As the crises of the past few years reduce from boil to simmer, labor, transportation, weather and rising costs continue to weigh on operations at New York City’s Hunts Point Produce Market, part of the city-owned Hunts Point Food Distribution Center. But the market is seeing a consistency of business.
Retail traffic is always a matter of concern, as wholesalers contend that larger operators fail to realize the potential of the market to help them deal with the ebb and flow of demand as it proceeds throughout the year with different buying opportunities. Whether it is holidays, growing seasons or even the shift of different cooking styles or reasons to cook outside or indoors, the Hunts Point market is the hub for those seeking opportunity buys and best fill-in options.
At the same time, infrastructure continues to be a consideration as the market gathers support for major renovations. The Hunts Point Produce Market, in its longtime Bronx location, continues to pursue funds to renovate or even completely rebuild the facility.
“We have been very fortunate,” says Phillip Grant, Hunts Point Market chief executive. “We now have city, federal, and, in the latest round of funding, about $130 million from Gov. Hochul. It’s a solid start.”
The funding promises have come from a number of sources, including a pledge of $100 million made by New York City Mayor Eric Adams more than a year ago, which now has been boosted by a $130 million offer from New York Gov. Kathy Hochul.
“Now, we have to go back to the federal government and shake the tree,” Grant says. “We have about $370 million committed right now. The goal is to outpace rising costs.”
To turn the pledges into funds and work on the market will require an environmental review, which is on tap for the fall of 2025. Although the situation remains fluid, the market is working to secure more funding pledges.
Grant says it is premature to speculate on just what projects the money will bring and how extensive work will be. It’s better, he says, to get the money flowing and, when the market knows just what it has on hand, make the determinations about where to start and how extensive the project should be. However, he says the project will be apportioned so wholesalers can continue to operate while work is ongoing.
“It’s definitely going to be phased from the east side, working our way west, and we will figure out the rest,” he says, based on what can be accomplished with the funding received. “We will try to keep everyone in business and feed the New York region without disruption.”
Market improvements continue, however. The city opened a highway ramp to the market and surrounding neighborhood that has gained general praise for making access faster. A cool roof is being installed in phases, lighting upgrades are underway, and rail improvements adjacent to Building D are being pursued.
A healthy Hunts Point Market serves the region and the nation, but to do so, it requires 21st-century infrastructure to remain effective, says Gabriela D’Arrigo, vice president of D’Arrigo New York. She adds, however, it’s not certain how much or when funding will finally arrive, which affects how the wholesalers on the market can plan for the future.
CRITICAL ROLE IN NY ECONOMY
The Hunts Point Produce Market plays a critical role in New York, supplying 25% of all the city’s produce, or 900 million pounds annually. The independent, single-store and small chain supermarkets that use the market consistently understand the opportunities it represents.
“I have a buyer who goes from house to house every night to find me the best product at the best price,” says Zeke Kreitner, chief produce officer, at Seasons, Flushing, NY, an operation with five neighborhood supermarkets and an Express convenience store currently in operation. “I always get good product.”
The way Seasons shops the market was once the standard operating procedure for retailers in the New York area, but contract buying and electronic links have made dock-walking retail produce buyers rare. Yet, the smaller independent solitary or multi-unit operators can use Hunts Point as a resource to compete with their bigger rivals by offering consistently higher quality fruits and vegetables.
Marc Goldman, produce director at Morton Williams, a family-owned and operated food retailer of 15 stores in New York metropolitan area, says the market is changing, with delivery becoming more common. Since the pandemic, wholesalers are making more deliveries and adding trucks, which establishes closer relationships.
However, Goldman continues to like the hands-on approach. “I have a buyer there I talk to every day,” he says. “Ultimately, it’s up to the buyer, buying quality first, then taking in the price.”
Market Basket, a two-store gourmet food market and catering company in Franklin Lake, NJ, regards the Hunts Point Market as an advantage for similar reasons, the ability to have a buyer on the docks multiple times per week to purchase quality first for its middle-class to affluent customer base.
