PHILADELPHIA -- In a world where buying produce direct and forming alliances with suppliers is becoming more common for supermarket chains, there is little room for the traditional middleman, the produce terminal market wholesaler.
But some wholesalers will continue to play a vital role in produce retailing -- the ones that can quickly evolve from middlemen to providers of essential services.
The key to that evolution for wholesalers will be to find exactly what the retailers need or lack, and then become the best solution for it, according to John DiFeliciantonio, president of wholesaler Procacci Bros. Sales Corp., and its processing division, Garden State Farms, both based here.
What's more, that philosophy of "find the need and then become the solution" could work well for produce retailers when applied to their own customers, the consumers, said DiFeliciantonio in an interview with SN.
"The wholesaler, per se, has become less important to supermarket operations. But some wholesalers have recently become more important, those that have diversified and looked to see what the retailers' business is, and have tried to become a part of it," he said.
"I can tell you that what retailers are not interested in is a middleman. The goal of anyone in this business is to get as close to the source as possible, if not become the source yourself."
As the produce business keeps changing rapidly, DiFeliciantonio has watched the wholesaler community struggle to keep pace, and the pace of change won't slow in the future.
"With regard to wholesalers and how they react to retailers, the wholesaler must be an aggressive entity, see what is going to happen and find a place for his business to fit in. He has to make himself needed, and not sit back waiting to be needed.
"Wholesalers have been losing market share -- direct buying at chains is up and they need terminal wholesalers less and less. We still believe there is a lot of business on the wholesale side, but it is changing."
That change, he said, is taking the form of new or expanded roles, such as that of importer, custom repackager and private labeler, store merchandising consultant, value-added processor and procurement expert when it comes to niches such as ethnic, exotic or organic produce.
In DiFeliciantonio's opinion, a number of wholesalers have kept pace. "From what I have seen and heard, there is probably a handful of companies at this level of operation and commitment, but not many more than that. That is pretty much what it takes; you have to be there for these people when they need you and you have to invest in the physical and human resources."
Some of those elements of change represent a significant departure from traditional produce wholesaling, but DiFeliciantonio added that wholesalers can also remain vital to retailers by adopting a more sophisticated version of the wholesaler's role.
"No one could buy on a direct basis 100% of what they need and be right all the time," he explained. "The best retail produce man in the world will tell you that. It is their job to buy direct, but they must also be able to depend on someone that has fresh arrivals every day of top merchandise."
And again, that someone can be the terminal market wholesaler, but not likely in the traditional mold. The vital wholesaler will carry the same top lines that supermarkets handle, so that when a buyer runs short or runs over, the wholesaler is there, as a seller or buyer -- in other words, as the solution.
The wholesalers that concentrate on being a reliable source of national brands, repacking for suppliers such as Dole or Sunkist, for example, will also find themselves at an advantage in dealing with supermarket customers.
"We have tried to identify where the retailers want to place their business, and one area is with national brands where they are strong," DiFeliciantonio said, speaking of his own firm's experience. "Retailers are comfortable with these labels. The promotions are there for these labels, and they take advantage of it.
"Beyond that, these products are excellent. There is quality and service behind the name. It is an easy sell."
But it is a different business, philosophically and in practice, than the "traditional" wholesaling that he characterized as "opening our doors in the morning, closing them in the evening, just receiving what we thought we could sell on the street, taking consignments from shipping point when the shipping point was long."
To stay in demand, wholesalers will have to do more, according to DiFeliciantonio. For Procacci Bros., that "more" takes the form of a burgeoning importing business, custom-repackaging, gift basket production and myriad other services.
"We import chestnuts on a huge scale from Italy every season. We import pears and apples, large volumes, from Argentina every season.
"Chestnuts are holiday season items. We come in October and November and go through January. We represent people in Italy; in the U.S., we are on the ground floor. We set the price, the volumes and we sell the whole crop. In effect, we are the grower.
"It is the same with pears and apples. Again, we represent the grower, sell the crop, have exclusivity of the label, set season prices, are able to give rebates, to establish ad prices. We have a deal like that with kiwifruit, too. In these deals, we are the proprietor, so in dealing with us, the retailer is not paying a middleman."
DiFeliciantonio said such a modus operandi matches retailers' needs. "This is how the retailer has to do business now; he has to have the volume, the quality, the price established; have reliability of delivery when he has volume at set prices in the future. And this is how we, as a wholesaler, saw we needed to grow our business."
He said Procacci also has a hearty and growing business in repacking tomatoes, as well as potatoes, oranges, corn and strawberries. It also packs gift baskets for the holiday season and all year round.
"Retailers need consumer packs of all these items. They need stated weights, up-to-the-minute graphics. They need their private labeling, the right PLUs and UPCs. We have a whole department to set up artwork, packaging, weights, sizes and styles of packaging."
All that and more, however, does not supplant his company's commitment to wholesaling. But rather, he said, it all adds to Procacci Bros.' vitality as a wholesaler.
"We are going to our retailers every day with the consumer packs and imported products, so that it is easy for them to come to a jobber like us and buy loads of lettuce, four, five, six loads at a time.
