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United Natural Foods, a leading distributor of Amazon-owned Whole Foods Market, has been hit by a halt after a cyberattack that is expected to cause disruption to supermarket shelves.
UNF says it relies on whole food with nearly $31 billion in annual net sales, but said it detected “fraud activity” in its IT system on June 5th. The incident has hampered the ability to take some systems offline, hampering their ability to meet and distribute customer orders.
In its filing with the U.S. Securities and Exchange Commission on Monday, UNF said there was anticipated “temporary” disruption to the company’s operations, adding that the investigation was in early stages and notified law enforcement.
The incident is the latest among retailers tackling the threat of cyberattacks. UK groups, including Marks & Spencers and Co-op, have been forced to shut down their systems in recent months.
In the case of UNF, this violation jeopardizes the smooth supply of fresh produce and branded products to more than 30,000 locations across North America, including luxury whole food stores.
Last year, UNF signed an agreement with Whole Foods and expanded its role as the “primary distributor” of its Amazon subsidiary until May 2032. David Garraway, Vice President of Supply Chain at Whole Foods, said the Rhode Island-based company played a “significant role in the supply chain.”
In its latest annual report, UNF said its biggest clients understood to be Whole Foods accounted for around 23% of its $31 billion in net revenue for the fiscal year ended August 3, 2024.
UNF said it has implemented a “workaround” in some operations, as it tries to minimize customer disruptions as much as possible, and is working to ensure that the system is safely brought back online.
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UNF’s stock fell by 9.3% on Wall Street after its disclosure, giving the group a market capitalization of around $1.5 billion. He didn’t say whether that was the subject of ransom demand.
UNF’s 2024 whole food contract replaced an existing arrangement that was expected to expire in 2027. The group’s commercial relationship with the grocery chain came before Amazon acquired it in 2017 for $13.7 billion.
Whole Foods did not respond to requests for comment.
UNF is set to report quarterly results on Tuesday.
