Since the Midwest’s growing season is relatively short—about three months—imports are essential to keep up with demand for fresh, high-quality produce, including organic items. “Organic imports extend the seasons, ensuring they’re available 52 weeks per year,” states Scaman.
“For millennials, organics are mainstream commodities,” he explains. “They’re the first generation of consumers to have organics their whole lives. For them, organics are the rule and conventional is the exception.”
Area Greenhouses
In and around Chicago, greenhouses are making it possible for more produce to be truly local. Last November, Brooklyn-based Gotham Greens opened a new two-acre greenhouse in the Pullman area on Chicago’s South Side.
According to the company, the new facility is expected to grow nearly 10 million romaine lettuce, kale, and basil plants this year. The premium-quality, pesticide- free leafy greens and herbs are destined for retailers, restaurants, and institutions throughout the Chicagoland area. The Pullman greenhouse’s yields are projected to equal those of over 50 acres of conventional field production.
BrightFarms, Inc., also located in New York, builds and operates greenhouses near supermarkets to produce ‘local’ produce, slashing the time and distance commodities will travel from farm to destination. In partnership with local Mariano’s (a division of Wisconsin-based Roundy’s Supermarkets), BrightFarms will grow and deliver fresh produce to the regional chain’s stores. Located in Rochelle, about 80 miles west of Chicago, the BrightFarms greenhouse will supply leafy greens and herbs for Mariano’s private label.
The mission of grower FarmedHere, located in Bedford Park (a suburb about 30 miles southwest of Chicago), is to supply a full line of branded fresh organic greens and herbs within 24 hours of harvest and make them accessible to everyone—restaurants, stores, specialty shops, and consumers too.
Wholesaler Impact
If urban greenhouses are a trend and a few becomes many, will it impact Chicago’s wholesale distribution network? Pappas says Coosemans Worldwide has been a niche dealer of fresh herbs and specialty greens for years, “but we deal mostly with individual units or small chains. The large greenhouses like Gotham Greens sell primarily to large chains, so they don’t really affect our business.”
Page 6 of 7« First«...34567»
In 1914 poet Carl Sandburg described his adopted town of Chicago as the “city of the broad shoulders,” referring to the commercial and industrial vigor of the U.S.’s third-largest city. The description is no less true today as Chicago enjoys the combined benefits of a Midwestern setting, great infrastructure (including six interstate highways that connect both east and west for 2,000 miles), and a prime location on Lake Michigan.
Chicago continues to evolve from a legendary meat-and-potatoes region to a culinary promised land. Along with the area’s vibrant diversity and being within a day’s drive of 70 percent of the country’s population, it’s a formula that places the Chicago International Produce Market (CIPM) at the heart of the expanding produce industry within the Midwest and nation.
While Chicago is a city full of culture, superb dining, and a hub of commerce and innovation—one inescapable feature is the weather. The brutal, arctic winters and steamy, sweltering summers not only present challenges for preserving the quality of fresh produce, but consumer behavior can be greatly affected by fluctuating temperatures, both high and low.
Weather Extremes
A number of sources discussed how during the harshest parts of the winter sales often slow down, and there are gaps in supply that can cause prices to rise. A recent case in point was tomatoes.
Mark Pappas, president of Coosemans Worldwide, Inc., a specialty distributor and importer on the CIPM for nearly 25 years observes, “The gap in hydroponic tomatoes was bigger this year,” he confirms. “Prices have been up and it was tough to source some items. Canadian hothouses were retooling just as there were less than ideal conditions in Texas and Mexico. All varieties of tomatoes were expensive. We’ve seen spikes before, but this year they stayed up longer than in previous years.” The upside, he notes is that the pricing spikes rarely last. “In spring, everything is more plentiful and prices come down.”
Longtime wholesaler Nick Gaglione, president of Dietz & Kolodenko Comp-any, a receiver and distributor located at the CIPM, comments, “If people stay at home due to extreme weather, they’re not buying as much. On the other hand, the early winter of 2015 was mild, so people were doing things other than shopping for groceries, purchasing more prepared foods from service delis. Instead of buying five pounds of potatoes from the produce department, they would buy a pint of roasted potatoes.”
