The nation’s fastest growing metroplex—Dallas and Fort Worth—is a mega-opportunity for buyers and sellers of fresh produce, flowing through a network of wholesalers, retailers, and farmers’ markets to consumers. With Dallas ranking as the third largest city in Texas, this region continues to experience exponential growth, welcoming hundreds of thousands of new residents to the area.
According to a study by Texas A&M University, the annual average impact of Dallas-Fort Worth (DFW) crop production on the economy is more than $1 billion annually. A big slice of this agri-business belongs to wholesalers in the metroplex, with nearly 88,000 workers claiming an annual payroll of over $6 billion.
No Terminal Market
For a rapidly growing metro area with millions of mouths to feed, surprisingly, Dallas does not have a central terminal market. In 2013, DF Market Holdings purchased the wholesale market from the city, and Dallas’ City Council voted to privatize much of the market’s land and property. Today, the former market is home to trendy shops, restaurants, and luxury condos. While the market offers a handful of fruit and vegetable stands, it no longer includes wholesalers.
These days, most Dallas produce dealers work out of specialized, custom-built facilities on the outskirts of the city. From these suburban facilities, produce businesses enjoy quick and easy access to highways and more affordable office and warehouse space. Perhaps this is why Dallas suppliers do not consider the lack of an official terminal market a disadvantage.
“The traditional wholesale terminal where buyers would walk and purchase hasn’t existed in Dallas for a long time,” says John Acton, general manager of Coosemans Dallas.
“With most retail and foodservice customers, so much is direct now,” continues Acton. “Everybody has contracts and everybody has procurement arms.” In his view, terminal markets across the United States are less prevalent than in years past.
A future trend?
“It’s just kind of the new world,” suggests Tony Stachurski, vice president of Hardie’s Fresh Foods, a family owned distributor that has been serving Dallas retailers and foodservice customers since 1943, and has locations in Houston and Austin as well. “There are still some thriving terminal markets,” he adds, “but for the most part, I think most terminals have taken a backseat to companies building state-of-the-art facilities.”
Stachurski points out that many of the terminals across the nation were built 30 to 50 years ago. As property values rise in many downtown areas, terminal owners often make the decision to sell the market for development. Most Dallas produce businesses still trade with each other on a wholesale basis, he says. “Just because there’s not a place to do it that’s called a terminal market, there’s still plenty of commerce happening between the companies in Dallas.”
The nation’s fastest growing metroplex—Dallas and Fort Worth—is a mega-opportunity for buyers and sellers of fresh produce, flowing through a network of wholesalers, retailers, and farmers’ markets to consumers. With Dallas ranking as the third largest city in Texas, this region continues to experience exponential growth, welcoming hundreds of thousands of new residents to the area.
According to a study by Texas A&M University, the annual average impact of Dallas-Fort Worth (DFW) crop production on the economy is more than $1 billion annually. A big slice of this agri-business belongs to wholesalers in the metroplex, with nearly 88,000 workers claiming an annual payroll of over $6 billion.
No Terminal Market
For a rapidly growing metro area with millions of mouths to feed, surprisingly, Dallas does not have a central terminal market. In 2013, DF Market Holdings purchased the wholesale market from the city, and Dallas’ City Council voted to privatize much of the market’s land and property. Today, the former market is home to trendy shops, restaurants, and luxury condos. While the market offers a handful of fruit and vegetable stands, it no longer includes wholesalers.
These days, most Dallas produce dealers work out of specialized, custom-built facilities on the outskirts of the city. From these suburban facilities, produce businesses enjoy quick and easy access to highways and more affordable office and warehouse space. Perhaps this is why Dallas suppliers do not consider the lack of an official terminal market a disadvantage.
“The traditional wholesale terminal where buyers would walk and purchase hasn’t existed in Dallas for a long time,” says John Acton, general manager of Coosemans Dallas.
“With most retail and foodservice customers, so much is direct now,” continues Acton. “Everybody has contracts and everybody has procurement arms.” In his view, terminal markets across the United States are less prevalent than in years past.
A future trend?
“It’s just kind of the new world,” suggests Tony Stachurski, vice president of Hardie’s Fresh Foods, a family owned distributor that has been serving Dallas retailers and foodservice customers since 1943, and has locations in Houston and Austin as well. “There are still some thriving terminal markets,” he adds, “but for the most part, I think most terminals have taken a backseat to companies building state-of-the-art facilities.”