Zachary Chernalis, chief operating officer and part of the family that founded and runs Market Basket, spent a year on the Hunts Point market as its produce buyer, which has given him an appreciation for the operations.
Market Basket has arrangements with different houses on the market, but the wholesalers it works with know Chernalis is looking for the best quality they offer, and they deliver for him.
RETAILERS TAP INTO MARKET EXPERTISE
The market merchants endured recent turmoil during the COVID-19 pandemic, the 2021 labor strike, supply chain challenges, and inflation. D’Arrigo is one who says current business trends are not so much a return to normalcy, as compared to pre-pandemic times, but a turn toward stability, with the typical ups and downs of the dynamic produce business.
“It’s trying to maintain consistency and being able to service the customers,” she says, “working through the challenges our suppliers have been going through. Most of it is weather-related, frankly, and labor-related, which is the story of the produce industry’s life.”
“We have the ability to be flexible with all these things, which is the advantage of being a wholesaler,” she adds. “We don’t have contracts with customers some other people have, so we have the ability to be flexible and agile, which is a huge benefit.”
The market can function as a place where retailers can build out their selection of produce based on availability and occasion. Because it has constant availability from multiple growers at all times, retailers can use it both as a full-time source or to supplement other sources.
“It is incredibly important, and it’s always going to be important,” D’Arrigo says.
Larger retailers, which lean heavily on contracted product, don’t necessarily look at the wholesale market and its function as central to their way of doing business today, but D’Arrigo says that’s overlooking a prime advantage: The ability to adapt and balance assortments based on holidays and broader promotional opportunities that occur through the year.
“We’re here to help the retailer,” says Michael Armata of E. Armata Inc. “We’re here to make it easier for the retailer.”
For example, market wholesalers are in a position to help retailers try new products or work at the margins when seasonal items peak. Armata says wholesalers can be providers and even advisers, given their broad perspective. “We can show them all the different options,” he says. “We’re very aware of what’s going on.”
Among its recent updates, E. Armata recently installed a more efficient warehousing system, using RF (radio frequency) scanner guns to better track inventory.
When things get complicated and retailers see an opportunity escaping, they may turn to the wholesale market for support. However, wholesalers consider relationships to be critical and can’t readily prioritize occasional purchasers, D’Arrigo says. Rather, maintaining relationships with wholesalers puts both parties in a position to appropriately respond to changing conditions.
“What we’ve really focused on over the years is the relationship and the support we’re giving our customers and our farmers,” says Stefanie Katzman, executive vice president, S. Katzman Produce.
She likes to use an accordion analogy. “We can expand and take as much product as our farmers need us to take, and we can shrink down and piece out the product in small amounts for retailers, to keep everyone in the mix when there is not enough to go around.”
Katzman says a lot of retailers are used to purchasing produce based on data flowing through their computers, which sometimes works fine. Yet, people who follow the numbers aren’t necessarily produce experienced, which can present a problem when a bad year for a commodity is followed by a good year. So, price might have been up the year before because of weather, and now the buyer is only purchasing what the company sold the year before — and is missing out on an opportunity.
At Rubin Bros. Produce Corp, Vice President Cary Rubin says beyond the difficulties of the past few years, the produce business is inherently challenging, with conditions always changing. However, he notes that wholesalers have a role — and can have a bigger role — helping retailers deal with a constantly shifting marketplace.
He says the main opportunity for the market is doing business with the smaller retailers. “The market is the place where smaller independents have a chance to be competitive with the bigger stores,” Rubin says. “That’s especially because we’re in the tri-state area, the part of the country that has the most mid-range and small-range independents. This market provides opportunities for the smaller businesses to thrive, to do as well as, and even better, on price.”
And price matters these days, says Peter Faraci, buyer/sales manager at Coosemans New York.
“Customers are definitely becoming more price conscious,” he says, adding that quality and customer service are equally as important.
