Sysco, USFoods, and the failure of anti-trust laws...

[theclemsonkid]

You know how I can prove that those with the money call all the shots? Take a look at the merger today that was announced. Sysco purchased US Foods, for around 8 billion dollars. Before the merger, Sysco help approximately 18% of the market share, while US Foods holds about 8% of the market. Combined, that means a single company will now hold over 25% of the market share.

As someone who owns a business that is currently with US Foods, I can tell you what's going to happen. Before this merger, I basically had two choices on who to use: Sysco or US Foods. Sure, there are other, much smaller, local distributors, but they can't provide the product reach, delivery, and price of the two giants. So if I were to use anyone other than Sysco or US Foods, my costs would go up enough to where either I raised my prices, or go out of business.

Now with this merger, it's going to basically tie the hands of tens of thousands of businesses just like mine. Sysco will come in, combine current accounts, and slowly begin to switch every thing over to their house brands and the like. The quality will decrease, and now because they know we have no other choice, the price will increase. On top of that, some of these local and small distributors will more than likely go out of business since they won't be able to compete financially.

If ever there was a time for antitrust laws to be enacted, I would sure hope this is it.

But I would bet the farm, that the pockets of our trusty politicians have been greased just enough that this will slide through. And when that happens, everyone loses. Except Sysco and the politicians who allow it to happen...

 

[2quills]

It's one thing when your cable bill goes up. It's another when the products necessary for the very survival of your business go through the roof. Been there, done that. Yep, it sucks. You really have to be adaptable to survive these days. Businesses that provide non essential services are a huge gamble IMO because of stuff like this.

 

[phixer]

"The Matrix is a system, That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, politicians, carpenters. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it."

 

[darthtang aw]

You know how I can prove that those with the money call all the shots?  Take a look at the merger today that was announced.  Sysco purchased US Foods, for around 8 billion dollars.  Before the merger, Sysco help approximately 18% of the market share, while US Foods holds about 8% of the market.  Combined, that means a single company will now hold over 25% of the market share.  
As someone who owns a business that is currently with US Foods, I can tell you what's going to happen.  Before this merger, I basically had two choices on who to use: Sysco or US Foods.  Sure, there are other, much smaller, local distributors, but they can't provide the product reach, delivery, and price of the two giants.  So if I were to use anyone other than Sysco or US Foods, my costs would go up enough to where either I raised my prices, or go out of business.
Now with this merger, it's going to basically tie the hands of tens of thousands of businesses just like mine.  Sysco will come in, combine current accounts, and slowly begin to switch every thing over to their house brands and the like.  The quality will decrease, and now because they know we have no other choice, the price will increase.  On top of that, some of these local and small distributors will more than likely go out of business since they won't be able to compete financially.  
If ever there was a time for antitrust laws to be enacted, I would sure hope this is it.
But I would bet the farm, that the pockets of our trusty politicians have been greased just enough that this will slide through.  And when that happens, everyone loses.  Except Sysco and the politicians who allow it to happen... 
You haven't been in business long enough to see the up side in this. I have had to deal with similar situations on numerous occasions. The latest one was four months ago.
I had this happen here....I went to one of the smaller family owned distributors...asked if I gave them all my business in the products they carry if they could give me a price reduction. They matched prices and then cut the price by 6.5%. I then transferred the cost saving to my customers. They appreciated seeing a price reduction for a change and have spread the word on my business increasing my total sales by 50% the last two months.
Pricing is never set in stone...and the distributors want your business....learn to negotiate, get on the phone and tell the local distributors what you want and need to switch to them.....It is things and actions like this that keep you ahead of the curve. So many small businesses fail because they think pricing is set in stone...it isn't...they think they dont have the same options as corporations...this is not true.

 

[2quills]

Small business' s that don't understand the simple concept of price negotiating are doomed to fail period.

 

[beaslbob]

Quote:Originally Posted by TheClemsonKid http:///t/396786/sysco-usfoods-and-the-failure-of-anti-trust-laws#post_3535235
You know how I can prove that those with the money call all the shots? Take a look at the merger today that was announced. Sysco purchased US Foods, for around 8 billion dollars. Before the merger, Sysco help approximately 18% of the market share, while US Foods holds about 8% of the market. Combined, that means a single company will now hold over 25% of the market share.

