KeHE Distributors has taken a much deeper plunge into the drug store retail channel.
Naperville, Illinois-based KeHE told Winsight Grocery Business that it has formed a national distribution partnership with retail pharmacy giant CVS Health. The fresh, natural, organic and specialty food and grocery wholesaler said it started distributing products this month to CVS Pharmacy stores across the country. Overall, CVS operates more than 9,000 retail locations in 50 states, the District of Columbia and Puerto Rico.
“KeHE began distributing products nationally to CVS Pharmacy in October 2023,” Kristen Christopher, vice president of alternate channels at KeHE Distributors, told WGB in an email. “The partnership with CVS is a significant advancement of KeHE’s strategic vision that will benefit our customers, employees and suppliers by creating more opportunities for growth. As many of the products are already distributed by KeHE to grocery and alternate store formats, this newfound channel presents an opportunity for the company to see unprecedented growth within its brand community.”
Through the distribution partnership, CVS shopper will gain access to new and emerging “health-conscious brands,” including high-quality, better-for-you natural, organic and specialty items, according to Christopher.
“The assortment available to CVS includes products that support the trends consumers are looking for, including living a sustainable lifestyle. Consumers vote with their wallets and are looking for transparency in products, packaging, transportation and ingredients alongside a growing interest in sustainability,” she explained. “Becoming a more conscious consumer. Consumers today are more mindful of what they are putting in their bodies. They are taking more control of their health, curating their food and beverage choices for long-term success and results.”
Citing research from Mintel, Christopher also said 78% of consumers are looking for products that offer “new ways to heal” and “support the mind, body and spirit.”
Other shoppers, meanwhile, aim to “elevate the culinary experience,” Christopher noted. “Consumers are searching for extreme flavor, the joy of nostalgic foods and adventures of global cuisines while creating something worth sharing on social and with those they love,” she said.
And tied to that is a search for food innovation and unique ingredients, she added. “Consumers are looking to personalize their food experiences with flavor-forward and functional ingredients to support their eating habits.”
Despite adding a huge new customer in CVS, KeHE had recently expanded its reach and capabilities upon finalizing its acquisition of DPI Specialty Foods, a western U.S. specialty foods distributor, in June. The deal brought KeHE more than 1,000 customers across channels plus another three distribution centers, serving 17 states.
Including DPI, KeHE now serves more than 31,000 customers, carries over 80,000 SKUs and has 6,100-plus suppliers, deploying a total of 7 million square feet of warehouse space across more than three temperature zones in 19 distribution centers. Its customers include natural food stores, supermarket chains, independent grocery stores, online retailers, retail pharmacies, convenience stores, foodservice providers and specialty retailers across North America.
“KeHE is well-positioned to serve CVS nationally,” Christopher stated. “Our recent acquisition of DPI also gives us a combined footprint that allows us to better serve retailers across the country.”
On the consumables side, CVS’ partnership with better-for-you product distributor KeHE builds on an effort begun over eight years ago to emphasize healthier food, snack and beverage offerings, including fresh items.
In mid-2015, CVS Pharmacy launched a 500-store pilot of an enhanced retail presentation offering a curated selection of national and niche better-for-you brands to make eating healthier and more convenient for on-the-go consumers. About a year later, CVS expanded the initiative to more than 2,900 stores, including the addition of over 250 fresh, refrigerated and non-perishable healthy foods and beverages and 360 stores getting an updated food layout. Also, roughly 25% of front checkout space—typically filled by candy—was transitioned to better-for-you snacks.