There are those who have been writing off the wholesale sector for years now, but for something that, if you believe the doomsayers, should be long dead and buried, it is looking pretty chipper.
Granted, there are firms that struggle to make ends meet, but they are in the minority and there would appear to be a growing undercurrent of confidence in wholesale, pushed forward by vibrant, forward-thinking companies which, rather than sit back and watch the sector dwindle and die, have gone out there and nailed their colours to the mast.
It is the attitudes of pro-active companies, such as Re:fresh award winners Bristol Fruit Sales (BFS), that is leading the resurgence in the wholesale market and as a result, attracting new, high-quality suppliers back into the sector.
Brian Daykin, chairman of the Fresh Produce Consortium’s wholesale division, says the pressures suppliers now face in the multiple sector are making them start to ask questions.
“How long can suppliers be pressurised into lowering prices? Let’s face it, you’ve only got to follow an Asda lorry down the motorway to see the emphasis placed on low prices.
“The pressure must be having an impact on those suppliers and they must be thinking, ‘is this the best way forward for us’?”
As a result, he says producers are now looking for more profitable routes to market, and the wholesale sector is stepping forward to offer that opportunity.
Nick Matthews, group marketing manager with BFS, says the attitude in the supply base towards the wholesale markets is changing. “We’ve got suppliers who used to supply the big retailers, but they’ve now switched solely to us.”
A prime example of that changing attitude has been the launch of Gomez Reserv, a premium brand created by leading supermarket supplier and another Re:fresh award winner Gomez to tap into a relatively unmined seam within the wholesale markets.
Jim Parmenter, md of Gomez, says: “I identified that the non-multiple sector was crying out for high-quality produce and prepared to pay a premium for it. We took a look at how we could best market premium quality produce and came up with Gomez Reserv.”
He says the brand that was created gives people throughout the sector the opportunity to easily recognise the fact they are buying premium produce. The company created a format world-wide, seeking out the best quality produce and ensuring all the growers are producing to the same high specifications, all of which is going into the same packaging.
He adds: “Customers only have to see our boxes to recognise the products inside are going to be of the highest quality.”
So far, the brand covers stone fruit, grapes, strawberries and vine tomatoes, but Parmenter says they are always looking for new lines. “It’s not exclusive, but the products have to meet the standards and be a bit special. We’re challenging growers all the time to produce high quality produce.”
At the moment, the brand is only aimed at the trade, but Parmenter says there are plans to start promoting the concept to consumers, to get them looking in store for the Gomez Reserv mark.
Gomez is one of several companies taking a fresh look at the wholesale markets. Rather than continuing to simply writing them off, businessmen like Parmenter and his team are recognising the opportunities that remain open to them.
He says: “I think the sector is very clear now, just because they’re non-supermarket doesn’t mean they don’t demand high quality product. We think the sector deserves quality produce just as much as the multiple market.”
The potential is there, he says: “At the moment, the multiple retailers are simply taking market share off each other, while the non-multiple sector is holding up quite well and I think it can be developed.”
Chris Rudd is another supplier who has found the wholesale markets to be a valuable route. His Cheshire-based company, Frank Rudd & Son, up until recently had been a supplier to the big retailers, in fact the biggest retailer - UK number one Tesco - however, the pressures and lack of returns forced Rudd to re-evaluate his operations.
“We used to grow for Asda and we went from it to Tesco but Tesco seemed very keen to just buy Polish fruit and we got a bit disillusioned with it.”
His is not a big operation, he admits, growing on about two-and-a-half acres of land, and he struggled to gear his operation up to supply the big boys.
However, he found himself left in a difficult position when the supermarket business fell down. “We were left a bit high and dry by the supermarkets, but fortunately the wholesale sector was there. We’d always done a bit with the wholesale markets, but now we send pretty much everything to them.”
Rudd now supplies his tomatoes to Bristol Fruit Sales under the brand Cheshire Tomatoes. “There’s a little less cost involved in dealing with the wholesalers, and we deal with BFS a lot, and those guys want to put some money in your pocket, which is nice. They’re keen to get us a good return, whereas the supermarkets are keen to screw that extra penny or two out of you.
“When you’re in with the supermarkets you’re just anonymous, just a number, but now we’re much more visible, we’ve got our own brand and it’s paying off.”
The sole focus of businesses like Rudd’s, and the premium offerings of the likes of Gomez, are a far cry from the old attitude of many operators.
Rudd says: “In the past, the markets have been a dumping ground for producers, but hopefully, by putting some good stuff into the market, it will find a good home.”
But not all producers are reacting in the same manner. As reported in last week’s Journal, leading top-fruit grower Ian Mitchell is undertaking a study into the wholesale sector, to investigate whether UK apple and pear producers are making the most of the markets. The interim results are disappointing however.
He says the vast majority of UK growers are not addressing the needs of the wholesale market and, as a result, are missing out on some good opportunities.
“Growers in the past haven’t had a lot of interest in what’s required and that hasn’t changed. It’s time for growers to reconnect. An awful lot of them don’t make enough effort to find out the market requirements.”
