Economy tests Chicago produce market - The Packer

Economy tests Chicago produce market

12/11/2009 09:54:00 AM
Bob Luder

CHICAGO — Greg Mandolini has a sign sitting prominently on his desk in his office at Mandolini Co. at the Chicago International Produce Market.

He smiles and gives a half-hearted chuckle when it’s brought to his attention, but beneath the veneer is a man who strongly believes every word.

“Tough times don’t last, tough people do.”

Bob Luder

Mike Ruffolo, salesman for Michael J. Navilio & Son Inc., Chicago, displays a package of Earthbound Farm organic spring mix. Ruffolo says profits are down despite normal sales.

It’s Mandolini’s mantra for dealing in the produce industry during these difficult economic times, and it might as well be for all of his peers in Chicago and beyond.

“It’s been difficult,” said Mandolini, president of the company. “Volume has been down, you can’t deny it. We’re forced to be more proactive with our accounts receivable. You don’t want to chase away customers, but you also have to take care of your business.

“I want to be your produce supplier, not your banker.”

Mandolini said there have been days over the last year where he’s been left “scratching my head and saying, ‘Give me a break.’ I just think people are being a lot more cautious now with what they’re doing with their money.”

He said his situation has been made more difficult by the fact Mandolini Co. Inc. deals mostly with fresh fruits, especially tree fruits and citrus.

“I think it’s maybe easier to be a distributor in vegetables,” he said, “because when you open a cookbook, it’s not telling you to throw a package of grapes into a recipe.”

True enough. But the last year and a half haven’t been easy for distributors of fresh produce of any kind.

Profits down

“We always thought we were recession-proof,” said Rich Domagala, vice president of Evergreen International Inc., also located on the Chicago International Produce Market. “We got a rude awakening. We have a good mix of foodservice and independent retail customers, and I know all of their profit margins are hurting. Everyone’s looking to save money.”

Breck Grigas, president of World Wide Produce Inc. on the terminal market, said the produce industry is in the same condition as business on the whole — no worse, no better.

“It’s been tough on everybody,” he said. “In economic conditions like this, you just have to tighten up and pay attention to the smaller details. Everybody’s in the same boat.”

Grigas said some of the finer details he’s addressed to take care of business at World Wide have been to maintain a diverse customer base, especially when it comes to servicing the company’s many independent retailers, which serve a wide array of culturally diverse groups among the Chicago metro area’s 9 million inhabitants. That means keeping on hand a wide variety of commodities.

“This market (which opened in November of 2002) has changed a lot since the old South Water Market,” Grigas said. “People have a lot more room to deal in a lot more commodities.”

Mike Ruffolo, salesman at Michael J. Navilio & Son Inc. on the terminal, said his company, which deals primarily in specialty produce items, is selling the same amount of produce during the economic downturn, just not for as big a profit.

“People have to eat,” Ruffolo said. “I’m not saying we’re recession-proof. We’re selling the same, but we’re not making as much money. We’re holding our own, but I think that’s due to adding salesmen, adding commodities, working on customer service, getting our orders out properly.

“It’s how you manage your Xs and Os. Profit isn’t as high. We’re working on smaller margins. But people are still going to buy it.”

Extra challenges

Dave Watson, president and chief operating officer of Strube Celery & Vegetable Co., also on the terminal, said as much as the economy has hurt the produce marketplace, a couple of developments in the Chicago area produce industry have affected it even more.

Certified Grocers Midwest Inc., for instance, merged its business with Central Grocers Cooperative early this year.

Central Grocers, a large wholesale supplier of independent retailers and foodservice businesses in the Chicago market, then built a new facility in Joliet, Ill., and decided to source from outside the market.

“That took two large customers out of the terminal market,” Watson said.

Just another challenge for the “tough people” of the Chicago produce market to endure, he said.

“We just have to continually find ways to stay relevant to our core customer base,” he said.



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