Supermarket Chains Narrow Their Sights

Friday, August 08, 2008

 

ONE of the biggest brand names in food this summer doesn't carry a trademark. It's the word "local," which has entered the language as a powerful symbol of high quality and goodness.

 

Supermarkets are beginning to catch on that stocking corn and tomatoes grown nearby is not enough for customers. Now they are competing with farm stands and farmers' markets for a wider variety of fresh fruits and vegetables.

 

It's been a boon for local farmers. Ten years ago local produce was devalued at the wholesale Hunts Point market, said Lyle Wells, whose family has been farming on Long Island since 1660. "Now you can't get enough of the stuff."

 

Last month Wal-Mart announced that it plans to spend $400 million this year on locally grown produce, making it the largest player in that market.

 

"When Wal-Mart makes a major effort to reach out to local food systems, it's a major signal," said Gus Schumacher Jr., a consultant to the nonprofit Kellogg Foundation and a former Massachusetts commissioner of food and agriculture, who has worked to introduce farmers to restaurateurs and retailers since the 1980s.

Some independently owned, small-to-medium-size chains have been selling extensive lines of local seasonal fruits and vegetables for years, lines they are now expanding.

 

For the largest supermarket chains, though, where for decades produce has meant truckloads transported primarily from the West Coast, it's not always easy to switch to the farmer down the road.

 

But soaring transportation costs, not to mention the cachet customers attach to local food, have made it more attractive not just to supermarkets but to the agribusiness companies that supply them.

Growers like Dole and Nunes have contracted with farmers in the East to grow products like broccoli and leafy greens that they used to ship from the West Coast. Because of fuel costs, in some instances the cost of freight is more than the cost of the products.

 

"There is a huge shift," said Brian Nicholson, an owner of Red Jacket Orchards in Geneva, N.Y., who has also become a distributor for local farmers. "Wholesalers and retailers no longer say, I can get it cheaper from out West."

Some supermarket chains are allowing farmers' markets to take over part of their parking lots on certain days; others have put a farmers' market right inside the store.

 

But not all chains are there yet. "The whole commercial value of local is just now being appreciated by retail," said Bill Bishop, chairman of Willard Bishop, retail marketing consultants in Barrington, Ill. "It's a little bit behind the curve."

Hannaford Brothers, with 165 stores in New York, Vermont, New Hampshire, Maine and Massachusetts, has always sold local produce, but in the last two years its customers have pushed it to offer more. "There's been a 20 percent increase in sales" in the last year, said Michael Norton, a company spokesman. "Our research tells us consumers have about five or six reasons for wanting local: freshness and taste; keeping farmland in the community and having open spaces; a desire to be close to the food source and know where it comes from; support of local farmers and keeping money in the community. Embedded in all of this is concern about food safety. All this creates pretty powerful interest."

Will Wedge, director of produce for the chain, said that in company surveys, "82 percent of all customers told us loud and clear, locally grown produce tastes better. We have over 200 farmers selling over 50 different commodities, primarily from June through September."

 

Wegmans Food Markets, a 71-store chain based in New York with locations in Pennsylvania, New Jersey, Maryland and Virginia, has been buying from local farmers for the last 20 years. Today it has 800 farmers and has also experienced a 20 percent increase in sales of local produce over the past year. "There's a real emotional connection with local," said Dave Corsi, vice president for produce.

 

Mr. Corsi said that in order to buy from local farms, the chain had to stop acting like a chain. "We don't control these relationships centrally — the produce manager in each store does this directly," he said. "We only guide the stores."

 

The King Kullen Grocery Company, with 45 stores, all but one on Long Island, has become famous for its local produce, but it took a while. Tom Cullen, a vice president of the family-owned chain, said the company started to buy from local farms 12 years ago but it didn't work out because neither the quality nor the supply was consistent. "It's taken years to build trust with farmers," he said.

Some of the early attempts by retailers have shown that local does not always mean better.

In New York last week there was no discernible difference between blueberries from New Jersey and those from California at Food Emporium, both priced the same. Jersey tomatoes at Whole Foods were barely more flavorful than those from away. Packaged plums and apricots at both stores were hard as rocks, and the corn was not really fresh.

 

Mr. Bishop said he wasn't surprised. "Part of being new means not completely perfected. To a significant number of shoppers it seems logical that local has the connotation of being fresher and better tasting, but it isn't necessarily so."

 

Several companies and nonprofits are working to put farmers and supermarket executives together to iron out the kinks. A major focus of Karp Resources of Southold, N.Y., is how to re-regionalize the food system.

 

"Regional agriculture systems in the Northeast, mid-Atlantic and Southeast are really quite broken," said Karen Karp, the president of the company. "Small farmers can sell direct, but there is no infrastructure for middle-sized farmers to get stuff into supermarkets." There are no warehouses, limited trucking facilities and few distributors.

These growers are used to picking the zucchini and bringing it to a stall at a farmers' market. In order to sell to grocery stores, they have to learn pricing, invoicing and ordering systems as well as post-harvest handling techniques that include chilling, sorting and grading for size and color.

 

Big retailers have even more work to do. Used to making just a few phone calls to large produce distributors, often thousands of miles away, they do not have the setup or the personnel to deal with individual farmers who deliver to the back door.

 

Some of them are reluctant to do so and small farmers either have to join a co-op or find a distributor who can deliver to the supermarket's warehouse.

 

The chains also have to change their purchasing practices to make room for seasonal local produce instead of being locked into a year-round contract with one source in order to insure the lowest prices.

 

"It takes innovation and reallocation of resources," said Mr. Nicholson of Red Jacket Orchards. "It takes passion, and patience to get good collaboration. They have to be willing to spend more money because it's costlier buying from small growers."

 

Ms. Karp said: "If retailers want to deal with these farmers they can no longer push all the risk about food safety and quality assurance back on the individual farmers, who can't bear those costs."

 

Joe Casa, owner of Harbor View Foods, on Long Island, knows the difficulties firsthand. Mr. Casa's company helps growers and markets communicate, telling stores what is ripe in the fields and telling farmers what produce managers will buy. After he convinced some East End farmers to grow extra produce for the Great Atlantic & Pacific Tea Company, which owns Food Emporium, Pathmark and Waldbaum's, the process stalled. "It's hard to make things happen at A.&P., to get approval from top management," Mr. Casa said. "I told them I had stuck my neck out to get farmers to grow extra stuff for them, but I couldn't get an answer from them."

 

The impasse was resolved when the Long Island Farm Bureau called Senator Charles E. Schumer and told him that a number of farmers might be stuck with unsold produce. He agreed to intervene and soon enough the senator and the chain held a press conference to announce that Long Island produce would be available in some of its stores.

 

Despite the difficulties, many in the food industry believe the demand for local food is here to stay. "It's going to be a way of life," said Matt Seeley, vice president for marketing of the Nunes Company, which sells Foxy brand vegetables. "I don't think there is any turning back."