Weather
Outside of the controlled climate is where business can get tricky. “The weather makes it interesting,” shares Chip Wiechec, president of Hunter Bros., Inc. Fluctuating temperatures, not growers, created sizeable gaps and gluts in the marketplace. The wet spring earlier this year delayed planting, while cooler temperatures threatened replants of important summer items like parsley, radishes, and endive in areas like Michigan and Ohio. “Vegetables are impacted more than fruit,” he observes.
Due to the unpredictability of nature’s forces, Wiechec says, “Merchants who can be flexible and roll with the weather have an advantage over those who are locked into a [preplanned] program.” When retailers commit to ads based on historical marketing programs, he explains, sometimes, because of weather events, the promotion is in place but the produce is not.
Maxwell discussed California’s drought and whether it’s been affecting produce businesses on the East Coast. “People say it’s not—but it is,” he states. “The drought is driving the cost of goods up and up. When the availability of goods diminishes, the cost climbs accordingly.”
Marketplace Trends
Like pretty much everywhere, locally grown product continues to be popular with consumers. For Philly, this can mean product from growers in New Jersey, New York, and up the coast. Plus, the transportation headaches are having a positive effect on the locally grown market. “It’s fresh and reasonable, because there’s less freight involved,” says Collotti.
Reilly also keeps tabs on the locally-grown trend. “When selling to retailers, if we can say it is locally grown, that’s a good selling point for us,” he comments. Further, business is up 20 percent to date over last year, and Reilly credits locally sourced goods as a part of this success.
John Vena agrees. As president of John Vena, Inc., he says “the demand for local continues to drive so many marketing and purchasing plans.” Even so, he says local is not the biggest trend. “The strongest trend we see is toward more and more ethnic or regional specialties.” But Vena doesn’t mean domestically grown. “We are constantly working to fulfill demand for imported product to round out seasonal domestic offerings.”
One such imported item is mangos. “The demand for mangos increases every year,” points out Penza. “It’s a great summer item, and all year round, too.” Penza attributes mango demand to mainstream consumers becoming more educated about the beneficial fiber, vitamins, and minerals found in the fruit. “It’s no longer an ethnic item.”
Mangos and cilantro are good examples of what used to be considered specialty or ethnic, but are now a staple on many shoppers’ lists. Collotti credits cooking shows and chefs for the ballooning demand of once-unknown products. “Specialty produce is not just for certain groups anymore,” he says.
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Today’s gleaming Philadelphia Wholesale Produce Market has come a long way, given its humble beginnings. Though the market is still a relatively new facility, as always in the perishables industry, there are challenges and achievements—among them the unpredictable weather, shipping and transportation problems, and food safety, as well as the promise of new products and exotic fruits and vegetables making their way into the city.
Trials and Triumphs
With each new era, the industry seeks to position itself for the long term. Similarly, each decade brings triumphs and challenges commensurate with the scope of its reach. Significant triumphs boast a number of high-tech firsts in storing, cooling, and ripening. “We’ve built new banana ripening rooms where we have the ability to ripen from our iPhones—even while away from work!” enthuses Tracie Levin, general manager for M. Levin and Company, Inc. And although the Philadelphia Wholesale Produce Market (PWPM) provides buyers and sellers with ample space to wheel, deal, and maneuver, there are still impediments.
The Transportation Migraine
The one challenge that seems to trump all others at the Philly market is transportation. “Finding reliable, available, and affordable transportation seems to be worse this season,” says Michael Cutler, president of Michael Cutler Company, in Olyphant, PA. He is looking to transport full truckloads, and is not alone in his frustrations.
“Transportation is the headache,” confirms Jack Collotti, president of Collotti & Sons, Inc. “It’s getting harder and harder to get it as fast as you need it.”
Mike Maxwell, president at Procacci Bros. Sales Corp., estimates the cost of transportation inflates five to six percent every year. “I do see it as equitable between competitors,” he shares, noting all providers tread against the current of mounting regulations on equipment and drivers. “I wish I could see an end.”
The issue is governed partly by supply and demand, and partly by Uncle Sam. First, the demand for California product outweighs demand for East Coast goods. As a result, New England merchants pay a lot more to get a truck from California than it costs for California to get a truckload from the East.
