Smokes and snacks are at the center of Core-Mark Holding's cosmos. The company distributes packaged consumables (including cigarettes and other tobacco products, candy, snacks, grocery items, perishables, nonalcoholic beverages, and health and beauty aids) to about 29,000 convenience stores; mass merchandisers; supermarkets; and drug, liquor, and specialty retailers. Cigarettes and other tobacco products are its top sellers, generating more than three-quarters of net sales. Through about two dozen distribution facilities, Core-Mark serves customers in all 50 US states and five Canadian provinces. Its 10 biggest clients (which include Couche-Tard and Valero) contribute about a third of sales.
Core-Mark supplies its customers from a network of more than 25 distribution centers in the US and Canada. It also operates dedicated facilities for its largest customers Couche-Tard and Valero in Phoenix and San Antonio, respectively.
Its Core-Mark Canada business contributes 15% of the company's total sales.
Core-Mark's sales increased nearly 12% in 2011 vs. 2010, while net income was up 48% over the same period. The run up in sales was driven by its entry into two new markets through the 2011 purchase of Forrest City Grocery, a wholesaler with customers in Arkansas, Mississippi, Tennessee, and surrounding states, and the establishment of a new operating division in Tampa, Florida. Increased sales in the company's food/non-food category also contributed to top-line growth.
In an effort to grow market share and extend its geographic reach, Core-Mark has been active on the acquisition front. Most recently, the company agreed to buy North Carolina-based J.T. Davenport & Sons, a distributor to the convenience store industry in eight states, for about $45 million. In 2011 Core-Mark purchased family-owned Forrest City Grocery, a wholesaler with customers in Arkansas, Mississippi, Tennessee, and surrounding states, for about $66 million. The strategic purchase filled a gap in Core-Mark's service area. (Forrest City Grocery became a wholly-owned, indirect subsidiary of Core-Mark.) A core element of Core-Mark's corporate strategy is to expand its presence east of the Mississippi. To that end, in mid-2010 it purchased the assets of Finkle Distributors, whose customer base included New York, Pennsylvania, and other surrounding states, for $43 million. The deal added Finkle's customer accounts and inventory, and it complemented Core-Mark's acquisition of Auburn Merchandise Distributors (2008), which served customers in Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island.
Core-Mark hopes to offset the decline in cigarette smoking by gaining a larger share of the shrinking market and growing its non-cigarette categories, like fresh foods. To grow food sales, Core-Marked has expanded its "Fresh and Local" food program to more than 8,7000 stores. The program offers freshly made sandwiches, salads, baked goods, fruits, vegetables, and dairy items. In the second half of 2010 Core-Mark began distributing Jamba Juice's "Grab 'n Go" line of fresh deli wraps, salads and sandwiches, bolstering its fresh offering to convenience stores. (Core-Mark also supplies coffee and coffee brewing equipment and other food-to-go programs to its customers.) As consumers increase their purchases of fresh food and dairy products at convenience stores, Core-Mark has focused on offering customers more fresh merchandise, which has the added benefit of returning higher margins. To keep perishables fresh on the way to market, the company has upgraded its refrigerated capacity and invested in chilling docks and other systems designed to deliver fresh goods quickly.
Advisory Research, Inc. owns nearly 13% of Core-Mark's shares.
The company's roots reach back to 1888, when it was known as Glaser Bros., a family-run candy and tobacco distribution business in San Francisco. – less
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