Summer in the City: Detroit Style

How the Comeback City’s revival impacts the trade

Detroit_MS

Whether you prefer to call it a resurgence, a rebirth, or a comeback, there’s no question Detroit is on the upswing—and it’s proving to be a boon for the Motor City’s produce wholesalers.

“For the first time in a long time, we have something to be proud of here,” remarks Dominic Russo, a buyer for Rocky Produce, Inc. at the Detroit Produce Terminal. “People are buying produce, and there’s confidence.”­

In recent years, downtown Detroit has seen an influx of investment funding from businesses like JP Morgan Chase to help turn the struggling city around. The result has been nothing short of amazing: from about 20,000 new jobs since 2010 paired with training and educational opportunities, along with small business incentives and community development projects.

There is also a slew of new retail stores, including national supermarket chains and independent grocers, scores of new restaurants offering a variety of foods and cuisines, extensive renovations to the Cobo Convention Center, and the Detroit Pistons basketball team’s new Little Caesars Arena is slated to open this year to much fanfare.

“With more convention centers and more hotels and overall investment, it’s been fantastic,” asserts Nate Stone, head of special projects for Ben B. Schwartz & Sons, Inc. at the Detroit Produce Terminal. “More restaurants are opening, more retailers are opening, and they’re all going to use produce,” he says.

To top it off, Detroit’s prolonged population decline is finally slowing. Some experts predict the city could see its first growth since the 1950s. “There are people moving back into Detroit, and they’re mostly young people looking for a different kind of excitement—and Detroit is beginning to offer it,” Stone adds.

Thriving Terminals
Throughout Detroit’s ups and downs, the city’s two produce markets, the Detroit Produce Terminal and the Eastern Market, have remained pillars of economic strength. That’s because wholesalers on the markets serve retail and foodservice customers far outside the boundaries of Detroit, across the Midwest and beyond.

“Being based in Detroit, our business is going to increase as the city grows,” says Dominic Riggio, president of Riggio Distribution Company at the Detroit Produce Terminal. “But our business goes so much farther beyond the city. So regardless of what the city does, our growth pattern is good.”

Seven miles northeast, the Detroit Eastern Market has gained a new occupant: Michigan Farm to Freezer. In April, the Traverse City-based processor leased the vacant property in the former Cattleman’s Meat building.

The new tenant company plans to spend $1 million to renovate the space, with the help of an $800,000 grant awarded to Eastern Market’s corporate parent.

Michigan Farm to Freezer aims to be a perfect complement to the market’s other tenants, as the company takes in imperfect produce, processes the commodities, then flash freezes the product for sale to schools, stores, restaurants, hospitals, and foodbanks.

Steady & Climbing
Over the past year, Detroit wholesalers have been responding to the same trends as most other terminal market merchants: climbing demand for local product, greenhouse vegetables, organics, tropicals, and ethnic items.

But Detroit merchants have an ace in the hole for one of these categories, since they’re located just an hour away from North America’s top greenhouse producer, Leamington, Ontario, across the Detroit River.

Greenhouse veggies
Running hand-in-hand with the locally grown movement but rising to a higher level with year-round availability, greenhouse vegetables are booming in popularity.

“Greenhouse is a big part of the business and becoming larger,” Stone emphasizes. “It’s allowed people to say they’re getting a locally grown product, which is very true. If you get product from a greenhouse in Michigan or Ohio, that’s as local as you can get.” Of course, Leamington is nearby too.

Wholesalers on Detroit’s terminal markets handle an expanding range of greenhouse vegetables including peppers, cucumbers, tomatoes, zucchini, lettuces, and spinach. While some of these products come from Michigan greenhouses, the vast majority hail from Leamington. “Detroit is an easy market for Leamington to reach, and it’s almost like a homegrown product for us because it’s so close,” confirms Riggio.

“Greenhouse is great because it’s consistently good quality,” Stone comments. “You know what you’re going to get, and you know what your yield is going to be.”

Hydroponics gain ground
Recent years have witnessed the emergence of Detroit’s own ‘protected’ agriculture in the form of hydroponic growing operations. Green Collar Foods set up vertical growing racks in the Eastern Market’s Shed 5 back in 2015, and Artesian Farms began growing in the city’s Brightmoor district around the same time.

Jeff Adams, founder of Artesian Farms, says his hydroponic system uses 96 percent less land area and 98 percent less water than conventional growing. “In this area, there’s a lot of urban gardening going on and different community gardens that have been emerging over the last five or six years,” he explains.