“The pandemic showed us we needed to strive and pull ahead more than ever on customer service,” Faraci notes, adding customer service is constantly “changing and reshaping Coosemans New York. Deliveries and set-ups are almost an industry standard, and every time we open new accounts, that is the first question they ask.”
Nick Pacia, Trucco chief executive, says the year has presented various opportunities for growth. “The labor shortage has eased somewhat, efforts are being made to manage transportation costs effectively, and the sector remains adaptable in mitigating the impact of extreme weather events,” he explains. “Overall, these challenges are driving innovation and resilience within the industry.”
Although prices have some pressure on demand, Pacia says the outlook remains fair.
Trucco has a foodservice team and has been making investments to make sure it can satisfy customers, particularly as food safety guidance and regulations come into play. The company also is seeing a shift in customer requirements.
“Our customer interactions are changing a little bit,” he says. “Phone and text messaging are playing a more significant role. Delivery requests are rising, and we’re expanding our services to meet the demand. Adapting to changing needs is critical to serving our customers better.”
Although major retailers will continue contracting large amounts of their produce, Katzman says disruption in certain markets can make set deals less effective.
“Just in time” is losing some attractiveness, and “just in case” has become a more attractive concept. The ability to tap terminal markets as a way to balance contract purchasing should be reconsidered by any retailer willing to concede that produce is not a wholly predictable business, Katzman says.
Yet, she points out, “just in case” is not the same as “just in an emergency.”
“You might see less contracting with farmers because they don’t want to fall down on a contract, and they don’t know how much product they’re going to get,” Katzman says. “Because we’ve had such tight and high markets, you have some growers who aren’t interested in contracting as much as they used to. Every farmer handles it a little bit differently, depending on their crop and the amount of risk they want to take. I don’t think one way is right or wrong. I think you need a combination of the two when you’re a big retailer.”
The retailer may want to buy direct because it can make sense to a given operation. However, Katzman says, she can’t turn her business upside down for a retailer who is facing short supply if it doesn’t at least do some regular business with the company.
“What are they going to come in for? They’re going to come in for the tight items,” she explains. “That’s no good because everyone wants the tight items, and we have to take care of our regular customers.”
“Our customers understand this is a long-term relationship. I don’t need all of their order, but they need to buy a little every day to keep us as strong, so I can carry that extra volume when they do need it, and so that it’s fair, and they’re not just picking me off on the tight, hot items, and I can give them product when they need it,” she says.
AGE OF TECHNOLOGY
Charlie DiMaggio, president, FresCo, notes his company’s main concerns are labor availability, customer preferences, and the evolving market.
“To tackle these concerns, we are actively searching for skilled workers to join our team. Additionally, we closely monitor customer demands to ensure we meet their expectations. We also adapt our strategies to stay competitive in the evolving market landscape. It’s a continuous effort to address these concerns and remain successful.”
Finding skilled workers who are willing to work in this industry “can be tough,” DiMaggio admits.
The way of doing business at the market has changed significantly, and technology is playing a role, he adds. A consequence, however, is the need to accommodate customers more.
“A smaller proportion of customers still come to the market, but more are relying on phone calls and newer technologies like online ordering or even texting,” says DiMaggio. “Delivery requests have also increased, and we are working to accommodate them by expanding our delivery services.”
At A&J Produce, how business is conducted has evolved and, even if some older practices remain, the application of technology is more important than ever.
“Everything we have is scanned,” says Stephanie Tramutola, A&J accounts payable and social media coordinator. “We’re fully on Produce Pro [software]. We used to be everything pen to paper. Now, everything is at our fingertips.”
The application of technology to food safety has also been part of A&J’s refit of its warehouse space. About 70% of the warehouse is now refrigerated, which ensures the facility can maintain the cold chain as product moves through the operation. The upgrade anticipates the importance of certifications and, potentially, regulations as they become a bigger part of wholesale operations.
