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Will Testa Produce's $24 million green gamble pay off?

by Nick Przybyciel
May 31, 2012

Knifing 24 stories into the jagged, rusted skyline of Chicago's Back of the Yards industrial area, the free-standing wind turbine flanking Testa Produce Inc.'s 91,000 square-foot operations facility is more than a clean energy source.

It's a statement.

For Peter Testa, president of the 100-year-old produce distribution company bearing his family name, the turbine boldly declares to his large national competitors like SYSCO Corp. and US Foods, that, despite their enormous buying power and multi-billion dollar revenues, he's not intending to go anywhere.

After a decade of modest revenue growth, Testa is betting on sustainable energy's cost savings and marketing resonance to increase his company's 20 percent market share in its Midwest sales territory. He believes the company's new, $24 million LEED Platinum-certified refrigerated food distribution facility – the first of its kind in the U.S. – provides a major comparative advantage.

“We outsmarted the biggest and best corporations in our business by creating a place that they can't duplicate, because they can't build only one building, they have to build multiples,” Testa said, referring to the number of distribution centers his competitors need to service their national footprints. “And because they have to build multiples, the costs to do so go prohibitively up.”

Going lean and green is the future for this regionally-focused distributor. Owing to a manageable sales territory that can be serviced by a single distribution hub, Testa believes he's in the perfect position to go all-in when it comes to investing in green operations.

And Chicago restaurants with a sustainable bent are starting to take notice when it comes to choosing a produce distributor.

“With the new facility and shared values, it made the decision for me,” said Bob Kassal, owner of Pillar's Social Cafe, a progressive Rogers Park eatery that gets its produce from Testa.

Testa's newest strategy is a quantum leap forward from the company's humble beginnings in 1912, when founder Dominick Testa went door-to-door selling celery out of a basket. Now on its third generation of family leadership, the company has grown into an upper Midwest empire with sales territory reaching from Champaign, Ill. in the south to Green Bay, Wis. in the north.

After moving into its new building, the company has expanded to its current – and largest – size, employing 207 people, including a full sales staff, a small army of warehouse workers, several commodity buyers, marketers and quality assurance personnel. Not to mention 70 trucks. While distributing produce remains its mainstay, Testa has grown its product line to offer dry goods and other foodservice supplies in an effort to compete with corporate distributors, which typically have diverse inventories and can service customers in one stop.

This approach has won Testa a respectable client base that includes warehousing giant Avendra LLC and major culinary groups like Levy Restaurants. However, by remaining focused on produce while touting its green ethos, Testa is also attempting to stake its claim in the exploding sustainable foods market.

“I've got the benefit of being one-of-a-kind, and I got the benefit of doing what I wanted to do,” Peter Testa said. “If you're the only one at something, what's that worth?”

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