Wholesalers Serve Shippers In Trying Times

Originally printed in the October 2020 issue of Produce Business.

Based on a solid foundation, wholesalers and suppliers work even more closely together to meet the challenges of present and future.

For decades, wholesalers played an essential role in moving produce for their suppliers, and today’s harsh business climate only emphasizes their significance. “Wholesaler and shipper relationships are the driving force for moving food effectively, and for connecting the farm with the diverse customer base outside of contract-heavy national chain store retailers or restaurants,” says Dave Hahn, director of procurement for Four Seasons Produce in Ephrata, PA. “Independent retailers, smaller-scale produce buyers, and regional chains want access to diverse products and brands they know their shoppers will want. Shippers want wholesaler partners they trust to help get their products to that independent customer base.”

Wholesalers fill a specific niche in the supply model in any industry but even more uniquely in produce, states Matthew D’Arrigo, chief executive of D’Arrigo New York. “We are very versatile and very loyal,” he says. “An FOB shipper may have a game plan on how they’re going to market.

However, then weather happens and the plans all change; and that’s where wholesalers come in.”

The long-standing relationships developed between wholesalers and their suppliers form a strong foundation for business. “Without our suppliers, we couldn’t do what we need to do for our area and our customers,” says Dominic Russo, buying and sales director/logistics coordinator for Rocky Produce in Detroit. “These are partnerships and relationships forged over time.”

Strong wholesaler-shipper relationships ensure companies can navigate ups and downs. “When there are shifts in supply, demand and quality, shippers and wholesalers can lean on each other to ensure they find the right outlet for everything,” says Stefanie Katzman, executive vice president of S. Katzman Produce in New York, NY. “We view every shipper partner as part of our team, and we’re committed to helping our partners reach shared goals of growth and customer satisfaction.”

Successful long-term business means honesty, collaboration and understanding. “The margins in our segment of the industry are historically very slim,” says John Vena, president of John Vena Inc. (JVI) in Philadelphia. “The temptation to make money on every lot or transaction is strong. However, if you are trying to build a relationship with a supplier, you have to take the long view. Being honest with your shippers is basic. To strengthen those ties, you must realize you are part of their marketing and sales program. You are working for them as well as for your business, and that effort must continue all season and from year to year.”

Daniel Corsaro, vice president of sales and marketing with Indianapolis Fruit Company in Indianapolis, considers a wholesaler’s role as connecting the retailer and shipper, while acting as the architect of programs that are mutually beneficial for all parties. “If you can serve as a catalyst for shippers and your customer in exceeding their goals, you are adding immense value,” he says.

It’s tough to do it by yourself day in and day out, asserts John DiFeliciantonio, owner of North American Produce Company (NAPCO) in Philadelphia. “If you don’t have understanding and relationships with your suppliers, it makes a hard business impossible,” he says.

A History Of Trust

Though people think of wholesalers simply as middlemen, most wholesalers have cultivated generations of relationships with shippers that rely on them each day. “The supplier-wholesaler relationship is based on trust and integrity,” says Dominic Riggio, president of Riggio Distribution Co. (RDC) in Detroit. “There are many variables affecting daily business, and wholesalers need the trust of their suppliers and vice versa.”

Corsaro remembers how years ago it was more of a buy-sell relationship. “Two people, on the line, talking every day to buy and sell product,” he says. “Now it’s a much more intimate and transparent relationship.”

Many great wholesaler-shipper relationships got started, according to Hahn of Four Seasons, when a buyer and a seller helped each other out of a big jam or took a chance together — and it worked. “Along the way they developed mutual respect and solved problems for each other,” he says. “Relationships are at their best when both sides look at the relationship as a two-way street.”

At 75-year old Fierman Produce Exchange in Bronx, NY, supplier relationships have been long-term. “At the end of the day, they have to trust me and I have to trust them,” says Joel Fierman, president. “The whole business is based on relationships, not contracts.”

