Through six years of economic ups and downs since their move to a new facility, the majority of merchants on the Philadelphia Wholesale Produce Market (PWPM) have learned to innovate and as a result, endure. The current strong economical headwinds, coupled with a robust retail environment, bode well for 2017 and beyond.

“We are seeing the overall average price of produce more than 10 percent higher than a year ago,” says Tom Kovacevich, general manager of T.M. Kovacevich (TMK), Philadelphia, who says it’s a good time to be in the produce industry. “The increase in prices has ironically been met with increases in demand. Retail’s desire to have the best quality and right price marries well with the PWPM’s greatest strengths. In a sense, the competitive wholesale environment is the perfect brew to serve the competitive retail environment. We are seeing the giant national wholesalers struggling to compete with the quality, selection and values one can find at the PWPM.”

Dan Kane, PWPM’s general manager, agrees that business is good. “The PWPM continues to prosper and grow for two reasons: our facility and our people,” he says. “Looking back over the past six years, the number of customers coming through our gate has steadily increased. More people are appreciating the unique features the PWPM has to offer in terms of safety, quality, convenience and variety.”

The 700,000-square-foot facility was designed with state-of-the-art technology in refrigeration to ensure the proper temperature to hold produce at its peak, says Kane. “Our customers have grown to depend on our secure and efficient buying atmosphere, which shelters them and our products from the harsh elements,” he says. “Easy loading and unloading, cold chain management and exceptional sanitation are just a few of the benefits attributed to the PWPM.”

Though the market boasts superior cold chain control and an efficient workplace, Kovacevich points out what really matters is what buyers think about how the change has affected their business. “I regularly ask the customers how it’s going and if they are happy with the new building,” he says. “The most common response is just how thankful they are to be buying here. The ease of loading, being free of the elements and the ever-expanding variety of quality offerings available make the whole experience a dream compared to the older open air terminal market of Galloway Street.”

Fadi Abi-Khattar, president of Klinghoffer Brothers, Philadelphia, says this past summer especially highlighted the value of PWPM’s refrigerated market. “We had several heat waves getting into the mid- and high 90s,” he says. “It’s on those days that our customers and our shippers really appreciate this market. On the old-style markets, wholesalers would be throwing stuff away by the afternoon, destroyed by the heat. Here, it’s just fine.”

Measured Growth

According to the PWPM, several companies on the market have expanded space-wise in the past six years. M. Levin & Company added eight 48-pallet ripening rooms and expanded into two more units. Colonial Produce, Pinto Brothers, John Vena Inc. and TMK also added units. And, in December 2016, the PWPM welcomed Paterson Produce.

“Most of the merchants have held their own and even continued to grow,” says John Durante, president of Nardella Inc., Philadelphia. “We’ve got a great facility, great people and great prospects for the future.”

J.M. Procacci, an owner of Procacci Brothers Sales Corp., Philadelphia, attributes some growth to a shift in business style. “The walk-in trade in Philly may not be as high as other areas, but we have marketers here delivering all over the region,” he says. “So we are a walk-in business, as well as a large distribution business. We see our distribution business growing, especially because we have the necessary food safety certifications.”

Mark Levin, chief executive at M. Levin & Co., Philadelphia, reports its biggest change in 2017 was the consolidation of its operations under one roof. “We sold our old warehouse and expanded our space at the PWPM,” he says. “With the expansion of our ripening rooms, we now have the capacity to ripen 800 pallets of bananas. Our expansion also gave us another 120 pallets of refrigerated space. This has helped us in turning product and expediting customer orders.”

TMK started with four units in 2011 and has expanded to nine units. With the expansion, the company has doubled its workforce. “The nine units we operate out of today have a capacity of more than 100 truckloads,” says Kovacevich. “However, we are not a storage operation, but rather a 24-hour order picking operation with more than 90 employees united with the primary focus on customer satisfaction.”

Changes on the market also encompass new employees. M. Levin hired salesman Ryan Miller in January 2017 to specialize in Western vegetable sales. “We are trying to expand that product area,” says Levin.

John Vena Inc. has also expanded personnel, including a chief financial officer and a new position for food safety and quality assurance. “With the compliance levels demanded in today’s regularity environment, this is a crucial role,” says John Vena, president.

TMK added third-generation Ry Manos as its watermelon buyer. “In March of this year, watermelon legend Marty Strulson retired,” says Kovacevich. “Ry has been working very closely with Marty for the past couple of years learning the tumultuous business of trading watermelons. We are excited to have another generation accept the challenge and responsibility of buying and selling.”

