Originally printed in the September 2018 issue of Produce Business.
Through applause and skepticism, wholesale merchants build lasting value for the customers.
In 2011, the merchants of the Philadelphia Wholesale Produce Market (PWPM) made the move to a new futuristic facility. “We built the most state-of-the-art produce market in the country, maybe in the entire world,” says Mark Levin, chief executive at M. Levin and Company. “Our market creates the best possible environment for produce, keeping it fresh and safe for our customers with an unbroken cold chain and ideal storage temperatures.”
In the past seven years, the majority of market merchants has proven the facility’s worth, remaining steadfast and growing. “Gate receipts have remained steady over the past year,” says Dan Kane, PWPM general manager. “We keep our current customers and attract new ones by listening to all concerns and addressing them as best we can. We are always looking for ways to make the produce buying experience in Philly a good one, and we believe that translates into boosting our bottom line.”
Though some who made the move are no longer in business, the facility currently houses 22 fresh fruit and vegetable merchants. “Some do business out of one unit and others have several storefronts,” says Kane. “The common thread, however, is their unique blend of competitiveness and cooperation. We’re proud of the support we give each other. A rising tide lifts all boats, and it’s in everyone’s interest to help each other grow.”
Customer satisfaction is reportedly high at PWPM since the facility provides a competitive yet comfortable environment. Louis Kean, salesman at E.W. Kean, notes a large percentage of customers are companies distributing to other stores or restaurants. “Many of our customers are price-conscious because they compete with larger distributors or wholesalers,” he says. “The market provides a competitive environment to meet this need.”
This facility makes it easy for customers to shop, according to John Hickey, managing partner at Coosemans. “Everything is refrigerated so customers have time to look around and set their orders up. They’re keeping the cold chain intact, and product is lasting longer. They have plenty of room to stage orders before they’re ready to load the truck.”
John Vena, president of John Vena Inc., sees today’s customers asking for a lot more than their predecessors. “Our facility was built to allow us to do more for our customers,” he says. “We have all the resources we need to keep up with their demands. Our market is easy to keep clean, food safety protocols are easy to manage and the cold chain is 100 percent intact.”
The market’s cold chain integrity aids everyone. “Any educated produce mind will tell you protecting the cold chain improves the gross profit of the end user,” says Filindo Colace, vice president operations for Ryeco, LLC. “When unloading lettuce off a truck at 90 degrees, you take shelf life off it. It may not affect the wholesaler because we sell in a shorter timeframe, but ultimately somebody loses shelf life.”
Zachary Olah, owner/operator of retailer Fresh Produce of Palmyra in Palmyra, NJ, has been sourcing produce from PWPM for over five years since he opened his store. “I’ve heard stories about the old outdoor market and how hard it was keeping the temperature of the produce steady through the supply chain,” he says. “Temperature control is key to the longevity of the produce. In the end, the customer gets a longer shelf life leaving a great impression.”
Todd Penza, salesman with Pinto Brothers, agrees cold chain and food safety considerations cater to customers of the future. “These things are of increasing importance to customers, and our facility allows us to offer the highest standards,” he says.
Food safety, quality and customer satisfaction drive the business, according to Levin. “It is essential our customers feel we keep a clean environment, not only for the produce, but for the customers themselves,” he says. “We have implemented many procedures into our operation, including traceability in case of product recalls. We are also proud to have an organic certification through CCOF. We have stayed on top by updating our refrigeration systems to make our operation even more efficient.”
Colace views the PWPM as closing a link in the food safety chain. “Growers invest a lot in food safety,” he says. “However, when you take product that has been properly cared for and put it into a market that isn’t up to speed on food safety, then all the work that’s been done at the grower level goes out the window. Everyone in the chain needs to handle the product correctly for true food safety.”
Vena points out it’s essential to have proper handling techniques and traceability programs in place with the customer base increasingly composed of organizations that have strict vendor requirements. “With specialty produce, that can be a challenge,” he says. “We work closely with a large number of small growers to ensure they provide the documentation we need as an SQF Level II supplier.”
Nardella is concentrating on getting USDA-certified for FSMA, reports salesman RJ Durante. “It’s a lot of paperwork and very laborious,” he says. “As of 2019, everyone here at PWPM must have those records, so the more savvy merchants are already pursuing it.”
Building the facility was a progressive move seven years ago, asserts Vena. “We’re reaping the benefits now,” he says. “But, we have to continue to ask: What’s next? We’re excited to help define that.”
One continuous change at the market is the ever-increasing product variety. “I find myself bringing in more items to stay competitive,” says Fadi Abi-Khattar, president of Klinghoffer Brothers. “Almost everyone is handling core items now, so we need greater variety to be able to meet more needs of our customers.”
Levin reports continually adding new items to his company’s already extensive list of produce. “Now more than ever, we are catering to such a diverse population that to grow we must listen carefully to our customers’ needs and demands,” he says. “Our city has so many ethnic backgrounds that it is hard to keep up with all the new items, but in doing so we create a positive atmosphere for our customers.”