The CIPM, which opened at its current location in 2001 and is home to around 20 vendors, recently addressed Chicago’s extremes in weather by adding an enclosure around the main dock. This not only helps reduce costs by maintaining temperatures in the loading area—during the heat and humidity of the summer and bone-chilling cold of the winter—but can also minimize losses and shrink of the many perishables stored inside.
Labor Pains
Unions play a big role in Chicago commerce, and this can present challenges to produce vendors on the Market.
The playing field, especially when it comes to hourly wages, is uneven as nonunion workers reportedly earn $18 an hour while union wages are in the range of $30 per hour. For an industry with razor-thin margins, the impact can be staggering.
A related facet of labor concerns transportation and the ongoing hours of service wrangling between drivers and federal authorities. Limits and fewer hours behind the wheel can turn a routine or typical three-day haul into four or more days, especially with the vagaries of Chicagoland’s legendary traffic snarls.
Several of Chicago’s main arteries were among the American Transportation Research Institute’s “Congestion Impact Analysis” in 2015, including the I-290 interchange at I-94 (ranked second in the nation out of 250 total locations), as well as I-94’s interchanges with I-80 and I-90 going into the city. Fortunately, the CIPM is just off I-55, so most drivers aren’t forced to navigate through all the most congested routes.
Driver Shortage & Retention
Another conundrum revolves around experience behind the wheel. The U.S. Department of Transportation now requires drivers to have at least two years’ experience before they can be insured. “We have about 15 trucks that make runs to pick up produce from Mexico,” comments Pablo Enriquez, Jr., who owns and runs the trucking division of Enriquez Produce, Inc. on the market. “Drivers have to be at least 21 to drive out of state; from ages 18 to 21, they can drive in-state to gain experience.”
Of course, on top of less time behind the wheel, younger drivers cost shippers and receivers more because of higher insurance premiums, which is why experienced truck drivers are so valuable and in short supply. “One of the biggest challenges is that it’s difficult to retain older, experienced drivers,” explains Enriquez. “These individuals frequently have families and don’t necessarily want to spend days on the road.”
Toss in the ever-changing regulatory atmosphere and maintaining a steady roster of drivers is even harder. “The tough regulations definitely affect our business,” Enriquez asserts. “The limited hours of service and electronic log books can lead to having product stuck on the road. Regulations mandate that all drivers take eight hours of continuous rest (even if an individual is comfortable operating on five hours of sleep), and this slows deliveries—which can result in damage to our perishable products.”
Market Advantages
Although today’s technology has made it possible for merchants to do almost everything online, there are still many advantages to being on-site at the CIPM. Most wholesalers still favor the face-to-face aspect of the business, believing buyers and sellers who rely more heavily on phone calls and online orders may be missing opportunities.
Gaglione appreciates the large customer base and friendly rivalry; he also cites the CIPM’s advantages of newer construction projects, cleanliness, and having everything on a single level (unlike the old South Water location, which had four levels of warehouses and docks originally designed to accommodate horse-drawn wagons).
Pappas agrees that there’s plenty of competition at the CIPM, and it’s both a positive and a negative. “When we started, there were potato houses, leafy green houses, etc.,” he observers. “Now everyone has specialties—but actually, competition is good for business.”
On & Off The Market
Not everyone, however, feels it is necessary to actually be on the market, with some receivers and distributors locating their businesses adjacent to the CIPM or nearby. Anthony Marano Company chose a huge industrial space next to the new $60-million CIPM when the anchor businesses relocated from the South Water Market back in 2002.
“My dad started selling to wholesalers at the CIPM from the Blue Island Avenue location because he didn’t want to compete with his customers,” explains Enriquez. “Here, it’s not as congested for loading trucks and there’s less chance your competitors will come around to check out your merchandise. Also, being outside the CIPM has enabled us to offer better benefits to our workers than the union businesses do.”
