“It’s very different because it is one of the most competitive retail markets in the country,” he said.
Zwillinger said there is a higher than average per capita square footage of supermarket space in the Phoenix area, which means competition for consumer dollars can be fierce. The Phoenix-Mesa-
Scottsdale metropolitan statistical area had 549 supermarkets and other grocery stores, not including convenience stores, in 2007, according to the most recent economic census data from the U.S. Census Bureau.
Sales reached nearly $6.88 billion that year.
Jose Felix, partner in Delightful Quality Produce Co., Mesa, Ariz., said major southwestern cities are very different from East Coast markets. Delightful has buyers in the southwestern region in Arizona, Nevada, New Mexico and Texas, as well as buyers in Canada, in the Northwest and on the East Coast.
“One main reason is Florida and the cost of freight,” he said.
It’s less expensive for grower-shippers in Florida to supply produce to East Coast markets because freight costs are lower. When Florida’s supply dwindles, Eastern buyers provide good markets for Delightful and other southwestern shippers.
The economy has a big effect on the fresh produce market in the Southwest, as it does throughout the country, Reinauer said. But its effects are confounded or even magnified by immigration issues.
“As borders become tighter and the economy slows down, we’ve lost a lot of the Hispanic market,” Reinauer said.
Immigrants who lost jobs have left the area, he said. They are important to the fresh produce market in the Southwest.
“I think what’s happening in the market is as much about the economy as it is about immigration policy,” Reinauer said.
“It’s not definitely one or the other. They are intrinsically tied to one another in this region.”
Economic effects on produce businesses vary according to the type of business and its products. Felix said his tomato sales didn’t suffer during the recession.
In fact, 2009, Delightful’s first year in business, was good because demand was up for Mexican tomatoes after freezes damaged Florida’s crops.
“We were talking about (whether) economics or demand and supply have a bigger effect,” Felix said.
“I’d say supply is the big factor in the industry. It’s more important than the economy in determining sales.”
Generally, transportation issues in the Southwest are the same that face produce companies throughout the U.S.: high fuel costs and fewer available trucks. But parts of the Southwest face the additional challenge of not being able to provide fresh produce for trucks to haul back out after delivering loads.