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Twin Cities economy seen improving after slight dip

by Tad Thompson | November 21, 2010
Minnesota's Twin Cities historically have had stable economies. Produce industry leaders there said that even their region has felt the national slowdown, but the effects were not severe and there are already signs of improvement. Meanwhile, competition among food retailers is increasingly fierce.

On Nov. 9 Jim Hannigan, chief executive officer of J&J Distributing Co., located in St. Paul, told The Produce News, "We are seeing more and more competition at retail. The consumer has many choices, so I think if a retailer disappoints them and sends them somewhere else, they don’t come back in the same manner."

This occurs within a food industry “that quite frankly is flat.” Meanwhile, “the big box stores right now — Walmart and Target — are getting a lot stronger,” he said.

“Aldi’s seems to be gaining momentum with the economy. We have a Trader Joe’s here now,” Mr. Hannigan noted. “There is a lot of competition and we don’t have that kind of population. We are not a Chicago, that is for sure. Our population is increasing but not at the level the retail grocery stores are [expanding].”

Mr. Hannigan continued, “The foodservice industry is alive and well here. This area has — for a lot of reasons — been recession-proof. I don’t think we are anymore. I think we have had job losses and we a lot more people on food stamps,” and receiving other forms of assistance.

But despite cutting back, “people are going to restaurants for sure. There is still a lot of disposable income here,” he asserted.

Phillip Brooks, CEO of H. Brooks & Co. in New Brighton, MN, said, “Minnesota overall is at a high level. The Minnesota economy is doing much better than many other places in the country, but at the same time, there is a record number of people eligible” for public assistance.

Thus, Mr. Brooks said, “It is not as good as we would hope, but it’s not as bad as other places in the country. That doesn’t mean there are not a lot people with problems in this economy. There is a lot of pain all over the country because of that.”

Marylou Owen, chief operating officer and owner of G.O. Fresh, based in Minneapolis, said that, although her pre-cut produce firm serves a broad segement of the Midwest, “we have a large number of customers in Minnesota. We, without naming names, have food distributor and chain business. We sell to food manufacturers, too.”

Ryan Tonolli, the sales and marketing director at G.O. Fresh, noted that the Twin Cities restaurant index is “on the upswing. There is a growth in the dining sector here and the savvy operators that survived the last few years are taking advantage” of the current market situation “by getting into restaurants that were closed for pennies on the dollar. We are starting to see solid growth on the independent and chain side. So I feel if you are looking at the Twin Cities I would project that the next year is going to be a nice recovery in terms of restaurant growth.”

Mr. Tonolli on Nov. 12 had just returned to Minneapolis from a school foodservice show in Bismarck, ND. “A lot of schools are taking advantage” of a new federal program to move fresh fruits and vegetables “like they never had before for kids in school,” he said. Thus, “there was a lot of excitement in Bismarck. I am just thinking there are a lot of initiatives and trends that are going in the right direction for our industry.”

Mr. Hannigan said that the Twin Cities’ “population is growing. The hardest thing to do in this area is to get people to move here. The second hardest thing is to get them to leave. It is not as cold as everyone says. Today (Nov. 9) it is 68. Our climate is changing. We have far more nice weather. It is not as cold in the winter. I have lived here most of my life. The winter was much worse when I was younger.”

(For more on the Twin Cities, see the Nov. 22, 2010, issue of The Produce News.)