L.A. market feels effects of economic slowdown
L.A. market feels effects of economic slowdown
LOS ANGELES -- It is often said that the produce industry fares better in hard economic times than many other industries because people still have to eat.
But that is not to say that produce is immune to the effects of economic vicissitudes.
In fact, most of the shippers, wholesalers, repackers, distributors and brokers in the Los Angeles area with whom The Produce News has spoken in recent weeks say that they are feeling a slowdown in business and that most of their customers and suppliers are as well.
That slowdown does not always mean a decline. It may simply mean a slower rate of growth in some cases, or that business is flat. And some companies have indicated that while package volume may be off, total revenues are not, due to higher unit costs.
But it does appear that the vibrancy that has characterized the Los Angeles produce scene in recent years has been somewhat dampened by the current economic climate.
Produce executives here generally cite high fuel costs as the biggest factor dragging on their bottom lines, but overall cost increases from packaging materials to labor are also having an effect on the produce industry from the grower level up, as are weather problems, water woes, the real estate slump and food-safety scares.
At the consumer level, people are being more careful how they spend their money, some say, and that has been good for staple commodities but hard on higher-priced specialties or value-added convenience items and it seems to have hit restaurants harder than supermarkets.
But not everyone has had the same experience. Some companies specializing in value-added products say demand is as strong as ever.
"I just got off the phone with one of my growers a few minutes ago, and they were running the numbers out there on what it is costing to grow stuff," Alan Moore, president of L.D. Butler Inc. in the City of Industry, said June 20. "Their costs are up 18 percent over last year at this same period," with fuel costs, fertilizer costs and other petroleum-based products topping the list. "They are seriously worried," he said.
Costs have been going up for everybody, Mr. Butler said, and "economically, you can see the stress in the market." One or two days a week "it might be real busy," he said, but "the rest of the time it is very slow."
For Butler, business is basically good, he said, "but it could be better."
Some recent consumer studies have shown an increased interest in home cooking, which may have been influenced at least in part by people feeling that they need to be more careful how they spend their food dollars. That trend seems to be "helping the medium-sized stores and the smaller stores" in particular, he said.
"In Los Angeles, what we are seeing right now is heavy, heavy competition," said Wes Liefer, president of United Produce Sales in Brea, CA. "The economy is obviously struggling right now. People are a lot more conscious right now about what they are spending on everything, food included. People only have so much money to spend ... [and] everyone is watching pennies."
Not just in Los Angeles but across the country, retail buyers are "more price- sensitive than we have seen probably in the last 10 years or so" and are "shopping a lot more," he said.
Tom Espineda, owner of Tom E Produce in Los Angeles, said that all of his customers have seen business decline a little, "but nobody has declined any worse than anybody else ... business is slow right across the board." Until things "settle out," he said, "if you can keep your head above water, that is all you can expect."
"Everybody is just watching everything they can do to save some money," said George Peterson, president of G&K Distributing Inc. in the City of Industry. "Operating costs are going up. Fuel costs are just out of sight. I think everybody is focusing on that right now."
"I think we are fortunate as an industry," said Richard Flamminio, president of Umina Bros. in Los Angeles. "People continue to eat, and fortunately for us [in Los Angeles] we have an abundance of ethnics -- Hispanics and Orientals -- who value produce. We still have valuable customers here, and we are still a main destination for a lot of produce."
"It's pretty slow everywhere," said Alvaro Ramirez Jr., warehouse manager at Ramirez Bros. in Los Angeles. "Our vendors, our customers, restaurants, markets - right now I think everybody is going through a pretty big crisis."
"Growing the business is tougher now," said Ray Davis of Pacific Sun Distributing Inc. in Bell, CA. "Volume is down. Not significantly, but it is down." But "in another six or eight months, it should turn around, I hope."
(For more on the L.A. market, see the July 14 issue of The Produce News.)
But that is not to say that produce is immune to the effects of economic vicissitudes.
In fact, most of the shippers, wholesalers, repackers, distributors and brokers in the Los Angeles area with whom The Produce News has spoken in recent weeks say that they are feeling a slowdown in business and that most of their customers and suppliers are as well.
That slowdown does not always mean a decline. It may simply mean a slower rate of growth in some cases, or that business is flat. And some companies have indicated that while package volume may be off, total revenues are not, due to higher unit costs.
But it does appear that the vibrancy that has characterized the Los Angeles produce scene in recent years has been somewhat dampened by the current economic climate.
Produce executives here generally cite high fuel costs as the biggest factor dragging on their bottom lines, but overall cost increases from packaging materials to labor are also having an effect on the produce industry from the grower level up, as are weather problems, water woes, the real estate slump and food-safety scares.
At the consumer level, people are being more careful how they spend their money, some say, and that has been good for staple commodities but hard on higher-priced specialties or value-added convenience items and it seems to have hit restaurants harder than supermarkets.
But not everyone has had the same experience. Some companies specializing in value-added products say demand is as strong as ever.
"I just got off the phone with one of my growers a few minutes ago, and they were running the numbers out there on what it is costing to grow stuff," Alan Moore, president of L.D. Butler Inc. in the City of Industry, said June 20. "Their costs are up 18 percent over last year at this same period," with fuel costs, fertilizer costs and other petroleum-based products topping the list. "They are seriously worried," he said.
Costs have been going up for everybody, Mr. Butler said, and "economically, you can see the stress in the market." One or two days a week "it might be real busy," he said, but "the rest of the time it is very slow."
For Butler, business is basically good, he said, "but it could be better."
Some recent consumer studies have shown an increased interest in home cooking, which may have been influenced at least in part by people feeling that they need to be more careful how they spend their food dollars. That trend seems to be "helping the medium-sized stores and the smaller stores" in particular, he said.
"In Los Angeles, what we are seeing right now is heavy, heavy competition," said Wes Liefer, president of United Produce Sales in Brea, CA. "The economy is obviously struggling right now. People are a lot more conscious right now about what they are spending on everything, food included. People only have so much money to spend ... [and] everyone is watching pennies."
Not just in Los Angeles but across the country, retail buyers are "more price- sensitive than we have seen probably in the last 10 years or so" and are "shopping a lot more," he said.
Tom Espineda, owner of Tom E Produce in Los Angeles, said that all of his customers have seen business decline a little, "but nobody has declined any worse than anybody else ... business is slow right across the board." Until things "settle out," he said, "if you can keep your head above water, that is all you can expect."
"Everybody is just watching everything they can do to save some money," said George Peterson, president of G&K Distributing Inc. in the City of Industry. "Operating costs are going up. Fuel costs are just out of sight. I think everybody is focusing on that right now."
"I think we are fortunate as an industry," said Richard Flamminio, president of Umina Bros. in Los Angeles. "People continue to eat, and fortunately for us [in Los Angeles] we have an abundance of ethnics -- Hispanics and Orientals -- who value produce. We still have valuable customers here, and we are still a main destination for a lot of produce."
"It's pretty slow everywhere," said Alvaro Ramirez Jr., warehouse manager at Ramirez Bros. in Los Angeles. "Our vendors, our customers, restaurants, markets - right now I think everybody is going through a pretty big crisis."
"Growing the business is tougher now," said Ray Davis of Pacific Sun Distributing Inc. in Bell, CA. "Volume is down. Not significantly, but it is down." But "in another six or eight months, it should turn around, I hope."
(For more on the L.A. market, see the July 14 issue of The Produce News.)