Another nontenant is Blue Island Wholesale Produce, Inc. Daniel Suarez is president of Blue Island Wholesale, which imports from Mexico for the Hispanic foodservice trade. He says being across the street from the CIPM works well and can be less complicated than the hectic pace at the market. “We have customers we’ve had for 20 to 25 years,” he explains, and believes that by keeping the company small and off the market makes it more manageable and advantageous to his buyers. “We can serve them better.”
Roger Riehm, owner of Blue Creek Produce—a grower, broker, and distributor located 40 miles outside Chicago in the suburb of St. Charles—made a major transition this year. The supplier, which built its business on tomatoes before expanding to other vegetables and fruit, had been affiliated with the CIPM for many years before opening a new office in Florida.
Riehm says he moved part of the company’s operations and sales staff because of Blue Creek’s extensive greenhouse operations in Mexico. “It made sense for us,” he explains, “since so much of our business is in tomatoes grown in Mexico and Florida. We felt the need to be closer to our growers.”
Despite the recent move, however, Riehm notes, “a large portion of our sales and administrative operations are still in St. Charles and that’s worked out very well for the company and our employees.”
CHICAGO INTERNATIONAL PRODUCE MARKET: THE 411
Address: 2404 S. Wolcott Avenue, Chicago, IL 60608-5300
(Located on the South Side of the city, off of I-55 near the intersection of Damen and South Blue Island avenues.)
Phone: 847-585-0701
Email: info@cipm.org
Website: www.chicagoproducemarket.com
Hours:
Monday – Friday: 8 am to 12:00 pm
Saturday – reduced hours
• Many merchants open at 3:30 or 4:00 am; individual business hours may vary.
• Closed Sundays, as well as New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas Day.
Available Services:
Value-Added
• Fruit ripening
• Custom repacking
• Packaging
• Private labels
Transportation
• Truckload consolidation
• Cross-docking
• Daily delivery by ground or air
Factoids:
• Opened in 2001
• State-of-the-art facilty
• 20-plus produce businesses
• Multigenerational vendors
Food Safety
While the implementation of several Food Safety Modernization Act rules this year will be a victory as a result of the most significant food safety reform in 70 years, its progress and rulemaking process has also generated much trepidation, especially for smaller operations and the costs of compliance. The good news is a graduated schedule for implementation, depending on size. This is also good news for the receivers and distributors who source locally-grown fruits and vegetables in the area.
“If you want to sell to the big full-line distributors and chains, you have to have all your ducks in a row food safety-wise,” comments Pappas at Coosemans. “When we first started in the mid-1990s, people would bring in wild morels (mushrooms), covered with dirt. We can’t purchase food that way today. What if they were contaminated by some toxin?
“Having a paper trail documenting proper handling is essential,” Pappas continues. “More small companies are complying, which gives us more sources for product. If you’re a serious grower, you’re going to comply. It allows us to provide more local produce, and we can be confident of its safety. That’s good for business,” he concludes.
Scott Weber, a partner in the Ruby Robinson Company, Inc., a distributor and grower-shipper located in Buffalo Grove, a northern suburb of Chicago, adds, “We have a whole department dedicated to food safety that makes certain all our suppliers comply with traceability. If they can’t validate food safety, we can’t buy from them.” To Weber, the equation is simple: as more companies comply, there is more safe product, and this should give customers peace of mind.
Enriquez concurs, finding a substantial number of “customers as well as consumers are demanding traceability. Everyone down the line is concerned about food safety and FSMA will make sure more of our suppliers can comply.”
Trends & Changes
When Chicago’s market moved from the Loop to its South Water Place location in 1925, many of the merchants and their families were relatively recent residents to the up-and-coming city—mostly Polish, Greek, and Italian immigrants. Seventy years and a new produce market later, at its present South Blue Island at Damen avenue locale, the CIPM has become even more of a melting pot.