As someone who owns a business that is currently with US Foods, I can tell you what's going to happen. Before this merger, I basically had two choices on who to use: Sysco or US Foods. Sure, there are other, much smaller, local distributors, but they can't provide the product reach, delivery, and price of the two giants. So if I were to use anyone other than Sysco or US Foods, my costs would go up enough to where either I raised my prices, or go out of business.

Now with this merger, it's going to basically tie the hands of tens of thousands of businesses just like mine. Sysco will come in, combine current accounts, and slowly begin to switch every thing over to their house brands and the like. The quality will decrease, and now because they know we have no other choice, the price will increase. On top of that, some of these local and small distributors will more than likely go out of business since they won't be able to compete financially.

If ever there was a time for antitrust laws to be enacted, I would sure hope this is it.

But I would bet the farm, that the pockets of our trusty politicians have been greased just enough that this will slide through. And when that happens, everyone loses. Except Sysco and the politicians who allow it to happen...

sounds to me l ike 75% of the market or so is still available.
And you just have to adjust.
my .02

 

[beth]

Establish your business as a locally owned, locally supplied, organic shop. You can thereby ride the advantages of having "local" and "organic" labels for your store. Include some highend coffee and it will be ok if you have to charge more because people want "local" and "organic" and are willing to pay more "green" to be "green".

 

[2quills]

You haven't been in business long enough to see the up side in this.
Pricing is never set in stone...and the distributors want your business....learn to negotiate, get on the phone and tell the local distributors what you want and need to switch to them.....It is things and actions like this that keep you ahead of the curve.
This depends on the types of products you need for the business that you're in. If the cost of manufacturing for a particular product or good goes up across the board then it isn't always just about the best price you can find locally if the locals are forced into raising prices as well to survive. The fact of the matter is large take overs can and do cause disruptions that trickle down through the market place. When all of the small local bakeries in the area also begin to shop around and everybody switches you may find yourself in a situation were the little guys can't cope with the demand and supply becomes an issue. Or you have to settle for less quality and hope your customers are still happy.
It's just the markets way of saying hey, it isn't easy in small business these days. Adapt or die.

 

[silverado61]

Quote:
Originally Posted by Darthtang AW http:///t/396786/sysco-usfoods-and-the-failure-of-anti-trust-laws#post_3535278
Quote:
Originally Posted by TheClemsonKid http:///t/396786/sysco-usfoods-and-the-failure-of-anti-trust-laws#post_3535235
You know how I can prove that those with the money call all the shots? Take a look at the merger today that was announced. Sysco purchased US Foods, for around 8 billion dollars. Before the merger, Sysco help approximately 18% of the market share, while US Foods holds about 8% of the market. Combined, that means a single company will now hold over 25% of the market share.
As someone who owns a business that is currently with US Foods, I can tell you what's going to happen. Before this merger, I basically had two choices on who to use: Sysco or US Foods. Sure, there are other, much smaller, local distributors, but they can't provide the product reach, delivery, and price of the two giants. So if I were to use anyone other than Sysco or US Foods, my costs would go up enough to where either I raised my prices, or go out of business.
Now with this merger, it's going to basically tie the hands of tens of thousands of businesses just like mine. Sysco will come in, combine current accounts, and slowly begin to switch every thing over to their house brands and the like. The quality will decrease, and now because they know we have no other choice, the price will increase. On top of that, some of these local and small distributors will more than likely go out of business since they won't be able to compete financially.
If ever there was a time for antitrust laws to be enacted, I would sure hope this is it.
But I would bet the farm, that the pockets of our trusty politicians have been greased just enough that this will slide through. And when that happens, everyone loses. Except Sysco and the politicians who allow it to happen...
You haven't been in business long enough to see the up side in this. I have had to deal with similar situations on numerous occasions. The latest one was four months ago.
I had this happen here....I went to one of the smaller family owned distributors...asked if I gave them all my business in the products they carry if they could give me a price reduction. They matched prices and then cut the price by 6.5%. I then transferred the cost saving to my customers. They appreciated seeing a price reduction for a change and have spread the word on my business increasing my total sales by 50% the last two months.
Pricing is never set in stone...and the distributors want your business....learn to negotiate, get on the phone and tell the local distributors what you want and need to switch to them.....It is things and actions like this that keep you ahead of the curve. So many small businesses fail because they think pricing is set in stone...it isn't...they think they dont have the same options as corporations...this is not true.
Don't tell them that "you need" to switch to "them". Convince them that "they need" "your" business. And now more than ever, they do need your business. They will need to start competing on prices sooner or later.

