Providing Continuity In Disruption

Originally printed in the July 2020 issue of Produce Business.

New York area wholesalers showcase their critical role in the supply chain, especially amid a crisis.

New York City’s energetic marketplace became even more so early this year, as distributors faced a labyrinth of new challenges. New York is a tough, competitive marketplace in normal conditions according to Paul Auerbach, president of Maurice A. Auerback Inc. in Secaucus, NJ. “It always has been,” he says. “There is a lot of competition from terminal wholesalers, people in other cities and customers loading out of shipping points. Customers have many different ways to source product, so you must have a competitive advantage and know how to compete.”

Despite the disruptions caused by the COVID-19 crisis, the New York marketplace and its supply chain continued to function. “The market held up throughout the crisis, though we’ve had a lot of uncertainty, and it has been a fluid scenario,” says Anthony Serafino, executive vice president at EXP Group in North Bergen, NJ. “From a produce perspective, Quarter Two is always a good quarter. This time of year, we have our mangos from Mexico and Haiti—always good sellers.”

As unprecedented ambiguity hit, buyers turned increasingly to wholesalers for greater supply chain elasticity. “In the past few months, there has been a lot of uncertainty,” says Auerbach. “Everything from foodservice to retailers to shippers operated in uncharted waters. Flexibility was crucial, and wholesalers have flexibility.”

As with anything, a business doesn’t want to be too heavily invested in one supply chain pipeline, advises Evan Kazan, vice president of Target Interstate Systems in Bronx, NY. “I would think and hope that retailers see this as an opportunity in their operations to make sure they are diversified in their suppliers,” he says.

Selling produce in the normally demanding New York region is even more challenging now, with more factors involved, notes Bruce Klein, director of marketing for Maurice A. Auerbach. “It used to be about just selling competitively; now procurement is challenging, as well. We have had to deal with cancelled flights, boat delays, pickers not able to enter the country to harvest—a whole host of issues we never had to think much about before on a large scale.”

Confronting Uncertain Times

Like the entire national industry, wholesalers in New York were at first swamped with panic-buying, combined with disorder. “When this whole crisis started, there was major uncertainty,” says Ronnie Cohen, principal for Vision Import Group in Hackensack, NJ. “The market demand wound up smoothing itself out, so the continuity in general has been reasonable, but the demand cycles were greatly unknown.”

“We had customers that we didn’t do a lot of business with in the past looking for product. Our farm stand customers, for example, saw a dramatic increase in sales, probably because they encompass a more open atmosphere than a store.”

— Joey Granata, FreshPro Food Distributors

At FreshPro Food Distributors in West Caldwell, NJ, the company saw almost double volume for the first few weeks of the crisis. “We found such high demand, and volume put a strain on supplies,” says Joey Granata, director of produce sales. “Customers were just buying up anything they could. We had customers that we didn’t do a lot of business with in the past looking for product. Our farm stand customers, for example, saw a dramatic increase in sales, probably because they encompass a more open atmosphere than a store.”

The fact that Easter and Passover, and to a smaller extent Mother’s Day, happened right in the middle of the crisis was another major doubt-driver, according to Auerbach. “For asparagus, Mother’s Day is a holiday,” Granata says. “Especially for Easter and Passover, you look at historical data and base orders on that. But this year nobody knew if the past history would be indicative or not. So holidays during the crisis became a bigger unknown. A company like ours became an even greater asset to many retailers, foodservice operators and wholesalers who, at this time, had no idea what to predict or expect.”

Building on Established Strengths

To some extent, produce professionals are used to crazy times, and many were able to draw upon existing foundations. “Being involved in the produce business my whole life, I’ve seen a lot,” says Cohen. “Our basic business experience has allowed us to keep our cool and continue to serve customers, regardless of what happens. We’re importers, and we were challenged to manage our business a bit differently. Luckily, we had invested in technology before this happened, so we were able to continue to operate remotely without skipping a beat.”

EXP’s greatest strength was how well its procedures were already set up, explains Serafino. “We’ve had a lot of these in place already,” he says. “The crisis has taught us, and is still teaching us, that the practices we have had as far as safety and PPE work and continue to grow in importance.”