Retail Snapshot
Now that the dust has settled from the departure of Dominick’s, the diversification of the Chicago market has been a boon to consumers who enjoy the benefits of specialty chains such as Whole Foods, Trader Joe’s, and deep discounter Aldi. With Indian, Persian, Hispanic, and Asian ethnic groups as well as Chicago’s traditional Italian, Greek, and Eastern European populations, there are more opportunities for niche stores able to cater to the many ethnic groups that call Chicago home.
Though the closing of Dominick’s has not been without challenges, Scott Weber, a partner at Ruby Robinson Company, Inc., has seen some positive aspects. “We were an approved supplier for Dominick’s. Interestingly, their departure has benefitted both the independent grocers and the produce terminal. It has helped the independents expand into more neighborhoods, plus they support the produce terminal much more than Dominick’s ever did,” he says.
“Smaller chains can react more quickly, taking better advantage of deals and availability at the terminal,” continues Weber. “They’re more able to make spot buys and rotate products. The pie has been cut into smaller pieces, but there are lots of good options for consumers. Each store has its own formula and product mix, depending on the neighborhood.”
Conventional stores such as Jewel (still in the process of reinventing itself) remain a presence even as big box stores Target, Walmart, and Costco encroach on Chicagoland’s traditional supermarket terrain. These stores are also being squeezed by the smaller ethnic retailers filling the void left by large chains that have either vacated the area or consolidated.
Many of these specialty shops began as ethnic greengrocers that expanded to other grocery items. For example, the six-unit Valli Produce and International Market began with produce. Tony’s Finer Foods, a 12-unit chain that also began with fruits and vegetables, has expanded to carry a wide variety of Italian and other international products.
In 1980, buyers for Garden Fresh Market would walk the old Chicago South Water Market at 2:00 am to find fresh produce for their first store. Thirty-five years and six locations later, Garden Fresh is still anchored by a large produce department along with deli, bakery, and a wide variety of packaged goods.
Other stores in this category include Pete’s Fresh Market, Angelo Caputo’s Fresh Markets, and the more recently established Fresh Thyme Farmers Market. Their common thread is a broad selection of quality and exotic produce, as well as extensive ethnic products at competitive prices.
Chicago public radio recently reported on the new norm of shopping at multiple stores. Cost-conscious shoppers will go to Aldi or Save-A-Lot for staples, then shop specialty or high-end stores like Whole Foods or Trader Joe’s for organic produce and imported items.
They may patronize two or three mid-range stores as well, such as Mariano’s or Caputo’s, for special ethnic produce items or value-added partially-prepared meals. Mariano’s, owned by Kenosha, Wisconsin-based Roundy’s Supermarkets, is among the region’s fastest-growing chains and seems to be redefining the middle-market grocery store with a focus on hospitality, turning grocery shopping into more of a ‘destination’ or ‘experience’ for shoppers.
In addition, as the larger chains continue to consolidate and compete for customers, smaller neighborhood markets are also opening, chasing the same shoppers. Longtime wholesaler Nick Gaglione of Dietz & Kolodenko, Inc. on the Chicago International Produce Market observes, “In a local neighborhood with a few hundred residents, where there were once four stores, now there are seven.”
Bob Scaman, president of Goodness Greeness, Inc., agrees. “The Chicago market has become ‘over-stored.’ Wherever a Dominick’s left, it seems two new stores have replaced it. The market is the same; it’s just being divvied up by more players.”
This was certainly true in the case of another player that was unsuccessful in its original foray into Chicagoland, and is back for a second try. Mrs. Green’s, a natural and organic foods supermarket chain out of New York, opened its first Midwestern store in Lincoln Park in 2014 and closed it last summer after too few customers and competition from a new Whole Foods Market nearby.
Mrs. Green’s newest endeavor is similar to a neighborhood market, a smaller version of its initial attempt. This time in Winnetka, more than 15 miles north of the city, the store has less square fotage and promotes a more intimate shopping experience of all-natural foods and products. Parent company Natural Markets Food Group has plans for as many as five more stores in and around Chicago, sprinkled along the northern shore of Lake Michigan.
