• Southeast remains key market for expansion
• Goal is to build national distribution business
• Revenue could reach USD 170m by year end

Source Logistics, a US distributor of Latin American and other food and beverage brands, has more opportunity to expand as a Palladium Equity Partners platform, said co-founder and CEO Raul Villarreal.

“We’re far from tired of this venture,” said Villarreal, who along with Marcelo Sada and Fernando Ramirez co-founded and self-financed the business in 1999.

“This is a relatively new acquisition for us and currently we are in investment mode,” Daniel Ilundain, president and co-head of funds, Palladium Equity Partners said in a joint interview. Palladium acquired a majority stake in Houston-based Source Logistics in November 2023. “The goal is to continue building the platform – there’s a lot of growth to be had,” noted Ilundain.

Source Logistics has completed one acquisition as a Palladium platform and has seen revenue rise from USD 80m-USD 100m at the time of the investment to a 2025 projection of USD 160m-USD 170m, Villarreal said.

A near-term priority is to expand in the Southeast, preferably through acquisitions. Source Logistics has no physical presence in Georgia or Florida, which are logical markets for expansion, the CEO said. Its current distribution and fulfillment centers are in Texas, California, Oregon, New Jersey, and metro Chicago.

An ideal acquisition in the Southeast would be a family-owned distributor of Latin American brands, with size being less important than strategic fit and location, Villarreal and Ilundain said. Since the beginning of the year, Source Logistics has opened a 271,000-square-foot warehouse in Dallas; a 425,000-square-foot warehouse in Laredo, Texas; a 166,000-square-foot warehouse in Edison, New Jersey; and an 80,000-square-foot warehouse in Houston, for a total of 5.8 million square feet in 26 facilities.

Source Logistics also continues to look for M&A opportunities in current markets and is not opposed to building organically.

Chicago is its newest market, which it entered through the February 2025 acquisition of the warehousing business of LaGrou Distribution, a family-owned business consisting of eight ambient, cooler, and freezer facilities in Northeast Illinois, comprising 2 million square feet. Terms were undisclosed.

LaGrou’s temperature-controlled facilities are a first for Source Logistics. A boutique investment bank ran a limited sale process for the facilities and introduced Palladium to LaGrou’s owners in 2024, said Ilundain, noting that the New York City-based PE firm works in partnership with Source Logistics’ management to identify targets. Source Logistics co-founder Sada, formerly CEO, is president of strategic development.

Before the LaGrou deal, the Source Logistics distribution and fulfillment network covered 71% of the US Hispanic population and 52% of the total US population. With the acquisition, its coverage increases to 80% of the Hispanic population and 75% of the US population, the CEO said.

Navigating tariffs

Since roughly half of all revenue is derived from importing products, the Trump administration’s unfolding tariff policies have been both a liability and potential asset for Source Logistics. On the one hand, tariffs increase the cost of goods for consumers and complicate the distribution and marketing process. On the other hand, Source Logistics is “helping clients solve supply-chain complexity” by navigating the tariff landscape for brands, said Ilundain.

“For 25 years, we’ve built deep, trusted partnerships with Latin American brands breaking into the US market,” Villarreal said. “With Palladium behind us, we’re positioned better than ever.”

Ilundain, for his part, noted that with national distribution capabilities, “We believe Source Logistics will be a great potential business for both strategics and financial sponsors” when Palladium exits, the timing of which he declined to speculate on.

Morrison Foerster advised Palladium on the majority-stake investment in Source Logistics and also advised Palladium and Source Logistics on the acquisition of LaGrou.