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Overhead costs and new customers the keys to a huge change for Philadelphia

by Tad Thompson | May 20, 2010
PHILADELPHIA — Two-and-a-half is a number on the mind of every distributor on the Philadelphia Regional Produce Market. That is the factor by which the distributors' rent will increase when they move later this year to the new Philadelphia market.

Heightened overhead costs give Philadelphia’s receivers one choice: build sales volume.

John Vena Jr., president of John Vena Inc., said that success at the new market strictly hinges on increasing sales. "In order to satisfy our overhead requirements, we need to increase our top line by 30 [percent] or 40 percent. That may not be enough, so we need to improve operations to stop bleeding cash through our operations. When your overhead is low, if you blow a little money by not controlling inventory, it’s not a big deal. But we’re moving to the big leagues now."

Chip Wiechec, owner of Hunter Bros. Inc., said, “Hopefully there will be new customers. It is only natural that people will be curious — whether they are customers or suppliers. We have the opportunity to sell customers more products in a safe and timely manner.”

At Ryeco LLC, partner John DiFeliciantonio is pleased that the new facility’s marketing committee has aggressive plans to “spread the word about the new facility.”

He said, “I don’t think new business will come from a whole lot of new areas. But it will come from areas where we could do better.” Potential customers now buying direct from shipping points will find “we can serve them better.”

Mike Maxwell, president of Procacci Bros.-Garden State Farms, said that adjusting to the new market and modern food-safety procedures “will be a shock” to operators. “Change is feared, but it is also looked forward to. People will get comfortable eventually. Our industry is demanding that change is upon us and that we grab the baton and run with it. That is what we’ve got to do.”

Mr. Maxwell added, “The market will be an attraction for anyone from around the world.” The Philadelphia market “will become a template” for terminal markets of the future.

Sharing that line of reasoning is Mark Levin, chief executive officer of M. Levin & Co. Inc., who noted, “Hopefully this is the template for someone else’s future.”

Mr. Levin said that the old facility is “missing out” on sales opportunities “because it is past its prime. Hopefully, when we are in the new market, we will have customers from northern New Jersey or New York here.”

Mr. Levin noted that Philadelphia must remain competitive on pricing and that it will still be much easier to access the Philadelphia market. Furthermore, “produce will hold better because we can maintain it better. People will want to come here to shop.”

Joe Bozzelli, a produce broker, works daily on the market even though his firm, Millbridge Farms, is based in Vineland, NJ. Mr. Bozzelli said that with the food-safety benefits of the new market, “retailers would be nuts if they bought from another terminal market.”

Because of the new market’s ability to hold products at ideal temperatures within the cold chain, market operators can become forward-distributors for grower-shippers, according to Mr. DiFeliciantonio. The new market will bring large, modern coolers; more dock space; more places for customers to park and load; “and we can expand and do what we do better.”

While Mr. DiFeliciantonio acknowledged that it is a “daunting” experience to move to a new market, “you have to stay positive. You know there will be a learning curve. It will be different to deliver and unload. We’ve been used to one way all of these years. It is going to be different — and better. We will learn as we go.”

He added, “Most people are really looking forward to operating from the new market.” Suppliers and customers “will see we are committed. We have a big debt, with help from the state. It’s a huge commitment, but we can’t be afraid. We have to attack this and look at every situation as a challenge and opportunity to do better. Everything is tough, but there are a lot of tough guys in this business. This won’t be easy to do, but the merchants in Philadelphia are up for the challenge.”

(For more on the Philadelphia market, see the May 24, 2010, issue of The Produce News.)