Tramutola says the company is hoping when its food safety review comes up in September, the upgrades to the facility will get due consideration. “Our grade was high before, but we’re hoping to score even higher than we did last year,” she says.
The addition of technology has been something C&J Brothers has been pursuing for some time, and it has added a new system that’s up to the latest standards in place. “Now we’re more precise with our numbers,” Matthew Park, the company’s chief executive says.
He describes current business as “steady,” with a consistency that allows wholesalers to move forward with initiatives and plans.
D’Arrigo notes market merchants need to be ready for increased food safety scrutiny “that’s going to be enforced on distributors and wholesalers as a whole.”
“The way that we’re structured here as wholesale food distributors, there’s no cookie-cutter plan of attack or strategy.”
Retailers and growers both have been navigating guidelines and regulations, and often times they have their own initiatives, which focus on factors such as food safety and sustainability.
The goals aren’t the problem for wholesalers, D’Arrigo says. What concerns her is that models developed for other sectors will be imposed on wholesalers, even if the fit isn’t very good.
“I don’t know how they will impose a lot of what they deem to be logical regulation, and still depend on us to be the solution for stability when the other markets are unstable,” she says. “Our input is never asked for. This is what retail does; this is what foodservice does; this is what growers do; so you can do it. We’re never asked.”
D’Arrigo says industry organizations provide some support, but other sectors pull more weight than does the wholesale part of the food business. As such, wholesalers wind up having to deal with initiatives that don’t really apply to how it does business, and that situation is looming.
At Coosemans New York Inc., food safety has always been important, emphasizes Charlie Badalamenti, operations manager. “We are proud to be one of the first to implement a certified food safety program well before it was required by customers or the industry.”
Badalamenti adds that food safety policies have been heightened across the board since the pandemic and also the implementation of the FDA’s final rules regarding the Food Safety Modernization Act. “We continue to adapt and comply with new food safety standards year after year.”
Joel Fierman, president of Fierman Produce Exchange, says at a pivotal point in the operation of the market, it might be best to reconsider just how the business has changed, why it has changed and what could be a way to reposition the market both for the customers who still shop it regularly and those who are less inclined to do so. He also suggests closer coordination and information-sharing among market merchants.
More retailers should be buying on the market, Fierman says, and consideration should be given to what they need to return on a regular basis.
“If I was a buyer, I would take advantage of this market like there was no tomorrow,” Fierman says, “because if you don’t take advantage of it, you’re foolish.”
Although the Hunts Point Produce Market isn’t shopped the way it used to be, Stefanie Katzman says relationships have shifted, rather than lapsed. In the past, the big chain supermarkets would shop more in the market and do a little more opportunity buying. Today, she explains, the market continues to have an opportunity to build sales with the strong contingent of independent grocers operating across the New York metro area.
Independent supermarkets don’t have their own distribution centers, Katzman explains. “The market acts as their distribution centers. We’ll deliver to some of them four or five days a week, which allows them to have fresh product on their shelves each day. They don’t have to worry about storing it. They don’t have to build a cooler.”
Some smaller stores might have smaller staff, or might not have a produce manager, she adds, and buying on the market lets them rely on the expertise of a wholesaler who has different products and information.
“We’re doing that all day long. We’re talking to hundreds of farmers, not just in the United States, but around the world. And we’re collecting all this information on all the crops, all the weather conditions, all the production, and we’re summarizing it and giving them little CliffNotes versions and helping them run their business. It’s about the partnership with the retailers.”
The arrangement is good for growers, too, because a direct shipment to 10 small stores is expensive, she adds. “In that way, the market can serve retailers who might otherwise generate too much shrink, while at the same time protecting the shippers’ brands.”
“We bring product from many different growers,” Katzman says. “Why do we do this? Because where we’re located with our dense population and our multicultural diverse population here in New York, we need to because customers want it.”
“The benefit of working with a wholesaler is we deal with so many growers, but then we also deal with so many retailers, so we can keep that product coming in more frequently and keep it fresher.”