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San Francisco Produce Markets

Quality and Specialty Drive Business In The City By The Bay

The San Francisco Bay Area is home to 7 million people, served by hundreds of local grocers, chains, foodservice outlets, and three primary produce terminals. San Francisco is known for its high taste, for restaurants breaking the mold, trying new varieties, offering local produce, and delivering new culinary delights to patrons—and all of this epicurean and innovative activity is great for the fresh produce industry.

The Markets
Since the 1870s, San Francisco was served by one terminal market; today, the area is served by three main markets: the San Francisco Wholesale Produce Market (SFWPM), the Golden Gate Produce Market (GGPM), and the Oakland Produce Market (OPM).

The OPM has been at the same location on Franklin Street since 1916 and is privately owned. The SFWPM, owned by the city, recently signed a 60-year renewed lease at its Jerrold Avenue location that includes $100 million in investments and expansion. The current market consists of 10 buildings and 30 merchants on a 300,000-square-foot complex, with annual revenue exceeding $500 million. Among the upcoming improvements are rerouting traffic and enclosing part of a public street for inclusion in the market, and warehouse renovations.

The GGPM, on the other hand, is also privately owned, so improvements and changes tend to happen quicker and at the discretion of the merchant owners, versus having to go through city legislation to make changes.

“Essentially, the GGPM is one of the few privately-held markets in the country,” comments Steven Hurwitz, president of Bay Area Herbs & Specialties, LLC. “The other San Francisco market is owned by the city and doesn’t have the flexibility we have to make changes.”

Recent improvements include updated lighting and infrastructure changes to address cold chain, food safety, and traffic flow issues. “We’re in the final phase of a $3.8-million solar project that will support more than 90 percent of our electrical and refrigeration needs,” shares Hurwitz. “We’re proud to be a part of sustainability in this way.”

Strength in Specializing
The San Francisco region is unique in that it provides a strong market for high-end items, organics, and new varieties, and yet it faces some real challenges in labor shortages and water issues, and is not immune to price fluctuations in specific commodities. Even so, veterans are finding ways to build business and bring new items to market.

“Business is steady,” Hurwitz says. “Like everybody, we’re facing the challenges of labor rates, and are focusing on being more efficient and launching new lines.” The company is also committed to expanding its organics line.

“Prices have gone a little crazy lately,” admits Roger Lopez, in sales and manager at Bruno’s Quality Produce. A case in point is avocados, with tight supply and plenty of demand. “We’ve been using more brokers on all commodities to find the best price or availability, and we started a new line of business delivering to restaurants, which is doing well.”

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The San Francisco Bay Area is home to 7 million people, served by hundreds of local grocers, chains, foodservice outlets, and three primary produce terminals. San Francisco is known for its high taste, for restaurants breaking the mold, trying new varieties, offering local produce, and delivering new culinary delights to patrons—and all of this epicurean and innovative activity is great for the fresh produce industry.

The Markets
Since the 1870s, San Francisco was served by one terminal market; today, the area is served by three main markets: the San Francisco Wholesale Produce Market (SFWPM), the Golden Gate Produce Market (GGPM), and the Oakland Produce Market (OPM).

The OPM has been at the same location on Franklin Street since 1916 and is privately owned. The SFWPM, owned by the city, recently signed a 60-year renewed lease at its Jerrold Avenue location that includes $100 million in investments and expansion. The current market consists of 10 buildings and 30 merchants on a 300,000-square-foot complex, with annual revenue exceeding $500 million. Among the upcoming improvements are rerouting traffic and enclosing part of a public street for inclusion in the market, and warehouse renovations.

The GGPM, on the other hand, is also privately owned, so improvements and changes tend to happen quicker and at the discretion of the merchant owners, versus having to go through city legislation to make changes.

“Essentially, the GGPM is one of the few privately-held markets in the country,” comments Steven Hurwitz, president of Bay Area Herbs & Specialties, LLC. “The other San Francisco market is owned by the city and doesn’t have the flexibility we have to make changes.”

Recent improvements include updated lighting and infrastructure changes to address cold chain, food safety, and traffic flow issues. “We’re in the final phase of a $3.8-million solar project that will support more than 90 percent of our electrical and refrigeration needs,” shares Hurwitz. “We’re proud to be a part of sustainability in this way.”

Strength in Specializing
The San Francisco region is unique in that it provides a strong market for high-end items, organics, and new varieties, and yet it faces some real challenges in labor shortages and water issues, and is not immune to price fluctuations in specific commodities. Even so, veterans are finding ways to build business and bring new items to market.

