SAVVY Wholesalers REMAIN ‘Eyes And Ears’ OF CUSTOMERS

Originally printed in the March 2019 issue of Produce Business.

In an age of consolidation, diversifying is the new path to survival and success.

Through retail consolidation, the emergence of produce in big box stores, an increase in distribution centers and direct supermarket buying from grower-shippers, wholesalers remain indispensable.

They build resilience into the produce distribution system by giving the largest retailers a safety net that helps them safely avoid stocking too much produce, and providing efficiency that lets smaller stores and restaurants stay in the game.

But possibly most important, wholesalers remain an indispensable source of information largely because of their wealth of contacts at the nerve center of the complex movement of fruits and vegetables from field to fork.

“Many of our customers rely on us to be their eyes and ears — and we think of ourselves as their partner, rather than supplier,” says John Vena, president of John Vena Inc., Philadelphia.

“We keep tabs on market conditions across the board, but more importantly, we try to keep tabs on their business. That’s where we provide the real added value, especially for a lot of our foodservice and processing customers who have very specific needs about product quality and specifications.”

This family-owned-and-run company was started a century ago by the original John Vena, who had immigrated from Gangi, a farming community in western Sicily.

“We go out of our way to identify issues before they occur, rather than risk headaches for everyone down the line,” says Vena. “Not to mention, we have 100 years’ worth of relationships in the industry on everything from greenhouse veg to Jerusalem artichokes and jackfruit. That range of product plus that kind of service is why our customers keep coming back to us day after day.”

This up-to-the-minute sense of what is going on in the always-changing produce world is just as important as the ability to fill shorts in defining the modern wholesaler.

“Our customers count on us as a retail consultant to help in analyzing their product mix,” says Daniel Corsaro, director of sales and marketing at Indianapolis Fruit Company, Indianapolis. “We sell mainly to independent retailers, and their market has shifted during the past 18 to 24 months as customers are looking for quality products at competitive prices.”

Over the past 70 years, Indianapolis Fruit has built its business as a hub delivering fresh fruits and vegetables from three facilities with a combined 250,000 square feet of space on a fleet of more than 150 refrigerated trucks to retailers throughout 15 Midwestern states.

“The biggest change has not been the people we serve but the models they are trying to operate,” says Corsaro. “They are trying to maximize their use of square footage without using a lot of employees.”

The independent supermarkets, in particular, count on wholesalers for much of the managerial work the large chains keep in house.

“The small guys rely more on information from you and they get more items,” says Matthew D’Arrigo, chief executive of D’Arrigo Bros., Bronx, NY. “We are the distribution center for the small guys. We also give them 7-to-14 days out pricing. There is also a lot of delivery service and logistical help. We deliver six days a week, and we’re thinking about moving to seven days.”

Following their service in World War I, Sicilian immigrant brothers Andrew and Stefano D’Arrigo took jobs working in a roadside farmers market and began careers that culminated when Andrew’s son, Stephen, led the family in opening D’Arrigo Bros. of New York following his service in World War II.

D’Arrigo Bros. wholesales a full line of fresh produce, including vegetables from the company’s 30,000-acre California vegetable farming operation sold under the Andy Boy label.

The wholesalers are indispensable for the independents because they need their contacts and expertise, but wholesalers also play a vital role for even the largest supermarket chains by keeping a savvy ear to the ground.

“We work hand-in-hand with supermarkets to promote goods,” says Mike Maxwell, president of Procacci Brothers Sales Corp., Philadelphia. “We help them to project ads two or three weeks ahead. Everyone appreciates the help. Procacci has information from grower-shippers that allows them to help retailers procure and plan. We work on helping the major chains develop a stable platform for fresh produce through procuring and pricing the product.”

When Joe and Mike Procacci formed Procacci Brothers Sales Corp. in their parents’ cellar, they had no idea their venture would grow to become one of the largest produce wholesaling operations in the country, shipping fruits, vegetables and flowers throughout the Northeast from seven warehouses strategically located near the Delaware River in South Philadelphia.