Fred Penza, president of Pinto Bros., Inc., explains, “We pay around $7,500 for a truck from California to Pennsylvania, but when the truck goes back hauling chicken wings or pharmaceuticals, for example, they’re only charged $4,000 or $5,000. I’d like to see that leveled out—it’s not fair,” he remarks.
Plus, the supply of carriers willing to truck to California is declining. California’s emissions regulations far exceed other states. To comply, tractors, reefers, and trailers must be retrofitted with special filters to the tune of $20,000 to $30,000 per installation, Penza estimates. “We’ve lost a lot of independent carriers who used to truck to California,” he asserts. “They just can’t afford it.”
The issue is further complicated by the federal government. Collotti blames the issue on the Federal Motor Carrier Safety Administration’s revised hours of service rules. “What used to take three or four days, now takes four or five,” he observes—and this is a big spread in the perishables business. Collotti says there are fewer drivers now too, adding to the transport squeeze.
Food Safety
The next most vexing challenge is the race for food safety compliance. “The blitz is on for food safety,” says Tom Curtis, president of Tom Curtis Brokerage, Inc.
Certifications are now the rule, and no longer a suggestion. Whether selling to restaurants, institutions, or retail grocers, suppliers will need proof of HAACP, GAP, and/or Primus certifications. Yet most merchants echo the same sentiment: “It’s worth it,” states Curtis. “All it takes is one person not to care. All it takes is one incident to destroy a farm, a business, an industry, and then we all find out what the cost really is if we don’t do it.”
Now three years old, the PWPM was designed specifically to prevent foodborne illnesses. Surfaces are easily cleaned—an important variable in inspections—and, unlike its Dock and Galloway Street predecessors, the current Philly market’s 700,000-square-foot “produce mall” is fully cooled. As Michael Reilly, owner of Ryeco, LLC puts it, “The cold chain is never broken here. Produce is handled at the right temperature from the time it is received until it is out the door.”
Better yet, varying temperatures are a snap at PWPM, where one of the top benefits is making compliance simple by eliminating the detrimental and risky effects of erratic temperatures. As Curtis states, “It’s clean, it’s safe, it’s sanitary.”
Another bonus of the controlled climate is the added longevity of the inventory. “There’s virtually no shrinkage here,” explains Collotti.
Philadelphia Wholesale Produce Market
6700 Essington Avenue
Philadelphia, PA 19153
(215) 336-3003
www.pwpm.net
Open to the public
Size: 700,000 sq. ft., near the Schuylkill River
Hours:
Sunday 10:00 am to Monday 1:00 pm
Weekdays 10:00 pm to 1:00 pm
Anytime by appointment
Peak Hours: 4:00 am to 10:00 am
Closed: Saturdays, July 4, Christmas Day & New Year’s Eve
Weather
Outside of the controlled climate is where business can get tricky. “The weather makes it interesting,” shares Chip Wiechec, president of Hunter Bros., Inc. Fluctuating temperatures, not growers, created sizeable gaps and gluts in the marketplace. The wet spring earlier this year delayed planting, while cooler temperatures threatened replants of important summer items like parsley, radishes, and endive in areas like Michigan and Ohio. “Vegetables are impacted more than fruit,” he observes.
Due to the unpredictability of nature’s forces, Wiechec says, “Merchants who can be flexible and roll with the weather have an advantage over those who are locked into a [preplanned] program.” When retailers commit to ads based on historical marketing programs, he explains, sometimes, because of weather events, the promotion is in place but the produce is not.
Maxwell discussed California’s drought and whether it’s been affecting produce businesses on the East Coast. “People say it’s not—but it is,” he states. “The drought is driving the cost of goods up and up. When the availability of goods diminishes, the cost climbs accordingly.”
Marketplace Trends
Like pretty much everywhere, locally grown product continues to be popular with consumers. For Philly, this can mean product from growers in New Jersey, New York, and up the coast. Plus, the transportation headaches are having a positive effect on the locally grown market. “It’s fresh and reasonable, because there’s less freight involved,” says Collotti.
Reilly also keeps tabs on the locally-grown trend. “When selling to retailers, if we can say it is locally grown, that’s a good selling point for us,” he comments. Further, business is up 20 percent to date over last year, and Reilly credits locally sourced goods as a part of this success.
John Vena agrees. As president of John Vena, Inc., he says “the demand for local continues to drive so many marketing and purchasing plans.” Even so, he says local is not the biggest trend. “The strongest trend we see is toward more and more ethnic or regional specialties.” But Vena doesn’t mean domestically grown. “We are constantly working to fulfill demand for imported product to round out seasonal domestic offerings.”
