While many produce suppliers to the foodservice industry felt the sting of the recession, most now say sales are bouncing back and they are looking forward to continued growth in the immediate future.
“With the economy, it’s been a struggle with less people going out,” said Rich Dachman, vice president of produce for Houston-based Sysco Corp.
“But the industry has readjusted in all phases, including the operators, who have understood how to give better value to their customer and get them into their restaurants,” he said.
Similarly, Sysco has worked to give its own customers a better value and to look for ways to support them, he said.
“We’ve all worked together as an industry to get the customer back, and I think we’re seeing that now,” Dachman said.
Foodservice business at Watsonville, Calif.-based Driscoll Strawberry Associates Inc. held up well during the recession, said Doug Ronan, vice president of marketing.
However, he added that certain segments were impacted by the economic pressures that affected the foodservice industry, and the company “experienced some weakness during the second half of 2008 and early 2009.”
Now, the firm is experiencing “solid growth with our foodservice customers as the U.S. economy continues to improve,” he said.
The fast-casual and quick-serve segments have been doing well, he said. Travel and leisure has improved since late 2008, and healthcare has remained steady, while schools remain seasonal.
Business has been booming at Church Brothers LLC, Salinas, Calif., said Vince Ballesteros, director of sales.
However, Ballesteros doesn’t think the 20% increase the firm experienced over the past year is indicative of industrywide foodservice gains.
Many segments of the industry have to take business from each other to earn market share, he said.
Some distributors are looking for more key sales while working with thinner margins, he added.
“Our focus was trying to create efficiencies within our company and continuing to provide value to our customers,” Ballesteros said.
The company, which does 75% of its business with foodservice customers, has achieved growth by offering safe, quality products such as romaine, spring mix, fresh-cut salad blends and broccoli florets along with consolidation services to provide customers with one-stop shopping, added Ernst Van Eeghen, director of marketing and product development,
“Our piece of the pie has been increasing,” he said, with growth through existing customers, new customers and new items.
Kansas City, Kan.-based Liberty Fruit Co. Inc. experienced double-digit growth during the 2009-10 fiscal year, as it has for the past eight years or so, said Scott Danner, chief operating officer.
However, he’s concerned about rising gasoline prices that are forcing some consumers to choose between putting gas in their cars or going out to eat.
“Today’s fuel rates have definitely had an impact,” he said.
Spice World Inc., Orlando, Fla., experienced an early dip in foodservice business as the recession took hold, said Mitch DiMarco, director of foodservice/industrial operations.
But since garlic is a staple item, “we really weren’t hurt that bad, and it seems like (business) is coming back,” he said.
The key to surviving a recession is to avoid sacrificing quality, DiMarco said.
“When (foodservice operators) sacrifice quality, people realize it,” he said, adding that Spice World’s customers did not cut back on quality.
Spice World has increased its ingredient sales business to food manufacturers, he said, which also has helped keep business up.
“We’re picking up new customers every day,” DiMarco said. “I don’t have any complaints.”
At Boskovich Farms Inc., Oxnard, Calif., where up to 40% of the business is in foodservice, that segment now represents a larger portion of the firm’s value-added business than in the past, said Mike O’Leary, vice president of fresh-cut.
The company’s strengths are in non-traditional items, such as green onions, cilantro and spinach.
During the recession, the company has been pressured to manage its business well, he said.
“We’ve done a good job of that, in partnership with our customers,” he said. “We’ve weathered the storm.”
Suppliers are optimistic about the future.
“Generally speaking, people are eating more fruits and vegetables,” said Jay Iverson, partner and vice president of sales and marketing for GreenGate Fresh LLLP, Salinas, Calif.
Consumption is rising as consumers respond to the obesity crisis, and as more salad bars pop up in schools, he said.
People are going to be paying more attention to nutrition and what they eat, and that leans toward more fruits and vegetables, Dachman echoed.
“I’m on many boards with large retail companies … and I think we agree that foodservice introduces people to product to go buy at retail,” he said. “We’re going to be opening up the palate of our consumers to more ethnic foods in the produce area.”
The recession may have kept many people home, O’Leary added, but now consumers are managing their wallets better and venturing out again.