Around the country and across the world, Rocky Produce’s relationships date back decades according to Russo. “We do things with integrity and transparency to keep our growers and shippers happy,” he says. “These long-term relationships allow us to always have the right supply, quality and size of what our customers need.”

It’s not uncommon to find wholesaler-supplier relationships in the second and third generation. Strube Celery & Vegetable Co., in Chicago, has been around for more than 100 years. “We have shippers and growers who have been with us for multi-generations,” says TJ Fleming, vice president and director of sales. “I work with shippers my parents and grandparents bought from.”

Rubin Bros. Produce Corporation in Bronx, NY, dates its relationship with Dole of Charlotte, NC, going back several generations. “My father, Marc Rubin, built our early relationship with Bud Antle in Salinas, CA, (which later become Dole) selling his western veg,” says Cary Rubin, vice president. “Over the years, we built this relationship which allowed us to become their exclusive veg supplier in Hunts Point. When Dole got into the salad business in the 1990s, it solidified the relationship because we did exclusive distribution for them. Since then, we’ve kept that relationship through the years. It’s worked out well for both parties.”

Since 1960 Nathel & Nathel in Bronx, NY, has partnered with Turlock Fruit Company and its owner Don Smith. “We are proud to be the exclusive supplier of Turlock melons in New York City,” says Ira Nathel, president. “My grandfather, Daniel Nathel, started working with Don in 1960, and the partnership has blossomed into one of our strongest suppliers. Our success with Turlock has been driven by our commitment to ensuring we treat the product as if we grew it ourselves.”

The majority of D’Arrigo New York’s supply is from vendors the company has cultivated in excess of 25 years. “Our New York state apple suppliers have over 50 years with us, and I’ve known our South Carolina peach suppliers since I was a boy,” says Matthew D’Arrigo. “There is no question this contributes to our success.”

Gabriela D’Arrigo relates her family has worked with Grimmway for 40-plus years. “My grandfather started it and it’s been a great relationship,” she says. “We also have long-standing relationships with Starr Ranch and Driscoll’s.”

More Than Just A Deal

The wholesaler-shipper relationship is deeper than just a close business contact. “You know each other personally, families have met,” says NAPCO’s DiFeliciantonio. “You spend time together during visits to the farms. It’s business but it’s also friendship.”

Connecting with suppliers and understanding their operations, their facilities, their business, is extremely important, relates Nathel. “We take the time to get to know our suppliers so we can fully appreciate their work,” he says. “When you speak with someone every day it’s important to speak their language and connect on a deeper level.”

One of the most rewarding aspects of relationships with shippers, according to Katzman, is how businesses have grown together. “For example, S. Katzman Produce started with our founder, my great-grandfather Samuel Katzman, selling produce in New York on a horse and buggy,” she says. “Our shipper J&D Produce started its business selling from family farms in New Jersey. Over the years we’ve grown together: Katzman to a national wholesaler/distributor and J&D Produce is one of the biggest grower/shippers in Texas. We’ve been honored to be their partners on the journey.”

Two of the largest suppliers for North American Produce Buyers Ltd. in Toronto, Ontario, Canada, represent long-term relationships strengthened over time. “About 18 years ago, we were just starting in the stone fruit category and looking to establish a new brand,” says Larry Davidson, president. “I picked up a directory and called up Brent Smittcamp at Wawona (now Prima Wawona of Fresno, California). The process and development of that relationship led from a business relationship to a friendship.”

Davidson further explains the stonefruit relationship with Wawona led to the company’s second strongest relationship, Gesex in Chile. “We wanted a mirror out of South America of our Wawona relationship and were led to Gesex 15 years ago,” he says. “Our relationship with them became so solid, we opened a company jointly with them in the U.S. called Summit in Fresno, CA.”

Four Seasons Produce started working with [Chambersburg, PA-based] in the 1990s when they were a seasonal organic farm in Central Pennsylvania. According to Hahn, the relationship grew and expanded through the years with Four Seasons bringing Lady Moon’s high quality organic veggies to the up-and-coming natural food stores and food coops of New York, Philadelphia and Washington, DC, and Lady Moon Farms expanding to year-round production in PA, GA, and FL. “Now Four Seasons Produce and Lady Moon Farms are on the second generation of leadership and continue to evolve together,” he says.

