The last time FPJ visited Gateshead, the headline read “Four’s company”. Just two years later, it could easily have been “Three’s a crowd”. As the wholesale market celebrates 40 years since moving from Newcastle city centre to Team Valley Trading Estate in nearby Gateshead, however, there is certainly no lack of competition remaining between the three fruit and vegetable wholesalers that survive from the 35 which initially made the short journey south across the Tyne.
Total Produce’s acquisition of The Greenery saw four become three, but the tempestuous nature of the relationships of the men heading up the market’s leading firms ensures that the competitive lights shine as brightly as ever.
Dudley Baty (Thomas Baty Ltd), John Holland (JR Holland Produce LLP) and Alan Shield (Redbridge/Total Produce plc) share nearly a century of experience in the market. They also own, between their firm, more than 60 per cent of the units on the site. But they are all happy to admit that they don’t get on. And when there are big decisions to be made about the market’s future, that by implication leads to some, let’s say, tricky situations.
Holland, who recognises he stirs up mixed emotions in the market, adds: “We are three strong, well-run businesses working at a very sustainable level and there is no question that the market works with three major players. We are all doing the same thing and we are all pretty good at it. There is most certainly not a cartel; it is a highly competitive environment. The market is still a vibrant place. I wouldn’t say we get on; there is a real ding-dong all the time in a trading sense.
“The fruit trade is so incestuous and we are all trying to sell the same stuff to the same people. It’s a shame that it has become a situation where we dislike each other, but while there is no need for it, I suppose it’s fairly inevitable. I get on very well with a lot of people in the trade elsewhere in the country. In Leeds for instance, there are also three main companies and we get on famously - but not in Gateshead.”
He continues: “I admire what Alan has achieved in this market, and that he is trying to run a business to the same level as I am, knows the margins he wants and is tight on credit control. Baty’s is also a very sizeable, decent operation. I can live with that; it’s the rusty van merchants that none of us want [to be competing with].”
Baty himself prefers to keep any comments on the other two closer to his chest, saying simply: “You can’t really bring any of your competitors into your confidence. We are not close as companies, but we have a healthy respect for each other.” But it is clear that a burning ambition to outwit the other two fuels the fires of all three, and in a market, that surely cannot be a bad thing.
“If there were any fewer than three wholesalers, you could question whether it would still be a market,” adds Baty. “By its ethos, a market should have several traders to both ensure competition and, importantly, to spread debt. I still feel we have to work hard to make a living in this market, which suggests that it is very competitive.”
“Things are never uninteresting,” laughs Malcolm Venus, manager of North East Wholesale Fruit & Vegetable Market Co Ltd, who runs the trader-owned market site on behalf of members. And things are set to get very interesting indeed, as the silver anniversary perhaps inevitably coincided with yet more thoughts of relocation or refurbishment of a site that has seen its best days.
The site, which cost £1.5 million to build in 1968, is now in a state of disrepair. There are, however, no restrictions on its future use, so the options are wider than they might have been in the past.
A 3.8acre leasehold site has become available next door, at an asking price of £1.8, which simply using a pro-rata equation would value the wholesale market site at roughly £12m - and it is freehold. Venus rightly points out that it is not quite as simple as that, but the fact remains that the site has a decent inherent value, which would play a part in any decision on the market’s future location. “The site is only worth what someone is willing to pay for it. And if the existing tenants decide it is the right route to redevelop it and make it fit for purpose, they will have to find whatever it takes to put the roofs and roads right,” says Venus.
“The cost of upkeep at this site is only going to escalate. The cost of wages, energy and other things go up too, but all the members do is moan.”
Baty says: “We are at the stage where it will cost in the region of £750,000 to repair the main concourse roof and re-tarmac the market. We’re not going to get very much for our money. It is ironic that the buildings that were put up to replace the old market, in Newcastle, have just been knocked down. Gateshead market, in my opinion, has also reached the end of its natural life.
