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Supply and demand is the name of the game

John Russell, president of J.E. Russell, talks about the supply side of the produce business

produce-russell

J. E. Russell has been distributing produce to Eastern Canada, since 1977, from the Ontario Food Terminal in Toronto. John Russell, company president, talks about the supply side of the business.

CG: How has the fruit and vegetable industry changed in the last decade?

JR: There’s been tremendous growth in value-added: precut salads, chopped and shredded lettuce, etc. Fifteen or 20 years ago [we shipped] 24 cartons of iceberg lettuce, and if you were a retailer you trimmed it, put an elastic band around it and piled it on your counter. Although retailers still do that now, I would guess that 60% of those sales of lettuce are cut and processed by the grower/shipper organizations, such as Earthbound Farm and Fresh Express, packaged and shipped across the country, and sold that way.

CG: What’s led to this increase?

JR: Family units have shrunk over the last 30 to 40 years. It’s easier to take a 10-ounce bag of salad mix and use it over a few days, as opposed to a traditional romaine or iceberg that might not get used in a timely fashion.

CG: What do consumers want today?

JR: Organics is one thing they want. Demand and production for organically grown produce has increased dramatically over the last 10 years. It’s an area where we have focused a lot of our attention in terms of new offerings [about 15% to 20%, compared with less than 5% a few years ago]. As we align ourselves with organic growers, we’re gaining momentum in terms of the different types of produce we’re able to offer. The influx of organic specialty retailers has opened up a competitive channel with conventional retailers who are now carrying an organic line in their stores. [Growers] are finding ways to maintain consistent levels of supply now, so we’re not seeing as many [peaks and valleys] in supply and price.

CG: What category is thriving?

JR: The berry category has really taken off. Everyone’s familiar with the antioxidan­t qualities of blueberries, but other fruit, such as pomegranates and cranberries, also have those types of health benefits. Blueberry consumption in Eastern Canada has probably quadrupled in 10 years.

CG: What about local produce?

JR: It’s another category that’s very much in growth mode. We all have the need for farmers, so the more produce that can be produced and consumed in your local area is good for everyone. Obviously there are things like tropical fruit that can’t be produced in Canada, so there is always the need for imports. But we’ve tried to have a cohesive interaction between local and imports to meet the demand.

CG: How much pressure is there to cut costs and quality when it comes to produce?

JR: Quality is foremost in our minds at all times. Historically, the whole- sale industry has been low margin, high volume. Retailers are constantly under price pressure. On any given day you come to work with expectations of margin X: sometimes it’s X minus, sometimes it’s X plus [laughs]. We kind of have to change on the fly based on supply and demand. Some days your strawberries look great and everybody loves them and they’re buying, and other days the guy across the street looks a little bit better than you. All of those things change the way you market just because it’s such a highly perishable product. You can’t put it back on the shelf and hope that it’s worth more tomorrow. It never is.

Canadian Grocer spoke with Canada’s produce power players to learn how they stay ahead of the game. Read more Q&As with the country’s top produce experts below:

Category Management with Costco’s Oleen Smethurst here

Fortinos’ merchandising strategies with Sergio Mazzuca here

Buying practices with Longo’s Mimmo Franzone here

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