Fresh produce business in Southwest begins recovery - The Packer

Fresh produce business in Southwest begins recovery

01/03/2012 11:11:00 AM
Jim Offner

Few metropolitan areas took bigger hits from the recession than Phoenix and Las Vegas. The worst appears to be over, however, according to produce wholesalers in each city.

“I think the housing market has kind of bottomed out a little bit,” said Willie Itule, owner of Willie Itule Produce, Phoenix.

“I think that’s been a key player in the economy, and I believe once we hit that bottom and start to make that slow, gradual trend up, you’ll see more and more restaurants sprouting up here in Phoenix and in Arizona, and I think that will be very good for the business.”

Itule’s company has a heavy emphasis on restaurants and institutional foodservice, and he said he has seen indications of a rebound by glancing at those sectors.

“I think, for one thing, people are finding ways to eat out,” he said. “Restaurants are becoming more creative, and I believe portions are being cut down a little bit, but the prices have become more attractive. So the consumers are going out and getting good bang for the buck.”

The hangover from a recession that saw once-booming housing and construction sectors collapse is still being felt, said John French, owner of Phoenix-based Produce Brokers of Arizona.

“The economy seems a little on the sluggish side. Everybody is hoping for growth next year,” French said.

Produce vendors have felt the effects of the downturn, which began to hit with its full force in 2008, French noted.

“It has impacted business greatly,” he said. “The construction boom is gone, so all the construction workers are gone. All the stores got to be down.”

John New, president of Phoenix-based Grand Avenue Produce, said the market is as “tough as ever.”

“Phoenix is tough. It always has been,” New said. “We have the second and third generations of the family working here, and this business has been tough for the 36 years I’ve been doing it, and it’s no different today than it was 36 years ago. It’s just a tough, tough market.”

There is an upside, though, New said.

“The good thing is, we’re basically in a great spot,” he said. “We’re close to the winter Yuma deal. We’re close to Nogales market. We’re a day from Salinas. Phoenix is a great spot, but it’s a tough town, because a lot of shippers kind of treat Phoenix like L.A. in that they try to use it as a dumping ground. From a buyer’s standpoint, you’ve got to be very, very careful who you deal with.”

Economic factors have made things even tougher, and vendors have had to adapt, New said.

“You definitely have to get creative,” he said. “We’re trying to be more diversified. We’re working on a wine distributorship.

“It’s all about packages, so you’ve got to have the package count on the trucks. We started carrying dairy the last two or three years. We do a lot of proprietary items for a lot of the chains.”

The company also distributes bottled water, New said.

“It’s not the way it was 30 years ago, where you get by selling a couple of boxes of tomatoes or a couple of boxes tomatoes and making $6 or $7 a stop,” he said. “It’s all about packages. We sell everyone from the big retail guys to other produce companies.”

New said his company also has a long-established tomato program, which has helped.

“We’re real proud of our tomato program here. That’s kind of where we shine,” he said. “We distribute tomatoes to a couple of wholesalers on the L.A. market. We’ve had to kind to change with the times to try to beat it.”

Things have improved in the last year, New said.

“In 2009, that was probably the toughest year we’ve seen; 2010 bounced back pretty good,” he said. “In 2011, it was real close to 2008 numbers, which was a good year.”

The company’s best years likely were 2006 and 2007, New said.

“But ’09 kind of took the wind out of everybody’s sails, and it’s been a bounce-back ever since then, so we kind to think out of the box and try to separate yourself from everybody else, and that’s kind of what we’ve done.”

Randy Workman, general manager of Coosemans Phoenix LLC, described the market as “a little slow” in 2011.

“The whole year as slow, but it’s been picking up a little bit,” he said. “I expect the next year to be a little off.”

Economic factors are the source of the sluggishness, Workman said.

“The economy has affected it a lot,” he said. “Before, people were more interested in quality. Now they’re more interested in prices, and it’s really affected it a lot.”

Coosemans focuses on specialty items, and Workman said his company is trying to bring in more mainstream items, as a hedge.

“We’re trying to add more items, so we can keep in the flow of business,” he said. “Especially with the economy down, people are doing more chain restaurants now.”

Recovery is ongoing, said Rick Crispo, partner in Phoenix-based Legend Distributing LLC.

“We’re starting to see some recovery,” he said. “The foodservice industry seems to be coming back a little. We’re starting to see that recovery. Even on the retail side, we’re starting to see some better movement than in the last couple of years.”

Crispo also noted that his company, now seven years old, has seen consistent growth, regardless of economic factors.

“Through good times and bad, we’ve continued to grow,” he said.

There is room for optimism in Las Vegas, as well, said Greg Bird, regional director for the Las Vegas market with Los Angeles-based Los Angeles & San Francisco Specialty Produce.

“I think that, looking statistically, there’s been single-digit growth for the economy in general. However, there’s been good opportunities for the food side,” he said.

“In terms of foodservice, the trends are chefs are looking for more local ingredients and unique items they can feature. By having the ability to supply these products, it has helped create value for their customers.”

Business has been more or less steady at Las Vegas-based Sandy Valley Farm Inc., said Cris Politis, chief executive officer.

“It’s been tough, but we do get the opportunity to deal with restaurants when they put on events, and we have big weekends,” he said.

“A lot of them put on conventions, sometimes they’ll go for a week. Whenever something like that is going on, we’ll have a steady week or weekend.”

The recession killed off some restaurants, but others now are rising up, Politis said.

“A lot of smaller restaurants didn’t make it,” he said. “Now, it seems like there’s a lot more people that are starting up again. They’re taking a chance at opening a new restaurant somewhere. There are signs of recovery. It’s more steady.”



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