 

[darthtang aw]

Don't tell them that "you need" to switch to "them". Convince them that "they need" "your" business. And now more than ever, they do need your business. They will need to start competing on prices sooner or later.
i never said that. I said, "tell them what you need to switch to them". In other words, pricing structure, delevery time and dates, quantity guarantees.

 

[silverado61]

Quote:
Originally Posted by Darthtang AW http:///t/396786/sysco-usfoods-and-the-failure-of-anti-trust-laws#post_3535297
Quote:
Originally Posted by silverado61 http:///t/396786/sysco-usfoods-and-the-failure-of-anti-trust-laws#post_3535291
Don't tell them that "you need" to switch to "them". Convince them that "they need" "your" business. And now more than ever, they do need your business. They will need to start competing on prices sooner or later.
i never said that. I said, "tell them what you need to switch to them". In other words, pricing structure, delevery time and dates, quantity guarantees.
Sorry. I wasn't trying to quote you. I just meant that the small suppliers need him more than he needs them. Wasn't trying to offend. Guess I just misread your typing.

 

[darthtang aw]

Sorry. I wasn't trying to quote you. I just meant that the small suppliers need him more than he needs them. Wasn't trying to offend. Guess I just misread your typing.
Don't worry, of all the people on this forum, I am the least likely to be offended.
Darth (the offender) tang

 

[theclemsonkid]

Quote:
Originally Posted by beaslbob http:///t/396786/sysco-usfoods-and-the-failure-of-anti-trust-laws#post_3535280
Quote:
Originally Posted by TheClemsonKid http:///t/396786/sysco-usfoods-and-the-failure-of-anti-trust-laws#post_3535235
You know how I can prove that those with the money call all the shots? Take a look at the merger today that was announced. Sysco purchased US Foods, for around 8 billion dollars. Before the merger, Sysco help approximately 18% of the market share, while US Foods holds about 8% of the market. Combined, that means a single company will now hold over 25% of the market share.

As someone who owns a business that is currently with US Foods, I can tell you what's going to happen. Before this merger, I basically had two choices on who to use: Sysco or US Foods. Sure, there are other, much smaller, local distributors, but they can't provide the product reach, delivery, and price of the two giants. So if I were to use anyone other than Sysco or US Foods, my costs would go up enough to where either I raised my prices, or go out of business.

Now with this merger, it's going to basically tie the hands of tens of thousands of businesses just like mine. Sysco will come in, combine current accounts, and slowly begin to switch every thing over to their house brands and the like. The quality will decrease, and now because they know we have no other choice, the price will increase. On top of that, some of these local and small distributors will more than likely go out of business since they won't be able to compete financially.

If ever there was a time for antitrust laws to be enacted, I would sure hope this is it.

But I would bet the farm, that the pockets of our trusty politicians have been greased just enough that this will slide through. And when that happens, everyone loses. Except Sysco and the politicians who allow it to happen...

sounds to me l ike 75% of the market or so is still available.
And you just have to adjust.
my .02

When they say that they make up "only" 25% of the market, what they fail to mention is that the other 75% are either "specialty" providers (i.e. only meat, only dairy, etc), or those other 75% are mostly in big urban areas. I'm in Canton, Ohio. Here, you have exactly three choices: Sysco, US Foods, or GFS. So in my case, their market share just went to 66.7%

As far as negotiating... I am well versed in that. However, most places these days won't budge. I've lost a few vendors because I have asked for lower prices. For example this week, I have stopped carrying Snapple brand. And I did that, because I was paying 74 cents per bottle, when I could go to the supermarket and buy the same thing for 66 cents a piece. I said I wasn't happy with the fact people off the street could buy the same product for less than I was paying as a retailer. I just asked them to match it. They refused, so I left. This is business in 2013.