Philadelphia’s ethnic customers, along with Top Chef foodie trends, push the diversity of product offering. Hickey of Coosemans reports increasing demand for specialty items. “Some of this is driven by TV or even the meal-kit business,” he says. “Whether it be purple potatoes or baby heirlooms, everyone is looking to differentiate themselves through specialty items. The smaller, upscale neighborhood stores also affect increased variety demand. In the spring we see them buying fiddlehead ferns, chanterelles and such.”
The market is trending in the direction of diversity, agrees Emily Kohlhas, director of marketing for John Vena Inc. “Exotic and ethnic flavors are making appearances everywhere, even among mainstream audiences,” she says. “We’re so excited to see the wider marketplace beginning to value variety. For instance, some customers now ask for a Hosui rather than a generic Asian pear. This trend signifies the consumer is ready, and maybe even willing, to digest a deeper level of connection with the produce they eat and the story behind it.”
AT B.R.S. Produce, salesman John Miklosey reports growing interest in unique items such as Swiss chard. “Our increase in ethnic customers, including Indian and Jamaican, challenges us to handle different items,” he says.
Increasing demand from specific ethnic groups, including Mexican, Indian, Asian, Arab and Russian, opens up opportunity for merchants carrying items for them, according to Abi-Khattar of Klinghoffer Brothers. “More and more ethnic vegetables are showing up on the market as wholesalers try to meet the needs of certain customer groups,” he says. “For example, Kean added an Asian veg category, and it’s doing very well.”
Kean reports the company has always carried typical U.S. vegetable items such as potatoes and onions, which it still offers, but its inventory list expands every day. He notes the business saw a new wave of customers when it expanded to include okra and Asian specialties such as daikon and Napa. “We hired another salesman to help us with it,” he says. “Ginger has become huge for us, and I’m hoping to expand more into Indian specialty veg.”
h3>Responding to Demand
PWPM merchants employ a variety of methods to increase product offerings from staffing to branding to importing. Hiring or equipping sales staff in new areas is one approach. To support its expanding offering, Pinto Brothers brought salesman Richie Mastero on board to handle greenhouse/hothouse items. “We now carry specialty and cluster tomatoes and hothouse peppers all year long,” says Penza.
Nardella’s Durante says when market merchant Jesse Pitt dissolved, owner Charles Clark started training him on bananas. “My father told me, people will always buy bananas,” he says. “It’s the drugstore model — slowly you add things to get more sales from the single customer. Nobody comes in just for apples anymore, so the more we offer, the more we sell.”
Levin added Ryan Miller to its staff almost two years ago to specialize in Eastern and Western vegetables. “He has proven to be a valuable addition,” says Levin. “Also our tropical buyer, Bill DeFelice, retired as of this past May but we didn’t skip a beat because Brian Kriebel, with the company for 33 years, now heads the division. He has already increased both our suppliers and customer base.”
Increasing demand for variety has led to increased importing among Philly wholesalers. Coosemans imports various items, including Holland peppers, leeks, endive and blackberries.
With government regulations becoming so difficult to navigate, importing has become a challenge a lot of companies don’t want to deal with states Daniel Vena, director of sales for John Vena. “We see it as a huge opportunity,” he says. “We’ve been importing specialty products from just about every corner of the globe for decades. Over the past year, we’ve really stepped up efforts to leverage our networks and friends to find the next coolest products.”
Earlier this year, Vena partnered with a kiwano grower in New Zealand and was the first to import the fruit direct to the East Coast. “It’s not easy since kiwano have very specific storage and handling needs,” says Daniel Vena. “Importing specialty items isn’t something you can just do on a whim if you want to do it right. It takes a deep level of experience and willingness to make the investment in experimentation.”
Vena also has been playing more in the off-season citrus space and looks forward to continuing to grow there. “Israel, South Africa, Ecuador and Chile have some really interesting varietals to offer, including Sweeties and Tango tangerines,” says Dan Vena. “The fruit we received this summer was incredibly flavorful. We’re excited to see where we can take it.”
Ryeco’s Colace explains the company has hundreds of permits to bring product from all over the world. “We’re importing persimmons from Spain, clementines from Morocco and Israel, lemons from South Africa, and oranges, loquats and mangos,” he says. “As long as we continue to increase our offering, we’re going to encourage the ethnic and specialty markets.”
Procacci imports tropicals, including roots and plantains, from Costa Rica, Colombia and Ecuador. “And, we’re working closely with growers in the Dominican Republic on green-skin avocados to offer our Feliz label on those during the season,” says Carlos Rodriguez, director of sales.
Procacci developed its Feliz label to standardize specs and provide greater assistance to retailers needing a tropical program. “For some of these products, there is no uniform spec,” says Mike Maxwell, president of Procacci Brothers. “We have been able to standardize the product, ensuring it has a PLU through our label. Our goal is to make a more universal product for all retailers.”
At the other end of the spectrum, local represents another huge segment for PWPM merchants. “We are at the auction in New Jersey every single day,” says Maxwell. “We promote the heck out of local produce. It’s not only fresher but also cheaper because of freight. Our PWPM store has a whole section of local.”
Ryeco’s Colace notes buyers looking to offer more local options to customers find an easy solution at PWPM. “A supermarket or restaurant can’t go to one farm and get everything,” he says. “By coming to the wholesale market, they can get a wide selection all in one place.”
