,” he said. “This is something our supermarket customers have been asking us for.”
The deal is expected to close within 30 days, subject to antitrust approval. Terms of the acquisition were not disclosed.
Millbrook, with four distribution centers located in Florida, Arkansas, New Jersey and Massachusetts, supplies more than 41,000 different SKUs — including more than 15,000 HBC items — to dozens of retailers, including several large chains. It carries a range of ethnic, confectionery and specialty offerings, including some organic and natural products, and has revenues “in excess of $300 million,” United said.
Funk said the expertise in specialty-product category management that Millbrook brings will help United expand its business with existing retail customers.
He said United would focus on maintaining service levels for existing Millbrook customers for now, but would look for logistical synergies in the coming years. Millbrook's smallest warehouse, located in Tampa, Fla., is not far from a new warehouse United is building in Sarasota.
Analysts said the deal should boost United's ability to generate more sales from traditional supermarkets.
“The only disadvantage United has had selling into grocery operators is that it is not a one-stop shop for natural, organic and specialty products,” said Scott Van Winkle, an analyst with Canaccord Adams, Boston. “By combining specialty with natural/organic, they will become a one-stop shop.”