In the River Cities of St. Louis and Kansas City, MO, produce distributors report favorable sales and movement. Business is reported as steady, or healthy, for most wholesalers that distribute produce to the Heart of America.

St. Louis’ Midwest connection provides it distribution advantages. “We have geographic advantages, and it is easy to get trucks,” says David Hamm, co-owner of Midstate Produce Co., located at the St. Louis Produce Market on One Produce Row. “Logistics makes it a lot easier, as there are always trucks coming from across the industry. We also keep seeing new restaurants popping up, which keeps the produce market thriving. We are moving a lot of produce. There’s a lot of business that comes through the market.”

St. Louis was originally the home of the Mississippians, an Indian civilization that vanished during the Middle Ages. In 1764, French fur traders founded the city, naming it for the King of France. The city was started on a high bluff overlooking the junction of the Mississippi and Missouri Rivers, according to explorestlouis.com.

Sharing the border with Illinois, St. Louis had an estimated 2016 population of 311,404, according to the U.S. Census Bureau, and is the cultural and economic center of the Greater St. Louis area — home to 2.9 million people — making it the largest metropolitan area in Missouri and the 20th largest U.S. metro area, behind Seattle, Minneapolis-St. Paul and San Diego, but ahead of Tampa, FL, Orlando, FL, Denver and Charlotte, NC.

Midwest Connection

St. Louis is known for many things, including offering the most complimentary tourist attractions outside Washington, D.C. Every year, around 26 million people visit St. Louis and tour its zoo, art museum, the Lewis & Clark Historic Site and view the Gateway Arch, the city’s signature attraction located along the banks of the Mississippi River.

The city’s professional sports teams, including the baseball Cardinals and hockey Blues, attract many to its downtown, which is thriving, says Charles Gallagher Sr., chairman of the board of United Fruit & Produce Co. “There’s a lot of activity in this area,” he says. “There is a lot of progress going on downtown with the Gateway Arch and grounds. Overall, business is holding up well.”

The 1904 World’s Fair introduced many new foods, including the ice cream cone, hot dogs and ice tea. Today, the city’s dining scene is exploding. “There is a lot of new chefs and new exciting concepts in foodservice here,” says Hamm. “There are new restaurants opening and a lot of restaurants are expanding into more locations.”

According to a February 2017 article in the St. Louis Business Journal, downtown St. Louis’ retail environment is in a turnaround. People throughout the region are attracted to a critical mass of restaurants and retailers expanding in the downtown area, which is also seeing a burgeoning residential population. Since 2000, 60 new restaurants and stores have opened downtown or have committed to opening, according to the report, which cites a Downtown St. Louis Partnership official.

“The culture in St. Louis is a melting pot. We have a lot of culture-driven restaurants. To serve the different cultures we have here, instead of carrying a few items, we carry a whole line other than the main produce. We are able to go through specialty people instead of other produce distributors in other areas, which may not have the melting pot we have,” says Hamm.

Many restaurants are opening food trucks, which offer a variety of foods. City parks host Food Truck Fridays. The city’s restaurant explosion is fueling produce demand. “A lot of the chefs have gone to specialty produce,” says Hamm. “They are using produce in new and interesting ways. They are coming up with new dishes and new ways of presenting food, taking produce and doing different things with it, giving it new twists. This drives us because we’re getting produce that hasn’t been in this market before.”

Kansas City Renaissance

Kansas City was born in 1821, the year Missouri became a state. A French explorer from St. Louis traveled on the Missouri River and founded a trading post. Since then, the Kansas City, MO-Kansas metropolitan area, which includes Overland Park, KS, has grown to 2.1 million people, a 4.7 percent increase from 2010 to 2016. Kansas City sits on Missouri’s western edge, straddling the border with Kansas. With a population of approximately 2.3 million, it ranks as the second-largest metropolitan area with its core in Missouri (after Greater St. Louis) and is the 30th largest U.S. metro region, according to 2016 information from the U.S. Census Bureau.