Baldor Specialty Foods in Bronx, NY, counted on its established system to pull through. “I think we knew in our hearts we’d designed a supply chain that could handle anything we threw at it, but I don’t think anyone suspected a crisis like this pandemic was ever going to test its durability,” says Michael Muzyk, president. “It’s done surprisingly well, from our farm partners and specialty food producers all the way to the kitchens of our favorite restaurants and now the family dinner table.”

Significant changes in operations did add time and cost. “The major change to operating our business included the extra costs and processes associated with sanitizing both the facilities and trucks,” says Floyd Avillo, president and chief operating officer at FreshPro. “Our fresh-cut business was also impacted, as we reduced capacity by more than half to implement more distance within the processing areas; limiting the amount of workers per day and the production capabilities.”

Target faced challenges early in the pandemic but adapted quickly. “We decentralized our operation and, with the use of soft phones and other cloud software, we were able to communicate clearly and efficiently with one another,” says Kazan. “We have been working remotely without a hitch. We were there for our customers as if nothing had changed, and there was no interruption in our business or service.”

Some companies, such as Auerbach, already had strict standards and hygiene protocols in place because of food safety certifications. “We added a few extra precautions, but a lot of it was already in practice,” says Auerbach. “We practice very strict food safety, since we are SQF Level 2 certified.”

EXP also had a solid foundation of SQF and other certifications. “We operate normally with masks and gloves, so a lot from a PPE and safety standpoint hasn’t changed,” says Serafino. “Many of the precautions were already part of our policy because of SQF but they’ve just become amplified or expanded. For example, we’ve had infrared thermometers since we opened because it’s how we monitor the fruit.”

Proving Their Value

As demand rode a wild cycle, New York City area wholesalers and distributors demonstrated their worth. “In a crisis, you see not only the value of the supply chain but how each cog of the wheel is super important,” explains Serafino. “With a nationwide pandemic like this, the supply chain has to be strong. This type of crisis exemplifies how important each piece of the chain is from the grower to shipper to wholesaler/distributor to retailer.”

One of the leading issues in the crisis was product availability and service on short notice, explains Auerbach. “Needs and timing changed,” he says. “Stores didn’t need something from California five days from now, they needed something five hours from now. It’s why we were critical to the supply chain during this time period. Getting a decent quantity of a decent quality product became an asset in the supply chain in general. We have good quantity of good quality available immediately, and we can deliver without buyers having to make decisions six to eight days out.”

Communication and trust played another crucial role during the crisis. “Since most of our customers have worked with us for many years, we have built a level of trust over time,” says Kazan. “When their normal work tasks become increasingly difficult to accomplish because of the circumstances, they use a trusted transportation partner, such as Target, to take some of the burden off their plate.”

Auerbach views his company’s multilevel communication as an asset. “We have good communication not only with the retail buyers but also the merchandisers,” he says. “This is also true of our foodservice and accounts—we have good communication at all levels of the customer base.”

The retail sector depended heavily on established and trusted brands, relates Lucky Lee, vice president for Lucky’s Real Tomatoes in Brooklyn, NY. “So, Lucky’s Real Tomatoes sales to retail grew immediately, as New Yorkers needed quality produce to cook more at home.”

Foundation For Success

A fundamental element to success in this crisis was the wholesale ability to draw on the relationships established with employees, customers and shippers. “When there is a disaster, we collaborate to feed people,” says Lee. “A great example is how our partner grower was awarded a Farmers to Families contract, which enabled us to distribute 56,000 cases of fresh vegetable boxes to a dozen local non-profits in our area, a program we were so fortunate and humbled to be a part of.”

As demand rode a wild cycle, New York City area wholesalers and distributors demonstrated their worth.

In the end, Muzyk credits Baldor’s resiliency to its incredible team of employees, network of farmers and partners, and state-of-the-art distribution chain. “These were the strengths we relied upon to see us through this fundamental business change—and it’s worked out better than any of us initially expected,” he says.

At Auerbach, its management places credit on the value of the long-term relationships with shippers developed over many years. “We value our shippers enormously,” says Klein. “We try to do the best possible job for them. They are just as important as customers—you want to be sure to take care of them and be conscious of what they need.”

Avillo praises the dedication of the FreshPro workforce. “Our people were tremendous,” he says. “Their approach to the business and putting in the extra hours and days to get the product in and out and delivered was remarkable. They really rose to the challenge; and I think they appreciated the efforts of our management to react timely to ensure safety.”