Consolidation Changes

Retail consolidation changed almost everything, as it led to supermarket distribution centers and direct buying from shippers, and threatened obsolescence for wholesalers.

“Back when my father ran this business, there were 14 stores in New York that had their own buyers, and we sold to all of them,” says D’Arrigo. “Now they’ve been gobbled up or bought out, and you’ve got maybe three or four out of the 14 left. Then there’s some new ones like Wal-Mart that weren’t here before.”

Wholesalers still serve an indispensable role for even the largest corporate chains, however, by taking care of shortages on a moment’s notice.

“With the large chains, we make it as easy as possible to buy a pallet to a full truck of any number of commodities on short notice at a price as close to what they are used to as possible,” says D’Arrigo. “It’s strictly a short-order need for the really big guys.”

Even as the largest markets develop their direct connections with shippers, they still need wholesalers.

“There’s always change, but we provide a product and service that meets the supermarket chain’s needs,” says Dominic Russo, buying and sales director at Rocky Produce, Detroit. “They are looking to us for filling shorts, and we try to be the best we can in filling their needs.”

Jack Russo began peddling produce in Detroit after immigrating from Terrasini, Sicily. His sons, Rocky and Dominic, founded Rocky Produce in Detroit’s Eastern Market following their service in the Korean War.

The company they started wholesales a full line of fruits and vegetables, both conventional and organic, including product from the best-known, national brand-name shippers.

The gaps that send large chains to wholesalers are not a surprise or mistake, but rather part of a plan that allows retailers to efficiently minimize shrink without running short of essential produce items.

“Retailers are controlling shrink/poor quality product by leaning on local wholesalers for a certain percentage of their product,” says Andrew Scott, director of business development at Nickey Gregory, Atlanta. “For example, Mr. Retailer buys 90 percent of its strawberries from its vendors and buys 10 percent from its local wholesaler partner.”

Nickey Gregory is a major hub that ships produce throughout the Southeast from its warehouse facility strategically located in the Forest Park campus just outside Atlanta, and another large warehouse just west of downtown Miami.

“The Nickey Gregory Company interacts with supermarkets across the Southeast through just-in-time ordering,” says Scott. “We fill that supply chain role. Our costs can be higher compared to buying direct, but as wholesalers, we buy a lot on speculation as markets swing up and down. By delivering to stores and distribution centers, there is a much higher cost these days for transportation, driver wages and expenses. We own our own trucks and have great drivers to deliver our customer’s orders. Transportation is a key component for wholesalers.”

Corporate supermarkets expect to run short from time to time and count on their wholesalers to fill in.

“Most of the chains have their own sources of supply, but they still need wholesalers,” says Philip Rosenstein, president of William Rosenstein & Sons, Scranton, PA. “We deal with some supermarket chains. They want produce, they are short on or lacking because their warehouse is short or sold more than expected.”

William Rosenstein & Sons ships a full line of fruits and vegetables from its facilities in Scranton.

The ability to be nimble in challenging situations goes a long way toward defining a wholesaler’s reputation.

“Our family has been involved in different levels of the fresh fruit and vegetable industry for six generations,” says Julian Sarraino, chief operating officer at Fresh Taste Produce, Ontario, Canada. “Our wholesale part of the business has always been built on service. We provide the customer with a degree of inventory agility that is crucial in perishables; they can order by the case or truckload.”

Canadian-based Fresh Taste sources fruits and vegetables from 25 countries in all corners of the world and ensures quality by taking ownership of the produce while it is still growing, or even earlier.

For some longtime wholesalers serving the largest supermarkets, it is not significantly different from serving their other customers.

“We sell to all the chains in the area; you do business with everybody,” says Dominic “Skip” Cavallaro, president of John Cerasuolo Co., Chelsea, MA. “The supermarkets call us every day, every other day. You give them a rundown of what you have, and they decide what they want.”

John Cerasuolo Co. started wholesaling produce throughout the region in the 19th century; moved into the New England Produce Center in Chelsea when it open in the 1960s; and was purchased in the 1970s by brothers Ken and Skip Cavallaro, who handle a full line of vegetables from throughout the United States and Mexico.

“Everybody gets the same treatment,” says Cavallaro. “You give everybody the right price and take it from there.”

Diversify And Survive

With the nature of retail and foodservice produce procurement always changing, most successful wholesalers make a point of hedging their bets by keeping a diverse customer base.

“We sell to a lot of different people, to institutions, or small wholesalers, a whole mix,” says Rosenstein. “You can’t put all your eggs in one basket.”

Other wholesalers also have found that diversified markets are essential in this age of retail consolidation.

“We’ve spent a lot of time focusing on growth in new segments. The retail landscape has changed,” says Emily Kohlhas, director of marketing at John Vena Inc., Philadelphia. “We still do everything we can to serve independent retail and help them stay competitive, but the fact of the matter is there are fewer and fewer banners left. Luckily, we have a strong foundation in the foodservice and manufacturing segments that has helped keep us growing through the evolution.”

Vena has responded to the challenge by adding additional ripening services as well as specialty produce items.

“To stay competitive, we’ve been developing add-ons that make us a one-stop shop — like custom ripening for bananas and avocados — as well as offbeat fruits like mangos, papayas and plantains; a product line that focuses on the newest players in the specialty market like Kiwano, Quenepa or Sumo citrus; and custom repacking of niche items,” says Kohlhas.

Even diversified wholesalers notice their customers in all produce segments are consolidating their buying operations.

“We sell to everybody all the time,” says Maxwell. “To the major supermarket chains, the box stores, groups with 300 independents. We’re pretty much in the trenches. We try to earn new customers every day. There has been consolidation in the retail business. Today, we’re dealing with buyers. Before, it was more of a regional thing.”

Because they sell to a variety of customers, wholesalers should be mindful each have different needs.

“We try to support all of our customers that support us — retail chains, independents and foodservice,” says Rocky Produce’s Russo. “Food safety is highly important to us for our foodservice and retail customers alike; they look for good quality and good delivery timing.”

Nickey Gregory took service to its foodservice customers to the point of developing an in-house, fresh-cut program.

“We do not sell much to retailers; we sell mainly to the larger foodservice companies and other wholesalers across the Southeast,” says Scott. “We have started our own processing/fresh-cut division, Family Fresh Foods, a division of the Nickey Gregory Company. Providing special fresh-cut and processed items for our customers has become another service that we are now providing.”

You Can See It, Smell It And Taste It

Peter Carcione’s father, Joe Carcione, was famous throughout Northern California and beyond through decades of media shorts as the “Green Grocer.” His televison spots on seasonal produce were delivered with such enthusiasm and warmth that you could almost smell and taste the produce over the radio.

“You have to sell the advantage of being able to see the produce,” says Peter Carcione, president of Carcione’s Fresh Produce, South San Francisco. “My dad was on the market. He could see the produce, cut it open and smell it and taste it and tell you what was good that week. There are a lot of small businesses popping up, and it’s our job to let them know the produce terminal is the place they can see the produce, smell it and taste it.”

Although some major wholesalers have their own efficiency-first facilities on the outskirts of urban areas, much like the corporate supermarket distribution centers, others choose to harken back to the days when the produce market was a meeting place of city consumers and nearby farmers and their representatives.

“There are 26 businesses in the wholesale market, and it is still the only place you can look at the produce, smell it and taste it,” says Carcione. “There are guys with one, two or three stores or restaurant suppliers coming down here. The wholesale produce market is still OK.”

From San Francisco to Detroit, there are still retailers who want to see and smell the produce before they buy.

“The independents are here shopping in person every day looking to see what’s coming in,” says Russo, from Rocky Produce.

Although Rocky Produce has expanded and distributes to retailers in the Midwest, Mid-Atlantic, South and Ontario, the family firm maintains its roots near the shores of Lake St. Clair in Detroit’s produce district.

The story is repeated across the border as retailers still walk the wholesale produce market in Toronto.

