Route to market

Before supermarkets became the dominant force in food and drink, wholesale markets were the main route to market for most growers. When supermarkets started to gain momentum in the 1960s, retailers cut wholesalers out of the chain and started to deal directly with the grower base, which was tempted by fixed prices over the daily fluctuations of the open market. This still holds true for many today, but trends show that we may be at the start of turning a full circle.

For those disillusioned with the multiples, the enormous foodservice industry, supplied partly by wholesale markets up and down the country, are a valuable route to market. In 2011, the value of goods delivered wholesale to the foodservice industry was £6.4 billion, according to IGD. And, some in the industry claim, this path is becoming increasingly attractive to growers, because of prompt payments of usually 14 or 28 days and the fact there are hundreds of market traders, rather than the handful of retail customers.

So how can growers get into this market? It can be as simple as going down to your local wholesale market and asking the traders what they want, says Zeenat Anjari, business development manager at London’s New Covent Garden Market.

“The salesmen at the wholesalers will know what specification they want from you; they might want their beetroots with beet tops because that adds value and as a grower you can get 50p to £1 more per bunch than a grower who has taken the beet tops off and fed them to the pigs.

“For foodservice there are different specifications in terms of size and in terms of the amount of leaf that chefs like on produce,” she explains. “So for example, a foodservice cauliflower is about twice the size of a supermarket cauliflower because it is getting cut up and chefs also like a bit of leaf, mainly because it is a sign of freshness, and also the leaf can go into the stockpot.”

Up until the scheme’s end this week, growers have been able to take advantage of having a business development manager, who introduced growers to wholesalers, at each of the London wholesale markets.

Peter Clarke is the outgoing business development manager at Western International Market. “If growers tell us what they are producing and the target markets they are serving then we can introduce them to suitable wholesalers and try to help them to negotiate a good deal,” he says.

Some products such as potatoes, onions and root vegetables are well catered for already, and there is little demand for new suppliers. However, other produce such as English garlic, tomatoes, cucumbers and salad crops are in short supply. Tim Williams, Clarke’s equivalent at New Spitalfields, says there is also demand for new cherry suppliers, as well as some herbs.

At Spitalfields there are 105 traders, says Williams, and nine catering supply companies. “The catering supply companies at Spitalfields buy in the market in bulk, then break it down into smaller quantities and deliver it out to their customers, which tend to be hospitals, schools, prisons, pubs, clubs, restaurants. We’ve got a large Chinese company that supplies both wholesale and catering and it supplies more than 2,000 Chinese restaurants and supermarkets right across the country.”

In the past, markets were often seen as a place to send lower quality produce. This is no longer the case. “Foodservice has got to be good quality, grade one,” says Williams. “I think that is what surprises the farmers most when they come to the market, how good the quality is. For a long time in the old days the market was the dumping ground. But now it is packaged and it looks really good.”

That view is backed up by Dennis Hutchinson, managing director of JR Holland Foodservices, wholesalers and suppliers based in Gateshead. “We tend to focus our purchasing ultimately on the quality of the product,” he explains. “We don’t always go on price but it does come into the equation at some point.”

Quality also includes investing in the correct packaging. “One of the things that drives me mad is quite often you will get recycled French wooden cauliflower boxes and we end up with English produce in them, or English cabbages in old New Zealand apple boxes,” says Clarke. “It just isn’t selling their product; people buy with their eyes and, even in markets, people expect it to be presented well.”

Some growers also invest in developing a brand. “Brands really do make a difference in the wholesale market because they can be trusted, but that does take investment,” says Anjari.

“There are a couple of apple growers in Kent, who send exclusively into the wholesale market, and theirs are the most consistent apples in the British season. Andy Bridger and Michael Eastwood both have trusted foodservice brands people ask for by name,” she continues.

“Continuity of product is important,” adds Clarke. “The grower needs to be big enough to grow for the whole season because customers tend to want to buy the same thing every day. Smaller growers can get round that by setting up small loose co-operatives.”

Complaints by supermarket suppliers about bullying tactics are not new, but what about markets? Are growers treated any better? “More growers are coming to the market now because they are fed up with the supermarkets telling them how much money they can make,” says Williams. “A lot of the traders work on commission, so they will take a percentage of what they sell it for. They will agree a bottom price with the grower and they will normally charge eight to 10 per cent commission, and then there is usually a handling charge per box or per packet, usually about 5p. Then they will be paid in either 14 or 28 days.”

Hutchinson explains how pricing works at JR Holland: “This business doesn’t work on long-term contracts, we always give a daily price or a weekly price. I don’t really have customers who are interested in long-term contracts.”

For growers interested in diversifying their customer base, the wholesale markets could be the answer. And who knows? Paying a visit to your local market could lead to your business taking a slice of the £6.4bn foodservice pie. -