During the past decade, downtown Kansas City has experienced more than $6.5 billion in commercial, hotel and residential development, according to visitkc.com. That urban renewal is helping attract more people and boosting produce sales, says Allen Caviar, president of Kansas City, KS-based Liberty Fruit Co. “With the revitalization of downtown, more people are going to the city,” he says. “Because of that, they’re spending money. Kansas City is really growing. It’s very tech-oriented and there are many tech companies coming here. The whole economy is doing well. The cost of living is very good compared to other parts of the country. It has always been a hidden secret. Now the secret’s out.”

In the metropolitan region, restaurants are thriving. “They keep growing,” says Caviar. There is a lot of competition and more restaurants are opening. There are many national chains that have started to pick-up on Kansas City as a whole. As the population increases, the geographic information that’s given to these restaurants on why they should open in certain areas shows it’s worthwhile for them to invest.”

The city has long been known as a test market for consumer products and trends. If a product is successful in Kansas City, others in the rest of the country will likely choose to purchase those products, which include food, fashion and entertainment, according to news articles. More than 100 barbecue restaurants in the metro area serve hungry diners. Those and other restaurants help fuel produce sales, says Caviar. “Demand for produce is growing in Kansas City,” he says. “It’s booming. There’s good potential to sell produce here.”

In St. Louis, wholesalers working on the St. Louis Produce Market, on the northeast side of the city’s downtown near the Mississippi River, distribute produce to the region’s many retail, foodservice and wholesale customers. The market has changed over the years. It has transitioned to a distribution market versus the jobbers’ market it was in the past, says Gallagher. While some restaurants and grocery stores still use the terminal market to supply their produce needs, there isn’t as much of that business as in the past, he says. Most of the business now involves delivering product to customers via truck in an 11-state area. Some customers require steady runs while others periodically call on the market.

Business at the terminal market has changed considerably as new wholesalers enter the market, observes Keith Omura, buyer and inspector with Cusumano & Sons Inc., which distributes to customers within a 100-mile radius of Mount Vernon, IL, including St. Louis’ outer suburbs and Paducah, KY. Cusumano & Sons uses the market on a daily basis. Omura characterizes the region’s produce economy as difficult because of the market’s declining influence in sales.

Wholesaling Challenges

Competition is increasing through national produce buying groups while smaller accounts, the restaurants and grocery stores, are disappearing, says Omura. Wholesalers from Kansas City, MO, Indiana and Michigan are doing more business in the region, he says.

“The competition in St. Louis from outside of St. Louis is starting to increase,” says Omura. “The distributors are outside of St. Louis, but are geographically influenced by our location. They aren’t really indigenous to St. Louis, but they see the city as a competitive market.”

The cost of freight in the metropolitan area has increased, and there are fewer truckers to haul produce, Omura says. He describes the city’s overall economy as stable. “It’s improving slightly, but there is no big spike, per se, in the amount of jobs or industries,” he says. “It’s been the same for the last four to five years.”

With its centralized produce terminal long closed, Kansas City’s distributors truck produce from individual wholesaling operations. In the past, Keith Connell Inc., based in nearby Stillwell, KS, distributed mostly to customers close to Kansas City, including Springfield, MO, Joplin, MO, and Wichita, KS. Today, it trucks a full line of produce to retailers and foodservice jobbers throughout the United States, including the Pacific Northwest, western Canada, Ontario, Canada, and parts of Texas and the eastern Midwest. Keith Connell, president, says the city’s geography helps with distribution. “We are centrally located in Kansas City,” he says. “It’s easier for us to begin expanding out from the middle part of the country.”

The city’s economy remains strong, and produce movement is favorable, says Connell. Retailers, including Prairie Village, KS-based Consentino’s Food Stores’ Apple Market, Price Chopper and Sun Fresh banners, and Kansas City, KS-based Balls Food Stores’ Price Chopper and Hen House, are opening stores.

“These chain stores seem to be growing and adding more stores,” he says. “It’s real competitive for these guys, who do well in merchandising. As far as the produce economy goes here in the Kansas City area, I think it is real good.” In addition to distribution, Keith Connell grows and ships 650 acres of watermelon and pumpkins from Missouri’s Bootheel — the southeastern part of the state — during the summer.

