The biggest company no one has ever heard of

STAFF WRITERS
August 07, 2013
news.com.au

C&S Wholesale Grocers Inc. has become the leader in an industry notorious for small profit margins.

IT’S the world’s largest grocery wholesaler. It had sales of $21.7 billion in 2012. The company’s owner is one of the 100 richest people in the world.

But you’ve probably never heard of Richard B. Cohen, or his company C&S Wholesale Grocers Inc., and that’s exactly the way he wants it.

He hasn’t given an interview in a decade, Bloomberg reports, and the company truck drivers who deliver goods to 4000 supermarkets around the US drive unmarked vehicles.

Mr Cohen, who is chairman of the private company, works out of an office park 145km northwest of Boston.

“We’re the biggest company no one has ever heard of,” company spokesman Bryan T. Granger told Bloomberg.

C&S became the industry leader earlier this year when the previous leader, Supervalu Inc., sold off assets to reverse sales declines.

Mr Cohen took control of the business in 1989. His grandfather co-founded C&S in 1918.

But how has he managed to turn the company into such a success in an industry notorious for small profit margins?

A major reason is the company maximises efficiency by paying staff extra for correctly filled orders. It also deducts pay when they make mistakes, says Harvard Business School professor Thomas DeLong, who wrote a case study on the company in 2003.

“He was able to eliminate many supervisors because the line workers know their business best,” Mr DeLong said.

Former C&S president Edward Albertian told Bloomberg less than two per cent of company orders have errors, efficiency that’s “unheard of” in the industry.

The structure saw C&S double sales over the past decade.

As a private company, C&S’s accounts are able to be managed differently to large public companies.

C&S documents show Mr Cohen, as company owner, let corporate income be taxed as personal income to avoid double taxation

Certified appraiser Scott Gabehart told Bloomberg private businesses use accounting methods that reduce their profit margins to minimise taxes.

Read more: