San Antonio Express-News (Sunday)
GROWING AMID TURMOIL
Flux: Fresh Texas adding capacity, but CEO Judy Clark says pandemic cutting into labor growth.
Judy Clark apologized for running three hours late for a scheduled phone interview on a recent Friday afternoon, but the chief executive of San Antonio’s Fresh Texas had a good excuse for being tardy.
Fresh Texas, a fruit and vegetable supplier to grocery stores, had just completed its acquisition of the Cece’s Veggie Noodles manufacturing plant in Austin for an undisclosed price. The deal had been set to close two days earlier, but delays pushed it to Oct. 30, delaying the interview.
The deal, the first since Clark took the helm of Fresh Texas in late 2018, represents a multimillion-dollar expansion for the company.
“The facility was not full, and so this gives us some really good room to grow and expand,” Clark said.
The roughly 50,000-squarefoot Austin plant gives Fresh Texas some additional capacity. In San Antonio, it occupies three buildings totaling 130,000 square feet.
Fresh Texas, which has the legal name of Fresh From Texas LLC, will produce Cece’s “spiralized” vegetables, but Cece’s will continue to market and distribute the brand.
Clark, 50, a former executive with the Keebler Co. and TreeHouse Foods, discussed the Cece’s deal, her career and how Fresh Texas has responded to the pandemic during our interview. The following transcript has been edited for brevity and clarity.
Q: Can you tell me about the Cece’s Veggie Noodles deal?
A: Sure. It’s my favorite topic right now. We’ve really outgrown our capacity at our plant in San Antonio with just great growth and healthful eating habits.
We’ve been looking for a building we didn’t have to build because time is a little critical to add the capacity. So we found (this) business in Austin, Cece’s Veggie Noodles, the organic spiralized noodles you see in stores. We bought their manufacturing assets. We’ll co-pack for them and produce for them.
Q: You’ll still maintain your presence in San Antonio, correct?
A: Absolutely. This is our anchor plant. We love our little campus here. We’ll just be able to have some growth that we can develop there. This will give us some dual capacity should we need any reason to move products between the two facilities.
Q: Explain what Fresh Texas does.
A: We are a value-added produce supplier. We bring in whole commodity, fruits or vegetables, and we transform them into something else. It could be as simple as taking a watermelon and coring it and the slicing it and putting it into a cup. It can be as complex as building out a meal that’s either in a roasting pan or microwavable bowl, something that you can heat and eat. Really, a complete meal solution.
Q: Does Fresh Texas grow its own fruits and vegetables?
A: We do not. We work with a network of farmers, really globally. But we focus here in the Valley and Texas and try to buy as much local produce as we can.
Q: I know the business was started by Jane and Bob Phipps as Energy Sprouts in 1981. Jane Phipps told us in a 1993 interview that the business couldn’t succeed just selling sprouts and that it needed to diversify. It eventually began processing vegetables and selling ready-to-serve vegetable trays with fresh dips. Can you pick up the story from there?
A: Mark and Lisa Miller purchased the business from the Phipps (in 1999). And Mark and Lisa were the ones who looked and said, “Gosh, I think we’re going to go beyond just vegetables. We’re going to bring fruits in and really kind of grow in the fruit and vegetable space.” And actually today we don’t run any Energy Sprouts at all, any kind of sprouts. We don’t do leafy greens. That’s the one product that we stay away from. Pretty much everything else that you’d find in a produce aisle we handle here.
Q: Do Mark and Lisa Miller still own the business?
A: They are part of the ownership today but not majority owner.
Q: San Antonio-based privateequity firm Texas Next Capital is the majority owner now?
A: They sure are. In 2017, the Millers, I think, were looking to retire. This business is tough and a lot of work. They had done a fantastic job growing it and were ready, I think, to play a little bit more golf and spend time with their family and do some traveling. So Texas Next came in and bought the assets that are here.
Q: How involved is Texas Next in Fresh Texas’ operations?
A: They’re not involved in the day-to-day of the operations. We have a really close relationship, obviously, and have a regular cadence of reporting and meetings. They’re not hands-on operators.
Q: How big is Fresh Texas in terms of revenue and number of employees?
