John Block is the president and chief executive officer of Food Distributors International, Falls Church, Va. He is a pork producer in Illinois and is a former U.S. Secretary of Agriculture.

Q What are the major issues facing food wholesalers and distributors today?

A There are two issues. The first is consolidation in the industry. Wholesalers are not only consolidating, so are their suppliers.

Second, competition is fierce. Although many food wholesalers are doing very well, they're facing increased competition from mass merchandisers, convenience stores and hypermarkets.

One of challenges is to take advantage of new technology to make themselves more efficient.

Q How has the wholesale sector changed and why?

A Again, the consolidation trends and fierce competition is driving change. Among the changes is the fact that there is some blurring of the lines between the wholesale and foodservice sectors. Now, wholesalers are finding out that foodservice can be done at supermarkets and convenience stores. This opens up opportunities and challenges.

Q What factors most affect profitability?

A Volume and margin. If a wholesaler has those two things, he/she is in good shape. If either one of those elements diminishes, a wholesaler will suffer.

The most powerful incentive is the wholesaler's customer base; if the wholesaler has a problem there, profitability goes out the window.

Q What food items have been strong for wholesalers?

A Meat traditionally has provided a good margin. Today, wholesalers are handling a lot of prepackaged and precooked meat products. These kinds of products are selling well and their sales volume is growing. The pork industry should expect that to continue.

Q What issues do distributors face that are specific to fresh meat?

A Everyone wants to ensure that they have a safe product. Food safety is foremost on the minds of wholesalers today. It's a constant concern and priority that fresh meat is handled in such a way to make it safe for the consumer.

Q How are wholesalers dealing with more stringent food safety initiatives?

A Their biggest responsibility is working with the retailer to ensure a safe end product. This is especially true in working with independent retailers. Food Distributors International has prepared a guidebook on how to select suppliers to ensure that the wholesalers are offering a high quality and safe product.

Q How do wholesalers fit into the pork chain? Is there a way for them to work more closely with producers?

A Wholesalers fit in by working with processors, which makes them the link in the chain between processors and retailers.
But let me say, that the stronger the chain and closer the links, the more successful everyone will be.

Q What can producers and/or packers do to help meat wholesalers and distributors?

A Make the system from farm to dinner table into a virtual chain that ensures product quality and consistency. A closer working relationship between the segments is required to accomplish that.
Producers are on the front end to produce a quality, consistent product. The consumer is looking for those things, and wholesalers will require and deliver whatever product traits the consumers want.

Q What future trends can we expect to develop in wholesale, distribution and retail food sectors?

A We will continue to see consolidation. We also will see internationalization. By this I mean companies from Europe and other countries will buy wholesalers, retailers and other U.S. companies.

The use of technology and communication transfers is cutting a lot of costs out of the business. Plus, with the increased speed of communication and technology, wholesalers can keep dramatically lower product inventories on hand and still quickly fill their orders as needed. It's hard for some companies to step up to the plate and adopt these changes, but they will have to in order to stay in business.