One such imported item is mangos. “The demand for mangos increases every year,” points out Penza. “It’s a great summer item, and all year round, too.” Penza attributes mango demand to mainstream consumers becoming more educated about the beneficial fiber, vitamins, and minerals found in the fruit. “It’s no longer an ethnic item.”
Mangos and cilantro are good examples of what used to be considered specialty or ethnic, but are now a staple on many shoppers’ lists. Collotti credits cooking shows and chefs for the ballooning demand of once-unknown products. “Specialty produce is not just for certain groups anymore,” he says.
Wiechec concurs and says cilantro sales have risen nearly tenfold in the last decade. He has also noticed an uptick in Asian pears, finding customers are intrigued by the juicy fruit.
From his vantage point as a wholesaler, Wiechec also observes the mounting demand for value-added items. “We used to only sell kale by the bunch in a box, now we have it recipe-ready in bags.” And it’s not just kale enjoying strong demand—the convenience trend has spread to other items like collard greens, which are also climbing in popularity in a washed, chopped, and bagged format.
Perhaps the most promising grab-and-go product is a twist on the enduringly popular salad kits. “If my wife says we’re having Brussels sprouts and red cabbage, I don’t get too excited,” Wiechec admits. “But shred them, toss with kale, sunflower seeds, and dried cherries—and it’s fantastic!”
Kohlrabi, once a nostalgic vegetable, is a rising star with room to grow, predicts Collotti. He’s getting more requests for it, and for the Indian herb medileaf, too. “These items have always been around, but there was never much demand—now, people are starting to ask for them.”
Collotti also notices a rising popularity in “aspirations,” which have not always been around like kohlrabi. More commonly known as the trademarked “Broccolini,” an aspiration is a cross between Chinese kale and broccoli.
Imports & Exports
When it comes to trade and the various fruits and vegetables coming in through the East Coast’s ports, most suppliers have an opinion. John DiFeliciantonio, president of North American Produce Company, says, “Many of the trade agreements protect domestic growers, and rightly so,” but at the same time, as an importer, he would like to see fewer restrictions so wholesalers can provide a greater variety of produce.
His counterparts in Canada, for example, are importing carrots and mangos with exceptional coloring and fragrance. “Domestically, our growers’ standards and cultural practices are the best in the world. At the same time, other countries who would like to do business in the States are upgrading their equipment and practices,” he states. Yet for some exporters, access is blocked due to the complicated, often protracted process necessary to gain entry into U.S. ports. “I think it’s time we revisit the rules.”
To that end, the Port of Philadelphia has been doing its part to increase trade, as a recent meeting with Mexican officials attests. In May, representatives from ten fruit exporters toured the PWPM and nearby packing and cooling facilities to discuss perishable exports.
Organized by Ship Philly First, a nonprofit group comprised of businesses, the Philadelphia port authority, Mexican consulate, and a development agency called ProMexico, the talks bode well for more fruit shipments from throughout Mexico, and should directly impact the PWPM’s merchants and area retailers.
According to figures released by the Philadelphia Regional Port Authority, fruit handled at the port for the first six months of the year totaled nearly 100,000 metric tons (dominated by grapes from Chile and bananas from Costa Rica), remaining steady compared to 2013. If Ship Philly First has its way, this number may rise exponentially in the next few years, benefiting grower-shippers in Mexico as well as wholesalers, retailers, and consumers in the Philadelphia area and extending throughout the state and Eastern Seaboard.
A Brief History:
Dock Creek to Dock Street to Essington Avenue
Philadelphia’s original wholesale market sprouted after city officials decided to fill in the dangerously polluted Dock Creek, a tributary of the Delaware River. The repurposed creek bed (renamed Dock Street) vastly improved the lives and health of city-dwelling Philadelphians by replacing the contaminated inlet with a fresh produce market.
It was a massive project for the day. But as horse power gave way to gas-powered trucks and population climbed by double-digits each year, the Dock Street market outgrew itself and the ability to feed the community and beyond.
Next came the Food Distribution Center in 1959 on Galloway Street, which embraced available technology of the day and carried the ball for over fifty years. Then, Philly did it again—transforming a former dump and eyesore on Essington Street into the sprawling, state-of-the-art Philly wholesale market of today.
