Opinion: Consolidation is key post-Booker/Tesco

For months, speculation has circulated the wholesale channel regarding the proposed Booker/Tesco deal, writes Priyanka Jethwa. But by the end, was anyone really that surprised when the deal was given the provisional green light by the Competition and Markets Authority (CMA)?

Despite leading UK wholesale bosses vehemently appealing to the CMA to reject the merger on a number of grounds, leading to Booker CEO Charles Wilson to refer to wholesalers he sees as being opposed to change as “backward“, it is now more important than ever that wholesalers adapt and evolve to changing market conditions, and concentrate all efforts on doing whatever is in their powers to remain relevant. And this needs to include looking at consolidation.

2017 has seen a number of acquisitions already take place in the wholesale channel, of varying shapes and size. There was Innovative Bites buying Hancock Holdings, for example, and Lomond Fine Foods Wholesale taking over Hall’s Direct. We have also had RD Johns Foodservice acquiring Chaffins Foodservice, and most recently, Dee Bee Wholesale acquiring Kingston Beer Supplies. Not forgetting deals involving Nisa, Morrisons’ attempts to get a stake in the wholesale channel, and all the rumours swirling around myriad other wholesalers.

Ultimately, I can understand why many in the industry have fears about the sheer scale of the new £60bn business, and why there is disappointment about the CMA’s handling of the case. But whether or not you agree with the CMA’s decision, wholesale is entering a new phase, and it is clear SMEs in the channel are banding together in the hope of having strength in a market only set to get more challenging. And it will be those businesses that stand a strong chance of remaining competitive and seeing profits grow in a post-Tesco/Booker marketplace.

Booker has successfully secured its interests for the future, futureproofing itself against an uncertain economy, and taking the next steps in the impressive growth trajectory it has enjoyed since Wilson came to the helm. In the next few months, it will be fascinating to see which other businesses take steps to consolidate, ensuring that they do not remain static, or risking possible failure.