Many influences contribute to Southwest’s demographics

01/04/2011 01:50:38 PM
Susie Cable

The Southwest region of the U.S. is a diverse area with deserts and crop-growing areas, mountains and canyons, and sparsely populated rural areas and densely populated cities.

In some areas, especially along the border with Mexico, most of the population is of Hispanic origin. Other markets, such as Las Vegas and the Phoenix metropolitan areaa, are influenced by tourists and winter residents.

“You have to be careful when you’re talking about any market and anytime you start lumping lots of geography together and try to talk about them as a whole,” said Greg Reinauer, senior vice president of Amerifresh Inc., Scottsdale, Ariz.

“Each market has its own unique needs.”

Arizona’s fresh produce market, for example, is influenced by its many resort destinations, while Nevada’s market is influenced by its gaming industry, Reinauer said.

New Mexico, west Texas and Utah have less dense populations, which affect their markets. Each area has its own demographics and needs.

Hispanic residents in southwestern states influence food choices in supermarkets and restaurants. The region has stores tailored to the preferences and budgets of its population.

Some fresh fruits and vegetables that might be considered specialties in other parts of the country are considered everyday items in the mercados, which feature items that appeal to Hispanics.

Nick Delgado, owner of Quality Fruit & Vegetable Co., El Paso, Texas, a produce distributor for western Texas and New Mexico, said the markets he serves — the El Paso and Albuquerque, N.M., areas — have strong Hispanic bases, but some consumer preferences are different.

For example, his customers in Albuquerque prefer larger fruit than do those in El Paso. He sells more large peaches (sizes 36-48) to Albuquerque and more medium peaches (sizes 60-80) to El Paso buyers.

The difference could be that families in El Paso are larger, Delgado said. Shoppers might prefer to buy more small peaches so each family member can have one.

Another difference between Albuquerque and El Paso is income levels. Delgado said El Paso tends to have lower incomes than Albuquerque.

The El Paso market is strongly influenced by its location on Mexican border.

West Texas and New Mexico have strong markets for fresh produce because Hispanics tend to consume more than the average amount of fresh fruits and vegetables, Delgado said.

Barry Zwillinger, partner in Legend Distributing LLC, Glendale, Ariz., said competition is especially intense in Phoenix, which makes the market unique from others.

“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.

“When you go into Nevada, New Mexico, El Paso, what do you do with those trucks once you get into those markets?” Reinauer said.

A lack of produce to haul out can make it more expensive to hire transportation to deliver to those areas. It can also mean there are fewer trucks available to deliver there.

It’s likely that truckers who haul produce in to a nonagricultural area will haul some other refrigerated or frozen products out, Reinauer said.

Amerifresh is a third-party logistics provider, in addition to being a fresh produce marketer to foodservice distributors, wholesalers and retailers. It sells to customers in Arizona and Utah, and does some business in Nevada and New Mexico, Reinauer said.

Felix said his Southwest buyers are not requesting much organic produce. The company doesn’t currently offer organic produce, but it plans to add greenhouse-grown organic tomatoes within the next couple of years.

Willie Itule Produce Inc., Phoenix, is adding organic produce, beginning with baby arugula, baby spinach, celery, broccoli, tomatoes and other common types of produce. Owner Willie Itule said adding organic produce to his line strengthens his company.

“The more I can offer, the better I’ll be,” he said.

Itule said he thinks growth in organic produce sales in Arizona has slowed during the past three or four years, but the overall growth in organic sales for the past decade has been good. He said he thinks improved quality and more affordable prices are primary factors in consumers’ increased interest in organic produce.

The locally grown movement has caught on in many markets, as consumers look for opportunities to buy from nearby sources and support local businesses. Itule said he thinks locally grown produce is more popular now because it can be more affordable and because retailers are focusing on local produce in their marketing.

“When the economy turned down, retailers backed off organics and went to local,” he said.

Itule Produce, however, doesn’t carry much local produce because food safety is a more important factor for Itule.

“Until I can check out each small grower, it’s too much of a risk,” he said. “I support the larger growers that have food safety programs.”

Itule Produce sources mostly from growers in California and Arizona, Itule said.

Felix said he doesn’t see much demand for locally grown tomatoes.

“People are not locked up to looking specifically for locally grown produce, especially at this time of year, when produce is being imported,” Felix said.



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