Kansas City’s central location aids in produce distribution. “We are really at a good crossroads for rail and trucks, no matter where you’re going nationwide,” says Dave Haun, president and owner of Haun Potato Co., a Kansas City, MO-based national broker of potatoes and onions. “To be sitting where we are allows us to do business on a spread-out basis for our customers. Being in the Midwest allows us to cover a wide area and still be on the fringes of anyone’s marketing plan or marketing region.”

Supermarket Bonanza

Retailers are doing well merchandising produce, report wholesalers. St. Louis hosts a variety of supermarkets, from small, local stores to the large national chains making a bigger presence in the area.

“This is a highly competitive retail scene,” says United Fruit & Produce’s Gallagher. “When Wal-Mart came in, people thought it was the end of retailers. But they learned how to merchandise against them. Many survive and do well. Dierbergs Market, Schnuck’s and Save-A-Lot are here. You also have Kroger coming in with a few discount stores and stirring up the market a little.”

The supermarkets see strong business, says Eric Schriever, chief operating officer of Front Row Produce, Overland, MO, which distributes throughout Missouri, Illinois, Arkansas and to Memphis, TN, and Nashville, TN. “The retailers are doing really well,” he says. “Everyone wants to have a fresh, in-house look with private labels, which is a huge complement from our customers. We are seeing tremendous growth in the retail side of our business.”

St. Louis area-based supermarket chains account for three of the region’s Top Five players. With a 23.2 percent market share from its 69 area stores, St. Louis’ Schnuck’s is the top supermarket, according to Chain Store Guide’s 2017 Market Share report. In second place, Wal-Mart’s 35 area stores garner a 20.6 percent share. The Kirkwood, MO-based Shop n’ Save is third at 11.2 percent while Chesterfield, MO-based Dierbergs is fourth with a 9.6 percent market share.

Curiously, market shares for eight of the Top 10 leading retailers declined slightly from the previous year while the percentage for Kroger and its Ruler Foods’ 11 stores increased from 3.3 percent to 5.1 percent. Dollar General remained steady at 2 percent while Dollar Tree/Family Dollar increased 1.3 percent to 1.4 percent. Whole Foods increased from 1 percent to 1.3 percent. Fresh Thyme Farmers Market’s three stores entered the list in 2016 at .60 percent.

In Kansas City, MO, Wal-Mart is the dominant player, capturing 21.4 percent of the retail grocery market through its 26 stores. Kansas City, KS-based Balls Food Stores’ Price Chopper and Hen House banners won 12.6 percent with its 28 area outlets. Tying for third place is Hy-Vee’s 20 stores’ 11.4 percent market share, while Prairie Village, KS-based Consentino’s Food Stores’ Apple Market, Price Chopper and Sun Fresh brands took 11.4 percent share with 26 stores. All others, including Costco, Sam’s Club and Aldi, account for market shares of under 8 percent. Four of the Top 10 retailers declined slightly in market shares while the Top Two, plus Super Target, saw small increases.

Quality Saavy Shoppers

In St. Louis, quality trumps price, says Schriever. “Price is important, but now it’s not as important as it used to be because quality is the major driving factor in what customers want,” he says. “The days of ‘hey, it’s cheap but the quality isn’t great’ are over. Everyone demands better quality.”

Quality is helping retailers compete against each other. “We have created partnerships with stores wanting to drive sales,” says Schriever. “A lot of independents are finding their place in the market with the big competition stores. We have partnered and created that custom feel with our customers that helps them make their patrons feel like they’re taken care of through special requests, special packs and overwrapping.” Sales to foodservice distributors and other wholesalers are also strong, says Schriever.

Cusumano & Sons’ Omura says he’s noticing a shift in St. Louis’ urban tastes. “The urban population is becoming far more cognizant of what good produce is versus poor produce,” he says. “They’re definitely looking at produce in a different perspective than what’s good or bad, not someone’s rejection sold at a cheap price. They don’t really want that anymore. They want a good-tasting peach instead of a peach with 25 percent defects that’s not No. 1. They want better products.”