Mitchell decided to undertake a study, with a £20,000 grant from the South East England Development Agency, as he thought things were beginning to slide.
“The wholesale market has always been an area of interest to me, and I got wind of the fact the UK fruit share in that sector was declining, and that didn’t make sense.”
The study revealed that growers are still using the market to offload unwanted supermarket rejects and lower quality produce. “Wholesalers do feel they are being used for non-spec apples,” says Mitchell.
He is now urging growers to work with the wholesalers to find a solution: “Why not work with the wholesalers and find out what the markets want? There will be a market for lower quality fruit, but you have to identify it, not just send pallets up there and moan when it gets knocked out at a lower price.”
He says growers need to look at issues such as packaging, which in most cases is inferior to imported offerings. “Appearance is often scruffy, there’s no branding and it’s often second-hand packaging. Any buyer who doesn’t have an allegiance to UK produce is going to choose the better presented imported fruit.”
Mitchell believes growers’ attitudes need to change: “I don’t write the wholesale markets off at all - there are opportunities there that are not being realised. I’m hoping what we are doing will help.”
But despite this, the change in attitude does appear to be gathering momentum, and Daykin says this is being driven by some of the wholesale companies. “This change is being pushed by the wholesalers who have a vibrant and forward-looking business. Taking BFS, its outlook to the industry is that if we’re supplying retailers and foodservice, then they’ve got to have quality produce - and that attracts the likes of Gomez and others. If you’ve got quality products, then you’ve got a good business.”
Matthews says it is up to the wholesalers to drive the point home, and that is beginning to happen: “The message is getting through that wholesalers don’t just want something on sale, something to knock out. We don’t want the retail rejects, and there are companies out there willing to pay good money for good product. Wholesalers are getting better at putting that point across.”
He says the simple fact is that no business can afford to take poor quality produce anymore. “If you go back 10 years, people would take produce from you that wasn’t 100 per cent right. But these days, our customers won’t take it unless its right, and landfill costs are far too high now and people need to realise that markets cannot be the dumping ground of peoples’ waste and rubbish. Wholesalers will now just not take it. If it’s not 100 per cent right, we can’t sell it.”
At the end of the day, wholesale is still a vibrant business, says Daykin, and suppliers are recognising that fact. “The figures show that wholesale is still 40 per cent of the [UK fruit and vegetable] market,” he says. “We’re still a significant part of the industry, and I think it’s a credit to the sector that suppliers of the ilk of Gomez and others have recognised the situation and responded.”
However, one question does still remain, he says. At the moment, the big multiples are focusing on each other and ignoring the wholesale sector. But should the interest in wholesale continue and the sector begin to draw more and more suppliers away from the mutliples, is that going to raise the industry onto the radar of the big boys? What will happen when the retailers have to start competing for the attention of the suppliers? Perhaps that is when things get really interesting...
PASCOES LEAD RETAIL REBELLION
The Pascoe family have farmed west Cornwall for 50 or more years and have seen a number of changes.
Having been involved with supplying the supermarkets with fresh produce, it became evident to them that intensive farming was wrecking the land, and was becoming an ever-increasing costly way to produce food for the farmer.
To preserve their land base for future generations, last year the Pascoe’s decided to stop supplying the supermarkets, deciding that the control, monitoring and dictation of how they farmed was basically wrong.
Being told when and how much fertilisers, pesticides or herbicides to apply based on purely academic lines, making no allowance for nature’s peculiarities, meant they often lost production or had produce rejected.
It was clear to them they were losing out and the consumer had little choice. Everything had an academic standard, which nature was being forced to produce, or it was refused by the supermarket buyer.
Having supplied the wholesale markets in the distant past, they decided to return to the trade. They approached old wholesale customers and say they were welcomed back with open arms.
They knew they were back in charge of their farming, and on spec, they bought a second-hand lorry to take the future produce to the markets.
Last year, they tested the cauliflower market with 57 acres of produce. They lifted during the day, delivered to Bristol wholesale market by night, and the produce was consumed for lunch the next day. In all, about 12 hours from lifting, the cauliflower was being consumed.
Mark Pascoe says: “The supermarkets artificially keep the prices low. This sucks subsidy payments to the farmer into the equation and enables them to keep the price they pay low, or even below cost. If the farmer wants to sell volume, he has to do as he is told.”
He says that in west Cornwall, landowners are refusing to rent their land for supermarket production as, when it is returned, it is fit for nothing. The Pascoe’s have gone back to proper crop rotation, which actually improves the land, which in turn gives better crops.
Consequently, this year, the Pascoe’s have worked with Bristol Fruit Sales and sown three times the volume of cauliflower and cabbage.
With the EU moving away from production subsidy to land management subsidies, the Pascoe’s knew they had to change. So they have formed their own co-operative and are supplying what the consumer wants, fresh produce, little to no artificial additives (organic preferably), and a reasonable price. Kilo upon kilo, the Pascoe’s can guarantee all three, and claim they can now compete head on with the supermarkets for price, taste and freshness.
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