A major change at Coosemans Phila-
delphia, Philadelphia, is evidenced by the presence of John Hickey as managing partner. Hickey formerly worked at John Vena and more recently was with foodservice wholesaler J. Ambrogi of Thorofare, NJ. “I returned to the PWPM this past February to begin taking the helm at Coosemans, since Marty Roth will be retiring,” he says.

Building on Technology

Mike Maxwell, president of Procacci Brothers Sales Corp., points out the biggest change in the produce business is not what is done, but how it’s done. “We use technology more now to accomplish what we need,” he says. “The speed of business has changed, and the way we’re doing business has changed because of technology.”

Procacci says the success of the Philly produce community is built on its ability to continue forging ahead. “You want to be the engine, not the caboose,” he says.

Todd Penza, salesman with Pinto Brothers credits the next generation for taking on new business requirements the previous generations didn’t have to deal with. “We are making sure we can stay relevant in the industry,” he says.

Philly wholesalers are incorporating technology to streamline operations both in front of house and back. M. Levin is piloting an automatic pay kiosk for customers to scan their ticket, pay and go. “We also use computers to keep control of inventory, sales and accounting,” says Levin.

Ryeco, Philadelphia, has installed new software for inventory management. “We are preparing to implement WMS (warehouse management system) to help improve speed of service to customers,” says Filindo Colace, vice president of operations. “We are also looking at building a new website. Produce Pro software can handle online orders, so our customers will be able to order online from our website.”

Linking Buyers and Shippers

PWPM provides a personal, experienced connection between many of the region’s buyers and shippers from all over the world. M. Levin’s Levin, now in his 41st year of selling produce full-time, emphasizes the need for personal relationships. “Technology doesn’t sell produce, people sell produce,” he says. “If a buyer wants to put plums on sale, we help guide them as to what variety. If I give you a good eating black plum one time and it sells because it eats well, but then next time you get a different variety that doesn’t eat well, then the stores wonder why customers aren’t coming back. The buyer needs the expertise a produce professional can give them.”

Procacci prides itself on building long-term relationships between shippers and customers. “We have always worked hand-in-hand to help growers move their crop through retail,” says Maxwell. “We are in close communication with shippers when we’re writing ads so we can identify opportunities to offer great deals for our customers and our shippers.”

DiFeliciantonio notes customers and growers have depended on relationships going both ways for 40 years. “We will continue these relationships as my children and their children move up and take over our respective businesses,” he says.

On the shipping side, Durante emphasizes the importance of relationships in variable markets. “When the market is in the toilet, shippers appreciate having a good relationship with the receiver,” he says. “For example, lettuce may drop from $30 to $10, and a chain store might only return $1 on that. Having a relationship with a terminal market receiver could mean you get $7 back in that bad market instead of the $1. That’s a huge difference and something shippers really value.”

Procacci says in today’s environment, vertical integration is very important. “A lot of shippers think of the PWPM as their forward marketer,” he says. “They may not be in partnership together, but they are aligned in forward marketing.”

For shippers, Coosemans’ Hickey promotes PWPM as a great distribution option. “Our state-of-the-art facility, built-in customer base and lots of truck traffic is a successful formula,” he says. “Warehousing cost is expensive, but this market gives shippers more exposure than just a cold storage place. It turns into a business venture with the selling partner.”

Pinto Brothers’ Penza agrees. “Our market is a great consolidation point for western and southern product, and for imported and domestic.”

A New Foodbank Initiative

By Jodean Robbins

The Philadelphia Wholesale Produce Market (PWPM), Philadelphia, puts great emphasis on supporting food banks and charity. Sonny DiCrecchio, PWPM president and chief executive, is proud of the market’s main philanthropic effort — Philabundance — a local food bank offering a variety of creative initiatives. “One of their programs, Fresh for All, is like a traveling farmers market set up in the same location every week so local residents can rely on the availability of fresh produce,” he says. “Last year, almost 1.6 million pounds of fresh produce was distributed free of charge at nine locations in Pennsylvania and New Jersey.”

Emily Kohlhas, marketing and business development manager for John Vena Inc., Philadelphia, reports the PWPM is also developing a gleaning program with Philabundance for unmarketable product. “We will be bringing volunteers to the market and doing the gleaning here in the waste management facility,” she says.

