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Curious City

A Tale of Resale: How Big Chains’ Produce Ends Up in Local Grocery Stores

If you live in Chicago and like fresh produce, you’ve probably noticed the same thing Kelin Hall has: Fruit and vegetable prices in the city can vary wildly from store to store. Sometimes it seems like you can see the same strawberries for $2.98 a pound at a chain store and then 98 cents a flat (that’s several packages) at independent stores like Cermak Produce, Pete’s Fresh Market, Tony’s Finer Foods and Stanley’s Fresh Fruits & Vegetables.

Questioner Kelin Hall has noticed this for years. And it’s made her wonder how her favorite Stanley’s — located near Whole Foods and Trader Joe’s — as well as other local produce stores could pull off these incredible bargains.

Then, one day, while shopping at Tony’s in Logan Square, she thought she spied a hint: "I saw a stalk of Brussels sprouts that had the same label as Brussels sprouts from Trader Joe’s."

This led her to ask Curious City if local stores like Stanley’s and Tony’s might be selling rejects from national chains like Trader Joe’s and Whole Foods — and, further, if there was something sketchy about the whole thing. 

We learned that Hall actually has it right — partially. Produce does sometimes flow from Whole Foods and Trader Joe’s to these smaller local markets. But not in the way she might think: It doesn’t involve dumpster diving, theft or anything like that.

To explain, we’ve created the story of hypothetical Brussels sprouts that were ordered and packaged for one store but eventually sold in another.

Produce, the Chicago way

While rejection and overstocks can happen in any town, Chicago has the perfect infrastructure to get this excess produce into consumer hands quickly and cheaply.

“Chicago is a very unique market because there are so many independent operators and you have a thriving and flourishing wholesale market,” says Pam Riemenschneider, editor of Produce Retailer magazine. “But where I live in Austin, Texas, for example, we have two major markets and you are not going to see a whole lot of fluctuation in those set ad prices at either of those operations. So you guys are lucky.”

Chicago’s wholesale district is located in the Pilsen neighborhood, near I-55. There are several wholesalers at the Chicago International Produce Market, but there’s another 10 acres of climate-controlled produce at Anthony Marano Company. There, salespeople sell fresh produce to buyers who represent some of the region’s biggest and smallest stores. But prices can change by the day and the hour, based on relationships, trust, weather, supply, demand and lots of haggling.

Peter Panagiotaros is a veteran of the wholesale market. He’s the buyer at of Stanley’s Fruit and Vegetables,  which offers some of the best deals on produce in the city; even a large, inexpensive organic section. The son of the original Stanley, he has several advantages in the local produce marketplace: the flexibility of buying for just one location; enough trained staff to sort through produce shipments; and long-standing relationships in the tight-knit wholesale community. He also tastes and inspects almost everything he buys at the wholesale market each morning.

Peter Panagiotaros, center, gives a mango a taste test at Anthony Marano Company, a wholesale market located in Chicago's Pilsen neighborhood. (Monica Eng/WBEZ)

Some of this produce comes to the wholesalers as direct orders from farms and shippers all over the world. Another smaller portion on any given day has been diverted or rejected from shipments originally ordered by large chain retailers.

Is there anything wrong with this?

While it’s true that some produce has technically been “rejected,” consumers shouldn’t necessarily be put off by the word. Again, rejection can happen for several reasons. It can actually just involve bad timing, as when a producer misses a delivery deadline, even by just 15 minutes. Wholesale market insiders say contracts are often written with a lot of latitude for chains to reject a load, and this can allow perfectly good produce that’s been over-ordered/overstocked to be labeled as “rejected.”

Whole Foods says its rejected produce may end up on the wholesale market but its overstock does not. Trader Joe’s declined to comment on the matter.

The most common reason for rejection, says Riemenschneider, is about cosmetics.

“Most often it’s going to be looks, size issues and sometimes packaging,” she explains.

But occasionally it’s rejected because it arrives a few degrees too warm (which can hasten spoilage), or because it’s not sweet enough. “But that’s considered kind of picky,” Riemenschneider says.

Usually this rejected or overstocked produce bears no trace of its original destination but other times — like when Tony’s stocks Trader Joe’s Brussel’s sprouts and Stanley’s sells cucumbers and peppers originally packaged for another chain — it’s hard to hide it.

“The shipper or farmer is not going to take the tags off because it wouldn’t make sense logistically,” Panagiotaros says. “It would almost be impossible because the quality of the product — once it was reprocessed — wouldn’t be the same as selling that day. So all of that is moved at a reduced price so they don’t end up throwing it in the garbage.”

Peter Panagiotaros, the buyer at of Stanley’s Fruit and Vegetables, observes the produce displays from his office. He says part of making the produce affordable involves quick wholesale buys, including some of produce rejected by major chains. (Monica Eng/WBEZ)

The wide variation in pricing between chain stores and local produce markets might seem like someone is losing a lot of money in the process. But produce is actually one of the highest-profit items in the grocery store, averaging about 50 to 75 percent markup, according to Riemenschneider and other produce trade sources. Unless the produce is rejected, the farmer is getting the full, agreed-upon price. And so if the wholesalers and retailers can cooperate to get the perishable product into the hands of consumers while it’s still good, everyone can generally benefit. 

With most of these deals, the produce is not much different than the stuff you’d see at a chain. But then there are the crazy cheap deals — like 98 cents for a flat of strawberries. At that point they may be on the brink of spoilage. Riemenschneider says this stage is called “sell it or smell it” in the retail biz, and few operations are equipped to pull it off. If you do find exceptionally cheap berries in this condition, she says, they could still be edible but you’ll want to examine them and even try to taste them before you buy.  And if you do, plan to use or freeze them right away.

As a food, health and environment reporter, I found another awesome aspect to this process. It ends up stimulating the economy while improving two of the food industry’s biggest problems: affordability of high quality fresh produce and food waste. Was Panagiotaros aiming to tackle them?

“As far as the environment goes, I’m glad it’s working out that way but we never planned it that way,” he says. “We say it on our sign, we try to give the best buys of the season. We want to make sure the customer can eat affordably and not overextend himself to have a decent meal.” 

More about our questioner

Kelin Hall is from Connecticut but she came to Chicago 10 years ago for college and recently completed her master’s degree in Social Service Administration at the University of Chicago. Five years ago she was an intern on WBEZ’s Worldview show. She currently works in Chicago as a bilingual therapist, helping children who've been sexually assaulted. In addition to social work, she likes salsa dancing, yoga and cooking — especially Thai curries and kale with garlic and sake. 

As for her take on our findings, she says she’s more confident in her purchases. “I had no idea there was this whole other economy based on relationships, and getting up early in the morning to haggle over food,” she says. “It just makes my experience at Stanley’s even richer. And I think it’s just awesome.”

Correction: An earlier version of this story misstated Kelin Hall's current job. Currently, Kelin works in therapy programs at YWCA locations in Chicago.

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