Retailers – A Mixed Bag
Despite its state-of-the-art facility, doing business with the area’s variety of retailers—both old and new—remains disappointing for many merchants. Recently, when new chains moved into the region, the PWPM was not tapped as a primary source for fresh produce. Instead, Curtis explains, the larger regional or national chains came in with their own central warehousing—one of the effects of consolidation.
DiFeliciantonio says it was never practical to think the PWPM would replace chain distribution centers, but the market can tangibly support the big players. “There will always be late trucks, or a problem in a growing area that creates a shortage. That’s when we help fill the gaps.”
Breaking into the major chains takes time to build relationships and trust. “Bigger customers are getting more comfortable that the volume is here,” he says. “They already know we have the variety—we have everything from A to Z.”
Even without all-in patronage from the big-box stores, optimism runs high. “Where we’re seeing the pull,” Curtis affirms, “is from independent retailers.” The independents recognize how the PWPM can help them be nimble, responsive retailers. He applauds ‘discerning’ buyers who realize the value of their purchases and appreciate the opportunity to buy the freshest fruit and vegetables by seeing the quality firsthand, then negotiating a suitable price.
DiFeliciantonio concurs. He observes some independent grocers are getting bigger, and may operate four or five stores. “There is a continued emphasis on freshness: ‘Eat fresh. Eat more fruits and vegetables.’ That mantra fuels their growth and ours.”
Building Bridges
In hopes of building bridges with the larger retailers, Philadelphia was chosen as the host of a Produce Marketing Association “Fresh Connections: Retail” event back in June, which brought a number of retail representatives to the PWPM for a tour. Also on hand were representatives from both Pennsylvania’s and New Jersey’s state departments of agriculture. The exposure was a good way for retailers to see firsthand what the facility and its many merchants have to offer.
Philly’s eight-county region is home to a number of grocery chains, and shoppers spend upwards of $8 billion annually on food. But there’s been much transition over the last couple years as up-and-comers like Whole Foods Markets invade the area, and old favorites like Genuardi’s, owned by Safeway, Inc., are closed or sold off (many locations went to Giant Food Stores, bolstering its presence).
Established leaders include the big three: ShopRite (owned by Wakefern Food Corp.), Giant Food Stores (owned by Ahold), and Acme (owned by Supervalu, Inc.).
Combined, these three heavyweights control more than 35 percent of the area’s grocery shopping. Two more retailers gaining market share are BJ’s Wholesale Club, which took over several stores in the city and suburbs formerly operated by A&P, Pathmark, and Super Fresh, and Wegmans, which opened several new locations the past few years. Other popular players include Save-A-Lot, Thriftway, Shop n Bag, and Redner’s Warehouse Markets.
As previously noted, upscale retailer Whole Foods Market is trying to make its mark with a handful of stores, while chains and independents alike continue to battle both Walmart and Target’s additional food offerings.
Last but not least are drugstores like Walgreens, CVS, and Rite Aid, which are dedicating more shelf space to fresh food, while convenience stores like Seven-Eleven and Wawa—which hold sway in the area with more than 450 stores combined—are carrying increasing amounts of fresh produce and on-the-go prepared foods.
Beyond retailers, the PWPM’s customer mix is as varied as its rainbow of goods. The market supplies hospitals, restaurants, schools, and processors. Neighborhood co-ops and nonprofits shop the market, too. DiFeliciantonio notes, “We serve individual households, too. It’s well lit, so families feel safe coming here.”
Industry Exposure
Despite the lack of enthusiasm regarding retail sourcing, PWPM merchants continue to network within the area and throughout the East Coast. The Eastern Produce Council has held its annual meeting at the facility for two years running, bringing in members from throughout the region.
“There are a lot of people in the industry we haven’t seen for a while before they came here (for the meeting),” Collotti enthused. “It’s an opportunity to rekindle those ties.”
The PWPM also gives back to the community in a number of ways, from having the market open to the public to sending fruit and vegetables to those in need. The latter is handled through donations and initiatives to several organizations, including local and regional food banks, as well as Philabundance.
Fresh Forum
While the Philadelphia Wholesale Produce Market is among the most modern facilities in the world, if there was one thing you could change, what would it be?
Jack Collotti, Collotti & Sons, Inc.
I can’t think of anything I would improve. The location is right by I-95 and I-76, and very accessible. There’s no rail siding, but that’s not an issue for us.
