Headquartered in Dayville, Connecticut, United Natural Foods, Inc. (UNFI) is the leading domestic distributor of natural and organic products, providing over 40,000 stock keeping units (SKUs) to more than 17,000 customers. The products include: grocery and general merchandise (52% of the portfolio), produce/perishables (15%), frozen foods (13%), bulk and food service products (8%), nutritional supplements and sports nutrition (7%), and personal care items, regional, national, and private brands (5%). Customers include independently owned natural product retailers (44% of revenues in fiscal 2007) supernatural chains (37%), comprising small and large chains of natural foods supermarkets mass markets (15%), situated across the U.S. foodservices (2%) and others (2%). The company's largest customer is Whole Foods Market, which represents 28% of total sales, while Wild Oats Markets currently accounts for 9% of revenues. Whole Foods Market has been a major customer since 1996. In October 2006, the company renewed the primary distribution agreement with Whole Foods Markets until September 2013. During the third quarter of fiscal 2004, a five-year distribution agreement with Wild Oat Markets, Inc. was also renewed. The company also owns and operates a few retail natural product stores, located primarily in Florida. United Natural Foods' strategy includes an active acquisition program in order to benefit from economies of scale. Since 1985, the company has completed several acquisitions, including Select Nutrition Distributors in December 2004 and Milkbrook Distribution Services in November 2007. Select Nutrition is a supplier of branded vitamins, herbs, dietary supplements, and health and beauty aids to health food stores, pharmacies, practitioners, sports clubs, and spas.

United Natural Foods is a growth company in a growth industry. The $46 billion Natural Products sector is growing 8% versus 2% for the overall grocery industry. The company's top-line is expanding at double-digit rates, driven by acquisitions, organic growth initiatives, and incremental distributor agreements. National purchasing power and key relationships with leading natural products retailers are two of the company's key competitive strengths. For instance, in October 2006, the company signed a seven-year primary distribution agreement with Wild Oats Markets, which added the Southern Pacific region of Whole Foods, which includes Southern California, Arizona and Southern Nevada. Management believes the amended agreement, along with other new business gained in the first fiscal quarter of 2007, should add an incremental $95 million to $105 million in sales on an annualized basis. In addition, the company claims to have the highest service levels in the natural products industry, with over 98% order fulfillment rates and a capability for fast delivery. The company also enjoys competitive market share with total market share having increased to 8.3% in fiscal 2005 from 6.9% in the year-earlier period.

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