Confex and Fairway Foodservice have announced they will merge into The Wholesale Group in January 2025, in a move that has ‘shaken up’ the industry.
The group’s new joint MD Tom Gittins (Confex) speaks to The Grocer about plans for the group, how it will operate, and its ambitions for growth
The news of a new buying group on the block caused “quite the stir”, says MD Tom Gittins in his first interview since announcing the creation of The Wholesale Group.
He is right. The merger of Confex and Fairway Foodservice to create the new entity is the biggest thing to happen in the world of buying groups since Today’s Group and Landmark Wholesale merged in November 2018 to create Unitas, which at the time boasted a £9.2bn buying power.
The Wholesale Group will still be some ways off that in terms of the collective turnover of its members, but at £4.47bn it has raced into a clear second place in buying group scale.
“I think our entry has shaken up the industry, it’s provoked others to be interested in what we’re doing,” says Gittins, who alongside his sister Jess Douglas will become joint MD of The Wholesale Group when it officially launches next month. Fairway CEO Coral Rose will join industry veteran Martin Williams as co-chairs.
The deal was certainly the talk of the town at the recent Federation of Wholesale Distributors Gold Medal Awards in London, with speculation rife about potential members who might be keen to jump ship for the new kid on the block.
Gittins isn’t naming any names but he is clearly pleased with how the deal has gone down with existing members and is expecting to be fielding plenty of calls from potential new arrivals.
“Our members see the need for this: it secures their future, and it secures our future by giving us a massive platform for growth. We haven’t had any adverse response from members so far, because I think they see the scale they’ll get from being in one larger group,” he explains.
“I think many see the benefits of switching sides right now. We’ve had a lot of interest from new members, and we’re open to new members that have the same ethos and way of working as our existing ones.
“We’re in talks with members from most other groups at the moment. The move has definitely provoked and shaken up the industry, and I think it will provoke others to stand up and want to be involved in what we’re doing.”
So what are the benefits the new group will bring? Well, there is the lack of membership fees, for a start. “Our focus is on catering for family businesses and working to support them,” Gittins says. He explains the new model would be similar to that of a co-operative and based on loyalty, where members are rewarded according to engagement.
“We have different profit centres, whether it be own brand, data or marketing, and those get shared out at the end of the year according to the loyalty of each member. In essence, the more you do for the group, the more share of the profits you can have. I don’t think any other existing buying group can match that.”
Confex’s expertise has focused on retail and cash & carry since its inception in 1972, whereas Fairway Foodservice has cultivated “an incredibly strong own brand” and had a foothold in foodservice for over 40 years.
By bringing the two together, members get “the best of both worlds”. Crucially, they also achieve a scale that is necessary as consolidation becomes a predominant trend, not just with wholesalers but with suppliers too, he says.
“We see a lot of consolidation in the industry at the moment, both for suppliers and wholesalers. Wholesale as an industry has always been about scale, and buying groups in essence are about scale. But now more than ever, you need scale to create the efficiencies suppliers are looking for,” he says.
“Take Diageo, or Mars Kellanova who are coming together next year. In a sense, the creation of a new, larger group is a response to what suppliers are asking for.
“So we have the capability to make sure every member has access to those products through our central distribution, and that distribution is a great way for members to start buying products in smaller quantities, with less commitment.
“Our focus going forward will be on delivered wholesale, and to make it more efficient and meet MOQ requirements from suppliers we will have a centralised system from our London depot.”
“It’s also a way for suppliers to develop, using our data to see who’s buying what, spot any product gaps, directly through central distribution. I think that’s going to be key.
“We are investing heavily in our tech infrastructure so our suppliers can deal with one head office and one payment system, even if we operate across 253 depots. We need to act like a Booker, or Bidfood.
“We want to be one group of fully independent businesses but act as one with the efficiency of one head office, one central distribution, one vision.”
Gittins does not expect the consolidation in the buying group sector to end with this latest merger, and predicts the number of wholesale buying groups could fall from nine to around three within five years.
“We are all doing the same thing, saving suppliers money by offering efficiency when they come and see us to negotiate terms, pricing, promotions, and deal with a bigger player.”
At the same time, he is adamant family businesses have a fighting chance to compete while remaining independent. For the new MD, Confex’s recent history after the pandemic proves there is still growth in the sector.
”Confex has doubled since Covid. I was worried we’d lose 60% of our members, instead we got to 200. A couple of people did sell up, but in general independent family businesses are very resilient.
“They keep growing because they offer a service that nationals can’t. They deliver a 30-mile radius, deliver 24/7, respond to customer needs, and know and stock what the customer wants. It may be harder to deal with suppliers as things consolidate. But there will always be a need for a local independent wholesaler.
“Our members may want to sell, but we haven’t seen that shift yet. And I think it’s overplayed that there isn’t a generation of wholesalers that want to keep doing just that. I don’t agree that people’s children don’t want to get into it.
“There are other guys claiming to be independent that are not really – but our 253 depots are run by individual families, truly local wholesale businesses. At the end of the day, it’s about a way to secure everyone’s future but also put in the tools for growth for everyone.”
Gittins is confident The Wholesale Group will reach the £5bn mark “pretty quickly”, and has a chance “in five years’ time to be the biggest”.
“That’s the plan, but we won’t do it at all costs. Growth must go hand in hand with service to our members, and to their customers. As long as we keep focus on service, the growth will take care of itself.”
Together with expanding the net of suppliers, with an extra 100 on board having “a massive impact on turnover”, the group is also planning to use Fairway’s decade-long expertise and Confex’s recent venture into own brand to expand the offer of the latter.
“We will be rivalling foodservice own brands across the country. We’re going to be as big, if not bigger. We will be the biggest delivered wholesale buying group, and the second biggest retail buying group. So you know, that scale means there is massive room for growth.
“Bringing Confex and Fairway together, we want to create new synergies, new scale – that’s what buying groups are about. In the end, we want to offer extra services for our members, and really be a one-stop shop for suppliers.”
The Wholesale Group
Turnover: £4.47bn
Members: 253
Customers: 349,000
Vehicles: 4,500
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