Davis Yung: Salad days

Fresh Direct Produce co-founder Davis Yung has built a business that handles 200 million pounds of produce annually imported from 28 countries

Davis Yung, co-founder of Fresh Direct Produce, saw the business opportunity in a need for independent local salad produce importers that are big enough to supply local and national stores

Trucks rumble along Malkin Avenue behind Strathcona Park, leaving the loading bays that face the mountains with fruit and vegetables for supermarkets and grocers across the city.

It's a scene that's been replayed each day in the city for decades. The food business may be global, but keeping stores stocked with fresh produce depends largely on a handful of distributors clustered on the False Creek Flats – a business whose rhythms have changed little since international produce giant Oppenheimer Group opened its doors here in 1858.

Sitting in a modest boardroom on Malkin Avenue, Davis Yung is keenly aware of that history.

Fresh Direct Produce Ltd., the company he started with partners Albert Lum and Kam Chiu Lee in 2003, got its start in the former Oppenheimer warehouse on Cornett Road (now Natal Street). Oppenheimer had recently expanded to new headquarters in Coquitlam, and the wholesale produce industry was in an era of consolidation. Working as a consultant, Yung saw an opportunity for a small wholesaler to make it big.

"Since there weren't that many independent, locally run, operated produce importers/wholesalers that have the scale to service the independents and regional and national chain stores, we saw an opportunity in the marketplace," he said.

Beginning with the small grocers, often run by immigrant families, Fresh Direct imported Chinese greens, okra, mangoes and produce rarely found in mainstream grocers. Today, it offers more than 500 items imported from 28 countries around the world. Yung doesn't disclose revenue, saying only that the company handles more than 200 million pounds of produce annually (approximately five million boxes).

Rick Kohn, a partner of Deloitte and leader of the consulting firm's consumer business practice, describes Yung as "visionary." Deloitte recognizes Fresh Direct as one of Canada's best-managed businesses, and Kohn credits Yung's ability to understand the big picture without losing sight of the details of the business with its success.

"He understands the business from top to bottom," Kohn said. "He was able to build up his skills and expertise, initially through niche markets, and then they were able to add further products on top of that warehouse and distribution capability and open up new relationships with increasingly more customers further afield because they had a service paradigm that was working."

The company outgrew its original location in 2006 and now has 55,000 square feet on Malkin Avenue. It opened a 16,000-square-foot warehouse in Calgary last year to serve retailers across Western Canada.

"We're the gateway to Asia Pacific, so it works really well for our import program – product from Korea, China, Thailand, Taiwan or Vietnam," Yung said of Vancouver. "[But] for servicing our chain store business in Western Canada, Calgary is actually the hub."

He added that the importance of the major chains has increased in the past five years.

While smaller, independent grocers were adapting to serve niche markets, large retailers such as Save-on Foods and Loblaws were adapting to new urban markets and expanding their stock to serve a consumer seeking natural, organic and exotic foods – often the same items the smaller immigrant-run grocers were offering.

Fresh Direct was ideally suited to the changes, which have also meant growing demand for some premium products and packaged items.

"We see the growth in the high-end premium area, we see the growth in the ethnic, tropical, imported items," Yung said. "We don't see a lot of growth in the staples – potatoes, onions. Maybe lettuces – but you see growth in salads; packaged products, convenience products."

Yung, in many ways, is suited to the challenges.

Born in Hong Kong, he came to Canada in 1987 as a Grade 12 student to study English at the King Edward campus of Vancouver City College (now Langara). He watched hockey, learned the language and eventually enrolled in SFU's business program.

His studies focused on marketing and management sciences. Upon graduation he landed a job as a financial analyst at UBC Hospital, but he hit his stride when a friend, the daughter of Van-Whole Produce partner Jason Du, suggested he consider wholesaling.

Du gave Yung opportunities in sales, buying, logistics, marketing and business development.

"It was a great learning experience. It was work, but it was also fun," he said. "The company's one thing, but actually working with someone that you feel you can learn from is really great."

Yung's father had always advised him to seize opportunities, to be grateful for them rather than worry about working too hard, and he took the advice to heart.

"The only thing you'll regret is that you didn't put in your best effort," he remembers his father saying. "When I started working I really believed any opportunity given to me was a privilege. So anything I was asked to do I said, 'Great.'"

The enthusiasm paid off; Du backed Yung's decision to pursue an MBA at Queen's University, working fulltime while studying part time. Yung also obtained his Certified Management Accountant (CMA) designation.

Meanwhile, Du and his business partners were looking to retire and sold Van-Whole to the Pattison Group in 2001. A year later, with his MBA and CMA in hand, Yung branched out on his own. He consulted for a year and saw that consolidation had created an opportunity for a smaller player to fill the void left by the disappearance of companies such as Pacific Produce (acquired by Sysco) and the integration of distributors such as Produce Terminal within H.Y. Louie.

Ten years later, Yung is still alive to new business opportunities.

While larger companies such as Oppenheimer have struck partnerships with larger international companies, Fresh Direct has developed its own lines of produce – Simply Fresh, Simply Hot and Simply Ripe. A package of Chinese vegetables with cooking oil, oyster sauce and peeled garlic offers convenience, while mandarin oranges are packed and distributed in mesh bags that allow customers to feel and smell the fruit without damaging it. Similarly, bananas are packed in 10-pound packages for distribution to Starbucks, which conducts annual audits of Fresh Direct's operations.

An export division also ships produce to Asia and Russia, capitalizing on Vancouver's location.

But for Yung, who married his high-school sweetheart in 1995 and now has two daughters, it's important to keep work fun and not be focused entirely on making a buck.

"My dad was always very focused on relationships," he said. "We spend a lot of time here, [so] if we can make it fun, enjoyable for the staff, suppliers and customers, then there's a lot of personal satisfaction in that."

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