“We’re rattling around in a 22-acre freehold site, that is no longer fit for purpose. But it is of value to somebody. We have options available to us. With the three traders we have, my preference would be to build a smaller, modern facility on this site. Alternatively, we could get a developer to build a new site either close to where we are, or maybe a bit further south in the A1/A19 corridor. That would be a three-to-five year project and hopefully the economy will have stabilised before then.”
The decision was taken a fortnight ago by the board to appoint Knight Frank to undertake an overview of the market’s current situation, and analyse its future options, in discussion with members. Holland says: “It would be remiss of the board not to undertake a complete review of what we are trying to achieve as a market.
“It’s not a straight line, so Knight Frank’s input will be very important. They will first talk to the board, with a view to consulting with all members, to find out what they want and what they require. From there, we will be in a better position to consider our options.
“We don’t know, for instance, how much room members want, or whether they believe we need to remain in Team Valley or not. Should we move further south? These questions all need answering, but this will be the most comprehensive, independent review undertaken in 40 years, and we will get those answers.
“There are three major wholesalers left on the site, and realistically, it is what these companies want that is going to happen,” Holland says. “The only way we will relocate is if all three believe that it will work out for them commercially. I believe that the market as a whole is not fit for purpose, but having said that, I’m happy with where we are. The review may decide that the market is fit for purpose, or that we should redevelop part of the market. If the decision is made to move, I think that is realistic in the next five years.
“The review will take around six months, and there are so many possibilities and options on the table - many of which we don’t know yet. At least we will have looked at it thoroughly, even if nothing happens for another 10 years,” he says.
Any move, says Baty, has to be made with view to making the market sustainable.
“To continue in this trade, everyone needs to become more efficient - every single penny has to count,” says Baty. “Fuel costs are higher, utilities costs are doubling, so getting another two miles to the gallon from our vans can make a huge difference, and efficient refrigeration is a must.”
Total Produce, for its part, has until now not had a place on the board. “We would not want to be on our own - there is lots of competition here and that is good for our customers, for us and for our supply base because they continue to have options,” says Total Produce’s wholesale division operations director Graham Broomhall. “We would be happy to stay at the existing site, but the refurbishment costs are huge and as I understand it, there is not any money in the market funds to pay for that. We want to see the maintenance of a strong and viable business environment and retain all the relative competitive elements of the market.”
Baty says any move should benefit the whole trade, but does not believe the site is turning customers off. “In the main, I don’t think our customers are too bothered about the appearance of the market, as long as the service and the products are good, but the traders really need an environmental-friendly, energy-efficient facility. It would be interesting too, to see if we can attract wholesalers from the dairy, meat and fish sectors into a new site, as a composite market would make sense to have a food market for the region,” he says.
“The important thing is that units are modular, and not restricted to use by fruit traders, as that would make them viable in the long term.”
There are some tenants on the site who would oppose a move, says Venus, because the location is important to them, and the peculiar ownership structure - which sees several members sub-letting units to outsiders - has produced a complex situation in its own right. There are 167 units on the market and only a handful are vacant. Under the terms of the lease, 90 per cent of the tenants are breaking their lease by sub-letting units, is all Venus says of the situation.
He believes his members face a catch-22 scenario. “Our forefathers entered into a 99-year lease with English Industrial Estates - which owns the Team Valley Trading Estate - on the road outside the market, which basically amounts to a ransom note. Payment began at £1 a year and is something like £6,000 a year now, and the maintenance of the road is down to us - they just cut the grass and trim the trees. Negotiations will have to take place to increase that lease before anything can happen with this site.”
“We are not land agents, so we have brought land agents in to hold our hands through the process,” says Venus. “They will make recommendations and we have the choice to take them up or not.” It does not need 100 per cent buy-in from the membership, though. “In the articles of association, the directors could actually sell the market above the heads of the members,” he adds, stressing that is not meant to imply that this will actually happen.
