Wholesalers Stay Proactive

Originally printed in the October 2019 issue of Produce Business.

Faced with adversity and change, produce wholesalers persevere
in finding ways to continue serving the evolving needs of customers.

In 1913, when TJ Fleming’s great-grandfather started Strube Celery & Vegetable Co. in Chicago, the wholesale market was the only option for most buyers. It remained the vital link for growers and retailers through much of the 20th century.

But Fleming, vice president and director of sales at Strube, points out times have changed in recent decades. “Now there are so many options for my customers,” he says. “So we need to consider where our advantage or niche is.”

“We have local farmers who grow exclusively for us… We sit with them in the winter and plan out the season, talking about what they can grow to give us both an advantage.”

— TJ Fleming, Strube

Produce wholesalers were paramount to the success of supermarkets before mainliners took on produce, explains Bob Corey, ambassador/advisor for Corey Brothers in Charleston, WV. “The successful wholesaler helped set ad plans, do seasonal resets and provide counseling and training of produce personnel,” he says. “The ones who did this exceptionally well grew their business dramatically.”

As times change, so has the game plan espoused by wholesalers, yet a winning record must be set on solid fundamentals.

“A lot of wholesalers talk about not knowing where they fit in and how they’re relevant, but in reality, a wholesaler’s job is to get from Point A to Point B better than anybody else,” says Daniel Corsaro, vice president of sales and marketing with Indianapolis Fruit Company in Indianapolis.

“When you focus on that, you get back to what you do well. Getting back to the basics is something we stress all the time — we have to do the blocking and tackling really well or else we can’t score any touchdowns.

“We must know as much about each customer as they know about themselves. That’s very exciting for us because we become a very integral part of their business.”

— Daniel Corsaro, Indianapolis Fruit Company

The days of simply supplying product to customers have faded away, says Butch Hill, general manager for Shasta Produce in South San Francisco, CA.

“Increasingly, customers are requiring not just product, but service associated with the product,” he says. “We live in a service-driven economy more than ever, and competition for the most inclusive service is fierce. We are constantly looking for ways to help our customers increase their bottom line. This includes making them aware of new items, reports for movement and profitability, merchandising and consulting along with ease-of-order placement, complete order fulfillment and on-time deliveries every time. These are both challenging and exciting times.”

“They (wholesalers) should always be thinking outside the box and imagine themselves as a successful delivery service and not just produce.”

— Butch Hill, Shasta Produce

At their core, produce wholesalers exist to provide breadth of product variety, supply chain infrastructure and economies of scale that many buyers would not have on their own, explains Jonathan Steffy, vice president and general manager for Four Seasons Produce in Ephrata, PA.

What types of buyers those are and what they need from wholesalers has always had an element of change based on what’s happening in the marketplace,” he says.

Wholesale Advantages

As the wholesale role continues to evolve, marketplace changes make them more relevant.

“With new rules and regulations around transportation, the increase of smaller independent food stores and an increased desire for fresh fruits and vegetables on a regular basis, the need for wholesalers in the supply chain has become even more important,” says Stefanie Katzman of S. Katzman Produce in the Bronx, NY. “With all the increasing industry challenges, the importance of information flow is even more important — one more advantage a wholesaler brings into play.”

“With all the increasing industry challenges, the importance of information flow is even more important — one more advantage a wholesaler brings into play.”

— Stefanie Katzman, S. Katzman Produce

Linda Luka, director of marketing and communications for General Produce Co. in Sacramento, CA, mentions food safety, product education, care and handling and transportation challenges as contributing to pressure in daily operations. “Food costs, profit margins and shrinking labor pools place more demand on retailers and foodservice operators,” she says. “Our contribution is in understanding their needs and goals.”

“We provide an annual retail playbook for seasonal merchandising and ad planning.”

— Linda Luka, General Produce Co.

Wholesalers should forget they are just wholesalers and look for any and all opportunities to increase offerings and services, advises Hill. “They (wholesalers) should always be thinking outside the box and imagine themselves as a successful delivery service and not just produce,” he says.

An Integral Team Member

Wholesalers were born to fill an essential role in the produce network. Katzman asserts wholesalers came about because not all growers or retailers were big enough to deal directly with each other, not all produce arrives exactly as planned, and not all production goes as planned.