Stachurski points out that many of the terminals across the nation were built 30 to 50 years ago. As property values rise in many downtown areas, terminal owners often make the decision to sell the market for development. Most Dallas produce businesses still trade with each other on a wholesale basis, he says. “Just because there’s not a place to do it that’s called a terminal market, there’s still plenty of commerce happening between the companies in Dallas.”
More People, More Food
The city’s remarkable growth, combined with more emphasis on health and wellness, continues to propel sales of fresh fruit and vegetables.
“There are a lot of people moving to the Dallas-Fort Worth area,” notes Anderson (Larry) Ma, general manager of Pacific Plus International, Inc., a distributor based in Farmers Branch, a small northern enclave of Dallas. “This area is booming, and new houses are going in all over the place. We’re growing every year, and this is a good thing for our business.”
Of course, the old real estate mantra about location helps too. “We’re centrally located to get (produce) out to a lot of different areas,” points out Acton.
Despite the area’s growth, there have been a few casualties. “The market over the last few years has narrowed down and lost some smaller wholesalers,” contends Steve Ford, managing member at Dallas Direct Distributing, LLC. Nevertheless, he says, “You’ve got a pretty strong market and foodservice industry, and wholesalers are strong. So, it’s a good place to be right now.”
Stachurski agrees. “It’s a very strategic place for businesses to distribute from because we can hit a lot of geographical locations,” he says, and he also appreciates DFW’s thriving economy and diversity.
Retail Roundup
On the other side of the selling coin is the retail scene. Like many fast-growing cities, Dallas and Ft. Worth’s retail environment is highly competitive and constantly evolving. Kroger, Albertsons, Tom Thumb, Market Street, and Wal-mart all maintain a strong retail presence in the metro.
Regardless, new competitors continue to enter the market, giving these grocers, both large and small, a run for their money.
“Some of the older chains are closing up stores, and there are several new ones like WinCo coming into the area,” points out Elaine Anders, president of Paradise Produce, a receiver in Dallas.
Idaho-based WinCo Foods LLC opened its first two discount supermarkets in DFW in 2014. Two years later the company prepared for major expansion by opening an 800,000-square foot distribution center in Denton, a city in the northern portion of the metroplex—the single largest economic development in the history of Denton. Today, WinCo has nine locations across the area.
“Trader Joe’s has a very strong foot-hold in Dallas,” points out Coosemans Dallas’ Acton. “Kroger is still maintaining its share. It’s a pretty complex group of retailers, and to top that off Amazon also seems to have a strong presence with home delivery. The retail equation is totally different than it was five years ago, and it will be different in another five.”
Indeed, Amazon’s $13.7 billion acquisition of Whole Foods is having an impact. “Amazon’s play with Whole Foods has really shaken things up,” observes Stachurski. “Retail seems to be an evolving market here,” he adds, as everyone tries “to figure out what consumers want next”—which may be a combination of bricks-and-mortar stores and online ordering and delivery.
Other competition is coming from meal kit companies, taking a nibble from supermarket sales by delivering fresh ingredients for home-cooked meals. “I think meal kit companies have definitely had an impact on retail,” remarks Acton.
Although meal kits currently represent only $1.5 billion out of the $800 billion grocery industry, analysts believe these numbers are on the rise. Globally, meal kits are now a $2.2 billion business, and Pentallect, a Chicago-based food industry consulting firm, predicts annual growth will be 25 to 30 percent over the next five years.
Restaurant Revolution
Like wholesalers, retailers, and meal kit providers, the foodservice industry also continues to shift into high gear. “The restaurant scene in Dallas is evolving very quickly,” confirms Stachurski. “There are all kinds of new concepts being tested in the Dallas market, and there’s been a lot of growth and new ideas from restauranteurs.”
According to the Texas Restaurant Association, the Lone Star State is home to a $52.4 billion foodservice industry, with more than 43,000 locations throughout the state—with the DFW metro area home to nearly 14,000 restaurants.
“The restaurant scene in Dallas has been pretty strong over the eight years I’ve been here,” comments Juan Manuel Ibarra, CEO and president of Marengo Foods Company, LLC, a Dallas-based grower-shipper. “There are always new restaurants being added, and I’ve noticed organic leaf items, as well as vegetables like tomatoes, have become a big part of menus.”
