High winter and spring prices stress produce sales

09/16/2010 06:41:18 PM
Doug Ohlemeier

PHILADELPHIA — Like other distributors, higher than normal costs of product are dogging Philadelphia wholesalers.


Doug Ohlemeier

Chip Wiechec, president of Hunter Bros. Inc., holds some locally grown sweet corn.


Chip Wiechec, president of Hunter Bros. Inc., said he has been discouraged by the prices for product he has been quoted.

“Some of our transportation costs and even the cost of doing an inspection have gone up exponentially,” Wiechec said.

Wiechec pointed to California lettuce selling for $5-6 a box while freight costs $8.

For a long time this year, California-grown celery cost $4-5 f.o.b. with freight at $10.

“By the time it gets to the East Coast, you have $10-15 invested in a $4 box,” Wiechec said. “The growers aren’t making any money. If we’re going to make 15% on it, we have to get $20 for a $4 box of celery and a $5 box of lettuce. In a competitive environment, it’s not a true representation of what is happening in the produce industry.”

John Vena Jr., president of John Vena Inc., said the high prices many vegetables sold for during 2010 affected sales by affecting package counts.

Vena said he doesn’t think produce sales will suffer from the economic morass.

He said there are things people reduce their buying but fresh produce — if it’s reasonably priced — isn’t one of the items they cut.

“People have to eat and have to live, and they have to do business,” Vena said. “In our industry, at least, we see that need for product.”

Vena sells specialty items, such as heirloom produce and greenhouse-grown vegetables, to retailers, foodservice purveyors and major wholesalers that visit his market store.

While Vena does more retail transactions, Vena said its foodservice business accounts for a little more in sales.

A combination of unfavorable growing weather, delayed deals and high truck rates kept prices unusually high this year, said Rick Milavsky, vice president of BRS Produce Co.

He said prices skyrocketed during the winter and spring and remained high for weeks.

“Everyone complains but these people (customers) want to do business,” Milavsky said. “They may have bought only what they needed. When prices get too high, they won’t buy extra and speculate. They will work a little closer. Product is expensive. They won’t spend $40-50 for items if they don’t have to.”

Most of BRS’ sales are to small grocery stores and foodservice purveyors that deliver to restaurants, diners and pizzerias.

Richard Nardella, chief executive and financial officer of Nardella Inc., said the higher prices were a negative with the slowing economy.

“The economy has affected everyone a little,” he said. “Prices were very high in January, February and March. But all in all, business has been good. We have picked up a few more customers, mostly retail, due to our hustling. We plan to continue to grow.”

Tom Curtis, president of Tom Curtis Brokerage, called overall business strong.

Curtis said his business was 25% ahead of last year up until mid-May, when he first saw the slowing of sales.

“Reports of the economy being better — I don’t see it,” he said. “I think we’re in for another rough ride. This economy may crack in October or November. Things are just not right. You can feel it.”

Mark Levin, co-owner of M. Levin & Co. Inc., said he sees produce consumption continuing to climb.

“People are more health conscious now than they ever were,” he said. “The unfortunate part I, depending on the economic class you’re in, you can only afford so much health. So much money has to go for clothing and school. I hate to see people skip on produce.

“With everything that has been said about produce in the past, it’s still the best thing for you. People may buy apples, oranges and bananas, but maybe they don’t need the exotic items like raspberries that are too expensive for the normal family.”

Levin said bananas remain a consistent seller for the wholesaler.

This is a tangent. Separate story? Celebrating its 104th year, the family-run M. Levin & Co. is managed by third-generation family members and has a fourth generation of daughters working in the business.

“It will be interesting to see how the women perceive this business, which has been a male-dominated business for years,” Levin said. “None of them seem to be afraid of the challenges. They’re all excited about the new location and modernizing the operations.”

Levin said all of the fourth generation is being trained to take over the roles of leadership.

Tracie Levin, Levin’s daughter and general manager, recently graduated from United Fresh Produce Association’s leadership program.

Sarah Levine works in banana ripening with her father, co-owner David Levin.

Margie Levin Fishman is in tropical sales and foodservice sales.

Brenda Segel works in inventory control.

“We make no bones about it. There are no slouches here,” Mark Levin said. “If they’re not willing to work, they will be employed here but not a part of the business. Our fathers never coddled us down here. You are here to do a job. The hours and labor are bad, but if you do the job well, everything will be all right.”

Levin said he and his cousin owners’ fathers instilled that philosophy in them that that they hope they are instilling that in their children.



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