Despite the tight competition, most distributors believe that the retailers who keep their produce departments front and center, and stocked with diverse, high-quality offerings, will survive and even thrive.
Another growing segment is the area’s sizeable Hispanic population and the rise of many Hispanic-owned companies. Founded by immigrants from Mexico and Latin America, there are restaurants and grocery retailers across the city and its suburbs, spurring demand in Chicagoans for pan-Latin cuisine and the many key produce ingredients that go into it.
Adolfo Vega Jr. manages La Hacienda Brands, Inc., a receiver, processor, and wholesale grocery company founded by his grandfather in 1973. “Everyone wants a piece of the Hispanic market,” Vega points out. “Our biggest volume items are papayas, cilantro, jalapeños, tomatillos, and bulk dried peppers used in salsas and general cooking. Sure, they’re Latin specialties, but these items have become popular in mainstream markets, too. A lot of people are cooking at home and enjoying spicier foods.”
Imports & Exports
Although the recent, historic signing of the Trans-Pacific Partnership is a major topic of conversation within the produce industry, it’s not really top of mind in Chicago, at least not yet. Perhaps this is due to no firm date for the trading to begin, but the agreement seems to stir far more enthusiasm on the West and East Coasts than in America’s heartland.
“We don’t import directly but deal with people who do, such as Giumarra in California,” mentions Dietz & Kolodenko’s Gaglione. “I know exporters can get a premium on items like cherries that go to China, so the best product may ship there. As a receiver, that doesn’t affect us much, but if the agreement means consistent availability at fair prices, I think it’s a positive.”
Weber also reserves judgment with regard to the effect the Trans-Pacific Partnership will have on the way wholesalers do business. “The items we currently purchase from Asia are garlic and ginger. If there are opportunities for profitable export business, naturally we’d seriously consider developing that category.”
“Anything that makes trade easier affects our business,” reflects Bob Scaman, president of Goodness Greeness, Inc., an organics dealer and foodservice distributor located south of the CIPM. “If the agreement extends the season and keeps shelves full, it’s good for us.”
Product Mix
Like the CIPM itself, with changes in structure and technological innovations, the very makeup of the terminal market’s product continues to change and evolve. Once dominated by potatoes and onions back in the early days, these very same commodities are now available in new colors, sizes, and varieties. Today’s CIPM is also home to many rare and nearly-unknown ethnic vegetables, tropical fruits, and hard-to-find herbs.
Tom Cornille, president of George J. Cornille & Sons, says, “Chicago is truly an international city and the Market reflects that. With a population that includes Hispanic, Asian, Caribbean, and Eastern Europeans, produce is more important than ever. You see demand for things like fava beans, which you find in Persian and Italian cuisines, and all manner of chiles, dried and fresh, which are important to Mexican and Thai cooks alike.
“Our customers are restaurants and we’ve observed that diversity drives innovation,” Cornille continues. “Seasoned executive chefs are getting a lot of input from culinary school graduates. Today’s young chefs understand the importance of using produce more than any other generation. They’ll experiment with different types of produce and the more exotic ingredients find their way into retail.”
More Organic
While the Midwest may have been a little slower to embrace organics, this is changing too, certainly among retailers. Riehm finds many stores are giving more shelf space to organics. “Organic produce is looking better than ever and the prices are coming closer to conventional produce. With the economy more steady, the average person is better able to afford it. To keep those customers, stores have to offer a wide selection.”
At Ruby Robinson Company, organic sales are booming for another reason. “Our organic business has grown exponentially from just a few pallets a week to truckloads, thanks to our newest hire Brian Holzkopf,” enthuses Weber. “Brian joined the Ruby team just over a year ago after 30 years in retail produce.”