There has been some downsizing, however, as Stachurski has noticed some consolidation in longtime or legacy restaurant brands in the metroplex. “Some that have been around for a long time, especially in the casual dining sector, are starting to reduce store counts as the economy changes and eating trends change.”
Dancing Around
In both retail and foodservice, produce businesses have noticed an uptick in demand in several categories. Marvin Offutt, general manager of Dallas-based wholesaler United Fresh Produce Group LP, points to growing demand for prepackaged fruits and vegetables. “We’re going more and more into prepackaging,” he says. Today’s consumer wants not just convenience and ease of use, but sustainable and flexible packaging as well.
“Most of the chain stores, who we do a lot of business with, want everything wrapped where the public doesn’t touch the product,” Offutt continues. “It’s getting to be big business here.” To meet the need, he says the company is gearing up with specialized machinery.
Receivers and distributors continue to see high demand for greenhouse-grown vegetables. “Greenhouse products are a very good value for the industry because they’re a little bit more stable and not as affected by weather,” explains Stachurski. “Also, the quality of greenhouse products is usually really good. We’re seeing a lot more demand for those items across the board in retail and foodservice.”
Ibarra with Marengo Foods doesn’t think it is necessarily that demand for greenhouse-grown items is on the rise—rather, it’s more a question of consistent quality. “At the end of the day, we’re in the business of selling a better product, at a better value, through a longer period of the year, and with better customer service,” he says. “We’re seeing a lot of growth in bite-size snacking items, like mini peppers, mini cucumbers, and grape tomatoes.”
According to some Dallas area dealers, organics are also a hot commodity. “I would say [our customers are] beginning to have more interest in organic,” shares Offutt, who thinks much of the demand is due to pricing parity. “Organics used to be about double the price, but now I think there are more people growing organic, so there’s more supply.”
Although Offutt says United Fresh Produce Group is not currently in the organics business, the receiver may be forced into it if demand continues to rise. According to Organic Trade Association research, U.S. sales of organic food and goods soared to $47 billion in 2016, an 8 percent increase from 2015.
“Organics still seem to be a little more of a niche market here in Texas, but it’s definitely growing,” Stachurski adds. “In the foodservice segment, it’s more common than it was 10 years ago, but is still not a driver.”
Challenges: Usual & Atypical
The buyers and sellers in the DFW area continue to deal with the usual trials and tribulations, from weather and food safety to labor and truck shortages.
Stachurski considers the most important issues to be twofold: “Labor is going to continue to be an issue; secondly, there’s food safety. We have a lot of regulations coming from FSMA, that companies may or may not be up to speed on, especially local growers.”
Offutt concurs on the issue of food safety. “Everybody needs to concentrate on it,” he stresses. “The most critical thing this year and next is we must be very careful about the way we treat our food products.”
For Acton and Ibarra, shipping and transportation are major headaches. Acton believes reducing overhead will help, while Ibarra is concerned about ELD usage.
“Electronic logs will have a huge impact on the industry; having expedited shipping operations will be critical to overcome new restrictions,” he says. “This has implications across the supply chain.”
Anders of Paradise Produce found the weather as the most profound challenge to the fresh produce supply chain. “Last year, a lot of product didn’t come aboard as quickly as usual because of the weather—and that’s critical.”
This year suppliers already dealt with flooding and tornados. “For growers, of course, food safety and weather are the most critical issues,” Ford notes. And although foodservice and retailers deal with these issues and more, he thinks there’s little “to hold them back. Business is good, the industry is good, a lot of people are coming to North Texas.”
The Road Ahead
Despite the usual challenges buyers and sellers of perishables face—from food safety and weather to labor shortages and trucking regulation—Dallas produce businesses continue to prosper. “Dallas is a big metroplex with many diverse customers, and that’s a huge advantage,” enthuses Ford at Dallas Direct Distributing.
Offutt agrees: “Dallas is growing, and the population is increasing,” he says, adding, “and when you’re in wholesale produce, the more people you have, the more business you do. I think Dallas is a good place to be in this particular time in history.”
“As long as the economy is good,” Ford adds, “the Dallas produce industry will continue to grow.”
