What are the top challenges facing poultry and food distributors? Ted Rueger, president of Eastern Poultry Distributors, identified three major issues facing poultry distributors in an interview with WATT PoultryUSA.
He serves as the current president of the National Poultry and Food
Distributors Association (NPFDA).
Issue 1: Rising cost of proteins
One of poultry distributors’ biggest challenges, Rueger said, is the rising cost of proteins.
“It takes more capital for poultry distributors to run their businesses today than a year ago,” he said.
“A load of boneless chicken for which a distributor might have paid $50,000 a year ago more recently cost around $80,000.
“Distributors are facing the same kind of cost increases in their beef
and pork purchases. Meat proteins are at all-time highs, and as a result 30
percent to 40 percent more capital might be required today to run their
businesses than a year ago,” he said.
Issue 2: Trucking regulations
“Trucking issues are challenging every business in the poultry industry,
including poultry distributors,” Rueger said. “There is increased regulation,
and it is costing distributors more to comply.”
Issue 3: Consolidation among the
largest food distributors
“One thing on every food distributor’s radar is the proposed merger of Sysco Corp. and US Foods Inc.,” Rueger said.
The deal, which would unite the nation’s two biggest food distributors, is expected to close before the end of 2014.
Many NPFDA members are bullish about their own business prospects, if the deal goes through and is approved by regulators.
“A lot of NPFDA members are optimistic that it could be an opportunity for them in their businesses. They don’t mind competing against bigger companies because it creates opportunities with end users who are looking for alternatives. They feel potential advantages accrue to smaller distributors in terms of responsiveness and nimbleness.”
Some distributors are also looking for an opportunity to recruit talented employees who might be job causalities of a merger.
NPFDA is a unique forum for poultry distributors to interact and share solutions to issues facing their businesses, he said.