“Our retail customers typically want to see and feel the fresh products that they are buying from us,” says Hutch Morton, director of compliance and business development at J.E. Russell Produce in Toronto. “Here at the Ontario Food Terminal, customers have a lot of options across the 22 wholesalers operating here, so meeting the buyer at the right price with the right product is the best way for us to build our business.”

This close contact with the wholesalers and their produce serves to ensure quality, especially freshness.

“In produce, ultimately freshness and quality will win the day,” says Morton. “We receive new product from around the world seven days a week, and that helps make us a destination for retailers looking to provide the very best to customers.”

For many, the market may be reminiscent of more congenial times, but it also makes the buying and selling of produce extremely competitive.

“If they are buying at the market,” says D’Arrigo, “they are shopping the whole market.”

The advantages of being able to look over fresh produce at the market is appealing, even to some of the biggest retailers.

“Some of the large supermarkets are coming back to the market; one came by yesterday saying they were thinking of coming back,” says Francisco Clouthier, owner of Maui Fresh International, Los Angeles. “The large markets thought they were saving money, but sometimes it’s just leading to more costs. There’s a lot of walk up at the market. That’s why we’re still down here.”

Although the wholesale market takes produce back to the days when personal contacts mattered more than today, this institution, too, is changing with the times.

“Ten years ago, a lot of the growers sold off the ranch or sold through cooperatives,” says Carcione. “Today, very seldom do you buy from the farmer himself. You’re doing business with the shippers.”

The institution, that began as a meeting of city dwellers and farmers who brought their wares by horse-drawn wagons to locations such as between the Capitol and the White House, has gone high-tech.

“The business has changed a lot; all business has changed a lot,” says Carcione. “The new generation uses their iPhones —texting customers and getting orders ahead of time. People text their orders in. It’s working for us; we have to adapt. I have younger workers who can do the texting.”

KNOCKING ON DOORS

With the produce landscape always shifting, wholesalers who lose some of the older customers must constantly find new ones to replace them.

“We look for all means of looking for new customers — in person, over the phone or texting,” says Dominic Russo, buying and sales director at Rocky Produce, Detroit. “We are always looking.”

That last phrase is repeated by many wholesalers when describing how they find new customers.

“We are always looking,” offers Daniel Corsaro, director of sales and marketing at Indianapolis Fruit Company, Indianapolis. “We have a team of business development managers across the Midwest looking for opportunities for Indianapolis Fruit. We get referrals from our existing customers, and we also get people seeking us out.”

Look as hard as you want, it comes down to performance as the only way to hang onto the new customer base.

“You get the first order and then you have to earn it every time,” says Matthew D’Arrigo, chief executive of D’Arrigo Bros., Bronx, NY. “To get new customers, you knock on doors, and there’s word of mouth. It’s word of mouth and hustle.”

There is relatively little new terrain for wholesalers, and business retention is largely a question of maintaining old relationships.

“You’re friendly with everybody, and honest,” says Dominic “Skip” Cavallaro, president of John Cerasuolo Co., Chelsea, MA. “You email, you talk to them and see what you can do. Right now, it’s all the same business that’s been out there for years. It’s all filled up.”

The competition is tougher, however, because the modern produce buyer has more information than ever before.

“Technology changed a lot of things; there is a lot of information available that didn’t used to be,” says Philip Rosenstein, president of William Rosenstein & Sons, Scranton, PA. “You go out and beat the bushes for new customers. You make appointments and presentations.”

Location convenient to large population centers plays a major role in opening up new opportunities for wholesalers.

“We’re centrally located on I-95 in Philadelphia,” says Mike Maxwell, president of Procacci Brothers Sales Corp., Philadelphia. “Forty percent of the population of the country is within 12 hours of us.”

A regional reputation built over time brings a fair number of new customers through the door.

“We get more business through referrals and our 20-year reputation as a high-quality wholesaler here in the Southeast,” says Andrew Scott, director of business development at Nickey Gregory, Atlanta.