At times, suppliers reach out first looking for new options. In the 1980s, an import company based in Israel approached JVI about purchasing fresh cut flowers. “I explained our main business was fresh produce and so they offered us greenhouse grown tomatoes in five-kilo cartons,” says John Vena, president. “We slowly built a following for the tomatoes. As time went on they offered us more greenhouse items including red peppers in winter and fresh herbs all year round. As the item list grew, so did our relationship. That relationship and trust in JVI helped us build the business to what it is today.”

Equal Exchange approached Four Seasons Produce in the mid-2000s with the idea of bringing Fair Trade organic bananas to the U.S. marketplace. “We took a chance together and started bringing in half a container a week to ripen and distribute,” says Hahn. “Now years later, we’re ripening many container loads each week of Equal Exchange Fair Trade Bananas, and we support their Fair Trade Organic Avocado program.

Wholesalers also link other suppliers together. T.M. Kovacevich (TMK) has worked with Sunny Valley International since 1990 and the Jersey Fruit Coop since 1986. In 1995, Jersey Fruit was searching for a new strategy to market crops and reached out to TMK for ideas. “We suggested they meet with Francisco Allende of Sunny Valley,” says Tom Kovacevich, TMK president. “They did, and began a wonderful relationship benefiting the local farmers for nearly 30 years now.”

Label Loyalty

Wholesalers serve as local connection for a label — an “extension of their shippers” as Katzman puts it. “It’s our job to be their boots on the ground promoting, selling and delivering their products,” she says. “And just as we support and promote their brands, they also drive customers to us. Some customers may inquire about their products but happen to fit our business model better. This is where our partnership comes into play. Our shippers will absolutely recommend us because it’s their sale too and we are a team.”

In the New York market, it’s commonplace for a supplier to refer retail inquiries to the wholesaler, explains Gabriela D’Arrigo. “It makes it easier on the shipper and easier for us,” she says. “It’s another element of why wholesalers are important — we are a regional extension of their office and a brand ambassador for their product.”

From a supplier standpoint, Rubin describes how exclusivity with a wholesaler gives the shipper more influence in the marketplace. “They can better control what they’re doing and want to do from a pricing and supply perspective as well as which customers they serve. It also builds a long-term relationship of trust, which can benefit them when challenges arise. For example, if they have distressed product from another channel, such as direct chain store business, they know they can send it to us and we’ll handle it fairly for them.”

DiFeliciantonio points out how in a terminal market, brand exclusivity makes sense for both parties. “It helps separate you from the competition and get a fair price for the grower since the grower label isn’t competing against itself in the market,” he says. “Especially with a top line grower, we can get the prices they need every season and give our customers a consistent label and quality.”

Easing logistics is another reason shippers refer buyers to the wholesaler. “We make the complicated logistics of sourcing and inventory management on imports easier,” says Davidson of North American Produce Buyers. “If a retailer contacted one of my suppliers in South America, they would refer them to me because of our relationship and the complication of the import process.”

Suppliers also use wholesalers to fill shorts. “A shipper can tell a customer in our area where they can get the label they need so when they are short we can fill the gaps,” says Strube’s Fleming.

The value wholesalers provide in having a diverse customer base is a real plus for shippers.

The brand ultimately links back to the relationship, according to Fierman. “We have our own branded product,” he says. “My brand may mean less in LA but more in New York. Its value really relates to the relationship with the grower/shipper and our ability to manage the quality and pricing of the product.”

Nathel emphasizes its approach to long-term suppliers as business partners as evidenced by his business with Turlock. “We speak with Turlock on a daily basis, even out of season so there is always communication between us,” he says. “When the market is down, Turlock knows. When the market is strong, Turlock knows. Ultimately our relationship has evolved so that Turlock Fruit Company is a part of Nathel & Nathel, and we treat them as if they are family.”

