Krispy Kreme Doughnuts Inc. (KKD) announced that it is entering into a supply chain distribution deal with the nation’s biggest food distributor Sysco Corp. (SYY), whereby Sygma, a Sysco subsidiary, will distribute proprietary doughnut mixes, other ingredients and supplies to Krispy Kreme franchise and company shops in the eastern United States.
IFG, another Sysco subsidiary, will be responsible for the export of Krispy Kreme goods to 20 foreign countries where the company’s international franchisees operate.
In 2008 Krispy Kreme outsourced the distribution of its food related products to its shops in the western U.S., while Sysco, based in Houston, is expected to start the distribution network in handling the eastern U.S. and carry on international exports during the second and third quarters of calendar year 2011.
Sysco Corporation is a global leader in marketing and distributes a wide range of food and related products to the foodservice and food-away-from-home industry. The company operates 180 distribution facilities serving approximately 400,000 customers. Sysco’s worldwide sales for its fiscal year ended July 3, 2010 were $37 billion.
Krispy Kreme is an international retailer and wholesaler of premium-quality sweet treats, including its signature Original Glazed doughnut. Headquartered in Winston-Salem, N.C., the company has been offering the highest-quality doughnuts and great-tasting coffee since it was founded in 1937.
Management of Krispy Kreme Doughnuts states that partnering with Sysco will allow it to benefit from its buying power and the size and reach of its distribution network. KKD reportedly plans to further simplify its Supply Chain operations and add capabilities and services to its franchisees following the completion of outsourcing for the delivery of doughnut mixes, ingredients and supplies.
KKD will carry on with the production of its doughnut mixes and concentrate on its mix manufacturing facility at Ivy Avenue in Winston-Salem, NC. On completion of the deal, this facility will supply the mix products to Sysco, as well as to the company’s west coast distribution partner, for delivery to Krispy Kreme shops, and also to contract mix manufacturers both domestic and international.
KKD currently holds a Zacks #3 Rank that translates into a short-term ‘Hold’ rating.
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