The UK wholesale sector grew by 0.3% to just shy of £30bn in 2016, driven primarily by growth in foodservice, according to the latest figures from IGD.
Foodservice sales were up 2.1% following the development of more clients in the expanding out-of-home market. This compared with a 1.8% fall in tobacco while sales to independent and convenience retailers were down 0.6%.
IGD also predicted that foodservice would continue to drive growth in the sector as a whole in the next five years. It said the wholesale market would be worth £31.3bn by 2021, with delivered foodservice set to grow by 2.5% over this period comapred with 0.5% for delivered grocery and just 0.1% for retail-led cash & carry.
“For another year, foodservice has lifted the wholesaling sector, representing the vibrancy of the expanding out-of-home customer. We’re also seeing growth in the chilled and fresh and beer, wines and spirits categories, demonstrating clear investment opportunities for wholesalers,” said IGD chief economist James Walton.
He added that the 1.8% decline in tobacco sales was to be expected following new legislation introducing plain packaging and minimum pack sizes.
A recent IGD survey found that four out of five (80%) wholesale suppliers remained optimistic about the future of the channel, including independent operators.
Walton added that there were still chances for wholesalers to drive growth in the independent market.
“Looking ahead five years, the sector still has plenty to play for, as not only is the growth of the foodservice segment set to continue, but according to new IGD research, more than two-thirds (67%) of suppliers to UK wholesalers are keen to continue investing in the channel. So there remains huge opportunity for success.”