The constant display of top-quality fresh produce at the terminal market can be a magnet for customers.

“We are always seeking new customers; big and small,” says Hutch Morton, director of compliance and business development at J.E. Russell Produce, Toronto, Canada. “Through product choice and product quality, new customers are typically attracted to our business, and we are here six days a week to work with them.”

SURVIVAL OF THE INDIES

Many wholesalers focus on service to the independents and small chains to avoid obsolescence in a produce world where much of their traditional role is played by supermarket distribution centers.

“We do a little bit with the large supermarkets, but a large majority of our business is independents and foodservice,” says Francisco Clouthier, owner of Maui Fresh International, Los Angeles. “We used to do more with the large chains, but that changed when they went to direct buying.”

Maui Fresh wholesales a full line of sweet and chile peppers, limes, melons, beans, eggplants, Hawaiian papaya, pineapples, pomegranates and other produce from the business Clouthier started at the Los Angeles wholesale market in 2004.

“For some of the independents we deliver direct to the store, some to the warehouse,” says Clouthier. “They are all different.”

The breadth of service wholesalers provide to small stores often makes them seem similar to partners in the business.

“Many wholesalers around the country are almost indistinguishable from the people who own the small stores,” says Matthew D’Arrigo, chief executive of D’Arrigo Bros. New York, which operates on the Hunts Point Produce Market in the Bronx. “We don’t do planograms for them, but they rely on us for a lot. We give them storage, and up-to-the-second delivery. I don’t know if we ever sold that much to the big, big guys. We do a lot of business with small stores or small chains, and maybe a third is going to foodservice.”

Some of the independents rely on wholesalers to supply them with higher-end specialty produce.

“There has been a resurgence of small-scale, higher-end retail stores, as well as independent restaurants and restaurant groups, especially in urban markets like Philadelphia and New York,” says Emily Kohlhas, director of marketing at John Vena Inc., Philadelphia.

“What’s most exciting about that trend for us is an increase in attention on specialty produce, which is becoming central to the lexicon of food culture and media.”

Many wholesalers on both sides of the Canadian border treasure historic relationships with local markets that often go back generations.

“We have always had a very strong connection to the local independent retailers in our market, and will always make them an important part of our customer mix,” says Hutch Morton, director of compliance and business development at J.E. Russell Produce, Toronto, Canada. “Their desire and need for fresh produce daily makes them ideal customers.”

J.E. Russell Produce wholesales and delivers a full line of conventional, organic and local fruits and vegetables from its facility in Toronto, and is the exclusive source of numerous brand names in Ontario.

Successful wholesalers have found new opportunities in the face of consolidation that reduces the number of large retailers.

“Over the past decade with consolidation running rampant in the food industry, we’ve inched higher in the food chain, working increasingly less with produce managers and chefs and more with the distributors that serve them,” says Kohlhas. “But with more and more entrepreneurs opening up shop and looking for alternatives outside the typical supply chain, we’ve had the chance to strengthen our line to the end user – and it’s great to have an ear-to-the-ground on the front lines.”

Even with invaluable help from their produce wholesaler partners, however, independent markets are in a battle, and they do not always survive.

“The independents we used to sell to 10 years ago are all gone,” says Peter Carcione, president of Carcione’s Fresh Produce, South San Francisco. “Twenty years ago we used to sell to the large supermarket chains.”

Carcione’s has offered fresh fruits and vegetables from its location at the Golden Gate Produce Terminal Market in South San Francisco for the past 50 years.

“Working with a wholesaler is beneficial for just about everyone, especially for ethnic independents or white tablecloth segments of the foodservice industry where access to niche products is a must to keep chefs engaged,” says John Vena, president of John Vena Inc., Philadelphia. “The only instance I can think of in which a wholesaler would drive up the cost of product would be in the very specific case of a large-scale retailer who is buying full truckloads direct. Any other scale of retailer would be well served to have a wholesaler partner. Because a wholesaler tends to keep a tight ship with slim margins, they can often offer pricing at, or below, the level a retailer will see from a traditional retail distributor.”