The market also regularly supports other local organizations in the Philadelphia region, including the Stenton Family Manor Homeless Shelter, where it donates produce 365 days a year, as well as a Thanksgiving dinner. More recently, PWPM has adopted the charity Angels of God in Pitman, NJ, founded in 2009 by then 12-year-old Katelyn Darrow, who experienced poverty and wanted to help others.

The most innovative philanthropic effort though is the recent opening of the Mid-Atlantic Regional Cooperative (MARC). “Located at our unit I9 right on the market floor, this operation supplies food banks directly from the PWPM,” says Tom Kovacevich, general manager for T.M. Kovacevich (TMK), Philadelphia.

MARC, a project undertaken in partnership with Feeding America and Feeding Pennsylvania, operates as a “sourcing” cooperative of member food banks in the Mid-Atlantic and Northeast regions, spanning a territory from Virginia to Maine. “The mission of the cooperative is to help food banks source produce more effectively,” says James DeMarsh, MARC director. “The co-op enables the food banks to centralize purchasing and logistics, minimize costs and maximize efficiency. If a food bank is offered a donation of produce in excess of their capacity, the co-op is there to connect that surplus to other food banks that can make use of the product.”

Currently, the co-op serves 24 food banks and could potentially grow to include a total of 42 food banks in the region. The program is also more expansive than just looking for donations. “In addition to taking donated product in cooperation with Philabundance, we also are empowered to purchase produce,” says DeMarsh. “We represent a potential revenue opportunity for merchants when markets are long.”

Kohlhas further explains grant funds are available for purchase of produce within this structure. “We’re excited to be able to work with this program as an outlet when product is long and we need to move product for a lower cost, but not necessarily donate it,” she says.

DeMarsh notes the particular attributes of the PWPM fit well with the needs and objectives of MARC. “We are subletting from TMK for the initial phase of this project, enabling us to take advantage of the resources of an established produce handling facility without having to start it all from scratch ourselves,” he says. “Food safety is just as important to food banks as it is to any produce business, and being able to operate in a modern facility with features such as refrigerated loading areas is a significant benefit. There are logistical advantages to this location and great opportunities for sourcing product from the merchants here. We have already shipped several tractor trailer loads into and out of this facility and are grateful for the opportunity to be partnered with the PWPM and TMK.”

Ahead of the Curve on FSMA

Food safety is another major area for technology applications. “If you don’t have a technologically advanced facility, you can’t control the cold chain and you don’t have the best quality product with the highest food safety,” says Colace.

Nora Schmidt, food safety and quality assurance manager at John Vena, says the company knew what was coming and prepared for it six years ago when it moved into the new facility. “The PWPM is fully enclosed and climate-controlled with state-of-the-art plumbing, electric and waste management systems,” she says. “At John Vena, our custom enterprise software allows us to track our inventory from dock to delivery. We’ve been challenging ourselves to move one step ahead of regulations, and accordingly, we stepped up our food safety audit to SQF Level 2 this year. Achieving SQF in a market-type facility is almost unheard of.”

Nardella reports being in the process of a third-party audit certification for food safety. “More and more of our customers, including smaller customers, are requiring this,” says Durante. “Fortunately, our facility here gives us a huge advantage in meeting food safety standards and regulations.”

North American Produce Co., Philadelphia, is also fully committed to complying with all food safety regulations. “We have third-party audits in place that are reviewed every year, and we are routinely inspected and audited by our customers,” says John DiFeliciantonio, owner. “The PWPM is fully committed to these audits and programs.”

Vena asserts the new regulatory environment supports PWPM’s business model and the investment in the facility. “It affords us a chance to tell our story to customers,” he says. “At this point, customers are taking advantage of the facility. Customers are spending more time here or coming more often because of what we offer.”

Colace emphasizes the new FSMA regulations, especially the foreign supplier verification aspect, will affect how business is done. “Now, we are completely responsible for the verification of food safety on imported products,” he says. “Historically, buyers relied on third parties for this, but now it needs to be done in-house. It’s going to give us closer relationships with growers, but at the same time drive up expenses.”

Schmidt acknowledges FSMA is going to be a major challenge for the industry, especially those handling niche ethnic and specialty produce because the growers are smaller and may struggle to maintain the mountains of records necessary. “Companies currently audited have some kind of idea what to expect, but companies operating without any type of protocol in place will have a less-than-easy transition,” she says. “Luckily, we are ahead of the curve: we have cultivated a culture that values food safety and protocol for years, and we’re committed to ongoing innovation and improvement.”