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Chicago is feeling effects of national economic squeeze

by Tad Thompson | August 24, 2009
Chicago's produce business "could be better for all of us, based on the economy and some on trends in Chicago," in the view of David Watson, president and chief operating officer of Chicago's Strube Celery & Vegetable Co.

The trends in Chicago started "with the consolidation at the Supervalu and Albertson's level. That created opportunities for independents to get bigger," Mr. Watson said. With this, independents took over what had previously been Cub stores. Now, "the independents are starting to buy more value and more direct."

Mr. Watson said that when Certified Grocers went out of business last February, there was a big customer shift to the Chicago International Produce Market but Certified customers have moved away from the market for now.

While retail chains buy only shorts on the Chicago market, "we are seeing the Hispanic grocery trend continue to grow. There is a good core of basic customers that we keep happy with consistently good quality, fair pricing and good service. The core independent retailers, foodservice distributors and Hispanic groceries are the areas we are focusing on," Mr. Watson said.

In early August, Lisa Strube, director of finance and administration for Strube Celery, confirmed that view. "Business on the market has been slow. Unfortunately, cool weather in Chicago has not helped. We've had extremely weird weather," she said. Because it has been cool, golf courses have been busier but swimming pools have been slow. She hoped that a forecasted heat wave would come about "to sell more watermelons and picnic food."

Ms. Strube said that margins are down, reflecting a quiet industry around the United States. "It's not where we like it to be."

Truck broker and freight forwarder Brent Schmit, president of Eclipse Distribution Inc., based in Shorewood, IL, also noted the impact of a cool summer in Chicago, which happened to be reflected in the transportation business. Outbound freight from Chicago "has been very slow, but it's starting to pick up," he said.

Very moderate produce buying in Chicago and other markets is keeping truck rates down this summer, Mr. Schmit said.

Chicago's Testa Produce Inc. is also seeing an uptick in business, according to President Peter Testa. In a period running from November to January, Testa, which specializes in serving the foodservice market, saw sales drop 20 percent to 25 percent. But, as of early August, the company's sales some weeks are less than 10 percent below those of a year ago.

Mr. Testa has needed to adjust his staff to match sales levels. He is working closely with foodservice customers to minimize their costs.

(For more on the Chicago scene, see the Aug. 24, 2009, issue of The Produce News.)