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Organic Food Distributor Expands Menu(Hartford Courant, The (CT) (KRT) Via Thomson Dialog NewsEdge) Oct. 6--United Natural Foods is growing beyond its organic roots, adding matzo, couscous and Bloody Mary mix. The Killingly-based food distributor announced Friday that it is expanding into the ethnic and specialties food market by acquiring Millbrook Distribution Services of Leicester, Mass. The deal will give United Natural, the country's largest distributor of natural and organic foods, a major presence in a complimentary market. Millbrook Distribution is among the largest U.S. distributors of ethnic and specialty foods, with products ranging from Terra Chips to Thai Kitchen's Original Pad Thai. "This combination will achieve our stated goal to increase the company's footprint in the specialty foods segment," said Michael Funk, CEO of United Natural. The company, which grew from small natural foods stores to a national supplier, employs more than 500 people in Connecticut. United Natural has more than 17,000 customers nationwide, from gourmet stores to Costco warehouse stores. The acquisition of Millbrook, which primarily serves supermarkets, is expected to increase United Natural's presence in that market. United Natural, which distributes such brands as Kashi and Cascadian Farm, has a multiyear distribution contract with Whole Foods Markets, making up almost 30 percent of its sales. But its fastest area of growth is distribution of natural and organic products to conventional supermarket chains. Still, Stop & Shop, Food Lion and other major supermarkets make up only 15 percent of its current business, said Mark Shamber, United Natural's chief financial officer. One reason for pursuing the Millbrook acquisition, Shamber said, is that supermarkets want one supplier for organic, natural, ethnic and specialty foods. Some supermarkets have been telling United Natural they would buy more from the distributor if it offered specialty products as well, he said. "A recurring theme was interest in whether or not we carried these specialty products," Shamber said. But even with specialty products, the fastest growth area is expected to continue in natural and organic foods. Industry estimates showed a 9.7 percent annual increase in sales revenue last year for natural products, while growth in specialty and ethnic foods was in the 5 percent to 7 percent range, Shamber said. Michael Krestell, an equity analyst for M Partners in Toronto, said the acquisition appears to be a good move for United Natural. The deal increases the company's presence on the East Coast and expands its distribution network, which can cut costs and improve delivery times. "There is tremendous advantage companies have when they're able to increase scale in a distribution business," Krestell said. The financial details of the acquisition were not disclosed Friday. It is expected to close in the next 30 days. Millbrook is privately held, while United Natural shares are traded on the Nasdaq Stock Market. United Natural's stock price closed at $29.39 Friday, up 4.15 percent. Shamber said the company does not expect major reductions in its workforce because of the acquisition. Over the long term, he expects the company will add jobs as a result of the purchase. Contact Mark Peters at [email protected]. To see more of The Hartford Courant, or to subscribe to the newspaper, go to http://www.courant.com/. Copyright (c) 2007, The Hartford Courant, Conn. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |