Well, the banners are flying across the world famous Avenue of the Americas in Midtown Manhattan, signaling to all the world that the produce industry is about to arrive in force in NYC!
If you missed the event last year here is a little video clip to give you a flavor for what this event is about:
The event is still young, and already the plans are afoot to make it even better in 2012. For now we thought we would devote this issue to some of the highlights of the event that we have not yet mentioned.
Walk, take a bike, ride a bus, grab a train, find a flight… but find your way to The New York Produce Show and Conference.
It builds on a long tradition. The Pundit’s great-grandfather, Jacob Prevor, wholesaled out of the old Wallabout Market in Brooklyn, New York, the Pundit’s grandfather, Harry Prevor, was a wholesaler and auction buyer in the old Washington Street market, the Pundit Poppa, was an importer, exporter and wholesaler and an original tenant on the Hunts Point market.
Now the premier association in the region, the Eastern Produce Council, and PRODUCE BUSINESS magazine have joined hands to make the capital of the world a capitol place for the produce industry to network, learn and spend a few days.
Take a look at some of the events we profile in this edition and look at the pieces we’ve highlighted previously.
Then sign up for your registration right here.
Hotels can be gotten here.
Travel discounts right here.
With The New York Produce Show and Conference fast approaching, there is, of course, a hubbub of activity. Chefs are being retained, academics and editors flown in from the far corners of the globe, buyers are making lists of priorities, exhibitors are shipping and students are preparing for the experience of their lives.
In the midst of it all, the industry should really pause and give a hat tip to the Eastern Produce Council. It is a small but passionate group, and this year, when the association could have sat on its laurels as offering its membership an extraordinarily successful trade show — indeed, by far, the fastest growing event in the produce industry — the EPC board, executives and membership of EPC decided to push on and make an excellent event truly extraordinary.
The result is two side events, one dedicated to excellence in Global Trade and one an Ideation Forum for Foodservice to help move sales and consumption of fresh toward the “half-a-plate” goal of the USDA.
Everyone should read the program schedule for these two events. They are simply extraordinary. We travel all over the world and attend all kinds of events. There is nothing remotely like these two programs in the entire world. Click on the links and see for yourself:
Global Trade Symposium
IDEATION FRESH Foodservice forum
These types of programs take countless hours and an enormous investment to put together. As a gift to its membership, EPC has made the programs available absolutely free to EPC members and very inexpensively to the whole trade.
These events speak so well of EPC. They wanted world-class — and these programs can be put up against anything in the world. They understood that the first year the audiences would be intimate, that it takes time to grow these programs as reputation spreads. Yet they didn’t shirk from the task at hand. Continuous improvement is the watchword. They wanted The New York Produce Show and Conference to be more valuable and more enriching for exhibitors and attendees alike. They were committed to giving their members a kind of gift, an opportunity for each member to think and engage and realize his or her own potential. It is really something exceptional.
It shows a kind of foresight and engagement rare today. Those of us at PRODUCE BUSINESS marvel at our blessing in finding the right team to join hands with to present The New York Produce Show and Conference.
If you would like to take advantage of either of these exceptional programs, please let us know here for the Global Trade Symposium and here for the Ideation Fresh Foodservice Forum here.
Back in the day, the Pundit imported garlic from Spain and Argentina, and we marketed garlic from some California shippers. We also used to supply Associated Food Stores in New York and shipped many mixed export loads to the Caribbean and Africa. So we sold garlic to the Auerbachs and purchased AuerPAK brand packaged garlic to sell to our retailers and to sell overseas.
This year we spiced up — that is a garlic joke! — the annual New Jersey Retail Tour offered as part of The New York Produce Show and Conference by adding the new Auerbach facility.
The retail stops on this tour were provided by some of the powerhouse members of the Eastern Produce Council — we will be visiting Shoprite, Kings, Fresh Market, A&P Fresh and Foodtown. The Pundit did this tour last year and was excited at the way these ultra high-volume stores serve a diverse market. We also got to chat with Derrick Jenkins from Wakefern, Paul Kneeland from Kings and Dean Holmquist at Foodtown, when each made a surprise appearance to greet the bus tour.
These are all great retailers, and so they all know a secret. Retailers can’t be much better than their suppliers.
So when a vendor invests to move his business to world-class status, he is helping himself, but he also is building the infrastructure that helps the whole industry improve. We thought that was more than enough to justify a look.
We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Maurice A. Auerbach
Hackensack, New Jersey
Q: What should attendees of the New York Produce Show know before they come to visit your new state-of-the-art facility? Could you start by providing an overview of your company?
A: Auerbach is a fourth-generation produce importer and marketer. Our customer base includes retail supermarket chains, foodservice distributors, wholesalers and terminal markets and some food processors and food ingredient manufacturers, primarily in the northeast United States and eastern Canada… although we do sell to other locations. All of these segments of our business demand better food handling than ever before.
Q: Is that what drove you to invest so heavily in your operations? Many times, businesses hold back in economic downturns rather than aggressively expanding….
A: Our premise has been to acknowledge a new food safety standard and elevate the company and the industry to a higher level. We view this as not only an investment in the company but in the industry.
Some people say I’m overbuilding it, and they describe my actions as overkill, but I believe in this. I want to be ahead of the curve as industry and government regulations proceed. People who care about food safety in the industry get it. It’s difficult to project the future, but I am convinced there is a serious downside risk if we don’t make these large upfront investments now.
Q: Could you describe the scope of your endeavor? What are the key changes you’re implementing to your operation and where are you in the process?
A: We’re doubling the size of our facility to 60,000 square feet, but more importantly the modern refrigeration component will be eight times bigger. The building will be almost all refrigerated with sophisticated, multiple temperature zone systems customized to different products and will maintain total cold chain capability from beginning to end. People on the tour November 9 will be seeing the final outfitting of the facility before we officially open later in the month.
From unload to receiving point, we’ve built modern refrigerated docks with food safe load levels and dock/stationing areas where product goes directly into several coolers to production, processing and packaging areas; and throughout the process the cold chain is never broken. All the receiving docks and exterior doors have been replaced for cleanliness, food safety, and energy efficiency. And all the loading docks and exterior dock doors have been replaced for those three things.
Within the refrigerated areas, different temperature zones are separated by high speed electronic motion-center-controlled roll up doors that only open a second and a half. In the palletized refrigeration facility, the pallet positions available are over four times our current facility.
Q: Is this all-encompassing cold chain practice unusual in the industry?
A: It’s not unusual for one of the big guys to have this kind of scheme, but it is unusual for a small local re-packer to have it. We hope others might be inspired by seeing the investment level that a regional distributor will commit to. We have all the controls with advanced information technology computerization. This includes an energy management system monitored by us and the refrigeration company on line, leading to more consistency in temperatures and efficiencies in energy use, both for economy and ecology. It will minimize the severity of refrigeration service calls, and increase energy savings to pay for itself in a few years.
There will be sustainability programs for trash, recycled materials, and excess food products all separated and disposed of separately, including recycled refuse and use of discarded product for feed and farm use.
The strategy is both for sustainability of our natural resources and for economics and cost reduction. We have a system both for public good and cost-reduction.
Next, as for productivity, besides reduced energy in cooling, we’ve reduced energy in lighting, and other environmental and economically valid factors are being employed in the production. The production rooms have floor drains and total wash-down capability. Our goal is to be revenue/cost neutral if possible.
Q: How long have you worked to bring this project to fruition? And what does this mean for your company going forward?
A: This state-of-the-art facility is a result of several years of site and systems capability research by us and research consultants. We see this as a dramatic change, not only structurally to the facility, but also mentally as a company. The building reflects our vision for the future of our business and the industry based on better handling methods, education and a commitment from our team to the modernization of both our company and our industry.
We spent a lot of money and some people have called it excessive or light years ahead of what’s mandated. In our business, we primarily deal with items like garlic, potatoes and onions that have lower perishability risks compared to items like fresh packaged salads. More and more customers, from the chain stores to the food companies, are looking for certain food safety certifications and more stringent requirements. Whether our actions will just qualify us or over-qualify us, we deem it important to take a progressive stance, not just to improve our company’s competitiveness and profitability, but also to work with the industry to reach a higher plateau in food safety standards. These are investments for our future.
This is going to be a great tour and important to understand the industry. Store counts get bandied about a lot. But one powerhouse New Jersey retail store can sell what 10 stores in rural Montana sell, so store counts can be less-than-useful. The business is here, and each visit provides clues as to how to get that business. A visit to the new Maurice A. Auerbach facility is a kind of challenge to regional operators everywhere: Are you willing to step up? Are you willing to make the investment? Are you prepared to play in the new, much more rigorous produce industry that is rapidly approaching?
To join the New Jersey Retail Tour and see the new Auerbach facility, e-mail us here.
Total show registration, including all tours and companion programs, is available here.
Hotel rooms can be booked at this link.
Travel discounts are sometimes helpful on last-minute travel. You can find those here.
New this year at The New York Produce Show and Conference is a Long Island Retail Tour. The Pundit was mostly reared on Long Island and it is an interesting place to learn about retailing to large suburban areas.
We go from Giunta’s Meat Farm to Stop & Shop, from Shoprite to Waldbaums, from Fairway to Kings.
With a population of almost eight million people, Long Island is the most populous Island in the US. The suburban counties of Nassau and Suffolk were protypical of post-World War II development, including the world famous Levittown.
The Manhattan retailers are very different, but it is retailers in places such as Long Island that are the workhorses of the industry, selling massive amounts of produce to an ethnically diverse population.
If you haven’t seen Long Island retailing, you are missing out on understanding one of the largest markets in the US.
If you would like to know more about this powerhouse of a market, sign up for the Long Island retail tour right here.
The whole New York Produce Show and Conference can be signed up for right here.
Hotels are here.
Travel discounts here.
Here at the Pundit, we get frequent requests from trade members in other countries to set up tours of retailers in the USA who are doing interesting things. For years, Stew Leonard’s has been a staple on these tours. The newest hot item has clearly been Eataly, which led us to include Mario Batali’s masterpiece in The New York Produce Show and Conference tour program last year — a tour we wrote about here. These visitors to America are always looking for what is hot and happening, innovative and new, different and rich with ideas… and in these two most atypical retailers, they find ideas to bring back to every corner of the world.
Of course, for a retailer to be innovative and interesting, it requires a supply chain that can meet those needs. So this year, we had the idea to try and provide guests of The New York Produce Show and Conference both an innovative supplier and two if its customers on one tour. This tour will include Baldor Specialty Foods, Eataly and Stew Leonard’s, a veritable cornucopia of food-marketing innovation. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Baldor Specialty Foods
Bronx, New York
Q: How did Baldor, which has secured a prominent position as a big specialty food distributor, decide to add a retail division? What role will your new facility play in your evolving business? Could you provide New York Produce Show attendees with a preview of what they will see and learn when they come to visit?
A: Baldor’s roots were developed in the retail world 20 years ago and over the years we’ve become known as a premier foodservice distributor. Being in this new facility has allowed us to reach back to our roots and reinvest in retail distribution.
Q: How will these plans integrate into the existing supply chain structure and competitive landscape?
A: We understand that a current distribution network exists. We’re not looking to disrupt that but are looking to complement that. Our new operation will allow us to bring direct to the store some very short-life items and difficult to source items that don’t lend themselves to larger distribution networks. Baldor has a fleet of nearly 200 trucks, so this is a natural transition as we are going by a lot of retail locations every day.
Q: How will your new facility accommodate your plans? What are some of the highlights you’ll be sharing with people on the tour?
A: I’ll begin by introducing myself, and to show how we transformed an old A&P distribution center into a state-of the art operation. The 150,000 square-foot facility sits on 15 acres and is fenced in with security gates in and out controlling traffic. We spent nearly $20 million renovating it with an energy efficient system that has full back up mechanisms in place. There are 48 loading docks with modern vertical dock plates, and a pit dock for sanitation, and controls for temperature and safety reasons.
We’re in the process of installing a warehouse management system, which includes computerized individual handheld computers to scan bar codes to improve traceability and order pick accuracy. We want to be able to monitor various temperature zones, and we need to separate out tropical to iced, to dry storage areas. We eliminated curtains separating those rooms to install high velocity doors.
Food safety can never be minimized, and we spend a lot of time, money and love making sure we’re providing good, safe, wholesome products. We’re a HACCP-certified food service distributor, and we’re proud of our rigid food safety standards. In our fresh cuts operation, everything going out of the room goes through a metal detector or x-ray machine to detect any foreign objects and validate the safety.
Q: Could you tell us more about your fresh-cut operations?
A: Baldor has a full fresh-cut facility, with more than $5 million spent on new equipment, including installation of a unique, high-tech custom onion peeling machine, and we run a full lettuce line, tomato line, bean line, as well as a sophisticated repack operation. We also have a certified organic repack house that allows us to further develop our organic brands.
On the fresh cut side, we have some 600 items to choose from and everything we do is cut to order. We can be the R&D for the client, customize cuts and products or find and source a specialized item.
We’ve installed state-of-the-art waste management in the fresh cut area that runs under the ground. So, there are various pick up points where waste gets vacuumed under ground to a holding container in the rear of the building where product can be captured and sold.
Q: Are you pursuing other sustainability measures?
A: We built solar panels on the roof with programming to calculate dollar savings combined with generators, which is a good recipe.
I’d also like to touch on the importance we place on benefits for our employees. I’m most proud of our people. We just celebrated our 20 years in business, and it’s amazing to see how we’ve grown to 650 employees. Baldor offers employees a subsidized meal program. It’s not common for a food distributor to have a cafeteria set up like ours. We also have a full gym with trainer, locker room and showers open to 100 percent of our employees.
In our Information Technology room that holds the brains of the company, we removed the wet sprinkler system and installed an FM 200 system. It sucks oxygen from the air, which would in fact put out a fire without use of water that would damage all the computer systems. We can maintain the brains of the company God forbid there was a fire.
We are implementing what I believe is revolutionary technology to increase efficiencies and ease the labor for material handling and movement of packaging as well as insuring continuity and uninterrupted flow. We should have a test model here for people to see on the tour.
Q: How is your test kitchen concept progressing? Will that be available for viewing?
A: Visitors on the tour can see our multifunction test kitchen, which is now up and running. It’s designed in a slight amphitheater type setting, looking into a full-equipped kitchen, with proper lighting, microphones and flat screen televisions. It will be used to introduce new products to our staff, and we can offer the room to customers that might need access to a kitchen and audio visual equipment. It also provides opportunities for special projects. For example, we’ve worked with the Hunts Point Alliance for Children to get kids in the community excited about cooking. For our first chef demo we brought in a premier French pastry chef to prepare desserts using a varied selection of Baldor-sourced products. In other instances, we’ll do an hors d’oeuvres line, or braised beef line.
Q: Have you done any notable events highlighting fresh produce?
A: We hosted a chefs meeting in the test kitchen, where we set up various tables with unique fruits from around the world that chefs might never have seen or tasted before. Chefs could also host their own show at Baldor.
We’ll also have smaller groups gather for more practical applications and experimental work with specialty ingredients.
Over the years, as Baldor has developed relationships with the finest level of chefs in New York City, we’ve become very good at sourcing products for their needs, whether it’s a Prince Edward pear or a rare chocolate, or sugar that can be pulled in sugar demos. Not only are we able to source but also to teach on how to use ingredients.
Q: How are you building this expertise on the retail side?
A: For our retail line, Baldor has introduced a few different brands, including an organic line From the Earth with a beautiful logo. Those brands are out there to help along with the custom labeling we do. We can put the stores name on a particular salsa or hummus dip, making it unique for that store. We have the flexibility as we develop our business.
We also have close working relationships with retailers like Eataly, where we can partner on creating winning produce departments.
Although the footprint on our new facility is 21 percent larger than our old facility, it is 3.5 times bigger in cubic capacity so we have room to grow.
Mira contacted T.J. Murphy, Vice President at Baldor, and son of Baldor’s CEO and Founder Kevin Murphy to learn more:
Baldor Specialty Foods
Bronx, New York
Q: Could you tell us about Baldor’s partnership with Eataly and the role you play in the program? Attendees at last year’s New York Produce Show had the opportunity to tour Mario Batali’s Eataly and as a preview we featured Jennifer Rubell, the original Vegetable Butcher there…
A: My father started Baldor and I’m vice president. I oversee the partnership between Eataly and Baldor. I started the relationship with Eataly to go in a different direction and explore retail and take care of the produce department, which is so necessary but difficult to run in the retail store. Our specialty is produce and Eataly lets us run the department and they don’t have to be concerned about shrink and overhead and shelf life. Baldor has all the resources, local farmers and international sources. We have the infrastructure to buy the best produce at the best price and get it to Eataly on time, seven days a week.
Q: That’s quite a responsibility. Eataly’s produce department carries a continually changing cornucopia of fresh seasonal items, exotic imported produce and hard-to-find specialty items with eye-catching merchandising. What do you find the most difficult part of the job?
A: Logistically it’s not that complicated, but the challenge is managing 500 line items every day, keeping them fresh and available and at the right price. Eataly has a multi-faceted operation with 700 employees, so our working relationship allows Baldor to focus in on the produce department and understand the items and identify the trends that Eataly’s customers are looking for.
It’s not a 700 employee retail store figuring out produce, which is a little piece of the pie. It’s Baldor’s 10 highly focused Baldor employees, working with all the tools of a produce company, servicing all Eataly’s major high-end produce users in New York City.
The best way to put it, we’re Eataly’s go-to suppliers, and with that commitment between us, it allows us to allocate all the resources we have to offer to help them to operate that produce department. We go further than just having a traditional customer/supplier relationship. We rely on each other to put together the best produce department out there.
Q: As you’ve developed this partnership, what has surprised or impressed you most?
A: What has surprised me is that if you make unique items available and have your department educated that this will careate a willingness for consumers to try something new. Basically, we bring in a new item and we educate staff at the store of where and how it can be utilized so they can explain to customers. There is increased T.V. and media attention these days on fresh produce, and cooking has become such a popular thing. It’s satisfying to see the trust we’ve built.
Q: Could you elaborate on your product selection strategies?
A: Baldor takes only the best product, so we don’t offer corn in the winter. It’s a focus on seasonal when possible, and organic when possible. We put such a focus on what’s in season. If you buy a peach out of season, you’ll probably be disappointed. At the same time, we’ll bring in premium New Zealand yams and educate consumers on all the ways to roast, boil and mash them. It’s about steering customers in the right direction. It’s a trust factor. If Eataly has it out on display, it must be good.
Q: Do you work with the Vegetable Butcher?
A: The Vegetable Butcher is part of the produce staff. Originally it was an idea to help customers prep their vegetables to be ready to cook, and it’s still that, but it has morphed into an educational area. So, now instead of just waiting for consumers to come with their vegetables, we work with the Vegetable Butcher, peel this, make celery root salad, do what’s in season, what tastes good or what may be a little intimidating. The concept is very much part of the success in the produce department.
Q: With your experience, do you have any advice for the produce industry on ways to increase produce consumption?
A: It’s fun to get people good fruits and vegetables. I think what happens in produce is that many companies get mired in the transaction and the education of staff in the industry and onward to the consumer is what struggles. The more you educate, the more enthusiastic the consumer becomes and the better your sales are going to become.
Especially with this local movement, it has to be in season when possible. The idea is growing in the right place at the right temperature at the right time of year. It’s not that grapes from Chile can’t taste good, but they need to endure a 15 day trip to get here, make it through logistics networks and remain on the shelf; it’s that they have to be picked earlier, and they’re not at peak ripeness.
An uneducated consumer identifying local really means in season and it tastes better.
We only do corn in the summer starting with Georgia and the Carolinas, moving to New Jersey and Pennsylvania and then Long Island.
If consumers have a bad experience, they often will blame it on the store. Our partnership has allowed Eataly access to Baldor’s resources, where we buy direct and know the ins and outs. We have unique items we’ll present, but how we operate is what’s most important. We don’t want to disappoint consumers.
We watched that old A&P facility deteriorate over the years and, although it became a controversy over who should get the space, we have to say that the image of a reborn facility humming with fresh-cut operations, solar panels and test kitchens is a pretty intense transformation. And speaking of transformations, every business faces the question of how best to train the younger generation. Unlike so many up-and-coming produce executives. T.J. Murphy is fortunate enough to be working in a position in which he is exposed to consumer habits and preferences -- that will serve him well as the years go by.
Everyone in the industry will be well-served by getting an opportunity to observe this unique facility and intriguing supply chain.
To join the tour of Baldor, Eataly and Stew Leonard’s, send us a note here.
Registration for any part of the New York Produce Show and Conference is available here.
For hotel rooms, please fill out this form here.
Travel discounts are right here.
Last year The New York Produce Show and Conference featured a “sneak preview” tour of the not yet open brand new Philadelphia Terminal Market. The tour was a hit and many spoke with awe of the new facility. Dr. Johan van Deventer, who was visiting with us from South Africa, was so impressed he wrote a report to his government on the facility.
But then it was a lifeless building — a mere facility — today it is open and bustling –a true market. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out what had transpired since last year and to get a “sneak preview” of what is in store for those heading down to Philadelphia on The New York Produce Show and Conference tour this year:
John Vena, Inc.
Q: As attendees at the New York Produce Show board the bus on November 9 for a tour of the new Philadelphia Wholesale Produce Market, what should they expect? Could you update readers on what has transpired since last year? I understand the launch was quite an undertaking…
A: Our scheduled move from Galloway Street to Essington Avenue in January of this year turned into a sort of moving target due to a few issues that raised concerns among our merchants and the construction team. We identified two issues that needed attention before we could comfortably move our operation to the new Market. The first turned out to be fairly easy to remedy. We were concerned about the finish on the floors, particularly in coolers containing iced product. The solution was fairly simple, but required a few weeks of research and we lost some time as a result.
The second issue revolved around the central refrigeration system. This required a lot more study due to the complexity and sheer size of the system and the unusual demands that a facility such as ours puts on that system.
We have 224 loading doors, 10 street-level access ramps and a fair amount of product and people moving around. Fine tuning the system so that all the common areas, which are fully refrigerated, and coolers maintained their set points, was quite challenging and resulted in two delays of our move and kept us out of the building until June 5. However, we feel good about the decision to delay the move. It gave our team a chance to learn about the system, and get it “right”. Of course, the system and our technical staff were tested immediately. We had record high temperatures in July and August, but the Market was comfortably cool all summer.
Q: Could you provide more perspective on how the refrigeration system works at this state of the art terminal market? Do you have backup plans if there is a problem?
A: The system is actually split into three interrelated sections. Each section is responsible to cool different zones in the Market. This minimizes some of the concerns about having a centralized system, since the actual load is spread over the subsystems. In addition, there are several different ways of monitoring stress on the system, such as computerized leak detectors and a complete monitoring system. In fact, the system is operated by touch screens, and there are terminals throughout the building with remote monitoring capability.
Q: What are some of the biggest changes and advantages you’re seeing with the new market compared to the old market?
A: Without a doubt, the biggest advantage to operating from our new building is the most obvious — the product that we are unloading and loading for our customers is inside the Market. So many positives are generated by that very simple difference. I am delighted everyday when I come to work and enter this building. Outside it might be hot, humid, pouring rain, breezy or still, birds buzzing and perching, but inside the Market, the air is always clear, sunny and 50 degrees. No birds, no rain, no blowing dust.
Q: With cold chain integrity integral to quality control and food safety, are you generating more business and attracting a new customer base?
A: Certainly any potential customers that have visited the Market are impressed with the possibilities we offer in the area of safety and cold chain management. We have seen renewed interest in doing business here from many of those customers, and our merchants are reporting that new business is coming their way. In my own business, we have seen that many customers are buying more from us, because of the cold chain component and the confidence it gives them in getting their orders loaded in top condition.
Q: Do you have any feedback you can share, any stories that illustrate the enthusiasm about the new Market?
A: A few weeks ago, I was leading a group of growers from Quebec on a tour of our Market. They had a lot of questions about how the building, especially the refrigeration system, worked and if we were satisfied with the facility. As we entered the Coosemans Philadelphia sales area, I introduced them to Marty Roth, the managing partner. The Canadian growers asked Marty what he thought of the new Market. Marty replied, “This building and our refrigeration are so wonderful, if you send me bad product, it gets good in my cooler!”
Q: Could you discuss your ability to better service customers, the logistics, efficiencies, etc.
A: In order to enhance the total customer experience, the merchants participated in a series of meetings to brainstorm about operational issues. Those meetings resulted in a wider range of hours for customers to shop the Market and fewer restrictions on access to the Market for customers and shippers trucks. Those departures from the Galloway Street business model, along with the wealth of common space and the number of doors in this building, have created a very positive atmosphere for customers.
The entire process for our customers has been streamlined. There is no pressure to find a place to load, no need to find and position dock plates and plenty of space to stage product prior to loading their trucks. All customers report that they get in and out of the Market faster and easier than they ever thought possible. To use the words of Tommy Kovacevich from T.M.Kovacevich, “We never dreamed we could be this efficient”.
Q: In a financial context, could you discuss the costs and benefits of building an operation like this? Have you done assessments on the upfront costs versus the savings realized short term and long term?
A: It will be sometime before we are able to get a good grip on the real cost of operation here, but we are finding many little savings that are adding up nicely. For example, on Galloway Street my company spent about $2000 per month repairing our pallet jacks, mostly for wheel replacement. However, since moving, almost no wheels have failed. Also, we are seeing a drop in the cost to dump trash and remove bad product. New types of compactors, some basic recycling of paper, cardboard and plastic and improved shelf life of our product due to the environment have all resulted in real savings.
Q: How are people responding to the new facility, customers, people in the supply chain, etc.
A: We have had visitors from every segment of our industry, from the food industry in general and from educators and philanthropic foundations. Everyone has responded in a positive way to our facility and what we are able to do here. For some of our recent visitors, this is the first terminal market they have seen. For others who have experienced our old market and terminal markets around the country, the typical response is usually “whoa, this is awesome”.
Q: How about internally?
A: The most amazing thing to me is how quickly everyone who makes their living here — staff and customers alike — have shifted their attitude about the building and facilities. Everyone uses the large bins for trash, recycling and garbage positioned around the building. Everyone took the time to learn how to properly operate the load levelers and to close the dock doors when they are finished loading. It seems that our customers are as proud of this new building as we are and they are doing their part.
Q: Could you describe how the market fits within the competitive environment. What is its reach, scope of people it’s servicing, and is that changing now that you have a state-of-the-art facility?
A: Our customer base is usually described as 500 miles in any direction, and we tend to do business with every kind of produce customer. In order for us to succeed, that must change. I think that the change will mostly come as increased market share within our trading area. The demands of the industry and our ability to meet those demands will open doors for us. However, we have to turn that opportunity to advantage through service to those customers.
Q: Can/should the industry look to the Philadelphia Market as a model for other terminal markets?
A: I think the industry will soon realize that this facility is not just an “improvement”; it’s a game changer.
Q: What are your goals for the future? Do you have any news in the pipeline that could be of interest to attendees?
A: Short-term, many of us are still trying to find the best way to use our new facility. But we are going to be very aggressive in the development of new business, including new ways to serve customers and the development of non-traditional markets.
Many potential and former customers know we have moved into the new Market but we still need to communicate to them the value of sourcing from within the Philadelphia Wholesale Produce Market. We are looking for ways to promote and facilitate food safety certification for our merchants and our market. We are exploring partnerships with associations, educators and foodies of all kinds to support programs that encourage and promote healthy food choices, particularly for children and young people.
Q: What are some of the biggest opportunities moving forward?
A: For sure, building this Market has left our merchants well-positioned for the future. Not to oversimplify, but our opportunities are only limited by our own imagination and initiative. Everything is in place, now. It’s up to our merchants.
Q: As the bus pulls up to Philadelphia Wholesale Produce Market and people step off the bus in anticipation of the tour, what will they see and learn?
A: The first thing, of course, that everyone sees is this massive house of produce, lots of trucks, forklifts, product, buyers, sellers, and so forth. The skylight over the main concourse and the way the building is color-coded to make it easier to find our merchants are also popular topics. But the biggest takeaway from a visit to our Market is really the merchants themselves and the courage and willingness to work together that they have shown over the last 10 years.
It has been a hard road for all of us, and several good companies have been lost along the way. But as much as we have argued and quarreled over the details of this project, not one of us has ever stopped believing that we could get here or stopped working to make it happen. To be honest, we are not without challenges, but a visitor to this Market will see a group of merchants that is working together to face them.
We had the opportunity to get a tour of the market a few weeks ago. It is an exceptional facility. Anyone in produce should certainly go see it. There is simply nothing else like it in the United States. It is more similar to state of the art food distribution facilities that are built by supermarket chains or foodservice distributors than it is to traditional terminal markets.
This kind of facility addresses food safety, food security and sustainability concerns in such a way that buyers who have shied away from terminal markets would have cause to reevaluate their stance.
Although building facilities such as this is certainly expensive, we suspect that over time the efficiencies and customer appeal of such facilities will have made it a very good investment.
What we really enjoy about the Philly market, though, isn’t the building. It is the people. It is large enough to offer a broad range of product but it is also small enough that everyone really knows each other and they are friends as well as competitors. In fact, getting this market built required great cooperation. The close personal bonds between so many of the principals was quite possibly a prerequisite for turning this dream into a reality.
If you would like to register for this tour just send us an e-mail here.
You can register directly for any facet of The New York Produce Show and Conference here.
Hotel rooms are available here. And travel discounts here.
New York is about doing things big, and in produce; few things are bigger than the Hunts Point Produce Market. To spend a moment on the walk is to stand at the center of an ingathering from across the globe. It is to see new products unveiled and new brands experimented with. It is to see capitalism in action and produce trading at its purest. There is nothing quite like it, and if you haven’t been there, or haven’t been there recently, now is the time to go.
We asked Pundit Investigator and Special Projects Editor Mira Slott to get us a preview of what Hunts Point would show visitors from The New York Produce Show and Conference tour:
Joseph Fierman & Son
Bronx, New York
Chairman of Hunts Point PR Committee
Hunts Point Terminal Produce Cooperative Association
Bronx, New York
Q: You’ve both been major advocates in rebranding the Hunts Point Produce Market’s public image to better convey its vital importance to millions of consumers in the Tri-State area, as well as to a vast number of retailers, restaurants and foodservice buyers, wholesalers, growers and distributors, and the local business community.
What should attendees at the New York Produce Show know about Hunts Point Market before they come for a visit? What will they experience on the tour?
A: FIERMAN: You’ll see the most diverse, colorful display of produce from all 48 contiguous states plus Hawaii and countless countries around the world. For some suppliers, it’s to see how their product is sold and for others, it’s to meet customers face to face. You’ll see the action, the bargaining, and the overall general excitement of walking into the largest market in the world. It’s reminiscent of being on the floor of the New York Stock Exchange.
A: GORDON: It’s a very unique experience. There’s a dynamic energy that flows through here, and it’s easy to get caught up in it… but I never tire of it. It’s fast-paced. I tell people to be cognizant of trucks being loaded and unloaded, jacks going back and forth. You’ll see everything in motion with the diversity of ethnicities because New York is a melting pot…Turkish, Chinese, Korean, Syrian, Indian… you’ll hear all the languages being spoken here. It’s like being on the streets of New York, a microcosm and mirror of New York.
I warn newcomers that it can be instant-overload and a lot of stimulation. If you’re coming from a small town in the Midwest, the contrast can be surprising.
Q: What kinds of reactions did you receive from New York Produce Show attendees on last year’s inaugural tour?
A: FIERMAN: Growers and shippers coming to Hunts Point Market for the first time were amazed at what went on here. That was key amongst all the reactions -- the scope of product, how product was marketed, and how it was handled. They were not only surprised but impressed.
People’s overall view of the market if they haven’t been here is to think of a little farmer’s market somewhere. It is not until you experience the amount of product, the physical size of the market and the hustle-and-bustle of people moving through the market can you really understand.
A: GORDON: There was so much interest and loads of questions people were dying to ask. Matthew D’Arrigo, Joel Fierman and I did our best to provide all the answers. Merchants are invited to participate when they can, but it’s a business day and the market is in full swing.
Q: Why is Hunts Point Market so important?
FIERMAN: This market covers the whole Tri-State area plus distant wholesalers use us as a source for certain imported and specialty product. There are tens of millions of people it reaches and serves. Because of the diversity in ethnicity in this area, not any one store can supply everyone’s needs, but this market puts it all under one roof, which no one distributor can accomplish.
At first, the market came with 137 merchants, but now with the consolidation of the market, we’ve gotten more high profile firms that service the community at the highest standards. What is unique is the overall scope in terms of the amount of product that passes through the market every day; it’s substantial.
A: GORDON: There’s never a shortage of supply, the items just come to us. Growers need to know that on the Market of 40 merchants, they need to find the two or three that best fit their offerings, and whether or not there is a niche. If everyone is selling broccoli, the holes are filled. There’s no room for another broccoli producer. Merchants here are loyal to their shippers for the long term.
We would love to have retailers in the market and to become customers. The market always avails itself for people who want to walk through, and merchants are always willing to work with customers and help them get the right products for their customer base.
Q: Have your marketing campaign efforts to boost the image and awareness of Hunts Point Market generated renewed interest?
A: FIERMAN: Recently, the market has been able to reach the public in a more positive light than it has in the past. New innovative tools like websites, our television commercials with Tony Tantillo the “fresh grocer”, and spectacular events like partnering with the American Cancer Society for our Knock Out Cancer fundraiser have enhanced community relations. These are new things that the Market has embarked on, but we’ve always been proactive in giving back to the community and working with City Harvest and Foods for Survival.
In the past few years, as we’ve been reaching out more to communities, it has served dual purposes — a renewed interest in local and tri-state areas and a viable source for great product.
Consolidation of the supermarket industry has created diversification for the green grocer to fill in niches the big box stores can’t accomplish alone. By making the market more visible, we’ve begun to attract new customers that lost site of what this market is — a true open wholesale market.
Q: How has Hunts Point Market balanced tradition with modernity?
A: FIERMAN: There’s a little bit of old school within the new technology. A handshake still works, but now you get a piece of email on top of it. You have people you can talk to here; you’re not walking into a computer order entry.
You see and talk to people directly responsible for selling you that product. While we’ve become tech savvy, the human factor is very important here; the ability to view product, get personalized service and value. Technology has played an amazing role in the industry, and we embrace it. The market has progressed while still maintaining a personal quality.
A: GORDON: We’ve been around since 1765, and the more things change the more they stay same.
Q: In closing, why should people come to tour Hunts Point Market?
A: FIERMAN: If they don’t come, they’re really missing one of the key landmarks of New York. I always say, there’s the Statue of Liberty, the Empire State Building, the United Nations, and Hunts Point Market!
In 1967, the Prevor family made its pilgrimage over the East River and moved its produce operation from the old Washington Street Market to the then brand new Hunts Point Market. What working on that market taught us was, among other things, it is absolutely indispensable.
It was indispensible to the metro New York region because the market served as the distribution center for all the independents and local restaurant and retail chains. The ability of these independents to thrive depended crucially on the efficiency and quality of their distribution center — Hunts Point.
It was also indispensible to the grower/shipper community. Although growers and shippers often claimed to have markets that would pay better, one quickly learned that this wasn’t very meaningful. One issue was that others might pay better — but only for particular sizes or grades. It turns out that retailers buy what they want, and Hunts Point would help growers sell what they needed to sell. That was, and is, a big difference.
Another issue was volume. It was almost certainly true that a wholesaler in a small city would pay more, but he would buy only the volume that his chain customers required. Hunts Point is unique in its ability to move massive volume. With the large number of small purveyors, small fruit stores, etc., the market is more flexible to price than most places in the country. So offer a good deal and all the sudden each independent is promoting.
It would be inconceivable to not offer a tour of Hunts Point as part of The New York Produce Show and Conference. Last year’s tour was a big success, and if you are in the produce industry and haven’t seen Hunts Point, you are missing a crucial experience that will lead to better understanding of the modern produce trade.
If you would like take the tour of Hunts Point, please let us know here.
Register for anything at The New York Produce Show and Conference right here.
Hotel rooms are available here.
And travel discounts here.
Urban agriculture is a big thing now. Last year, The New York Produce Show and Conference took a tour of a rooftop farm. It was awe inspiring to see farming with a backdrop of the Manhattan skyline. This year, we are going to see a small prototype of a greenhouse that one firm wants to put on the roof of supermarkets all across America. We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more:
Business Development & Public Affairs
New York, New York
Q: How did BrightFarms come about?
A: BrightFarms is the successor company to several others. We’ve been working five years putting greenhouses on rooftops, now exclusively with supermarkets. We strategize turn-key solutions, where we design, finance, build and operate hydroponic greenhouses on rooftops of supermarkets or nearby locations, sometimes in the back of their distribution center.
Q: Which retailers are involved, and are any of these rooftop greenhouses up and running?
A: We’ve just announced an agreement with McCaffrey’s Markets in Langhorne, Pennsylvania, to build and operate a greenhouse farm directly at one of its grocery stores. We’ve been in negotiations and are developing greenhouse plans with McCaffrey’s and two additional supermarket chains the last eight months, and we’ve received a lot of interest from other leading retailers about our business model. At this point, the downside is that none of the greenhouses on that scale have been built yet. Our first three supermarket greenhouses are scheduled to be built next year.
Q: Is the rooftop greenhouse that attendees will be touring at the Manhattan School for Children a small scale representation?
A: Yes, it serves as a model. As consultants, we were focused on designing greenhouses for other uses, including for public schools in New York City that are used for school cafeterias and to help kids learn about healthy eating, but not for commercial production.
We view the smaller greenhouses as environmental education centers. Students learn how to grow produce in a hydroponic greenhouse using modern agricultural technology. Class projects teach kids about local farming, produce and environmental sustainability, and the lessons become integrated into their school curriculum.
Supermarkets we’ve been talking to are clearly interested in big production greenhouses, but say they love the idea of having a greenhouse as a community resource for local schools and to tie back to the local supermarket in new ways to excite children about eating fresh produce.
The shell of this rooftop greenhouse is high-end and robust, built for 50 years with glass, steel aluminum, and everything automated by computer system to monitor and adjust humidity and temperatures. Still, these projects are much different in scale and magnitude.
Q: How different? What is the scale of these retail rooftop greenhouses? Could you describe the business model in more detail?
A: The ones we’re building next year are all about 40,000 square feet to 45,000 square feet. We’ve signed confidentiality agreements, but the first three hopefully will go public by end of this month.
Development is quite complicated. Essentially, the business model works like this: The supermarket agrees to a long-term, 10-year purchasing agreement. We work together to set the price, quality, and volume of produce, and agree on an arrangement to secure stable prices for 10 years. The predictable price allows us to go out and raise capital. The hard work gets done early on with the legal agreement. Those negotiations are complex, but we are hoping to announce more partnerships soon.
Q: Does the supermarket need to invest money upfront to jumpstart the project?
A: The supermarket is not paying for anything. The only thing the supermarkets pay for is the produce they would be paying for anyway. They figure out on average how many pounds of cucumbers, tomatoes, or other items they’d want through the greenhouse and a set price based on what they’d pay normally.
Q: Approximately, how much quantity and for what time periods are they projecting out?
A: Some $1 million to $1.5 million wholesale per year. That would be produce they’d be buying anyway, which we’ll supply out of our greenhouse. The produce is much better quality because it’s harvested and on the shelves in 24 hours. Some of the supermarkets would need to build the greenhouse a couple blocks away. Many are looking at building on the roof, where the produce is right there. It’s much better because it’s fresher for a longer shelf life resulting in less shrink. Overall margins are improved, and customers will want to buy more. It’s also environmentally beneficial with no shipping and no carbon emissions.
Q: In the produce world, prices can fluctuate significantly due to numerous variables; it’s a real supply-and-demand business. Are you experiencing any resistance from supermarkets that don’t want to commit to a set price in your 10-year contractual agreement?
A: The interesting thing, we initially understood that supermarkets don’t tend to go into long-term commitments for produce, and certainly not for 10 years. We were curious to see if supermarkets would buy in a completely different way. We agree to a quality standard so if for any reason quality is not there, the retailer can reject it. Making the commitment to a price that you know in advance for the next year provides a real sense of security.
It can be annoying when prices go up and down on a staple commodity; some like the game of offsetting profits, but a lot of buyers find it frustrating, and with oil prices up and down, a truck from California can be low one week and high another, and retailers often have to eat that price. We remove market randomness and uncertainty, but we have to work carefully and patiently through people’s concerns.
If the retailer has a set price at what they consider very attractive, $1.90 for a pound of xyz, they can enter a contract and lock it in. Our contract prices creep up very, very slowly based on the Consumer Price Index, a factor of two or three. For produce, prices historically rise faster. For example, average prices on tomatoes went up 6 percent or 7 percent over the past 15 years. If retailers project ahead, prices locked in through a contract over 10 years can be more beneficial.
Q: What products are available through your greenhouses, and are supermarkets targeting particular items?
A: The greenhouses use hydroponic growing techniques to produce all lettuce varieties, chard, mustard greens, kale, all the fresh herbs, tomatoes, cucumbers, peppers, squashes and a range of berries. The reason for this set is that they’re the most perishable items and people want them all year round. This justifies the cost of the greenhouses, which are very expensive to build and operate.
There’s an urgency of getting lettuce from field to shelf. A box of lettuce in the middle of winter lasts a day or two. It’s not an ideal situation trucking product six days from California when it has a 10-day shelf life.
We inform retailers of the range of products we can grow. The ones they know they are getting from big industrial greenhouses in Canada are desirable. Supermarkets know customers would benefit getting product faster and fresher.
Q: Do you think the attention on locally grown and sustainability practices are driving interest?
A: The growth and interest in locally grown produce is so great at the moment. Supermarkets are trying to keep up with it. We are coming at a good time as people become interested in environmental issues. The pushback on local is less about the use of local land, and more about jobs, hiring growers and staff from that state and helping local economies. But good quality is always the bottom line. Per acre or square foot of land, the greenhouse can produce 30 times more yield then conventional field agriculture.
Q: How significant is production in these greenhouses? Will they make a material difference in the store’s overall produce department offering?
A: If talking about a typical greenhouse with an average size of an acre, that greenhouse produces 500,000 pounds of produce a year with 365 days of production. That equates to $1 million to $1.5 million in wholesale price. Just the lettuce and tomatoes amount to more produce than one supermarket can sell. Volumes will obviously vary depending on the size of the retailer; in some cases the demand is 2 or 3 SKUs and in other cases 15 SKUs.
On average, the greenhouse grown product will cover multiple stores in the chain. We’ll send trucks to distribute to the other nearby stores.
Q: Could you clarify the scope of BrightFarms’ responsibilities? Does your company actually operate the greenhouses once they are completed? Do you hire experts and specialists to run day-to-day operations? How do you manage these ventures to insure contractual agreements are being followed?
A: BrightFarms is a finance management development company, New York City-based. We work with supermarkets to develop contracts and design and build the greenhouses, but once they’re up and running, it’s a farming job.
We look for young farmers in that state or region, so local farmers are working in every region across North America. We are dedicated to find local farmers to support the local community. Sometimes this requires training in hydroponic farming. It could be just a matter of not having enough experience in certain crops. Then it is their responsibility to hire staff, operate and develop the right quality.
We watch them from afar to be sure they are following contract requirements, and if needed, we can provide additional training, logistics, and equipment. Farmers clearly have to do rigorous quality assurance plans and training, but at the same time this structure is a highly automated and technology-focused operation, which is half the job.
Q: Are you affiliated in any way with Gotham Greens, a 15,000 square-foot rooftop greenhouse in Greenpoint, Brooklyn, that markets products to New York City restaurants and retailers like Whole Foods, FreshDirect and Eataly?
A: Gotham Greens is separate company, but we have a common history. The two people that started Gotham Greens used to be my colleagues when we were working for nonprofit organization exploring bringing greenhouses in urban areas. After this, we set up two separate companies with different business models but the same concept. From a commercial business perspective, the companies are entirely separate.
Q: How unique is your greenhouse model?
A: Our idea is that each of the greenhouses will be relatively similar, and the contracts relatively similar, though the produce is different. We want to develop a repeatable business model. There are many urban agriculture stories, but they are community specific and difficult to replicate across supermarkets around the country. If we’re dealing with 1300 stores, we have to come up with a model that we can replicate very easily. Our objective is shortening the supply chain, eliminating waste and creating a dedicated source of ultra local production.
Q: What are your biggest challenges? What are the biggest opportunities?
A: The biggest challenge is simply that it’s a new concept. People justifiably need to work through each part of the idea in detail. Many supermarkets responded to marketing emails and phone calls very soon after we launched the business in January (2011), and we spent the next few months in discussions.
Committing to a 10-year plan is a different way of buying produce. They need to have the patience to understand how the process works, this is what happens if produce arrives on one day and they don’t like it, etc. There is nothing brand new here; all the technology exists. The business model is actually copied from the solar rooftop industry, where companies signed long term power agreements and used to pay for construction and installation of panels on their roofs.
Going through the supermarket’s vice president of produce and engineering team, these are all new ideas. The challenging work is going through this process. All chains have different procedures. All have different strengths and weaknesses that impact the best approach.
The opportunities are quite considerable. We like to articulate the benefits of our business model. We need to achieve three things: provide better food because it’s fresher; better prices because we’re cutting out all that transportation; and a more stable price because it doesn’t go up as much as inflation.
We don’t think customers should pay more for better produce. Food safety issues are alleviated and it’s better for the environment in many ways. For example, we have a closed loop water system unit with all recycled water, which is the most efficient form in agriculture use. Each component is desirable, and we need to make sure all three exist at the same time from this business model.
Supermarket executives will see that ultimately as retailers they are judged on price and quality of the product. The rooftop greenhouse allows the opportunity to deliver to their customers a box of lettuce arriving on the shelf the first six days of its natural shelf life. Tomatoes can be grown for nutritional value and taste, not for shelf life, and picked when ready.
It is an interesting idea but so far it raises as many questions as answers. Certainly many retailers will be interested in doing something like this as a PR measure and supporting the school versions is a no-brainer. Still, there are real questions about the sustainability of the business model.
Will it produce needed yields? Can they audit for food safety in a way acceptable to big chains? Is it scalable –where will all these young farmers, expert in hydroponics, come from? How will supermarkets handle it if contract prices diverge from market prices in a way that hurts profitability? Will supermarkets commit for 10 years?
The company has a video that is pretty good at knocking the conventional produce industry. Finding fault is easy, but doing it better is hard. We wish Bright Farms and its staff well, but we will see when the commercial scale operations start opening.
In the meantime, we are touring this prototype as part of a tour of innovative Manhattan retailers. You can see both by letting us know you want onto the tour right here
You can register for all events at The New York Produce Show and Conference right here
Hotels can be reserved here.
And travel discounts found here.
The Story Of Lettuce from BrightFarms on Vimeo.
Each industry is given little gifts. Some force of history or fortuitous circumstance brings forth something incredibly good, which we have done nothing to deserve. Such a serendipitous occurrence brought us, in the produce industry, Roberta Cook.
What an incredible honor she does us by speaking at the inaugural Global Trade Symposium held in conjunction with The New York Produce Show and Conference.
We asked Pundit Investigator and Special Projects Editor Mira Slott to get us a “sneak preview” of her talk:
Dr. Roberta Cook, PhD
Cooperative Extension Marketing Economist
Department of Agricultural and Resource Economics
University of California, Davis
Q: What are the key issues you’ll be discussing at The New York Produce Show & Conference?
A: In terms of my talk at the Global Trade Symposium, I want to delve into several issues. There will be a lot of international attendees and a couple of high profile speakers addressing global trade themes. Of course any domestic player who sells imported produce is touched by global trade. Any domestic player that buys US produce is in competition with global buyers, so he too, is touched by international trade. A good niche for me is to focus on the U.S. market and top food industry trends. I’ll highlight those trends to set the stage for how they are impacting the industry.
First is the recession and economic downturn and its impact on produce sales in the U.S. Then I’ll look at international trade, produce trends tied to global issues and the potential impact of recessionary problems abroad on the U.S. market, showing data on imports and exports and how that has changed.
These market structures are relevant to retailers as well as those on the shipper/grower side. Retailers in the thick of it can benefit from more detailed information.
Q: What are the most significant structural changes affecting the competitive environment? And what information will most benefit Northeast produce industry executives attending your presentation?
A: One outgrowth of the economic downturn is the accelerated growth of private label, so I’ll have a section on the consequences of that in my presentation. I’ll also discuss select fruit and vegetable trends, and the share of production of fresh vegetables by state. This will be important for context of where the Northeast fits in the competitive landscape, and in the growth of local markets.
California accounts for one half of the value of fresh vegetables produced in the U.S. and about one half of the value for fresh fruit as well. The latest data on fruit has just come out. I always anxiously await the latest data to use and manipulate for different calculations.
If you’re involved in selling fresh produce or marketing it, the structural changes are momentous. A fewer number of buyers are purchasing products, and chains are changing how they buy, coinciding with growth in private label and issues on the production side.
If you’re a Northeast player, you’re not in the dominant part of the industry in terms of who controls supplies, and who is controlling a lot of import deals as well. It all ties together.
Coming back to select fruit and vegetables trends, I have some targeted information on per capita consumption trends and on specific products that would be particularly relevant to the Northeast produce industry, such as what’s happening in production and imports/exports for romaine and leaf lettuce. And I plan to discuss fresh broccoli trends. Broccoli would be of special interest because it ties into Miguel Gomez’s presentation.
Q: How is per capita consumption changing, and where is the growth?
A: While there is a gradual increase of consumption over time, it is also shifting and there is product substitution of consuming one over the other. The products losing out are ones that have been high in the past. For example, carrot consumption trends are declining but growing for chile peppers. I will give attendees a feeling of the mix and of how it’s shifting. I have scanner data for the top 10 fruits and top 10 vegetables to highlight relative values of commodities.
Q: You’ve no doubt sparked attention of some of our readers, who are trying to come up with that list of the top 20…
A: Well, I’ll get them started. The Number One product, including vegetables, is now berries, which might surprise some.
As the last section I have for my presentation, I will want to examine information on consumer trends, and also touch on local and organic, in terms of consumer attitudes.
Q: Returning to the economic downturn, how is this translating to consumer purchases?
A: A top food industry trend relates to shoppers migrating to retailers with strong value credentials. This is not new but really accentuated during the recession.
Q: When you say strong value, does that mean price?
A: I don’t like to say price. A product could have a higher price but represent good value. For example, demand for fresh is growing during the recession. Whole Foods was negatively hit but has been able to turn around.
People are paying attention to the price they are paying for goods and where they get the most value, and many retailers have lowered prices to close the gap with low-price competitors, but haven’t done so in a manner that works best for them.
Q: What pricing strategies are they employing?
A: New pricing initiatives include more every-day-low-pricing — Wal-Mart’s concept — from retailers that never did this in the past like Safeway. Price-impact stores are implementing a variety of retail strategies, and non-grocers are going into perishables.
Retailers are scrambling to offer what means something to consumers. They are trying to develop more effective pricing strategies and ads that will represent values to consumers.
Q: Produce is such a low-margin industry to begin with. How much room do they really have to slash item prices on the retail shelves? Don’t they have to look at other cost-cutting measures?
A: Cost-cutting is widespread. Retailers have been trying to retain margins; all formats have been affected by the economic downturn. We may technically be out of a recession but consumer behavior hasn’t changed.
All retailers have experienced downward pressure on margins. When firms start to cut costs, if they don’t understand how that affects performance, they may lose consumers and get migrations to other formats.
Now retailers are trying to focus on efficiency gains and become more productive, and they’re utilizing information technology to become more efficient.
One way to cut costs is to lower the inventory levels. SKU rationalization, referred to as SKURAT, is being implemented very aggressively by retailers, including Wal-Mart. Even the value-oriented retailers have experienced SKURAT.
One of the ways if you’re a retailer to generate more revenues is to free up inventory because a retailer has millions of dollars invested in inventory in its stores. We’re seeing chains getting rid of lots of items on the shelf that are tying up inventory.
Q: Is this just category management intensified? Couldn’t that strategy backfire if consumers were going to that store because of the selection?
A: Very painful lessons have already been learned in the last two years by Wal-Mart. Wal-Mart eliminated 15 percent of its SKUs, and now it’s announcing to its customers it is putting the SKUs back in.
Even though they gained shoppers during the economic downturn, they lost existing customers to competitors. Channel blurring trends have been going on for two decades but it is now accentuated.
Wal-Mart changed how it merchandised; going more to private label and deleting SKUs. In doing that, it alienated its core, loyal shoppers. There’s a reason that Wal-Mart has shown negative same-store growth for 13 quarters in a row.
Q: But in an economic downturn, doesn’t a chain like Wal-Mart usually shine when consumers are forced to tighten their purse strings and just shop for the staples?
A: You bring out an important point. This is not intuitive. People would have thought Wal-Mart would have been one of the few successful retailers.
This relates to retail strategies, scrambling to what represents value to consumers. There was this big wave to SKURAT. Supervalu did it aggressively. These retailers are already reevaluating strategies.
I like to make this point: I’ve been watching the industry since 1985, and I’ve never seen a time of more dramatic change concentrated in such a short period of time.
Q: That’s quite a pronouncement. Could you expound on this?
A: Within this turmoil, there is massive retail corporate restructuring to generate cost-savings and efficiency gains. We’re seeing a lot of buying systems, including fresh produce, in flux right now, with retailers changing how they procure and merchandise produce. This presents important implications for suppliers, which are very retail-specific. Each chain is doing something different.
Another major trend is store brand private label. That’s one way retailers have tried to provide value to their customers by utilizing private labels to offer lower price points and gain consumer loyalty. Private label is not new but is also accelerated during the recession.
Q: But this isn’t the first time we’ve had a recession or severe economic volatility. Why is the speed of change so jarring now?
A: The economic downturn really increased pace-of-change. In other downturns, we saw retailers making adjustments at the margin. This case is dramatically different because retailers are so dramatically impacted.
Years ago, we didn’t have all this channel blurring. The recession affected all retailers the same. As this recession hit, we were already in a more competitive retail environment so it hurt retailers of all types. Conventional chains didn’t use to have all this competition.
Q: What are the solutions?
A: I’ll address the basic bottom line. It is very important to be account-driven in marketing strategies if on the supply side; where as in the past, shippers sold commodity products the same way to different customers. Now success requires an understanding of the needs of specific accounts and trying to work together with those key accounts to improve performance with their category of products.
As a supplier, if you can focus with key buyers on how to sell more effectively to consumers, then it is possible to do a better job providing the right product at the right price at the right time and at the right place.
We have these big retailers and in the market structure section of my talk, I show just how few buyers we have. They have multiple divisions and banners, and different consumers serving even within those banners, and we haven’t exploited information technology of how to merchandise in store effectively.
Chains in the past were too broad in their marketing strategies, not getting down to the needs of shoppers in each different store. We’re seeing more information sharing between suppliers and retailers working together on how to better serve consumers, and in that process, there can be a reduction in shrink.
Q: How do sustainability strategies fit in the equation?
A: Sustainability is a global trend as a means to become more efficient, and a whole mantra driving non-value-added costs out of the system. When you consider shrink, just think about the specific pronouncements by Wal-Mart of the percentage it wants to reduce shrink globally and domestically as a way to be more sustainable; from new construction methods to eliminating waste, covering every aspect of doing business.
Q: From all you will be covering during your presentation, it sounds like we should add a few days to The New York Produce Show and Conference! You certainly will stimulate intriguing conversations. If you had to pinpoint the most pressing challenges facing the produce industry, how would you break those down for each segment in the supply chain?
A: The biggest challenge is to become consumer-centric. From the perspective of the grower/shipper, typically in the past when I would speak with California growers and ask, who is your customer, they would joke, the back of the truck. That is changing. Suppliers are much more focused on who they are doing business with, and strategically on accounts they serve.
As buyers become more consolidated, it becomes more and more challenging for smaller shippers to compete with large companies for mainstream products. Therefore, as a shipper, as you start partnering up with key accounts, you have to think strategically about the ones you’re not going to serve anymore. You can’t spread yourself too thin. It is very important to not short your key accounts. Now we have shippers doing account analysis looking at profit-and-loss statements per account, asking, which retailers are the best options for us?
Q: With all the economic volatility and strategic turmoil you describe at the retail level, can’t those profit-and-loss statements change on a dime? Isn’t there a dilemma that suppliers face when there is a consolidated buying pool? Suppliers wrestle with hedging their bets rather than putting all their eggs in one large retail basket. If Wal-Mart is restructuring its buying strategies away from long-term contracts to have greater flexibility on procurement, couldn’t that put a supplier at risk?
A: What you describe happening at Wal-Mart is absolutely true. But more generally, I always hear suppliers say loyalty is not a two-way street.
Retailers have to think much more strategically to have enough of the product they need. Markets can change week-to-week, day-to-day. Nevertheless, there is more pressure today for vertical coordination through the system. The long term trend is toward greater vertical coordination, which will continue to drive out costs.
The Wal-Mart model is a strategy to drive out costs. And now we have other retailers focusing on that as well because pressure to compete is so intense. One of the ways is trying to work more closely with key supplier accounts and going more direct to the source.
I do observe with top food industry trends, conventional retailers experimenting with formats oriented to ethnic groups. Almost all chains have developed a format for the Hispanic population. Retailers are using information technology to have the right product at the right price tailored to individual stores; where in the past, chains would make blanket decisions, putting a certain percentage of organics in every store, which didn’t make sense.
In looking at projected ethnic population trends, I did analysis on data I got from the Census showing average annual expenditures by race. Asians and Hispanics spend a lot more than Whites and Blacks. Hispanics have larger families and are shopping more in retail stores and eating out less. In regard to Asians, there is a lot more consumption of fruits and vegetables.
Q: Don’t these demographic shifts provide an opening for niche players?
A: There will still be independents doing a better job of serving ethnic markets. Overall, we need to become more consumer-centric, and this has to happen at all levels of the supply chain. Wholesalers play that role for independent retailers and restaurants.
The whole trend is to drive out non-value costs. If you can add value, you’re relevant. You can have very successful wholesalers and independent retailers.
Everybody has to figure out how they can add more value than their competitors. They have to think much more strategically and become much more focused.
There are a lot of risks putting all eggs in one basket. This is a critical point that buyers are few and larger, which is challenging for firms. Some firms are making the decision they don’t want one customer representing more than a certain percent of their business.
In my presentation, I will give my latest estimate on losses in the U.S. distribution system. It comes back to shrink. We always talk about the U.S. having the most efficient distribution system in the world, and we might, but regardless, we do have significant losses in the fresh produce system.
Average retail shrink is six percent. That’s a general number, as it’s hard to estimate it since each retailer is different. Our industry has been forced recently to think much more critically of how we can increase efficiency in the system. We have to strategize on how we can buy and sell more efficiently and how suppliers and buyers can interact more efficiently. Every firm has to do that.
Leave it to Dr. Cook to point out that which is both obvious and often unseen:
First, that a knowledge of global trade is not only important to people actually importing and exporting. Every supermarket, for example, even if it does no direct importing, is buffeted by global trade every day. Is the rising middle class in Brazil, Russia, India and China — the so-called BRIC countries — going to compete for the best Washington State cherries? That drives up prices and limits supply. Is a depression in Europe going to reduce demand for Chilean, New Zealand and South African produce — that fruit will be looking for a home, some of it in North America — that creates opportunities.
Another session in the Global Trade Symposium focuses on the global chain for proprietary grape varieties. We wrote about the Grapery, Mack Multiples and Sainsbury’s efforts with the Cotton Candy grape here. One high end US retailer called and asked why he didn’t get the deal. How about this for a theory: If one does a promotion with a US chain nobody but Americans know about it. If you do a promotion with a UK chain, everyone in South Africa and 50 other grape-growing countries hears about it. In the global market for grape varieties, releasing volumes to a British chain willing to do a big promotion, is a great way of getting growers around the world interested in planting certain grape varieties. A powerful example of how international trade in intellectual property can impact in which country grapes get marketed.
Second, the key issue is a reduction in the number of high volume buyers and the question is how producers ought to deal with that situation.
Dr. Cook points out the importance of not shorting key accounts. She is right, of course, yet when Mexico had its freezes and product was very short, we saw lots of vendors intentionally pulling product from their biggest customers to divert to small guys. Why? Well, they didn’t have enough product, so they were going to have to short Wal-Mart’s order by 72%. But Wal-Mart bought so much that if they shorted Wal-Mart 74%, they could supply hefty allotments to smaller chains such as Wegmans or Schnuck’s. They figured Wal-Mart would be equally upset with a 72% or 74% short, but they could win a friend at a smaller chain.
More broadly, we are especially interested in hearing Dr. Cook expound upon this search for efficiency. Wal-Mart’s problems in this area are, we believe, related to a failure to customize the response to the concept. It may be true that Aldi or Sav-a-lot can operate inexpensively by keeping assortment low.
We are not certain that this knowledge tells us very much about what we ought to put in a 200,000 square foot supercenter.
One other interesting point about being consumer centric is how being international can play into this. Both HEB and Wal-Mart have used intelligence gained in serving Mexicans in Mexico to do a better job with first generation Mexicans in the US.
If you want a treat, come see Roberta Cook’s presentation. Let us know you would like to attend the Global Trade Symposium right here.
You can register for everything The New York Produce Show and Conference offers right here.
Hotel rooms here.
And travel discounts here.
We suppose we could write a lengthy and thoughtful essay on the importance of the produce industry aligning with athletics and physical activity so as to fight obesity and position the industry as a force for good.
And we could explain how our understanding of this dynamic led us to invite ‘Doc Gooden’to The New York Produce Show and Conference. After all, we already explained that we invited Charles Oakley because of his cooking skills in a piece we called New York Knicks’ Charles Oakley Will Be Cooking Up A Storm At New York Produce Show And Conference.
How about if, instead, we just say that everyone works hard at The New York Produce Show and Conference —learning, networking, selling, buying, building relationships etc., and life should consist of not just meat, but also a little ice cream. So, along with Apio, which will be hosting him at its booth, we invited Dwight Gooden to come and add some fun:
Major League Baseball Pitcher
Q: Produce industry attendees are excited you will be coming to The New York Produce Show and Conference in November. Your amazing career in baseball and record-setting athletic achievements exhilarated and inspired fans. At the same time, you’ve faced many challenges and persevered through much adversity battling drug and alcohol addictions.
Could you share your mission toward healthy living, getting in shape, and eating well? How does produce fit into your diet? How strong is the relationship between nutritious eating, athletic performance and overall well-being?
A: Very important, not just for athletes. Eating nutritiously helps the body recover, stay balanced, and create energy. That’s one way I prepared myself for baseball.
It was put on us at an early age to eat fresh fruits and vegetables. When I was growing up, I was told, “You have to eat your vegetables and then we’ll get to dessert.” It’s very important to establish good eating habits at a young age. When you are older, those habits have already been formed.
Q: Did you ever feel resentful that dessert was dependent on finishing your vegetables? Produce industry executives and parents alike grapple with the right approach in enticing increased produce consumption…
A: It’s important not to force it upon them, but to add vegetables into the meal to make it taste better, or start with fruit, which kids love.
Eating produce is just as important for adults. When I was playing baseball, I was in the heat all the time and concerned about getting dehydrated. I was always grabbing oranges and bananas for the nutrients and to stay hydrated and energized.
Early on, even when I was in little league and then on the travel teams, we always had oranges and other fresh produce at the practices and games to refuel, and we’d drink lots of water. Now kids want sugary sports drinks and salty, processed snacks. They get mixed messaging.
Q: In what ways?
A: Much of that comes from the television and food manufacturers. A lot of kids watching professional sports on TV want to identify with the athletes. They see their sports heroes drinking Gatorade or other power drinks that have so much sugar in them, but eating fruit is most important.
With my own kids, I teach them to drink water. The kids have their backpacks on heading out the door and say, “Dad, I need my Gatorade, and I say you need fruit.” I try to pass down the lessons instilled in me as a child about getting enough fresh produce in the diet.
Q: How old are your kids? I imagine they have inherited your athletic talents…
A: I have all age kids, seven all together! There are five from my first marriage and two from my wife now -- a 19-month-old daughter, and six-year-old son. I live in New Jersey now and the weather is not always optimal for outdoor sports. One of my sons plays flag football, a son in Tampa from my first marriage plays baseball and football, and another plays basketball. The teams supply them with Gatorade, but I tell them, make sure you eat fruit. They have Gatorade, that’s fine, but have a banana.
Q: Do you cook healthy meals at home?
A: My wife is the cook. Thank God for the George Foreman Grill! I can grill up all kinds of vegetables, throw on a piece of chicken, and it’s easy.
My wife works out all the time and is into running, so she is always preparing healthy dishes filled with produce. I’m from the South, so I like all the fried food. My wife grills stuff. When we first got married, I had to negotiate with her about fried food. My first wife would cook whatever, but my wife now is into working out her body and understands how eating well is connected.
Q: It sounds like you are surrounded by a supportive environment. How important is that to staying on track?
A: The positive environment helps me a lot in my quest toward healthy living and in overcoming my personal struggles with addiction. When the environment is good and you’re backed by a supportive team, if you’re craving ice cream, or induced by other temptations, it’s so helpful to know you’re not in this alone. When up in age, the doctor says you have to change, and it can be very tough unless you have support.
It’s challenging for kids these days. They go to school and there’s a truck parked outside with greasy food. That’s why you have to start them on a path of healthy eating when they’re young. My 19-month-old will go for vegetables first, when others her age go for fatty foods. We started by putting fresh vegetables and fruit in her baby food. My wife would make sure she was eating nutritiously.
Q: Hopefully, when she’s older, outside influences won’t derail your efforts…
A: Now with computers, video games and texting, kids don’t want to go outside and they don’t understand the importance exercise and eating right plays in their health and well-being. My 16-year-old son has a lot of athletic ability and would do whatever the coach asked him to do, but he wouldn’t go out and run or take a bike ride on his own. Bike riding gets the heart rate up. Diet is essential but it must be combined with exercise.
Athletes are in the limelight where they can make a difference. Athletes should step up more than anyone to encourage kids to eat healthy, ride a bike, throw a ball around with friends. Once kids see the guys they look up to talking about it, they will become motivated. We have to hit them with this message young, even if they are not into sports. I can’t emphasize enough the value of starting these kids on the right track at a young age.
Q: As you’ve taken steps to lead a healthy, balanced life, are you looking to help others do the same? I remember reading about your plans to open a baseball academy back in 2009. Did that ever come to fruition?
A: I’ve had a dream to open a baseball academy for a long time, and it is a dream that is going to come true. I’m working hard to open the Dwight Gooden Baseball Academy and Sports Complex, which will also have a nutrition center and other family support services. Obviously, it’s about baseball lessons and sports training, but it’s also about healthy living and a balanced life. I’ll be able to share my life experiences with drugs and alcohol, the life turns and challenges kids go through.
In Florida where I grew up, weather allowed us to do outdoor sports all year round. But up here in the north, there are many months you can’t do that, so we’ve created indoor sports facilities for kids ranging from 8 to 18. I’ll be doing the pitching lessons; we’ll have softball training for girls, four batting cages, four pitching mounds, and an indoor track. If a brother or sister is not into baseball, we have a full basketball court, a half-size soccer field, and downstairs a video arcade and a golf area for putting, and other activities to keep them from being bored. At first, we thought we would build it in downtown Newark but now the plan is that the complex will be just outside of Rockland County, New York.
Q: Could you tell produce attendees more about the nutrition center and support services? Produce industry executives might want to get involved and donate produce or help your cause in other ways…
A: That would be great. Produce will be in the spotlight. There will be a health bar where kids can get nutritious shakes with all kinds of fresh produce. And we want to provide information about eating right and teach young kids ways to make healthy meals. We have to start there.
My goal because of the struggles I went through is to show kids there’s a better way. I want to give them strategies to handle life challenges so they stay on track and don’t lose their way. I want to talk to kids about enjoying life to the fullest and, most important, creating balance.
Come get an autograph from Dwight Gooden in Americas Hall II!
If you are coming to New York for The New York Produce Show and Conference, there is no reason to come alone. And if you are coming with a significant other, there is no reason they need to be alone in New York while you are busy on the trade show floor or at a micro-session.
Thanks to the generous support of Goodness Gardens, we are proud to offer a wonderful spouse/companion program.
This year the highlight will be a visit to Ground Zero and the brand new 9/11 Memorial and Museum. We’ve secured a limited supply of these hard-to-get tickets and have a luxury motorcoach with a driver and private guide taking us down. It is part of an overall tour of Manhattan in which everyone can stick together or go off on their own.
There also is a shopping tour of the top retail spots in NYC, including world famous Bergdorf Goodman and Tiffany’s.
And, not to be missed, High-Tea at the famed Plaza Hotel.
Then back in the hotel there is a lovely gift bag for each participant and the “suite in the sky” where makeup artists do a makeover and masseuses wring the tension from a long day.
Then there is the food and the champagne and the friendships that develop as everyone gets to know each other.
Mrs. Pundit personally designs this program, and it was a big winner last year. Some of the participants who met last year are still friends a year later. It is a way to experience the best of New York safely and with friends.
If you would like to sign up or need more information on spouse program just let us know here.
Our piece, Farmer Lee Jones To Keynote IDEATION FRESH Foodservice Forum At The New York Produce Show And Conference, brought some divergent response:
David’s point is well taken. Firms that manage to compete by adding value do much to elevate the trade. We also confess that we find these kinds of products extraordinary and very special. We enjoy looking at them, learning about them and eating them very much.
We would even say that to use David’s phrase, we find ourselves “in awe” of the people and the products.
Yet we add a little caveat, which is that we are also in awe of Wal-Mart and Aldi and Wegmans and Costco and many others. By this, we mean that, though it is absolutely amazing that Farmer Lee Jones can freeze and thaw a vegetable 69 times and in so doing raise sugar levels to create new peak flavor experience or that he can offer a one-inch cucumber with the blossom still attached, and we would relish the chance to enjoy these things, we also think it amazing and laudable that Wal-Mart can provide an economical source of food for so many.
We are very much looking forward to hearing Farmer Lee Jones. Beyond his story, though, we want to think it out and see how the beauty he has created can be painted on a larger canvas.
Another reader was more skeptical about Farmer Lee Jones:
We thank Noelle for her kind words and appreciate her elucidating the facts, although we don’t think Farmer Lee Jones intended any deception.
The Census report he was referring to is not the USDA Census but the actual national Census called for in the Constitution. There he is correct, although there are various agricultural worker categories; there is none for “family farmer” or anything similar.
Sometimes in writing, the flavor of a speaker is lost and we don’t think Farmer Lee Jones was being literal. He was using a little hyperbole. It is, however, interesting to note, though, that the actual imported food percentage isn’t that high. Best estimates are that roughly 15% of US foods are imported by volume and 7% based on value — though the percentage has been increasing.
In any case, it is asking these kinds of questions and thinking these kinds of issues through that is what IDEATION is all about.
So we hope that both David and Noelle will find their way to New York City and to the Ideation Fresh Foodservice Forum and the broader New York Produce Show and Conference.
You can see the incredible IDEATION FRESH Foodservice Forum program here.
If you would like to register, please send us an e-mail here.
Hotel rooms are available here.
And travel discounts are available here.