“My gut feeling,” says Venus, “is that something fairly radical will happen here in the next two years. Trading is not getting any easier and costs continue to rise; we just cannot continue like this. Although I’ve been saying it for a while, I think the board has no choice but to recognise that now.
“It’s the first time we have had this much agreement about something, which is a move in the right direction.”
But what of the market as a trading environment - is it still successful? Venus says yes. He says the throughput at the market can be justifiably said to have increased simply by measuring the success of his award-winning recycling scheme on the site. “I can tell that the trade has not diminished here simply by the volume of cardboard I have been recycling each year over the last eight years. We are baling and selling a lot more cardboard than we were when we first started doing it, and it has to be coming from somewhere.”
He adds that the market makes £30,000 a year from selling its waste, but claims that there has been scant recognition of this achievement from tenants. “When I first came here, the waste was being tipped into open-topped skips, then jumped up and down on to compact it. The impact of the compactor on the site has been tremendous, and I know for a fact that other markets are paying far more to dispose of their waste than we are.
“We are put on a pedestal among markets for our work on waste,” says Venus. “But if the majority of people in this market are aware of that, they have certainly never made anything of it.”
Baty, Holland and Shield all have their own reasons to remain committed to the market.
Baty, whose 18-year-old son Thomas has just become the fifth generation to enter the family trade, says: “I am very enthusiastic about the future and feel that I have at least another 10 years left in me.
“I was 15 when I came into the market and I chose this job because the £3-4 a week extra it gave me meant I could buy a moped! I started on the forklifts, then did the night shift, and made my mark when I brought the first iceberg into Gateshead.
“I still love the fact that in this trade you use your personality to encourage people to sell your produce. I love dealing direct with natural products and growers, and being able to make a decent return for them, as well as us. I guess we don’t get out and meet suppliers enough, but it is easy to get bogged down with the day-to-day issues. We are still keen on attracting new suppliers though, who want to deal with an independent company that is a good payer and works hard to maximise returns.”
Baty remembers the days when every shutter was up and 36 companies worked alongside each other. “We’re down to three produce wholesalers now,” he says. “But I was looking back at our accounts from the late 1970s a while ago, and we had a turnover of £300,000. I know that turnover isn’t the whole picture, but we’re at £15m now, so that illustrates that the companies that remain have absorbed the business pretty well.”
When asked why his company is one of the three that have thrived, Baty says: “We have just tried to keep ahead of the pack. I think it was bred into me. This is a family business and part of you always wants to keep that family name going.” He worked for a long time with his twin brothers Roderick and Clive, before buying them out five and 10 years ago. “They had both done 30 years in the trade and were ready to move on,” he explains. “They had old-school grafting qualities and taught me a lot of values.
“I am fortunate to have some very good people around me and they are relatively young in what is increasingly an older person’s trade,” says Baty. “We’re trying very hard to keep the age range of our team as fresh as possible, but there is certainly not enough young blood coming into the market.
“In many ways, this is an unattractive job, we all know that, but you have to turn it round and accentuate the positives. It is a lot of fun and there are some great characters to work with; you can travel at least one way to work when there is no traffic on the road; and salesmen don’t generally start here until 3-4am, so if you are able to adapt your lifestyle to the hours, we’re blessed compared to some other markets.”
Where Total Produce is effectively merging three businesses into one, Holland recently went from two into one in the market. “From my perspective, since we merged H2H and JR Holland in the market into JR Holland Produce LLP (and moved from one end of the site to the other), we have never done better at any time in the last 15 years,” he says. “It has all been about driving efficiency through the business, increasing sales and margins. We have hand-held terminals and a Pr2 system that I cannot speak highly enough of. The additional focus and speed of knowledge it has allowed us to have in our business has taken us to new levels.”