Chip Wiechec, Hunter Bros., Inc.
What I miss about the old market is you could see who was coming in… Here, it’s so big you can lose a feel for all of the customers. Sometimes, when customers owe you money, it’s easier for them to avoid you than at the old market. Also, customers may not walk around as much and see what’s available, due to the size. Rent is also a challenge.
John Vena, John Vena, Inc.
The one thing I would change about our facility would be to put our sales and administrative offices adjacent to the Sales and Display area. In that way, all of our sales and customer service people would have a better opportunity to interact with a wider range of customers, and they’d be physically closer to the product. What we do requires such a depth of knowledge about what we have in the cooler, and strong relationships with every customer.
Tracie Levin, M. Levin and Company, Inc.
The one thing I would change about the building is that the windows do not open to let in fresh air, especially during the spring and crisp fall days. But, in reality, keeping the cold chain is much more important— especially if it means keeping our food safe.
Michael Cutler, Michael Cutler Company
The facility is terrific, but there’s no railroad siding—that makes shipping and receiving more difficult.
John DiFeliciantonio, North American Produce Company
I can’t think of anything that could be better. We have mechanized loading docks, a huge number of loading docks, great lighting, wide aisles, lots of space to stage, there’s no congestion—this place is like heaven compared to what we used to work out of!
Fred Penza, Pinto Bros., Inc.
I wish the rent was free (laughs). There is a need to decrease expenses and move more product.
Mike Maxwell, Proccaci Bros. Sales Inc.
It’s really exceeded our expectations; it’s a beautiful facility. The employees are out of the elements. I can’t think of anything I would do differently.
Michael Reilly, Ryeco, LLC
I’m really happy with our new facility, and I can’t think of anything that could be better.
Tom Curtis, Tom Curtis Brokerage, Inc.
I would have it a little more accessible for the cash-in customers. They have to park at a distance, and if they need a jack, it’s a bit of a wait.
Philabundance
Time and time again since its infancy, the PWPM’s merchants prioritize taking care of their own. On Galloway Street, not far from the market’s former location, is the nonprofit Philabundance hunger relief agency. The philanthropic organization serves impoverished individuals, many of them seniors and children, in nine counties.
In the city of Philadelphia alone, 240,777 meals were created in 2013 using donated produce to feed the hungry, according to Levin. “It is a truly great organization,” she says. “They make a huge impact on the food banks in our region.”
What is unique about Philabundance is it doesn’t value food donations by simply putting them on a scale (although M. Levin alone donates anywhere from a few hundred to 250,000 pounds of fruits and vegetables at a time). The organization is more concerned with the nutritional “weight” of products than actual poundage, and measures donations in kind with its “Quality Adjusted Statistical Pound” (QASP) system. Philly’s fresh produce trade, of course, repeatedly tips the QASP scales in quality and is a natural partner with Philabundance.
“Philabundance does a nice job,” comments Curtis. “Take Philabundance away, and there’ll be a lot of hungry people.” Efforts have been helped of late through the agency’s first store, opened in 2013. As the nation’s first nonprofit grocery store, Philabundance serves the Delaware Valley through its new 16,000-square-foot supermarket in Chester. Previously designated as a ‘food desert,’ Chester has lacked a viable source for fresh food—especially fresh fruit and vegetables—for more than a decade.
Another charitable initiative was recently in the news. Ephrata, PA-based Four Seasons Produce, Inc., a receiver and importer, donated a chunk of its summer profits (totaling more than $50,000) to help feed the hungry. The gift was divided between three area food banks and Philabundance.
Conclusion
Pinto Bros.’ Penza is enthusiastic about the future of the produce business in the PWPM. “It’s a great place to work. We hope everyone stays in business,” he shares. “We are bringing up the next generation here. I think they will flourish.”
“We have a rosy outlook in Philadelphia,” agrees Curtis. “As food safety mandates become more stringent, there are some players elsewhere in the country who will have to play catch-up. But, for some of them, they won’t be able to,” he predicts. “But we’re there. As time goes on, I believe more and more customers will seek us out, even if we are at a distance, because we’re ahead of the curve.”
The heritage of Philly’s produce industry makes a statement that nothing is too hard, or too big. Its legacy is evident in the current culture, as the PWPM sails boldly into the new era of commerce. Clearly, the industry here will continue to outshine itself.
Image: Shutterstock