“I wanted to find a way to create jobs and income by growing food year-round and not just have seasonal employment the way most agriculture is here in Michigan,” Adams relates. “So, I landed on hydroponics.”

Adams purchased a vacant building in an industrial complex and set up a hydroponic growing system using trays filled with water and nutrients stacked up to 14 feet high. “In 2015, we started off at a local farmers’ market and called on a couple of retailers, and things started taking off,” he recalls. “Now we’re growing and expanding, and we can’t grow enough.”

Artesian Farms currently grows basil, kale, and a lettuce blend called Motown Mix. “We sell mostly direct to retailers, about 90 to 95 percent, and the other 5 percent is to local restaurants,” Adams explains, adding a small amount goes to a neighborhood farmers’ market.

“I think you’re going to see more and more vertical growing and hydroponics,” predicts Ben B. Schwartz’s Stone. “They’re going to take these vacant 10-story buildings, gut them, and grow straight up. It’s the future.”

Locally grown
Locally grown nongreenhouse produce represents the future as well—as residents clamor for the more than 300 commodities grown in Michigan’s soil, making the state the second most diverse, agriculturally, in the nation after California.

Ranking first in tart cherry production, Michigan grows up to 75 percent of the nation’s crop. The Great Lakes State is also the third largest apple producer in the nation, selling about 1 billion pounds annually.

Michigan is also number-one in highbush blueberry production, producing more than 100 million pounds every year. Additionally, the state is a top producer of asparagus, potatoes, carrots, and celery.

As locally grown sales continue to rise, Riggio says his company is making a concerted effort to work with small area growers to elevate food safety standards for both foodservice and retail customers.

“We’re getting growers caught up with some of the regulations and food safety standards required by the bigger retailers and foodservice accounts,” he explains. “Although they are seasonal, they have stepped up quite a bit, and this seems to be a good trend.”

Tropical, exotic & ethnic produce items
As consumers and chefs experiment with a wider range of healthier foods, wholesalers are reaping the rewards.

“Even though it’s not a huge part of business, everybody wants to carry these items because the ethnic diversity across the region is demanding it,” points out Stone, adding that cooking shows are helping fuel the fire. “Food channels are showing consumers what to do with products they don’t even recognize, so they’re willing to try it.”

The diversity of Detroit’s various neighborhoods also impacts sales. For example, Riggio stocks Middle Eastern as well as Asian and European items. “Every market has its own demographic, and for us, we sell a lot of the Middle Eastern produce. We have stores and foodservice customers that service different pockets of town,” he says, with differing demographics and eating habits, “and we service them all.”

Organics
While organics are not a big mover in Detroit, wholesalers have seen an uptick this year—but not from an influx of new buyers. “Our current organic customers are selling more than ever,” Riggio says. “New customers for organics are up slightly, but the existing customers that always carry organics—their sales are definitely up.”

Better availability and lower prices are feeding the trend. “It seems like every two to three years, organic goes through a growth spurt, kind of plateaus, and then comes back,” he adds.

Even with the climb, however, organic sales are only a fraction of Riggio’s overall volume.

Retail Corner
The retail scene across Detroit and its surrounding suburbs remains highly competitive. From major national chains and regional retailers to independents and big box formats, new stores continue to pop up all over the state of Michigan.

“The retail landscape here is pretty healthy,” comments Riggio. “The big chain stores continue to expand; it seems they’re opening new stores all the time.”

Independents hold their own
Riggio says independent stores in the Detroit area are also thriving. “I wouldn’t say they’re adding stores at the same rate as the chain stores, but the better independents are always looking for that potential new location,” he explains. This escalation, he notes, has been a big part of Riggio Distribution’s growth over the past five to ten years.

One Detroit-area independent, Imperial Fresh Market, invested $6.2 million a few years ago to double its store size from 20,000 to 40,000 square feet. At the time, it was the largest investment by an independent Detroit grocer, and remains a significant milestone to date.

“We have a strong independent presence here,” confirms Russo of Rocky Produce. “Our retail customer base is probably 50/50 independents and chains. It takes both of them to enable us to do what we do here,” he says. “We’re driven to bring in really high quality produce at a great value for our customers.”

