L.A. produce market enjoys slow, steady growth - The Packer

L.A. produce market enjoys slow, steady growth

07/15/2014 10:01:00 AM
Tom Burfield

LOS ANGELES — Wholesale business is inching upward in the Los Angeles produce market this summer as a chain that was launched with great fanfare seven years ago adjusts to new ownership and one of the largest produce markets may be up for sale.

“We’re doing fine, but I know there’s room for more business out there,” said Alan Pollack, general manager at Coosemans Los Angeles, on the Los Angeles Wholesale Produce Market.

“I don’t think the economy is where it should be or where it has been,” he said. “The price of gas is going up, and that affects everything.”

The ethnic makeup of the region continues to change he said, which requires the company to change its product line.

For example, “We’ve been adding a tremendous amount of specialty tomatoes,” he said, bringing in more of the smaller varieties.

The drought in the West and global warming are on everyone’s minds, added Karen Caplan, chief executive officer and president of Frieda’s Inc., Los Alamitos, Calif.

“But still, business is up and retailers and foodservice users seem to be using more and more fresh produce.”

Sales continue to rise on the organic side, thanks to retailer support, said Jimmy Matiasevich, sales manager for JBJ Distributing Inc./Veg-Land Inc., Fullerton, Calif.

“The retailers are putting a lot more into it,” he said, with bigger up front in-store displays and regular weekly ads.

Consumer interest also is growing in the value-added segment, said Larry Vein, president of Caldwell Fresh Foods, Maywood, Calif.

 

Convenience, healthful rule

Drug stores, convenience stores and gas stations are adding grab-and-go and portion packs that consumers pick up on their way home, he said.

Foodservice customers are looking to provide healthy menu options and turn to suppliers like Great West Produce Inc., Commerce, Calif., to provide them with market information, trends and new items, said Ken Ewalt, vice president, new business development.

The retail scene also continues to change as chains consolidate, independent market share grows and the number of Internet food providers rises, he said.

“But with change, come opportunities,” he added. “We are positioning Great West to be able to adapt to the changing market and continue to exceed our customers’ expectations.”

There have been no major changes at the Los Angeles Wholesale Produce Market, said executive director Richard Gardner.

At the nearby Seventh Street Market, improvements continue to be made.

In June, the market’s 33rd cooler box was in the processed of being rebuilt since the facility was purchased by Evoq Properties in 2011. Cost for each refurbishing ranges from $88,000 to $130,000, said Bob Iannessa, general manager.

“Every month we do one or two more,” he said.

Owners undoubtedly hope the improvements will enhance the value of the property, which Iannessa said is part of a portfolio of 37 properties the company has put up for sale.

Although there’s a chance the market could be torn down, Iannessa said he doubts that anyone would take out one of the largest produce markets in California.

“The market is a money maker,” he said.

If the market is taken out, it won’t be anytime soon, he said, since 90% of the tenants have five-year leases at the present facility.

Meantime, he said the company’s 2-year-old Eighth Street Market, with 32 units, “Has been struggling.”

It’s only 55% leased, he said.

Iannessa said he plans to concentrate on “getting it off the ground.”

 

Retail sea change

On the retail side, Boise, Idaho-based Albertsons has purchased Pleasanton, Calif.-based Safeway Inc., which owns the Vons/Pavilions stores in Southern California. And Tesco’s Fresh & Easy Neighborhood Market, based in El Segundo, south of Los Angeles, has been acquired by Ron Burkle’s Los Angeles-based Yucaipa Co.

Fresh & Easy was launched in 2007 and eventually opened about 200 stores, but the format never really caught on.

Burkle introduced the new Wild Oats line of organic products to the chain in June, and the company unveiled a marketing campaign to relaunch the chain.

Burkle is a “smart investor” who has experience in the Southern California supermarket industry, said Dick Spezzano, president of Spezzano Consulting Services, Monrovia, Calif.

“I think that Ron Burkle has a better chance of making (Fresh & Easy) a success,” he said.



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