“When a wholesaler like UNFI sneezes, the grocery industry catches a cold,” reads a recent Forbes article detailing the cyberattack on a $30 billion grocery wholesaler and one of the largest suppliers in the grocery industry.
A June 5 attack crippled a wholesaler’s ordering and replenishment systems, triggering widespread disruptions and exposing the fragility of a highly consolidated distribution network. The situation is a noteworthy example of the critical role wholesalers play in connecting producers, manufacturers and retailers across the U.S. food supply chain.
As many grocers are left scrambling, the incident reveals how deeper structural issues disproportionately impact small, independent food brands. While several common practices allow wholesalers to profit from supplier-funded discounts, they can also have negative impacts on smaller brands’ sustainability. These include:
- Manufacturer charge backs
- Off-invoice promotions
- Forward buying
- Bridge buying
These tactics, while beneficial to wholesalers and retailers, can lead to challenges for smaller suppliers who lack the leverage to negotiate more favorable terms. As a result, the supply chain becomes increasingly brittle. When one link of the chain breaks, there are few alternatives to fill the gap.
This means retailers are under immense pressure to compete with low-cost giants and rely on wholesalers to reduce costs. This cost-cutting pressure cascades down the supply chain, creating a system where small brands struggle to survive, consumers face rising prices and the entire industry becomes more vulnerable to disruptions like cyberattacks.
This is why cyber liability coverage is more important than ever — because no matter the size of your footprint or revenue, you have vulnerabilities.
How NFP Helps
NFP helps to manage risk with customized cyber liability policies covering business interruption, employee cybersecurity training programs, and expert analysis and audits to ensure security and address any coverage gaps. With a tailored cyber liability program and incident response plan, wholesalers, producers and grocers can build resilience.