The heart of Lucky’s business, according to Lee, was loyalty. “Management pitched in to help facilitate orders until we were able to rehire members of our loyal staff—some who had been with us for over 10 years,” says Lee. “We all packed orders for our long time customers, who in turn, made it possible to support and be loyal to our longtime partner growers. The network of loyalty had come full circle.”

Lee explains how building on an existing relationship with Long Island City home-delivery company Fresh Direct turned out to benefit all. “Two months ago, we started to see a decrease in the restaurant business due to corona, and then on March 16 all restaurants in New York were ordered to close,” says Lee. “Meanwhile, our retail segment grew — especially with Fresh Direct.”

Lucky’s was able to pivot and develop packaged tomato products, producing value-added items for its retail customers and food delivery companies such as Fresh Direct. “Since some customers were short on staff, they relied on us to fill the need and that allowed us to re-hire some of our people to pack the orders,” she says. “We were able to create some new packs to help minimize their labor, as well.”

Looking Beyond The Crisis

The wholesalers now focus on what comes next. What trends or influences will linger, and how will that shape business in the future? “There’s a new landscape, and we’re seeing where that’s going to go,” says Vision’s Cohen. “All the old rules are out the window. People are still eating, but the question remains as to how they will be eating. Businesses are making conscious decisions on how to stay in business, how to adapt to fit how people are eating now.”

EXP’s Serafino believes the COVID crisis may have a 911-type of effect on the country. “I mean that in terms of how we will do things differently moving forward,” he says. “So what is going to change post-COVID? Trends may show consumers cooking more, and retailers may do better than restaurants.”

Cohen agrees consumers could come out of this crisis with a new-found appreciation for using produce at home. “People are learning to be home and eat as a family again,” he says. “They are shopping conservatively, and fresh produce is a healthy option.”

Muzyk reports responding to a new phenomenon of COVID-19 — CookingFatigue, where home chefs are hitting the wall in terms of creativity and new, inspired tastes. “We’ve decided to help those people out by launching Baldor Kitchens,” he says. “With Baldor Kitchens, our talented culinary teams have come up with simple-to-prepare meal kits that are sure to add a little pizazz to a family’s weekly dinner menu. The kits come with a recipe card and all the major ingredients that have been assembled fresh that day at our facilities. All the home chef adds is a couple of pantry items and their imagination. We’re really excited to give our home delivery customers a truly restaurant-quality meal experience.”

“We all packed orders for our long time customers, who in turn, made it possible to support and be loyal to our longtime partner growers. The network of loyalty had come full circle.”

— Lucky Lee, Lucky’s Real Tomatoes

As far as product trends go, Auerbach’s Klein reports a shift toward packaged products, organic and cleaner product. “Not in every case but in some cases,” he says. “For example, we’re not seeing as much loose corn; it’s all packaged. There is also a big push for organics. Maybe people think it’s healthier and cleaner. And, a lot of associated health items, such as garlic and ginger, have been very popular lately.”

Restaurants will likely adapt to a capacity change, suggests Serafino. “It will be mandated at first, but eventually we’ll see restaurants adjust their capacity seating changes,” he says. “The big question is, what non-mandated changes or trends will occur? For example, are consumers going to be comfortable eating out? Foodservice will need to adapt and re-focus their business models.”

The wholesalers themselves are looking at how they continue to meet future needs. Auerbach will continue to utilize its re-pack operation to provide quality for buyers. “We can either pack or check the item here at sale and don’t have to have the inventory age from a West Coast packing,” says Auerbach. “That gives us a good quality advantage. We have the ability to provide product that has been checked six hours before delivery instead of 12 days before.”

Vision continues to promote and expand its line. “We continue to grow our bagged and value-added options,” he says. “People are going to be used to eating healthy and seeing healthy eating as the best defense against illness. We continue to look for other commodities that fit our category to expand our line.”

Lucky’s Real Tomatoes continues to promote its American, field-grown, sun-ripened tomatoes. “Lucky’s serves an important role in what has been our mission all along—to support East Coast American farmers,” says Lee. “We want to emphasize how very important this is moving forward. All our boxes now have a sticker saying, ‘Thank you for supporting our American farmer’.”

One thing is for sure, concludes FreshPro’s Granata: the future will definitely have a different look. “There will be changes,” he says. “Changes we can’t pinpoint right now. ‘Business as Usual’ will take on a whole new meaning as we recover from this over the next few years.”