While some consider the Baltimore/Washington, D.C., region recession-proof, suppliers of the two metropolitan areas said this year has seen a drop in foodservice and an uptick in retail.
The parallel rise in interest for locally grown produce has also created challenges and opportunities for suppliers competing with a growing number of farmers markets.
“Those companies that service the retailers are doing very well. Those that are only serving foodservice are finding it much more difficult,” said Don Darnall, executive director of the Maryland Food Center Authority, which oversees the Maryland Wholesale Produce Market, Jessup, Md.
Darnall pointed out that the Washington, D.C., region is still one of the better areas.
Joe Rahll, vice president of Edward G. Rahll & Sons Inc., Jessup, said despite the recession it is “business as usual” this year.
“As the weather came around, so did business,” said Rahll, who works with smaller wholesalers and foodservice.
“I think foodservice is maybe a little softer. Retail maybe a little stronger,” he said. “We’re pretty much on the money, so one balanced the other out.”
While calling the region “tremendously insulated,” Rahll echoed comments from many suppliers when he said many smaller restaurants have gone out of business under fierce competition for limited consumer dollars, and the dust is just beginning to settle.
John Gates, president of Lancaster Foods Inc., Jessup, said the effects of the housing market and unemployment are leaving people with very little disposable income.
“My feeling is that the economy is already starting to come back, indicated by the stock market … but employment and housing numbers are going to take more time,” he said. “I’m cautiously optimistic.”
In the organic business, Jerry Chadwick, vice president of marketing and business development for Lancaster Foods Inc., Jessup, said growth still exists, but it has slowed.
“Even with customers we have had a longstanding organic business with, we are continuing to grow sales over the previous year, just not at the double-digit growth,” he said.
For many suppliers in foodservice, like Rob Mumma, senior vice president of business development for Belair Produce Co. Inc., Hanover, Md., “spending is not in vogue now,” as he put it.
Belair provides exclusively to foodservice businesses including caterers and convention centers, fine dining and chain businesses, and he estimates business to be off 10% to 15%.
T.J. Rahll, office manager for Edward G. Rahll & Sons Inc., is also experiencing a drop in sales, leading him to “play it safe more than we’ve been normally.”
“We buy a little bit less and get by on what we need — no big risks on bringing in product,” he said.
Rahll said it is hard to tell the full scope of the economic downturn because business has picked up for the busy summer season.
“I’m not saying numbers are better than last year,” he said. “We definitely haven’t seen it overwhelmingly getting better other than the change of seasons.”
Chad Berman, vice president of operations for Belair Produce Co. Inc., Hanover, Md., agreed the summer bump has helped.
Berman said volumes have not dropped precipitously, but the price of merchandise is down.
Markets such as tomatoes did not get as high this year as they were last year, and there have been no natural disasters to inflate prices disproportionately.
“Everything got cheap — real cheap — and it stayed cheap,” he said. “It’s helped our business, and we’ve been able to pass savings on to our customers.”
The high number of government and contractor jobs in and around the area gives the region the reputation for being insulated from the economic woes facing the rest of the country.
Produce suppliers say that in addition, the location is ideal for providing locally grown products to marketplaces as far north as Philadelphia.
“There is an area of overlap where us and Philadelphia compete,” Darnall said. “We certainly dominate the Maryland, Virginia, Delaware and West Virginia areas.”
Darnall said the Baltimore-Washington corridor is the most adjacent metropolitan area to the mid-Atlantic region.
Tony Vitrano, president of the Tony Vitrano Co., Jessup, said he has noticed Washington weathering the economic downturn better than Baltimore. He also said retail business has grown over the last couple of years.
Although many suppliers said they see indications the economy is bottoming out, they are preparing for a new status quo.
“I think this is going to be a very, very bear market this year,” said James Campbell, night sales manager for Coosemans D.C., Inc., Jessup. “People are going to still lay back on it and not go out for the dining experience and try to save their money.”
Campbell also said he thinks people are still uncertain about gas prices and the stability of their jobs, so they will continue to save and keep discretionary food dollars in check.
“This year has been the worst that we’ve seen in my 20 years in this business,” he said. “We’re not going to see it this year, but next year I believe there is going to be a rebound once we start to see great news about the economy and President Obama’s stimulus starts working.”