MARKET STATS
Detroit Eastern Market

Founded in 1891; the largest historic market in the nation, spanning 4.5 acres. Features both retailers and wholesalers who sell more than 70,000 tons of fresh produce each year.
Location: 2934 Russell Street

Office Hours: Mon-Sat 8 am – 4 pm
Public Market Hours: Sat 6 am – 4 pm
President: Daniel S. Carmody
Contact: (313) 833-9300
www.detroiteasternmarket.com

Detroit Produce Terminal
Established in 1928; easy access to rail and ports of entry, including the Fort Street Cargo Facility, Detroit Service Port, and Detroit-Windsor Truck Ferry.

Location: 7201 W. Fort Street
Hours: 6 am to 8 pm, 7 days per week
Manager: Farbman Group
Contact: www.farbman.com

More, more, more
Michigan’s own home-state chain, Meijer, Inc., headquartered in Grand Rapids, continues to expand and make improvements to existing stores. In 2017 the Midwest retailer announced it would invest $375 million in new and remodeled stores across six states. The investment includes the construction of seven new Meijer supercenters in Michigan, Indiana, and Wisconsin, as well as 22 store remodeling projects.

Kroger Company is also adding stores throughout Detroit and the state of Michigan. Last year the Cincinnati, OH-based national chain announced it would invest $180 million to add new stores and fuel centers and create 1,000 jobs across the Great Lakes State.

German-owned chain Aldi also continues to expand its footprint across Michigan and the Midwest. With 30 Aldi stores currently in the Detroit area and 72 throughout the state, Aldi has plans to open six new stores this year.

Additionally, Aldi has made a $1.6 billion investment to update 1,300 of its 1,600 stores across the United States, including locations in Michigan, to better compete with the arrival of new German contender, Lidl. The newly remodeled Aldi stores will feature a modernized design with open ceilings, natural lighting, more eco-friendly materials, and plenty of produce offerings.

Facing the competition
As Meijer, Kroger, and others are ramping up expansion efforts, one formerly popular retailer is treading water. Whole Foods Market, headquartered in Austin, TX, currently has seven stores in the metro Detroit area. The retailer is facing a possible buyout by Boise, ID-based national grocer Albertsons (owner of 18 grocery banners in 33 states, including Jewel-Osco, Vons, Ami-gos, Tom Thumb, Safeway, and others), amid falling sales and share value.

Stiff competition from rival organic grocers—including Sprouts Farmers Market and Natural Grocers, as well as traditional retailers like Walmart and Kroger that continue to expand organic offerings—have put Whole Foods and its organic identity at risk.

“The national chains like Kroger and Meijer are still going strong,” agrees Artesian Farms’ Adams. “As far as the city of Detroit, Meijer is the only big brand that has two stores in the city. Whole Foods is also in the city, and we market to that store.”

Adams explains that Artesian Farms is not quite big enough to market to the larger retailers yet. “Our niche is the smaller regional customers,” he says, adding that the grower’s largest customer is Bush’s—an independent supermarket chain based in Ann Arbor, MI. Bush’s currently has 17 stores across the state, including six in the metro Detroit area.

Mixed blessings
While many of these metro Detroit retailers are thriving, some produce professionals believe the market could be reaching saturation. “A few years ago, Detroit was glad to get a few big names, but I don’t know if there’s enough business to support all the stores,” points out Ben B. Schwartz’s Stone.

On the plus side, though, if Detroit continues to see a resurgence, Stone believes retailers in the most popular areas will reap the benefits. “We’re just beginning to see people moving back into Detroit, and the demand for retail is driven by that,” he says. “I expect to see more successful retail establishments opening because the neighborhoods are growing again in certain areas.”

Stumbling Blocks
While business is booming for Detroit wholesalers, economic growth can often be a double-edged sword.

“One of our biggest challenges has been keeping up with all the business,” says Stone, adding that it can be difficult to secure equipment in a thriving economy.

“I think business is good around the country, not necessarily just in the produce business. Demand for some of the equipment we use is high, and we sometimes have to wait for a pallet jack and new tractors and trailers,” he explains.

In addition to available equipment, labor is an ongoing concern. “Labor has always been an issue,” says Russo, and the key is quality. Securing adequate, skilled workers “is very important to what we do here.”

On the Horizon
As Detroit continues its road to revival, the local produce industry will certainly reap most of these gains.

“This is one business with a future, no question,” enthuses Stone. “We’re full speed ahead, and I don’t expect that to change.”

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