Kitwave CFO David Brind

Kitwave is to build a new 80,000 sq ft warehouse in the south west to drive organic growth.

Construction of the new distribution centre, which is located two miles outside Newton Abbot, began last month and is expected to be completed by quarter three of 2024.

The move follows Kitwave’s acquisition of both Westcountry and MJ Baker, forming part of a plan to fully integrate its operations in the south west.

The wholesaler said the new warehouse would help to drive operational leverage and profits by combining delivery routes and sharing delivery vehicles to make operational savings.

It said it would be adding alcohol, ice cream, and other ambient retail and wholesale products to provide an all-encompassing product offering to customers.

“We now have 6,000 customers in the south west between MJ Baker and Westcountry and we’ve backed up that investment with an 80,000 sq ft distribution centre,” Kitwave COO Ben Maxted told The Grocer.

“We see this as an exciting next step in that development of MJ Baker in the south west, and we feel it will give us the opportunity to really sell into that customer base.”

Yesterday, Kitwave announced its H1 results which showed revenues increased above expectations by 23% to £275m.

The increased revenues were largely driven by the £28m acquisition of Westcountry in December.

However, Kitwave CFO David Brind said case weight growth during the same period remained strong at around 4%.

Brind said: “[The case weight growth] alludes to the fact that we’re probably experiencing either a mix of product or general price inflation to the tune of about 13%, which is lower than the food market’s expected inflation of 18%.”

Gross margins also increased to 21.6% despite the challenges posed by the inflationary environment.

The business said the integration of more high-margin foodservice business into the customer mix and passing on increased supplier costs were behind the increase.

“We are a service business, and we recognise we’re not always competing on price,” Brind added.

“If other wholesalers are in a market such as cash and carry where it’s a purely price-driven decision, then they’ve got that squeeze, but we rely on our service, our reliability and our product availability.”