A Needed Outlet

The value wholesalers provide in having a diverse customer base is a real plus for shippers. “We can push certain sizes they need to move and that’s important,” says Russo of Rocky Produce. “We have a lot of outlets for produce and a great sales team to promote product.”

Wholesalers and suppliers partner together to provide planned programs, albeit with some flexibly, to independents, explains Matthew D’Arrigo. “We have targeted priced-out deals we sell to our independent and smaller customers that are honored by our shippers,” he says. “They have ads all planned out, though they have flexibility. If you add them all up there are thousands of outlets in the New York metro area. They need this planned supply.”

As major retailers have moved to more contract pricing and set programs, wholesalers fill gaps for suppliers in various segments. “Given the highly dynamic nature of the industry, the rigid buying practices of some retailers don’t always serve the supplier’s best interest,” says Nathel. “In contrast, we work with the shipper because we can sell for a premium when the market is high or sell volume when they are long and need to move product.”

The organic category represents a massive piece of Indianapolis Fruit’s portfolio according to Corsaro. “One of our key partners has been [Salinas, CA-based] Organic Girl,” says Corsaro. “The biggest reason the partnership has been so successful is they’re constantly innovating and bringing new SKUs to the market, providing real-time performance data, and building programs customized for our customers. This allows us to keep our customers engaged and draws consumers back into that space to purchase something new and different when shopping.”

Organic Girl’s commitment to its brand is another key factor in the collaboration. “It’s easy in produce to want to work with everyone under the sun,” says Corsaro. “We couldn’t be more appreciative for the commitment the people at Organic Girl have to us and to their own brand. Anytime we have connected them with a customer, they’ve operated as an extension of us. When you’re maintaining a reputation, you want to work with someone who embodies similar core values and that you trust to have the right conversations with your customer even when you’re not there. Because of all these factors, our growth with Organic Girl has been exponential in recent years.”

Wholesalers also provide supplier access to additional outlets. “There is an entire community of foodservice buying and delivery companies to satisfy the very fast moving foodservice industry in our area,” says Matthew D’Arrigo. “Not any of that product is presold or programmed in any way. We also play the role of salvage sellers. We take things that have no home and find a home for it such as with sidewalk peddlers. We put a value on something many other buyers, and certainly chain stores, wouldn’t accept.”
Gabriela D’Arrigo explains in times such as this past year’s climate, the piece of oversupply and donation is huge. “We are able to get produce to outlets others may not even know about,” she says. “This year we’ve worked hard with donations to ensure people who need this food get it — something shippers may not have the ability to do directly.”

Enhancing Services

As costs and competition have forced creative solutions in the supply chain, wholesalers are fulfilling a variety of roles. “There are many versions of arrangements between shipper and wholesaler, including terms, cross-docking, and forward distribution,” says RDC’s Riggio. “The more services either party provides to the other only further enhances the relationship.”

Grower/shippers need wholesale partners for services including cross-docking, local rejections, storage, re-delivery and contracts agrees Andrew Scott, vice president business development and marketing for Nickey Gregory Company in Forest Park, GA. “A lot of these arrangements are predetermined relationships,” he says.

As costs and competition have forced creative solutions in the supply chain, wholesalers are fulfilling a variety of roles.

Repack and last-mile delivery are key services, according to Indianapolis Fruit’s Corsaro. “As consumer expectations for products change, there is a need for smaller pack sizes and a demand shift to more bagged and packaged products,” he says. “Wholesaler repack allows our partners to get bulk product in the market as quickly as possible and for us to pack and deliver to need. Other services include forward distribution and cold storage.”

Such services develop regional intimacy for suppliers advises Corsaro. “Anytime you can provide someone who is thousands of miles away with the ability to be more intimate with market needs, it’s very valuable,” he says. “We have five different transportation hubs across the Midwest and Southeast, which we use to facilitate those relationships.”

Strube also serves as a hub to provide distribution and repack services for suppliers. “It helps both the shipper and customer coordinate supply,” says Fleming.