“These are the three main issues wholesalers still resolve,” she says. “Over time, the wholesaler has become so much more, but everything we do can all be brought back to customer service and bringing the customers what they need.”

As business models have changed, wholesalers have changed with them.

“Fifty years ago, the model was, ‘we’re going to handle a Red Delicious apple, and we’re going to get the best price and sell it’,” says Corsaro. “Now, every customer wants a different Red Delicious in a different way. It’s about customizing every single customer’s different supply chain and go-to-market strategy. We must know as much about each customer as they know about themselves. That’s very exciting for us because we become a very integral part of their business.”

Wholesalers have become more of a strategic partner for foodservice and retail customers, concurs Andrew Scott, vice president of business development for Nickey Gregory Company in Forest Park, GA.

“Local and regional customers can replenish from a wholesaler the same day or next morning. And, wholesalers are offering more services, such as processing, private label, cross docking and redistribution and logistics.”

— Andrew Scott, Nickey Gregory Company

“We are that important step in the supply chain,” he says. “Local and regional customers can replenish from a wholesaler the same day or next morning. And, wholesalers are offering more services, such as processing, private label, cross-docking and redistribution and logistics.”

Corsaro explains the increasingly competitive retail environment drives the diversity of services demanded from wholesalers.

“As retailers continue to fight for market share through differentiation, retailers who have the same business model are asking us to help them be different,” he says. “So, instead of managing four or six programs, we’re managing 12 or 18. It’s so competitive in the retail space that it’s created a need for wholesalers and distributors like us who can handle different supply chain models for retailers who can’t handle it themselves.”

Especially in today’s information age with insight just a click away, customers expect more from all business they engage with, suggests Steffy of Four Seasons. “Some customers are simply interested in price, and that’s all they value,” he says. “But many other customers are looking for business partners to help them solve problems, achieve strategic goals and be more profitable — much different than having the lowest costs of goods. For the latter type of customer, aligning with the wholesaler is key.”

The past few years have definitely seen some culling in the wholesale industry, reports Emily Kohlhas, director of marketing at John Vena Inc. (JVI) in Philadelphia. “Successful businesses seem to have pushed one way or the other toward a volume-driven model more focused on the grower or a service-focused model shifting closer to the customer,” she says. “We’ve been able to hold ground somewhere in the middle because of our unique specialty product assortment, decades of relationships with growers, incredibly diverse customer base, and high-investment services that aren’t approachable for most small- to mid-size firms.”

“Successful businesses seem to have pushed one way or the other toward a volume-driven model more focused on the grower or a service-focused model shifting closer to the customer.”

— Emily Kohlas, John Vena Inc.

Shasta’s Hill says a complete universal system for procuring, storing, merchandising and selling products and services is the ultimate goal for wholesalers.

“We are seeing fewer independent markets these days, a real shame, because major chains are doing all of the innovating, and it is always proprietary,” he says. “No one is really innovating for the mom-and-pop. There are innovations available, but they are fragmented and all over the place. The wholesaler of the future will have an entire suite of proven systems and services working together in a way that will allow smaller businesses to successfully compete with major players without each one having to figure it all out for themselves.”

Crucial Team Support

Mounting constraints at retail have made marketing and merchandising support even more crucial.

“There has been a trend of some retailers allocating less labor hours to the produce department,” says Four Season’s Steffy. “Stores tend to have less tenure in produce than in the past, and filling open positions has become trickier. To help retailers and other produce buyers with this labor pinch, many produce wholesalers have added or expanded services, including store-door-delivery, third-party logistics help, merchandising support, staff trainings, display building and display contests, ad writing and promotion support, and stocking new convenience or packaged product lines that replace or augment what used to be cut or made in store.”

“Many other customers are looking for business partners to help them solve problems, achieve strategic goals and be more profitable — much different than having the lowest costs of goods.”

— Jonathan Steffy, Four Seasons Produce

Katzman notes wholesalers act as an extension of both growers and retailers.

“This is why these partnerships are so successful,” she says. “We have customers we can reach out to that can react in the moment to adjust retail pricing to promote products, and we have customers that we can set up ad promotions with in advance for seasonal, holiday, special occasions and programs.”

