About AMCON Distributing

AMCON Distributing Company and subsidiaries (AMCON) primarily engage in the wholesale distribution of consumer products in the Central, Rocky Mountain, Mid-South and Mid-Atlantic regions of the United States. Segments The company operates through two business segments, Wholesale Distribution (Wholesale) and Retail Health Food (Retail). Wholesale segment This segment distributes consumer products and provides a full range of programs and services to the company's customers that are focused on helping them manage their business and increase their profitability. It serves customers in 31 states and primarily operate in the Central, Rocky Mountain, Mid-South and Mid-Atlantic regions of the United States. This segment is one of the largest wholesale distributors in the United States serving approximately 7,000 retail outlets, including convenience stores, grocery stores, liquor stores, drug stores, and tobacco shops. The company distributes over 20,000 different consumer products, including cigarettes and tobacco products, candy and other confectionery products, beverages, groceries, paper products, health and beauty care products, frozen and refrigerated products and institutional foodservice products. Convenience stores represent its largest customer category. This segment offers retailers the ability to take advantage of manufacturer- and Company-sponsored sales and marketing programs, merchandising and product category management services, and the use of information systems and data services that are focused on minimizing retailers' investment in inventory, while seeking to maximize their sales and profits. In addition, the company's wholesale distributing capabilities provide valuable services to both manufacturers of consumer products and convenience retailers. Manufacturers benefit from the company's broad retail coverage, inventory management, efficiency in processing small orders, and frequency of deliveries. Convenience retailers benefit from the company's distribution capabilities by gaining access to a broad product line, inventory optimization and merchandising expertise, information systems, and accessing trade credit. This segment operates nine distribution centers located in Illinois, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, Tennessee and West Virginia. These distribution centers, combined with cross-dock facilities, include approximately 1.3 million square feet of permanent floor space. The company's principal suppliers include Altria, RJ Reynolds, ITG Brands, Hershey, Kellogg's, Kraft Heinz, and Mars Wrigley. It also markets private label lines of water, candy products, batteries, and other products. On February 3, 2023, the company acquired Henry's Foods, Inc. (Henry's). Henry's is a wholesale distributor to convenience stores and other retail formats operating in Minnesota, North Dakota, South Dakota, Iowa, and Wisconsin. Retail segment This segment operates health food retail stores located throughout the Midwest and Florida. This segment, through its Healthy Edge Retail Group subsidiary, is a specialty retailer of natural/organic groceries and dietary supplements which focuses on providing high quality products at affordable prices, with an exceptional level of customer service and nutritional consultation. All of the products carried in the company's stores must meet strict quality and ingredient guidelines, and include offerings, such as gluten-free and antibiotic-free grocery and meat products, as well as products containing no artificial colors, flavors, preservatives, or partially hydrogenated oils. The company designs its retail sites in an efficient and flexible small-store format, which emphasizes a high energy and shopper-friendly environment. The company operates within the natural products retail industry, which is a subset of the United States grocery industry. This industry includes conventional, natural, gourmet and specialty food markets, mass and discount retailers, warehouse clubs, health food stores, dietary supplement retailers, drug stores, farmers markets, mail order and online retailers, and multi-level marketers. This segment operates retail health food stores as Chamberlin's Natural Foods, Akin's Natural Foods, and Earth Origins Market. These stores carry over 36,000 different national and regionally branded and private label products, including high-quality natural, organic, and specialty foods consisting of produce, baked goods, frozen foods, nutritional supplements, personal care items, and general merchandise. Principal Products The sales of cigarettes represented approximately 62% of the company's consolidated revenue in fiscal 2023. Sales of candy, beverages, foodservice, groceries, health food products, paper products, health and beauty care products, and tobacco products represented approximately 38% of the company's consolidated revenue in fiscal 2023. Competition Wholesale segment The company's principal competitors are national wholesalers, such as McLane Co., Inc. (Temple, Texas) and Performance Food Group (Richmond, Virginia), as well as regional wholesalers, such as H.T. Hackney Company (Knoxville, Tennessee) and Imperial Super Regional Distributors (Elmwood, Louisiana) along with a host of smaller grocery and tobacco wholesalers. The company also faces competition from Whole Foods Market and/or its parent company Amazon, which pose a threat to the supply chains of food and grocery retailers, as well as convenience stores served by wholesale distribution companies as they continue to pursue a vertical, multi-channel sales strategy whereby both retail consumers and business level customers are targeted. Retail segment In its retail health food business, the company competes with a wide range of well-financed regional and national competitors, such as Whole Foods Markets, Trader Joe's, Sprouts Farmers Market, Natural Grocers, Fresh Thyme Farmers Market, General Nutrition Centers, Vitamin Shoppe, and other online competitors, such as Amazon who all have embarked on aggressive expansion strategies. Additionally, the company competes with specialty supermarkets, other independent natural foods store chains, small specialty stores, and restaurants. Conventional supermarkets and mass market outlets, such as Kroger, Albertsons, Walmart, Publix, Aldi, Trader Joe's and Costco have also significantly increased their offerings of organic and natural products providing another layer of competition. The company also faces competition from Whole Foods Market and/or its parent company Amazon, which pose a threat to the supply chains of the grocery and natural foods business as they continue to pursue a vertical, multi-channel sales strategy targeting both retail consumers and business level customers. Seasonality Sales in the wholesale distribution industry are somewhat seasonal and tend to be higher in warm weather months during which the company's convenience store customers experience increased customer traffic. The warm weather months generally fall within the company's third and fourth fiscal quarters (year ended September 30, 2023). Government Regulation AMCON is subject to regulation by federal, state and local governmental agencies, including but not limited to the U.S. Department of Agriculture (USDA), the U.S. Food and Drug Administration (FDA), the Occupational Safety and Health Administration (OSHA), the Bureau of Alcohol Tobacco and Firearms (ATF) and the U.S. Department of Transportation (DOT). History AMCON Distributing Company was incorporated in Delaware in 1986.