JR Holland Food Services is the market’s largest catering supplier, and also has a facility around half a mile away on the same trading estate. The foodservice sector faces its challenges as well as wholesale but, says Holland, his company is well placed to cope. “We are not purely focused on hospitality and private catering, which have colossal issues,” he says. “We service 12 LEAs in this region, which gives us the issue of having a 38-week business which has to carry cost for the other 14, but we also have a strong contract caterer business and regionally, foodservice remains strong. I am very comfortable that our core business is solid.”
Holland’s father, also named John, was a well-known market man for many years, before the father-and-son partnership was formed when JR Holland & Son was formed in 1983. “I’m inextricably linked to this market and I’ve got years of school fees ahead of me yet,” says Holland, who has nine and 13-year-old children.
“I’m very committed to the trade; I have great staff, quite a few who have been with me since ’83, and I am rightly proud of them. That in itself gives you an obligation - they’re not daft, but I’m sure they can see I’m committed to this company and this market for the foreseeable future.”
Maybe not another 40 years on the same site, but that’s another story. (There will be more on Total Produce Gateshead in next week’s FPJ, when we run the second in our series on the company’s wholesale division.)
LABOUR OF LOVE BRINGS BACK MEMORIES
FPJ arrived in Gateshead to coincide with a fascinating insight into the heritage of fruit and vegetable wholesaling in the North East.
To mark 40 years at Team Valley, ex-market chairman Brian Moon and local retailer Tommy Young joined forces on a labour of love that culminated in a trip down memory lane in an exhibition of more than 250 restored photographs from the old market, in Green Street, Newcastle, to the ‘new’.
The photos, dated from as far back as the 1880s, gathered from far and wide and were on show for four days at the market, attracting people of all ages who have been attached to both market sites over the years. “I have seen people I hadn’t seen for decades,” said Moon, who hosted the exhibition with his wife Margaret, Young and his wife Joy. Young added: “We have been surprised at the numbers of people who have come; it has been a real pleasure.”
The exhibits included the photo above, which depicts the hustle and bustle of the city centre Green Lane site, where Moon began his wholesale career in the 1960s. He said: “The photos have come from all over the place - various archives, the Central Library, members still in the fruit trade and whose forebears started their company.” There were also a number of FPJ clippings, featuring some of our coverage of the market over the last 112 years.
A DVD was also produced for the occasion and sold at £5 a pop for St Oswald’s and Willowburn hospices. A little short of £1,000 has already been raised. Anyone who would like a copy, call Tommy Young on 01207 503161.
BLUE MOON SIDES WITH VENUS
Market manager Malcolm Venus will be self-employed after April 22 next year and while he is available to keep working for the board, says “they have known that for seven years and done nothing”.
Ex-board chairman Brian Moon, who retired from West Cumberland Farmers (WCF) eight years ago, springs to his defence: “Malcolm spends his life being criticised for all manner of things,” he says. “I don’t think anyone realises the work he has done and the savings he has made on their behalf.
“I always believed this market could hold its own against any other in the country,” says Moon. “The roof was always an issue - when it was built they only put two layers in instead of the five we expected. But I have to say it has turned out to be a horrible place to come to. It’s soul less and I personally couldn’t work here any more.
“I visited Leeds and I think that’s paradise as a market. You need a market where traders compete with each other, but I don’t see that here any more - it’s more one-stop shopping.
“People need to analyse how much space they actually need. They would soon find out that it’s nowhere near as much as they’ve got. The more space you have, the more you are going to fill, it was the same with WCF. We used to have 40 units at one stage and every space had something in it, but it was totally inefficient. You couldn’t control it, and people took advantage of it. We condensed it, and made every unit a selling unit, and it made a difference.
“The key is not to wait for change to be enforced; you have to try and make it happen. When I was chairman 12 years ago, I made proposals that were not dissimilar to what we are seeing now. Whatever decisions are made at board level have to be right for the tenants and the workers, as they have to safeguard the futures of the companies and people who depend on the market.”
That amounts to around 350 people - there were 900-1,000 when Moon first worked at the site.
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