Added Value

Wholesalers join with suppliers to create added value in merchandising, promotion and other store-oriented services. Four Seasons Produce provides short- to mid-term forecasting and promotion planning, and mixes in some spot buying and opportunistic buying to help both shipper and independent retailer partners. “Taking the promotional planning a step further, we also provide monthly display contests for our retailers in conjunction with our shipper partners,” says Hahn. “This intentional planning builds excitement from both sides, and drives significant growth.”

The infrastructure and skillset to perform ripening provides value to both customers and suppliers. “Shippers value the fact that fruit can be ripened or conditioned prior to reaching store level,” says Hahn. “Both the shipper and retailer want a partner that will get it right because it’s crucial for consumers to have a positive experience. This drives additional sales for both the shipper and retailer.”

Nickey Gregory operates multiple ripening rooms given some of its customers don’t have ripening capability. “Customers buy from us because we know how to ripen sensitive commodities including bananas, tomatoes and avocados,” says Scott.

The contract ripening work JVI does for its shippers is a different game than ripening for one’s own customers, according to Dan Vena. “The shippers must trust their partner 100% to perform pre-conditioning to their standards, because we’re not shipping the product to our customers, we’re shipping or cross-docking it straight to their end user. As far as the customer sees, that product is coming straight from the shipper — we never take ownership of the fruit. That relationship has to be built on competency and trust.”

Wholesalers are expanding physical space for teaming with suppliers to manage inventory and even value-added. In February 2020, Nickey Gregory moved into a larger building on the Atlanta State Farmer’s Market. “Moving into a larger facility helped us gain the cooler space needed to store more products and pallet spaces in multiple temperature zones,” says Scott. “We also doubled the number of ripening rooms to help our ripening programs, and we expanded our fresh cut processing operation, Family Fresh Foods.”

Drivers Of Evolution

As the years present increasing challenges, wholesalers and suppliers turn to each other to innovate and stay viable. “When I look back, I can say that if we kept doing business the way it had been done, we wouldn’t be here,” says Larry Davidson, president of North American Produce Buyers Ltd. in Toronto, Ontario, Canada. “Establishing direct relationships and adding value for the growers has allowed us to build our business.”

As business becomes more complex and difficult from a supply chain standpoint, strong and transparent relationships help streamline the process, explains Daniel Corsaro, vice president of sales and marketing with Indianapolis Fruit Company in Indianapolis. “It’s a much faster pace and higher execution rate with solid relationships,” he says. “Suppliers know exactly what we’re looking for, when we’re looking for it and when we need it. Having a streamlined and efficient process is very meaningful in this day and age.”

Dan Vena, director of sales at John Vena Inc. (JVI) in Philadelphia, has seen the relationship between wholesaler and supplier change. “The strongest relationships we have are the ones that have been able to evolve along with the industry,” he says. “We are aware of our place in the supply chain, and we understand our suppliers are not going to remain competitive with certain types of customers if their products all have to be sold through us. Because of this we are constantly trying to figure out ways we can add value for our suppliers and their customer (when it is not us). We provide logistics, cross docking, cold storage, ripening and consolidation in an effort to add value for our supplier. So while these relationships are certainly more complicated than they once were, we have found that in most cases the complications have made them stronger.”

On some level, notes John DiFeliciantonio, owner of North American Produce Company (NAPCO) in Philadelphia, business has always been based on relationships but 40 years ago, the cost of operation was much less than it is now. “Back then, guys could plant, hope for a good crop and if something went wrong, losses weren’t spectacular like they are now,” he says. “It’s the same for us too. Our costs of doing business are astronomical, and they’re not going down.”

New services continue to evolve by necessity because the costs in the system are higher now, agrees TJ Fleming, vice president and director of sales at Strube Celery & Vegetable Co. in Chicago. “Trucking costs are a good example,” he says. “It’s easier for a supplier’s truck to drop off here and for us to consolidate and fulfill the order. Also, wait times at DCs can cost the shipper money, so again it may be easier for everything to come here for consolidation and then delivery. Changing regulations such as drive time also push the need for further collaboration. We must rely more on each other; it’s where the long term relationships between suppliers and wholesalers come into play even more.”