Things are somewhat different at Coosemans Worldwide; Pappas notes that among his mostly foodservice and distributor customers, “We’ve found the organic trade is not spilling out to the heavy produce users. Most of the organic products we handle are for specific customers. We don’t speculate as much as we do with conventional produce.”
Since the Midwest’s growing season is relatively short—about three months—imports are essential to keep up with demand for fresh, high-quality produce, including organic items. “Organic imports extend the seasons, ensuring they’re available 52 weeks per year,” states Scaman.
“For millennials, organics are mainstream commodities,” he explains. “They’re the first generation of consumers to have organics their whole lives. For them, organics are the rule and conventional is the exception.”
Area Greenhouses
In and around Chicago, greenhouses are making it possible for more produce to be truly local. Last November, Brooklyn-based Gotham Greens opened a new two-acre greenhouse in the Pullman area on Chicago’s South Side.
According to the company, the new facility is expected to grow nearly 10 million romaine lettuce, kale, and basil plants this year. The premium-quality, pesticide- free leafy greens and herbs are destined for retailers, restaurants, and institutions throughout the Chicagoland area. The Pullman greenhouse’s yields are projected to equal those of over 50 acres of conventional field production.
BrightFarms, Inc., also located in New York, builds and operates greenhouses near supermarkets to produce ‘local’ produce, slashing the time and distance commodities will travel from farm to destination. In partnership with local Mariano’s (a division of Wisconsin-based Roundy’s Supermarkets), BrightFarms will grow and deliver fresh produce to the regional chain’s stores. Located in Rochelle, about 80 miles west of Chicago, the BrightFarms greenhouse will supply leafy greens and herbs for Mariano’s private label.
The mission of grower FarmedHere, located in Bedford Park (a suburb about 30 miles southwest of Chicago), is to supply a full line of branded fresh organic greens and herbs within 24 hours of harvest and make them accessible to everyone—restaurants, stores, specialty shops, and consumers too.
Wholesaler Impact
If urban greenhouses are a trend and a few becomes many, will it impact Chicago’s wholesale distribution network? Pappas says Coosemans Worldwide has been a niche dealer of fresh herbs and specialty greens for years, “but we deal mostly with individual units or small chains. The large greenhouses like Gotham Greens sell primarily to large chains, so they don’t really affect our business.”
Scaman looks at the situation in a different way. While he concedes ‘local’ can be difficult to define, such is not the case with the similarly trending organic movement. Organics, he notes, must be certified by the U.S. Department of Agriculture and are part of the ‘good food movement’ comprised of three elements—organic, local, and field-to-fork. “These are the building blocks for large producers to step up their game—this is where growth in the produce industry is going.”
Looking Forward
Yes, it’s an exciting time for the produce industry in Chicago. With fuel prices lower than last year and the housing market stabilized, many residents in the city and suburbs have more disposable income. “People are eating out more and we’ve seen big growth in restaurants,” comments Cornille. “Twenty years ago, young people hung out in bars, but now dining is more important to them. Even bars are buying more produce like exotic fruits, herbs, and berries to craft specialty cocktails.”
“People are trying to eat more fresh versus processed foods and that’s good for those of us who sell produce,” Gaglione observes. “We work with suppliers who are leaders in the industry; it’s easier for us to sell a $20 quality branded item than a $10 item.”
Even basic commodities such as tomatoes and apples have acquired cache with new and heirloom varieties. “Uniqueness grabs people,” remarks Riehm. “So super flavorful, multicolored tomato medleys are an important trend and they’re more profitable than your standard slicing tomato.”
Scaman, whose company’s stock in trade is providing chefs with specialty produce, says, “Millennial chefs want to make apple pie like Grandma made, so they seek out unique varieties like Arkansas Black. It’s all about finding ways to differentiate.”
With the proliferation of produce- driven retailers, a vibrant restaurant scene, and the growth of rooftop greenhouses to provide fresh local produce year-round to creative chefs, Chicago remains a thriving, unique hub of the fresh fruit and vegetable trade.
Image: ©iStock.com/Antagain/SongquanDeng