 

[darthtang aw]

When they say that they make up "only" 25% of the market, what they fail to mention is that the other 75% are either "specialty" providers (i.e. only meat, only dairy, etc), or those other 75% are mostly in big urban areas.  I'm in Canton, Ohio.  Here, you have exactly three choices: Sysco, US Foods, or GFS.  So in my case, their market share just went to 66.7%
As far as negotiating... I am well versed in that.  However, most places these days won't budge.  I've lost a few vendors because I have asked for lower prices.  For example this week, I have stopped carrying Snapple brand.  And I did that, because I was paying 74 cents per bottle, when I could go to the supermarket and buy the same thing for 66 cents a piece.  I said I wasn't happy with the fact people off the street could buy the same product for less than I was paying as a retailer.  I just asked them to match it.  They refused, so I left.  This is business in 2013.
maybe the market is just different here...But I have always been able to negotiate..and get close to what I want. sometimes more. In the case of snapple, replace snapple with a competitor...that is what I have done with brands that dont budge or get so expensive. I dropped blue buffalo dog food like a bad habit when they had a 10% cost increase to us. Blue Buffalo has a huge following...I lost some business...but 95% of my customers were happy to switch to something not as "corporate" less expensive (lack of national advertising keeps cost down) and ultimately healthier.

 

[2quills]

maybe the market is just different here...But I have always been able to negotiate..and get close to what I want. sometimes more. In the case of snapple, replace snapple with a competitor...that is what I have done with brands that dont budge or get so expensive. I dropped blue buffalo dog food like a bad habit when they had a 10% cost increase to us. Blue Buffalo has a huge following...I lost some business...but 95% of my customers were happy to switch to something not as "corporate" less expensive (lack of national advertising keeps cost down) and ultimately healthier.
So you're forced into sacrificing nationwide growth from lack of advertising because you can't afford it. Are you saying you're ok with that?
If I were you guys I'd be thankful that my business is not in an area where the majority of that area exists because of a grand industry that has crumbled. Shopping around for a "good price" would be the least of your worries. Record high unemployment led to a lot of divorces and foreclosures. Then you have inflation going on in the national market which drives everything up. Those who do still have money won't want to spend it because they're contemplating their own survival. Local government corruption doesn't help things either. Yeah, markets are different everywhere.

 

[darthtang aw]

So you're forced into sacrificing nationwide growth from lack of advertising because you can't afford it. Are you saying you're ok with that?
.
i don't think you understood what I meant. Blue buffalo has a huge nationwide advertising campaign they have doing for about 5 years now. The cost of their food has increased greatly over the years to cover this advertising cost. I dumped them and stocked my shelves with a healthier less expensive dog food for my customers. Blue buffalo wants to be primarily in ***** and petsmart, my biggest corporate competition. Why get into a price war with them when I can find something better they dont carry and wont carry for several years...if ever.
I by no means will become a millionaire doing what I do. but i will have a decent income and have something to pass on to my kids that they can sell or carry on...Not to bad for a married couple with one high school diploma between the two of them.

 

[2quills]

i don't think you understood what I meant. Blue buffalo has a huge nationwide advertising campaign they have doing for about 5 years now. The cost of their food has increased greatly over the years to cover this advertising cost. I dumped them and stocked my shelves with a healthier less expensive dog food for my customers. Blue buffalo wants to be primarily in ***** and petsmart, my biggest corporate competition. Why get into a price war with them when I can find something better they dont carry and wont carry for several years...if ever.
I by no means will become a millionaire doing what I do. but i will have a decent income and have something to pass on to my kids that they can sell or carry on...Not to bad for a married couple with one high school diploma between the two of them.
I getcha. I think anybody who's been there has. After years of doing what you do I'm sure you have your business running like a finely tuned machine, smooth and efficient. As it should be.
Actually I was rolling back in the 90´s doing nothing but lawn care. Residential and commercial fertilization and pest control. Back then it was coming so fast little guys like me could afford to be selective about jobs we took. Even though we slowly began to see some of the effects of cheaper import products moving into the country and effecting domestic sales. Folks still had money. It was a gradual decent through the 90's it seemed to me then went into a tailspin after the turn of the millennium. Seems like after 9/11 hit us gas and oil prices shot up it began hurting a lot of people. Fuel, fertilizer and pesticides which are all oil based products and my three largest costs. I was already getting premium pricing from the main supplier in my area. I remember when they were bought out by another company they eventually jacked up prices as well. I tried a couple of smaller local producers but they were getting flooded and had hard time keeping up with everyone's supply sometimes. Quality wasn't as good but those were the options.
I eventually had to start taking on mowing/maintenance contracts to help offset the losses of profits on lawn care which had been much greater when oil was still cheap. But market became flooded with competition willing to work for peanuts in an area were anyone who could afford those services started going with the cheapest because they had no choice.
Decided to move on and can't be more thankful that I did. The thrill was gone and so was I. :laughing: