Business Spotlight: Produce Powerhouse

The Phipps family knows how to pick a ripe tomato.

From Frank Phipps’ 12-acre garden on Springfield’s Fort Street in the 1950s to his grandson, Steve Phipps, running a $50 million produce distribution company from Nixa, the family has remained a constant in the evolving food business.

Another Phipps is getting groomed in the industry. Tyler Phipps works for his Steve’s company, flying around the country to assess prospective suppliers.

Market Fresh Produce LLC currently purchases from 48 North American growers and ships to retailers and food service companies in 40 states. In 2013, the company distributed $50 million in fresh produce, mostly tomatoes, aided by an August acquisition of West Central Florida Produce in Tampa, Fla.

Eight years ago, the numbers weren’t so lofty.

Steve Phipps bought into Market Fresh Produce in 2005, when the business moved $1 million in produce and employed two people.

“The company was somewhat of a broken model,” Phipps recalls. “It wasn’t profitable at that time.”

Two years later, MFP turned its first profit under Phipps, and the company hasn’t missed a month with profits, he says, hungry for more and pointing to a business plan underpinned by strategic acquisitions.

“This all came pretty naturally for me,” Phipps says, recalling time in his youth spent on the family’s Phipps’ Gardens, now owned and operated by Fassnight Creek Farm.

He’s currently pursuing a company in Texas.

“Any deal could go south before the actual signing, but we think in the next 30 days it will be a closed deal,” he says. “The acquisition strategy is one component of how we grow our business. That’s why we’re excited to head toward that next goal of $100 million.”

The supply chain
From its headquarters in Nixa, MFP places orders with growers and packers and manages logistics with trucking contractors.

“This is our intellectual engine here,” Phipps says behind his large wooden desk surrounded by Western decor and pictures of family.

Fourteen of the company’s 48 employees work at the headquarters, tracking some 3 million cases annually of MFP-branded goods traversing the country. The remainder of staff works at the tomato repacking facility in Tampa.

MFP contracts with retail and food service companies that operate distribution centers, which then move product to grocery stores or restaurants. “We’re selling stuff all across the United States, but here locally we’re not in a lot of stores,” Phipps says, declining to disclose retail clients.

Cincinnati-based Total Quality Logistics is among the distributors under contract with MFP. Sarah D’Andrea, a logistics account executive, says TQL delivers most MFP products to Save-A-Lot stores.

“We moved a lot of sweet potatoes before Thanksgiving and into December,” she says of the peak season, noting 45 shipments of 42,500 pounds apiece were picked up at distribution centers and grower sites on their way to retailers.

Each shipment contains 990 cases of produce, she says, and transportation activity is heavy between the Arkansas-Texas and Georgia-Florida state lines.

About 60 percent of MFP-branded products are tomatoes, while sweet potatoes and the miscellaneous category including avocados and kiwi represent 10 percent. Sweet onions, potatoes and peppers round out the portfolio, and the company also brokers other products such as apples.

Phipps says MFP caps its purchases at 15 percent from any single grower’s crops to defend against field diseases and weather patterns.

“We try to have sweet onions that are sweet,” he says. “We want that onion to eat like a sweet onion.”

Profitable in produce
Phipps says the key to profitability is an infrastructure of suppliers and processing and packaging partners put in place his first couple of years at the helm. He also credits profitability to young hires focused on the business plan.

“We do everything by budget. If we spend money on something, there’s a line item on the budget and if we exceed one line, we’ll draw from another,” he says. “We’re constantly looking at that living, breathing document to see how we’re tracking for the year.”

While the company’s financials are not open to all staff, Phipps regularly reviews the books with the leadership team of Finance Director Jordan Jackson, Human Resources Director Mark Stratton, Field Operations Director Tyler Phipps and Sourcing and Supply Director Shannon Cox, who previously handled replenishment for Sara Lee with Wal-Mart Stores Inc. in Bentonville, Ark.

Steve Phipps, a 1978 Parkview High School graduate, has spent 36 years in the produce industry, including a 15-year stint for Kroger/Dillons, where Phipps introduced Springfield to buying salad by the pound with a salad and kiwi bar at Dillons on East Sunshine Street, says Stratton, who at the time taught and coached at the high school level.

Phipps also worked as sales and marketing director for mushroom grower J-M Farms in Miami, Okla., and NationFresh tomato company and served on the national sales team of a division of C.H. Robinson Worldwide. In October, Phipps career efforts earned him a national award from The Packer magazine as one of the top 25 executives in the fresh produce industry.

Thinking back to his roots on his grandfather’s farm, Phipps says those tomatoes couldn’t be hauled because they were full of juice and would bruise.

“The industry for many years has focused so heavily on growing products that would stand the test of distribution that flavor profile has in many cases taken a back step,” he says. “We try the best we can to bring conversation around flavor profile. We think it’s important that somebody be able to buy a tomato in the middle of winter that tastes like a tomato.”