Merchandising and ad support is a crucial section of the wholesaler playbook. Indianapolis Fruit has been providing merchandising and planning services for two decades.

“We have more than 20 people in the markets we serve who act essentially as produce consultants,” says Corsaro. “They are there to help get the retail department ready for the next morning or the next season and help customers understand how they can maneuver in competitive landscape.”

Shasta Produce developed a marketing department responsible for carrying out ad campaigns for both shippers and customers. “They primarily use social media for the delivery of these services, and it has been a very successful addition to our service offerings,” says Hill.

General Produce ensures its retail merchandisers have industry expertise in maximizing sales through thoughtful and visually impactful displays, according to Luka. “We provide an annual retail playbook for seasonal merchandising and ad planning,” she says. “This gets customized for particular customers to work in tandem with their specific promotional calendar and in-store activities.”

Four Seasons offers a broad variety of opportunities customized to meet specific retailer business models, including ad writing and quoting, off-invoice schedules for produce department value-added product lines, spot deals and flash sales, in-store special programs, themed or branded display contests, marketplace price checks, and custom-zone suggested retail pricing.

“Our expert produce merchandisers are highly engaged with customers in the field,” says Steffy. “They collaborate on department layout and setup, display-building, display contests and theme events, staff trainings, and show-and-tell learning events. They counsel retailers on ways to grow sales, improve margins, reduce shrink and establish their differentiation.”

Four Seasons reports receiving a thank you letter from the produce buyer at a food co-op store in New England, recognizing the efforts of merchandising specialist Dominic Pelosi. “He helped their produce team achieve a 16% year-over-year sales growth in the produce department for the second quarter, along with a multi-thousands gross-margin boost,” notes Steffy.

This June, Four Seasons senior merchandiser and natural stores coordinator, Brian Dey, crafted an event with Lexington Co-op Markets in Buffalo, NY, and Ocean Mist Farms. “The store branded a four-day artichoke bash as The Great Artichoke Adventure and included a 4,300-unit massive display of artichokes, give-a-ways and tie-ins with in-store foodservice,” says Steffy. “The event generated a lot of excitement, and now the store sells three times or more as many fresh artichokes on a weekly basis than prior to the mega display.”

STRATEGIC MOVEMENT GIVES WHOLESALERS AN EDGE

As transportation and labor become more problematic and buyers look to mitigate risk and expense, wholesalers have developed a new playbook of services to meet customer needs, including cross-docking, forward distribution and other logistics services as well as ripening, repacking and serving as importer-of-record.

John Vena Inc. in Philadelphia continues to grow its operating service departments, JVI Ripening and JVI Repacking.

“The contract ripening and repack work we do outside our core JVI Wholesale business is indispensable to the success of those investments,” says Emily Kohlhas, director of marketing at John Vena. “Next year, we’ll continue to increase the amount of direct importing we do through a new subsidiary, JVI Imports. It really is essential that as a wholesaler you thoroughly vet and stand behind every grower you represent. We are only as great as our growers.”

General Produce Co. in Sacramento, CA, offers cross-docking, forward distribution services, acts as importer-of-record for imports and repacks produce. “All this is becoming more commonplace, particularly as trucking challenges persist and the cost of distribution continues to rise,” says Linda Luka, director of marketing and communications. “The more services we can offer in this arena helps build our partnerships with customers.”

Geography, product line and service are all areas of evolution for MC Produce in Montreal. “We distribute all across Canada,” says Maria Cavazos, president. “We’re also doing more packaging to provide more value-added, and we’re adding more items to our lines.”

TJ Fleming, vice president and director of sales at Strube Celery & Vegetable Co. in Chicago, reports a growing emphasis on cross-docking. “There is great cost associated with trucks especially if a truck sits for 6 to 7 hours,” he says. “We have scheduled appointments for customers we serve every day, so we find more and more grower/shippers send us their product to deliver to the final customer. This service is growing because we do it well, and it’s easier for us to do than our shippers.”

Business on both sides of the field drives new services, as evidenced by Indianapolis Fruit Company’s growing logistics and cross-docking ventures. “There are multiple retailers across the country who have fantastic facilities, but their customers are asking them to carry twice the items now, which is complex,” says Daniel Corsaro, vice president of sales and marketing. “They’re asking us to manage some of their more challenging items.”

Corsaro explains as larger retailers in the country put pressure on growers to offer delivered programs, it can be complex for growers to comply.

“Delivery for a grower can be cumbersome and expensive,” he says. “We’re making an effort to work with our grower partners to do ‘last-mile’ freight and storage because we’re already in those areas. This allows our shippers to service their customers, and we continue to play an extremely relevant role in the supply chain.”

The Four Seasons Family of Companies, Ephrata, PA, engages in cross-docking for retailers and grower-shippers, LTL freight service inbound and final-mile service through the Northeast and Mid-Atlantic.

“We also provide freight brokerage, cold storage, banana and avocado ripening, repack and bagging, and importing services,” says Jonathan Steffy, vice president and general manager. “The demand has been so strong for this menu of services using our talents and assets that two well-established sister companies emerged a decade ago and are doing quite well.”

Additional services focused on repack, fresh-cut and ripening continue to cater to targeted customer needs. “Wholesalers had invested in professional ripening rooms primarily used for bananas in the past, but with the growing popularity in Hass avocados, wholesalers are starting to get involved with large-scale avocado ripening programs,” says Steffy.

Repacking and breakdown is a growing part of Strube’s business because many stores don’t want a 60-count cilantro, according to Fleming. “They’d rather take a fresher 30-count and replenish by coming back in,” he says. “Our customers are more conscious of the amount of produce they buy at one time.”

Nickey Gregory Company in Forest Park, GA, enjoys growth in processing/fresh-cut.

“We created Family Fresh Foods as our own in-house fresh-cut processor,” says Andrew Scott, vice president of business development. “Our customers have a need for value-added products they can order one day, and we deliver the next.”

Facilitating The Local/Organic Huddle

Many wholesalers align themselves with local and organic growers, serving as a hub to help maintain and grow these programs. TJ Fleming of Strube Celery & Vegetable Co. points out during the local season, customers may send someone around to two or three farms and bypass the market completely, but there is a cost involved.

“You have to hire a driver, and you lose a guy for the day,” he says. “Instead, they should take an account of what it costs them, what’s the real value. The perceived value is there, but what’s the real value. And, if there is an issue, can they go back to the farmer and get a credit? Probably not.”

As an alternative, wholesalers offer coordination and planning for the local deal. Four Seasons, located in Lancaster County, PA’s rich growing region, plans for product to be grown specifically for its customers at neighboring Amish and conservative Mennonite family farms.

“Such planning with regional growers throughout Virginia, Maryland, Delaware, New Jersey, Pennsylvania and New York is essential to our shared success in the late spring through fall,” says Four Season’s Jonathan Steffy.

Strube also enjoys strong local grower/shipper representation. “We have local farmers who grow exclusively for us,” says Fleming. “We sit with them in the winter and plan the season, talking about what they can grow to give us both an advantage. For example, whether we can be the first ones in the season with gypsy peppers.”

Georgia’s Nickey Gregory aligns with local growers and is a big supporter of Georgia Grown and Fresh from Florida. General Produce’s California location yields a great network of small and large local growers.

“We provide grower profiles for point of sale so customers can appreciate who’s growing their local pears, persimmons and melons,” says General Produce’s Linda Luka. “These farmers participate with us to provide retail support when possible for outdoor farmers market events and product education and tastings.”

Wholesalers also act as an organic distribution center for stores limited in buying organic directly.

“We have our own line of packaged, bagged and break-case organics,” says Indianapolis Fruit’s Daniel Corsaro. “This provides an opportunity to customers who want to sell organics but are shy about unknown customer demand. Our Garden Organic program allows them to minimize the exposure for shrink, damage and rotation. Our break-case program allows customers to carry more variety than they would if they had to buy full cases. Our packaged product allows for extended shelf life and easy merchandising. Customers love that it’s all UPC, so they don’t have to worry about a cashier ringing it up correctly.”

Certified Organic represents about half of Four Seasons’ sales volume, reports Steffy. “Natural foods retailers and other retailers with 100% organic produce departments benefit from our broad organic offerings.

“The organic program also helps Four Seasons support retailers who are self-distributed in conventional to grow or supplement emerging organic programs.”