A: We don’t generally share those numbers because we are privately held. In terms of employees, we employ over 700 employees whenwe are at our peak capacity here. With COVID, we’re a little lower than that, but (we’re) hiring and making progress each week getting back there.
Q: What are your most popular offerings?
A: Probably our largest-selling items, in terms of just tonnage, would be fresh-cut fruit. They have a good price point, and they just move a lot. Some of the other big movers are the items like zucchini noodles as Americans
look to a diet that’s more plantbased and the Whole30 and keto (diets). The alternative to pasta is really veggie noodles, and so we do a really nice portion of business there, as well.
Q: What are some of the meals that you can pop in the oven or microwave?
A: A lot those are sold through the H-E-B Meal Simple program. So they can always shop at their local H-E-B and find some really delicious meal solutions there.
Q: What do you do with the ugly produce?
A: (Laughs) Honestly, we reject probably 30 percent of the loads that come in here. We don’t accept it. Our standards are really, really high. Generally, we work with a really good group of growers and wholesalers and distributors.
Q: Is everything hand-peeled and cut or is it all automated?
A: I’d say 90 percent of what we do is hand-crafted. We have some equipment that we can use from time to time. For example, to peel mangoes, we can put those on a machine that will peel them and core them, but the mango has to be just right. If the mango is a little bit too soft or it’s a little bit too hard, the machine doesn’t do well on it. So we make a decision, really lot by lot, on how we’re going to process things.
Q: Is that what the bulk of what your workforce does, the peeling and cutting?
A: Peeling, cutting and hand placing.
Q: What is hand-placing?
A: Literally hand-placing things in a container .
Q: Are the fruits and vegetables sold under the Fresh Texas name?
A: Some are, and some are sold under store brands.
Q: So how has COVID-19 changed your business?
A: It’s put a lot of pressure on the hiring side. That’s probably been our biggest impact, to be honest, with folks choosing not to work. And who can blame them? These are scary times. Here on campus, we run a ready-to-eat manufacturing production facility. In term of PPE and safety protocols, we’ve been acting as if there’s been a pandemic every day. We wear face masks, we wear gloves, we sanitize, we clean well beyond any standards out there.
I’ve talked to my peers and we’re all struggling to find labor. It’s our biggest capacity limiter. We’ve had issues where farms couldn’t get seeds in the ground or couldn’t harvest because they didn’t have labor. So I think that’s been the message across a lot of our industry and others: Labor has really been challenging.
Q: What is the pay range for your workers?
A: Our production entry-level workers are earning somewhere around $12 an hour now. I can tell you when I got here at the end of 2018, they weren’t even earning $10 yet. So we’ve really been investing back into our employees and trying to drive efficiencies so we can afford to compensate a little bit higher and create better living wages for our team. Pre-COVID we started that.
Q: Talk about your career and how you ended up at Fresh Texas.
A: I’m kind of a lifelong (consumer packaged goods) food person. I started with Ernie in the hollow tree at Keebler back in the late ’80s. I’ve really enjoyed being in the food industry. A lot of pressure from a food-safety aspect, but there’s a lot of creativity and a lot of fun. Most recently I was with TreeHouse Foods. It’s one of the largest private-label companies in the U.S. From a discipline standpoint, I’m a supply chain, IT and salesperson at heart. This is my first turn as a CEO. I’ve kind of been prepping for the last decade to round out all of my areas and be ready to lead at a more strategic, higher level.
Q: We reported in 2007 that TreeHouse Foods acquired San Antonio Farms. Any connection?
A: I was part of the team when we acquired the business and integrated it into TreeHouse.
Q: Is that what brought you to San Antonio?
A: It certainly didn’t hurt because I’ve always loved San Antonio. I lived in Chicago at the time and was more than eager to jump on a plane to come down to San Antonio for customer visits or work at the plant down here.
Q: How did you end up being offered the job of CEO at Fresh Texas?
A: A recruiter that I work with had reached out to me. He was looking to help Texas Next find the next CEO for the company. He thought of me for this role. I immediately, of course, said no. It’s in San Antonio and I’m not moving and I’m not looking. Then I talked to the folks here and got to know the business a little bit better and thought this is something that we can really do something special with.