Levin agrees local is essential to his business. “It gives us a sense of pride to offer local produce and help support our farmers in the tri-state area. The younger generations seem to appreciate both local and organic produce,” he says
Earlier this year, Vena became an organic-certified handler. “More and more of our customers are asking us to support their programs,” says Kohlhas. “There’s just not enough consistent supply out there, especially for niche items, and a lot of folks are looking for more options in the way of suppliers. It’s been tough to grow into, but we’ve focused on a core group of commodities and have been able to build strong programs in organic herbs, organic chile peppers and organic garlic.”
Over-the-top customer service is perhaps the definitive trait at PWPM. For Kean, the goal is to develop a relationship with customers. “I want them to be comfortable in asking me anything,” he says. “We invite our customers to let us know whatever we can do for them, whether it be delivering shorts to the store or ripening. Customers can text the order at night, and we’ll have the night shift set it up to be ready first thing in the morning for them to pick up. We try to go above and beyond to make the most of their business.”
To better serve its independent grocers and ethnic stores, Procacci has added customer service representatives speaking various languages. “It is important for us to communicate well with our customers,” says Maxwell. “Customers appreciate the one-on-one personal service.”
Stephen Secamiglio, owner/sales at Colonial Produce, aims to stay relevant by making sure customers get the best quality and best price. “Along with that, we have to keep our farmers happy as well,” he says.
PWPM wholesalers offer an increasingly diverse portfolio of services to meet the evolving needs of customers, including delivery. Colace reports Ryeco does a lot of cross-docking and has increased delivery service. “Three years ago, Ryeco owned no trucks and used an outside hauler to deliver a couple loads a day,” he says. “Now our trucking division, Rob’s Produce, has 15 trucks and 18 drivers.”
According to Rick Feighery, vice president of sales at Procacci Brothers, the reduced-format stores especially need six to seven days a week delivery. “Formats such as Trader Joe’s and Aldi can’t be serviced from the West Coast. When you add up all the capabilities we have, including repacking, storage, delivery, you see a shift in the wholesale business leading to greater potential.”
Miklosey of B.R.S. Produce reports the company does some repacking to ensure customers get the quantity needed. “We also store product for some customers,” he says. “If they don’t have a warehouse, it allows them to have an inventory.”
Procacci’s off-site cold storage division, Nanco, offers a multitude of services for retail operations. “Our proximity to the ports make us ideal for cold storage solutions,” says George Binck, chief operating officer of Procacci Holdings and Nanco president. “We can hold it and also repack it. With the plight of the e-logs, we’re becoming a freight-forwarder. For customers whose truck can’t make the full distance, we end up cross-docking it for them.”
Ripening is another service area. Levin ripens about 30,000 boxes of bananas per week, offering services for customers and suppliers, whether on bananas, avocados or pears. “We have built new ripening rooms with the most current technology,” says Levin. “Our customers have come to expect service to be an essential part of our business. We offer them space to operate and load their trucks, even areas to stage their orders for their convenience.”
Vena takes assurance in Philly’s progressive thinking. “I like to think we’ve done more than just keep up with our trading partners,” he says. “We’ve tried to anticipate what they will need and prepare in advance to service them.”
As PWPM wholesalers confront market changes, they evolve in various ways. T.M. Kovacevich is working to analyze roadside stands to identify future potential. “We want to better investigate who our customers are with respect to these smaller businesses,” says intern Christopher Walker. “The focus of our project is on farmers markets and roadside stands, especially those located on the Shore routes.”
Particularly in the summer months, farm and roadside stands are prevalent in the greater Philadelphia area. “There are hundreds of roadside stands and farmers markets around the area, and they represent good potential for our business and the PWPM,” says Tom Kovacevich, general manager at T.M. Kovacevich.
Walker notes that even stands focusing on selling local still need additional items they can’t source locally, such as cherries. “The more we find out about these businesses, the greater opportunity we have to build business together,” he says.
Alliances and expansion within the PWPM denote another change. This past year, Ryeco took over unit B-4, Patterson Pickles. “We are now selling all their pickle products in our store,” says Colace.
Emily Kohlhas, director of marketing for John Vena Inc., reports Vena has taken on two new units in the past year, now occupying eight units. “We’ve also made a significant investment in transportation,” she says. “Our fleet isn’t large by any means, but we’re servicing more and more of our customers direct. Controlling more of the supply chain in-house means less risk and a higher level of quality control.”
In the past year, Mark Levin chief executive of of M. Levin and Company purchased new units in the market, making its total count six. “We now have our entire ripening operation under one roof, which has made us much more efficient,” says Levin.
Nardella, Inc. salesman RJ Durante mentions expanding mindset as a crucial future tool. “We are taking more risk,” he says. “Maybe a shipper has an odd size or something unique,” he says. “A lot of people are hesitant on new things, but when you get too scared and play it safe, you miss the opportunities. Ultimately, you have to ask yourself ‘Why am I doing this?’ Because if you’re doing it only for the money, you may as well get out right now — you have to be motivated by something more.”