U.S. imports are on the rise, and neither the challenges of overseas sourcing nor unpredictable delivery schedules are slowing down retailers' enthusiasm for foreign-made foods and general merchandise, industry distributors told SN.
"Demand for imports is up because people are traveling more to different parts of the world and they want to try different recipes, and the media is full of cooking shows that make some of these foods more popular and people want to get the ingredients at the grocery store," Monte Wiese, president of Lomar Distributing, Des Moines, Iowa, which supplies specialty foods exclusively to Hy-Vee Food Stores, Des Moines, told SN.
Demand for imports is so high, he added, "that there's a shortage of container ships across the Pacific."
For David Atkins, director of specialty for Giant Eagle, Pittsburgh, "The goal is to try to bring customers the best food available and some truly unique and authentic taste experiences from across the world."
According to John Baselone, vice president, merchandising, for Trader Joe's Co., Monrovia, Calif., "Making sure we have world-class products from around the world is what gives us our competitive edge. Importing goods is really part of our goal of offering great products and going wherever we have to go to get them."
Alain Bellefeuille, general director of SIAL Montreal, the international food exhibitor, said food shipments coming into the United States from overseas are up 28.6% since 1998, with imports of beverages and spirits up 64%, meats up 62%, dairy up 41%, fresh vegetables up 40%, fresh fruits up 34% and fresh seafood up 29%.
The amount of goods being imported into the United States has been increasing steadily, "in part because over the past three or four years the costs of direct import had been flat or declining due to increased competition, increased efficiencies at the [overseas] factories and, in some cases, excess supply," said Ron Scherer, president of Horizon Marketing, Gig Harbor, Wash. -- the overseas sourcing agent for a buying consortium of wholesalers. "That has taken a turn in recent months, however, due to increased costs for raw materials such as petroleum-based materials and rising steel prices. As a result, while tonnage is growing at a nice rate, dollar volume is increasing at a lower percentage."
American distributors procure imported goods in a variety of ways -- direct from overseas manufacturers, through domestic importers or through a host of trading companies and food brokers.
Companies looking for sources of supply will have a new tool by mid-March courtesy of SIAL, Bellefeuille told SN: a link on the association's Web site that will provide information on potential third-party contacts for all food products listed by the World Trade Organization. By 2007, SIAL expects to enable U.S. buyers to eliminate the middleman if they choose by providing them with information on direct access to the producers, he said.
The information can be found via the SIAL Montreal Export link at www.sialmontreal.com.
IMPORT OPTIONS
Hy-Vee had been buying imports and other specialty items through Lomar for more than 30 years before it acquired the company in 1991 to handle its needs almost exclusively, Wiese told SN. Rather than buying direct, Lomar buys through brokers "because otherwise, you need to buy in full containers, and we're not at that volume level yet, though it could happen someday," he said.
Asked about paying middleman charges, Wiese told SN, "You have to weigh the cost of the extra inventory you'd need vs. the low price and the volume you'd require to justify that inventory, and right now using a middleman to do the importing is worth it."
Among the items Hy-Vee imports are mandarin oranges from China -- which it buys in full container loads, Wiese noted; coconut juice from Thailand; and artichoke hearts from Spain -- "the subject of a series of trade wars right now that we have to keep our eyes on," Wiese noted.
Beyond foods, many supermarket operators import seasonal general merchandise throughout the year -- for Valentine's Day, Easter, summer sales of lawn and garden supplies, Halloween and Christmas. To facilitate the procurement process, six wholesalers -- five in the West and one in Pennsylvania -- have formed McKenzie Buying Co., a consortium based in Portland, Ore., to import products they couldn't afford to bring in individually.
The initial member of the group was Associated Grocers, Seattle, which worked with Horizon Marketing to obtain Christmas merchandise for its members, Scherer told SN.
"But we discovered early on that many categories of goods required orders from several hundred factories to fill a container, so working through AG, we entered into discussions with other members of Western Family [AG's private-label arm], which developed into a buying consortium through which we began broadening the buying base and mix of goods."
ESTABLISHING RELATIONSHIPS
Ten years later, the consortium includes AG; Associated Food Stores, Salt Lake City; Affiliated Foods, Amarillo, Texas; Associated Wholesalers Inc., Robesonia, Pa.; URM Stores, Spokane, Wash.; and Unified Western Grocers, Los Angeles.
"The factories in Asia are not interested in small orders, and they need time to arrange production," Scherer explained. "Virtually nothing overseas is made and warehoused -- it's all made after a purchase order has been received. As a result, there's a tremendous amount of flexibility to customize products."
That's a good thing, Scherer noted, given that each wholesaler has members who represent varying needs.
Working overseas, it's important for buyers to establish relationships with vendors, Scherer added. "If you go to the Canton Fair [in China] -- the world's largest trade show -- and don't know who you're buying from, what you see isn't always what you're going to get, so it's important to develop long-term relationships with your vendors," he said.
Importers also have to keep a close eye on costs, Scherer added. "You have to make sure your costs include getting the product from a China factory to your warehouse and to the customers, which means you have to estimate many variable expenses with regard to the transportation and handling of goods to clear products through U.S. customs."
Still, while Unified Western Grocers relies on Horizon for seasonal general merchandise buys, it prefers to deal with third-party distributors, traders and brokers for food items, Joe Falvey, president of Grocers Specialty Co., a $250 million Unified subsidiary, told SN. GSC relies on two category managers at its Livermore, Calif., facility to buy European imports through third parties "because it means we don't have to worry about ordering in full container loads -- we let them fashion a full container for several customers," he explained.
IMPORTING SINCE SEPT. 11
Bellefeuille said a toughening up of regulations on imports coming into the United States after Sept. 11 has not had too much impact. "U.S. customs changed some rules to put in better controls regarding potential biohazards, but in the import-export business, countries are always changing the rules for various reasons, and adjusting to those changes is just part of what you do," he explained.
According to Trader Joe's Baselone, "We've seen new regulations after Sept. 11 that make everything more challenging.
"Last year, there were quite a few instances where product was delayed for up to four to six weeks. We would expect a shipment in October but it would be delayed at the port and wouldn't get delivered until the end of November.
Trader Joe's copes with the delays by factoring in more time. "We try to pad the lead time a little more than we used to -- probably two weeks more," he said.
Big Volume U.S. Import Countries
Of the 176 countries from which the United States imports food, Canada is the largest source in dollar volume, followed by Mexico, Australia, Italy and the Netherlands. These countries make up 53.8% of the total $37.4 billion in food imported by the United States last year.
Top 5 Importing Countries to the U.S.
(By dollar volume, value in thousands of dollars)
Country: 2003; 2004; % Change
1. Canada: $7,400,158; $8,348,606; 12.8%
2. Mexico: $5,452,099; $6,210,820; 13.9%
3. Australia: $1,947,895; $2,330,693; 19.6%
4. Italy: $1,645,373; $1,731,429; 5.2%
5. Netherlands: $1,517,835; $1,556,758; 2.5%
January-December comparisons. Sources: U.S. Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics.
Imports on The Rise
Consumer demand for international cuisine has spurred consistent dollar volume increases of imported foods into the United States. Last year, food import consumption increased 12.4% to $37.4 billion.
