Recession hits Boston produce businesses hard

04/03/2009 12:00:00 AM
Andy Nelson

(April 3, Boston Know Your Market) CHELSEA, Mass. — Produce distributors in the Boston area are feeling the effects of a recession whose size and scope some say are unprecedented.

Few if any can see the light at the end of the tunnel.

For Yanni Alphas, president and chief executive officer of The Alphas Co., the current recession is unprecedented.

“This is the worst one in my 25 years in the produce business,” he said. “I don’t know when it will turn around. I think it will be at least a year or two.”

Because of the recession, sales are off about 20% at Mutual Produce Inc., said Richie Travers, partner.

“Even the high-end retail guys are looking for value,” he said. “Everybody’s working on smaller margins, us included. The competition’s more keen — you have to react and adjust.”

More chains in the Boston area are trying to imitate the value model of Tewksbury-based Market Basket Produce Inc., which often beats other retailers on price, Travers said.

Overall, though, foodservice has been hit harder than retail, Travers said.

Being in perishables does have its advantages in an economic downturn, however.

“That’s where we’re blessed — we’re in a business where no matter what sells, it has to be consumed in a short period of time,” Travers said.

Another blessing in such times, he said, is long-term relationships.

“We still have relationships with different companies dating back 30 years,” he said.

Reining in inventories has become more important than ever, said Frank Lisitano, president of Lisitano Produce Inc.

“You just have to adjust the volume so you stay efficient,” he said. “If you bring in the same amount of volume, you can’t move it. It’s not devastating, but you feel it. Only time will tell.”

Instead of running two trucks for deliveries, Lisitano Produce now runs just one, Lisitano said.

And truck traffic isn’t just down at Lisitano Produce, which is located across the street from the Boston area’s two terminal markets — the New England Produce Center and the Boston Market Terminal.

“I can see the difference in the number of trucks coming into the market,” he said. “A lot of them are starting to feel the pinch.”

Now’s not the time to add new programs, Lisitano said.

“I wouldn’t want to expand now,” he said. “We’re keeping expenses down as much as we can. We haven’t had to lay off anyone. They’ve all been here awhile, and we want to keep it that way.”

Two “terrific” weeks at the beginning of the year were followed by three “horrible” ones, Lisitano said.

“Everything we made, we gave back,” he said.

“Business is definitely off, and it’s economic-related,” said Steven Piazza, a salesman with Community-Suffolk Inc., Everett, whose business leans toward foodservice sales. “Restaurants are doing a little bit less, and it’s in turn affecting us.”

In lean times, Piazza said, it’s more important than ever for wholesalers to do their jobs well.

“It’s caused us to become better buyers and sellers, so we can provide better buys for the end-user,” he said. “It’s caused us to get lean and mean. And we hope that when we turn the corner (on the economy), we’ll be stronger than ever.”

However, Piazza said that corner isn’t in sight yet.

“It’s not easy to get to that point,” he said.

In February, it’s hard to gauge how much of a slump in business is recession-related and how much is seasonal-related, but there’s no doubt recession is at least a part of it, said Sam Rocco, president of BC Produce Inc.

“This time of year it’s slow anyway, so it’s hard to say how much it’s off (because of the recession), but it’s certainly off,” he said.

Piazza said he hopes his company’s improbable combination of experience and relative youthfulness will help it weather the economic storms present and still to come.

“Our average salesman is under 50 and has 20+ years of experience,” he said. “We’re not going to sit back and wait for (business) to come to us. As long as we can do that, we should be able to keep our volumes up.”

The nature of the Boston terminal markets’ predominant customer base has left them vulnerable in the recession, said Peter John Condakes, president of Peter Condakes Co. Inc.

“This market in general is weighted toward foodservice, and restaurants have felt the brunt of it,” he said. “Sales are off. We do have retail customers, and they seem to be holding their own.”

For “the first time in a long time,” Condakes said, word of layoffs is making the rounds of the New England Produce Center market.

Another effect of the recession is a lowering of the price ceiling on many if not most commodities, Condakes said.

“Whereas f.o.b.s may have gone up from $6 to $24 (before the recession), now maybe they’ll only go from $6 to $15,” he said. “Yes, they’re higher, but not as high. The demand side is very fickle at the moment.”

The current market climate has yielded a “magic number,” Condakes said: 99, as in 99 cents. Whether it’s an individual commodity or a packaged item, getting in under a buck is the marketing holy grail of the moment.

Just having a job in this economy is a reason to be thankful, said Bobby Nano, owner and president of Boston Tomato & Packaging LLC.

“Every time you listen to the news, you hear about a lot of people losing their jobs,” he said. “I can’t complain. Overall, we’re doing pretty well. We’re just waiting for spring.”

What gives Nano solace in leaner times? It’s his customer base.

“We have about 2,000 customers, and they’re all small guys,” he said. “They may not buy a lot, but they come in every day.”

That’s in contrast to chain stores, which may buy a ton of product one day, then none at all for several days or weeks running, Nano said.

“I dedicate myself to small people — they keep me alive,” he said. “I’m lucky that we have a lot of customers, so we don’t feel it (the economic downturn) that much. Those chains, they’ll put you out of business.”

Two or three loads of product per week a year ago may, in some cases, have been scaled back to one or two loads in 2009, said Maurice Crafts, a salesman for Coosemans Boston Inc.

Nonetheless, Crafts is keeping an optimistic outlook.

“It’s a little off, but we’re doing well,” he said. “Hopefully when spring comes, everybody will get rocking and rolling.”

Looking on the bright side, experience shows that economies go in cycles, and that strong companies can emerge stronger than they were before hard times arrived, Piazza said.

“After the Roaring ’80s we gave something back in the ’90s,” he said. “And that made us better and stronger.”

Not all Boston-area wholesalers are noticing a negative effect from the recession. Business was slow in late January and early February for John Cerasuolo Co. Inc., said Ken Cavallaro, treasurer. But it was due to other causes.

“It’s more weather-related,” Cavallaro said Feb. 12. “The last two or three weeks we’ve been in a deep freeze.”

The proof, Cavallaro said, is in the weeks leading up to the cold and heavy snows that slowed business on the East Coast.

“December was actually a good month, and the first couple of weeks of January are usually quiet, but not this year,” he said. “They were a little better than usual.”



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