Sysco 2015 Annual Report Download - page 12
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Please find page 12 of the 2015 Sysco annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.SYSCO CORPORATION-Form10-K4
PARTI
ITEM1Business
Employees
As of June 27, 2015, we had approximately 51,700 employees, approximately 18% of whom were represented by unions, primarily the International
Brotherhood of Teamsters. Contract negotiations are handled by each individual operating company. Approximately 37% of our union employees are
covered by collective bargaining agreements that have expired or will expire during scal 2016 and are subject to renegotiation. Since June 27, 2015, there
have been no contract renegotiations. We consider our labor relations to be satisfactory.
Competition
Industry sources estimate that there are more than 16,500 companies engaged in the distribution of food and non-food products to the foodservice industry
in the U.S. Our customers may also choose to purchase products directly from wholesale or retail outlets, including club, cash and carry and grocery stores,
or negotiate prices directly with our suppliers. Online retailers and e-commerce companies are also participants in the foodservice industry. While we compete
primarily with local and regional distributors, some organizations compete with us on a multi-region basis. In addition, these local, regional and multi-regional
distributors can create purchasing cooperatives and marketing groups to enhance their competitive abilities by expanding their product mix, improving
purchasing power and extending their geographic capabilities. We believe that the principal competitive factors in the foodservice industry are effective customer
contacts, the ability to deliver a wide range of quality products and related services on a timely and dependable basis and competitive prices. Our customers
are accustomed to purchasing from multiple suppliers and channels concurrently. Product needs, service requirements and price are just a few of the factors
they evaluate when deciding where to purchase. Customers can choose from many broadline foodservice distributors, specialty distributors that focus on
speci c categories such as produce, meat or seafood, other wholesale channels, club stores, cash and carry stores, grocery stores and numerous online
retailers. Since switching costs are very low, customers can make supplier and channel changes very quickly. There are few barriers to market entry. Existing
foodservice competitors can extend their shipping distances and add truck routes and warehouses relatively quickly to serve new markets or customers.
We consider our primary market to be the foodservice market in the U.S. and Canada and estimate that we serve about 17.7% of this approximately
$264billion annual market based on a measurement as of the end of calendar 2014. We believe, based upon industry trade data, that our sales to the U.S.
and Canada food-away-from-home industry were the highest of any foodservice distributor during scal 2015. While adequate industry statistics are not
available, we believe that, in most instances, our local operations are among the leading distributors of food and related non-food products to foodservice
customers in their respective trading areas. We believe our competitive advantages include our more than 7,300 marketing associates, our diversi ed
product base, which includes a differentiated group of high quality Sysco brand products, the diversity in the types of customers we serve, our economies
of scale and our multi-region portfolio in the U.S. and Canada, which mitigates some of the impact of regional economic declines that may occur over time.
We believe our liquidity and access to capital provides us the ability to continuously invest in business improvements. We are one of the few distributors
in the food-away-from-home industry in the U.S. with publicly traded equity. While our public company status provides us with some advantages over
many of our competitors, including access to capital, we believe it also provides us with some disadvantages that most of them do not have in terms of
additional costs related to complying with regulatory requirements.
Government Regulation
Our company is required to comply, and it is our policy to comply, with all applicable laws in the numerous countries throughout the world in which we
do business. In many jurisdictions, compliance with competition laws is of special importance to us, and our operations may come under special scrutiny
by competition law authorities due to our competitive position in those jurisdictions. In general, competition laws are designed to protect businesses and
consumers from anti-competitive behavior.
In the U.S., as a marketer and distributor of food products, we are subject to the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder
by the U.S. Food and Drug Administration (FDA). The FDA regulates food safety through various statutory and regulatory mandates, including manufacturing
and holding requirements for foods through good manufacturing practice regulations, hazard analysis and critical control point (HACCP) requirements
for certain foods, and the food and color additive approval process. The agency also speci es the standards of identity for certain foods, prescribes the
format and content of information required to appear on food product labels, regulates food contact packaging and materials, and maintains a Reportable
Food Registry for the industry to report when there is a reasonable probability that an article of food will cause serious adverse health consequences. For
certain product lines, we are also subject to the Federal Meat Inspection Act, the Poultry Products Inspection Act, the Perishable Agricultural Commodities
Act, the Packers and Stockyard Act and regulations promulgated by the U.S. Department of Agriculture (USDA) to interpret and implement these statutory
provisions. The USDA imposes standards for product safety, quality and sanitation through the federal meat and poultry inspection program. The USDA
reviews and approves the labeling of these products and also establishes standards for the grading and commercial acceptance of produce shipments
from our suppliers. We are also subject to the Public Health Security and Bioterrorism Preparedness and Response Act of 2002, which imposes certain
registration and record keeping requirements on facilities that manufacture, process, pack or hold food for human or animal consumption.