Locally Grown — Wholesalers Team With Local Suppliers

Wholesaler relationships with local suppliers boast deep roots reaching back in some cases to foundings. “Many of our local growers are multi-generational as is Strube, and we appreciate our long history with them,” says TJ Fleming, vice president and director of sales at Strube Celery & Vegetable Co. in Chicago. “I enjoy continuing relationships and doing business with people my grandfather started with.”

Local New York and New Jersey farmers gave S. Katzman Produce in New York its start in the industry and many have grown alongside the company through the years, according to Stefanie Katzman, executive vice president. “A true partnership is only successful when it’s mutually beneficial, and we always want our local famers to benefit from their partnership with us,” she says.

With steady demand for locally grown product, many wholesalers ally themselves with local growers to fulfill locally grown programs. “Small customers don’t have direct connection to the growers,” says Dominic Russo, buying and sales director/logistics coordinator at Rocky Produce in Detroit. “We align with local growers to support such programs and supplement the distribution we already have.”

Sharing Infrastructure

Local growers value the structural services wholesalers provide. “Many local growers are handicapped logistically,” says Matthew D’Arrigo, chief executive of D’Arrigo New York. “If a local grower has 15 items adding up to one truck of product, he or she is better off sending it to a wholesaler to break it down and get the product moved.”

Indianapolis Fruit Company, delivers to more than 20 states, managing what Daniel Corsaro, vice president of sales and marketing, calls micro-regions for locally grown. “Distribution and supply chain management are key areas we support all our local growers in,” he says. “Farmers want to be in the fields. They don’t want to be in storage, wholesale, or sales, so we help them in these areas as part of our partnership with them.”

Riggio Distribution Co. (RDC) in Detroit serves as a conduit for local growers to access customers and markets that can be challenging to obtain on their own, explains Dominic Riggio, president. “As a 12-month produce business, RDC has the logistics, sales team, and warehousing necessary to efficiently service the entire Midwest,” he says.

The relationship is bolstered by retail customers turning to their known wholesaler to service local needs. “Some national retailers with stores in our region count on us to aggregate high-quality local produce that meets their spec from GAP-certified growers and distribute it to those stores in season,” says Dave Hahn, director of procurement for Four Seasons Produce in Ephrata, PA. “As the wholesaler, we provide services to growers and retailers to ensure consumers get the local produce they want.”

Supporting Growers

Similar to national programs, wholesalers reinforce local suppliers in a variety of ways. Local exclusivity helps establish a relationship with the customer and prevents a grower competing against its own product, explains John DiFeliciantonio, owner of North American Produce Company (NAPCO) in Philadelphia, PA. “We’re also a release valve for over supply locally,” he says. “We are in the middle and reach out both ways to communicate information and coordinate promotions — especially when growers are long on product.”

One major benefit Indianapolis Fruit provides many of its artisan suppliers is helping to ensure they’re up to par on the food safety side relates Corsaro. “Many smaller growers need help understanding and implementing the various requirements, not only from government standards but also those of more stringent customers,” he says.

Indianapolis Fruit also educates local growers about customers. “We sit down a season or two ahead of time and help them understand what retailers we’re working with, what gaps we’ve seen in the supply chain and what they can cultivate and harvest to meet specific windows,” says Corsaro.

Nickey Gregory Company in Forest Park, GA, strongly promotes the state’s Georgia Grown program. “We have the Georgia Grown logos on our trucks and the front of our buildings,” says Andrew Scott, vice president business development and marketing. “Benefits include picking up Georgia Grown orders on our own trucks (controlling the logistics and on-time piece), less food miles from growers to distributor to end user, quicker inventory turns, fresher product and supporting the state we live in.”

Fierman Produce Exchange of Bronx, NY, has operated a packing facility in upstate New York for the past 50 years. “We are loyal to our growers and do our best for them,” says Joel Fierman, president. “They know at the end of the day when they send me their product that we will deliver for them and they’ll get paid.”