“Business is steady,” Hurwitz says. “Like everybody, we’re facing the challenges of labor rates, and are focusing on being more efficient and launching new lines.” The company is also committed to expanding its organics line.

“Prices have gone a little crazy lately,” admits Roger Lopez, in sales and manager at Bruno’s Quality Produce. A case in point is avocados, with tight supply and plenty of demand. “We’ve been using more brokers on all commodities to find the best price or availability, and we started a new line of business delivering to restaurants, which is doing well.”

A number of merchants have grown into niche or specialty suppliers to ensure their piece of the market and meet specific customer needs. “We deal with restaurants only,” explains Ric Tombari, president and CEO of Cooks Company Produce. “Our customers describe us as a hybrid between a farmers’ market and a produce company because we’ve built up a group of about 200 to 300 family farms that we buy from to curate our product lines.” Cooks Company services hundreds of area restaurants, six days a week, with “34 trucks and no sales people—our drivers act as sort of ‘green grocers’—advising customers on what’s fresh, new, in season, and recommending products.”

Robert Lichtenberg, director of purchasing for Earl’s Organic Produce, says, “We’re the only 100-percent organic distributor on the market. We recently moved into a larger space (a 33,000-square-foot facility) with triple-racked cooler spaces. As a region, San Francisco is booming, and most any business that deals with food does something with organics these days.”

Lichtenberg says that while it’s true the price of organics has come down some in the last decade, the real driver for the trend is lifestyle. “I believe people who are committed to buying and eating organic food do not do so because of price. While there’s a segment that shops price, more and more buying is driven by what people are putting into their bodies, how they prefer to see food grown, and the impact on the environment, farm workers, water, and soil.”

Even the full-service houses cater to more of a niche market in today’s environment. “We’re like a wholesale house used to be,” shares Phil Franzella, president of Franzella Produce, Inc. “At one time or another we’ve handled almost every item; we have shippers and some farmers. While business has been steady for the last three years, it has changed a lot: more people are going direct; you now have Costco, Walgreens, and Target selling produce; and there are more farmers’ markets popping up everywhere.” Further, he explains, distributors like Sysco are buying produce companies too, and some retail outfits are also selling wholesale.

Other former wholesalers got tired of the changes and found another path. Bob Boyajian, president and senior buyer at Integrated Trade Services, Inc., left the terminal markets 16 years ago to serve high-end independent retailers. In the Bay Area, he says local is a big deal for retail buyers, with less demand for bulk items and more for specialty products. “When I got into Hispanic stores, at first, I had to modify prices, but after a few years,” he notes, “they wanted higher quality.”

Whether in the high-end independent retail shops or back at the terminals, at least in San Francisco, quality is key factor in success. Shasta Produce, with stalls in each of the three markets, sees competition, innovation and novelty as the drivers of business.

“We realize the value of a wholesale market, of being right on the street and being with the produce every single day,” shares David Andrighetto, CEO of Shasta Produce. “What’s great about San Francisco is that it has an amazing culinary community and very high standards.” Other markets may welcome lower-priced produce items, he says, “but up here they won’t sell.”

Water and Labor Drying Up
Water and labor shortages are huge issues in the area, impacting not just produce businesses but all of California. “They’re calling it a permanent drought now,” Kyle Loveness, manager at J.C. Cheyne & Company, points out. “We used to get potatoes from California; now they’re mostly coming from Oregon, Washington, and Idaho. And there isn’t really a solution,” he contends, “just raising prices and rationing water.”

“Water is a hardship for farmers,” agrees Tombari, with many drilling wells to find more groundwater. The drought, he believes, will not only change how farmers grow, but what they grow. Labor is another part of the equation, with some growers not even planting or harvesting because of the lack of affordable workers. “The labor market is tight because the city has mandated minimum wages and all these fees; it makes it expensive to operate, and labor is tight because workers can make a lot money in jobs other than agriculture.”

There is some light at the end of this particular tunnel. Tombari says millennials are pushing “a new back-to-the-land movement” and are interested in growing organic produce. “That’s encouraging and maybe it’s a hopeful sign.”

In spite of the very real challenges of water and labor for California growers, the San Francisco produce scene is thriving with demanding customers who are both willing and able to pay for quality, organics, and innovation. This continues to drive the city’s markets with wholesalers finding their niches, and retailers and restaurants capitalizing on the quest for fresh, local, and specialty produce.

Images: my leap year & Rafael Ramirez Lee/Shutterstock.com