Pete Pappas & Sons, fourth generation tomato distributor in Jessup, launches venture with Tennessee grower
Workers sort cherry tomatoes in the repack room of Pete Pappas and Sons, produce distribution company. (Kim Hairston / Baltimore Sun)
March 28, 2016
Tomatoes have been good to Pete Pappas & Sons.
The Jessup-based produce distributor, a fourth-generation family business, has roots that date to the turn of the last century, when Greek immigrant Pete K. Pappas started selling tomatoes from a pushcart.
More than a century and many expansions later, tomatoes - vine-ripened, cherry, grape and plum - are still at the heart of one of the biggest produce distribution businesses of its kind on the Eastern seaboard. Pappas & Sons sells 40 tractor-trailer loads of produce a week, which adds up to roughly 75 million pounds a year.
Now the company has launched a joint venture with a Tennessee tomato grower that's also family owned - an arrangement Pappas says will help advance company interests amid the growing "farm to fork" movement.
The Fish family will grow tomatoes on land they own and lease, and Pappas will market and distribute the harvest.
Launched this month, the venture, called Smoky Mountain Family Farms, will give Pappas more control over its tomato sourcing, enabling it to better compete in the food industry and fill the growing demand for locally grown and fresh-as-possible tomatoes.
"In the summer, everyone wants to buy local produce," said CEO Peter G. Pappas, grandson of the founder. "The venture is putting us in the local tomato business. We have our own source."
It's part of a trend of food retailers and sellers linking directly to farms, said Jeremy Diamond, director of a Baltimore-based food consulting, marketing and advisory brokerage.
"The produce department, when you're talking about a supermarket or retailer, is the least profitable part of the store," he said. "As soon as the vegetables are picked, the clock is ticking to get it to the market and get it sold."
Diamond said the venture should benefit Pappas' retail customers and their shoppers as well.
"This kind of takes that guesswork out of it for the retailer, having Pappas involved with local growers," he said. "The retailer doesn't have to find local farmers and send their staff out to the farms. This takes out a little bit of the legwork.
"Customers want as fresh produce as they can get," he said. "Farmers' markets are more and more popular and the retailers in some ways compete with these farmers' markets."
In a sprawling refrigerated warehouse in Jessup, Pappas workers sort tomatoes by size and color. They wash, sanitize and repack tomatoes that arrive from the growers in crates.
Other employees stand at conveyor belts and pick up tomatoes to pack as they roll by. Cherry tomatoes are packed into plastic clamshell containers to be sold in grocery stores.
The center spans 125,000 square feet — enough to hold 150 trailer truckloads of produce. Much of the space is devoted to tomatoes. The business added strawberries about 25 years ago, and the state-of-the-art facility accommodates seasonal fruit and vegetables, such as melons and corn, as well as all types of tomatoes, berries, onions and pepper varieties.
The produce is sold to supermarket chains such as Giant Food and Safeway and food service companies that serve restaurants.
It's a far cry from the original Pappas pushcart that started around 1901 outside government buildings in Washington.
From there, the founding Pappas expanded to retail stalls in Washington markets during the 1930s. He got to know buyers for the area's earliest supermarkets, who came to the markets.
When the stores had extra produce at the end of the week, they would sell it to Pappas, who would re-sell to other vendors.
In 1942, those retailer relationships paid off when a delivery truck carrying tomatoes overturned, spilling tomatoes onto the road. The company, then known as Pete Pappas & Son — only the eldest son, Gus, had joined the business by then — was asked to handle the load.
"Gus had the foresight to repack the tomatoes and sell them," the company says on its website. "Thus began the Pete Pappas & Sons tomato repacking operation."
Giant and Safeway have been customers from the beginning.
The company moved from a 60,000-square-foot warehouse in Washington to the Baltimore area in 2012 when it needed to expand. It purchased the Jessup warehouse on Rappahannock Avenue near distributor Lancaster Foods, invested $2.5 million in renovations and added new categories of produce, including corn and peppers.
The business is as much in the family as it was at the start. Running the company with Peter Pappas are three of his children: sons Gus P. Pappas, president, and Aris P. Pappas, COO, both of whom joined more than a decade ago, and daughter Helen, head of digital media and human resources, who joined last year
The CEO's nephew Paul S. Pappas, vice president of operations, rejoined the firm in 2013 after running his own food distribution company.
Peter Pappas has worked in the business since 1971, when he joined his father and uncle, and he became president in 1979. One of the company's main brands, Patricia Brand, was named after Peter Pappas' sister.
The family had worked with the Tennessee grower and heard the owners were looking for a partner. They felt a connection, Pappas family members said, because they share values that come with running a family business for so long.
They were also attracted by what Gus Pappas called the "near-perfect growing conditions" in Tennessee's Smoky Mountains farmland, which they say produces tomatoes with a certain taste, appearance and quality.
"It was a no-brainer for us," he said.
Christine Fish Gilliam, who grew up on and now runs the 1,300-acre Fish produce farm her family has run since 1978, said the partnership makes sense for the grower as well. From July through October, her farm harvests tomatoes, which are shipped out in 25-pound boxes.
"We do the growing, they do the marketing," said Gilliam, general manager of Smoky Mountain Family Farm. "They helped us plan how many acres we were going to grow and told me, 'I want so many acres of this variety and so many acres of that variety.'
"We know we can sell them."