What’s in Store?
J. Polep Distribution Services Evolves with the Times
Stop by the Chicopee headquarters of J. Polep Distribution Services, and the first thing you’re greeted with is an old-fashioned cigar-store Indian standing beside the front door.
The adjoining office of Jeff Polep, fourth-generation president of this 116-year-old family business, is also strewn with kitschy memorabilia from the past century, but it’s that wooden Indian who tells the most significant story — one that starts with Polep’s great-grandfather launching a small-time enterprise, Polep Tobacco Co., in Salem, Mass.
“He started with candy and tobacco, but we diversified into groceries to survive,” Polep said. “Since then, we’ve kept diversifying.”
Today, J. Polep ranks among the top 12 convenience-store distributors in the country, servicing about 4,500 chain and independent retailers in New England, New York, and — most recently — Pennsylvania and New Jersey.
Much of that expansion has come in just the past several years, with the addition of alcohol products and an ice-cream and frozen-food division in 2007, and the purchase of Springfield Smoked Fish in 2011 and two Connecticut meat-processing plants, Mucke’s and Grote and Weigel, in 2012. Meanwhile, “we recently went into produce, both fruits and vegetables, and we’re carrying about 200 items,” Polep said.
All of this reflects the fourth generation’s constant focus on diversification.
“That’s where most of the growth has come,” Polep said, adding that some product additions have worked out better than others. “We’ve had exceptional growth in the ice-cream business; we sell a lot of ice cream.” Meanwhile, he added, alcohol products haven’t been as lucrative, although they do turn a profit.
In the past decade, J. Polep also launched Rachael’s Food Corp., named after Polep’s daughter. The Rachael’s line includes candy and other snack foods, but also a number of refrigerated products — from sandwiches and salads to meat products — that comprise the only foods that the Polep company produces on its own.
J. Polep also tries to find synergies among the Rachael’s products, such as putting smoked salmon from Rachael’s Springfield Smoked Fish on the sandwiches it makes in its commissary — which, like its meat-processing plants, is a USDA-inspected facility. “Anything we can cross-merchandise is pretty good for us.”
Meanwhile, the company’s salespeople, armed with iPads and other modern devices, are constantly restocking stores and tracking how each product is selling. “Our main function was always convenience stores,” Polep said, “but over the past few years, we’ve gone into fresh foods, healthy foods, natural foods. That’s been really good for us.”
Back from the Dead
Polep likes to show visitors a photograph hanging in the lobby, probably from around 1910. It shows his grandfather, Charles, standing on the running board of a truck driven by his great-grandfather, Sam. He says that photograph — and the hard work and legacy it represents — has inspired him to keep growing the company, even during dark days like the mid-1980s.
“In 1984, my father and uncle sold the business,” he said, adding that they believed the sale, to Trade Development Corp. (TDC), would bring security as well as access to the larger corporation’s expertise and buying power. They were wrong. “Within two years, the company that bought us went bankrupt.”
Polep, who managed the Chicopee operation for TDC, was determined to keep the business alive, but he had a non-compete agreement in his contract that barred him from restarting the company after TDC filed Chapter 11. After a week hashing out the issue in a Texas bankruptcy court, however, a judge released him from the contract. But that was only the beginning.
“We had to start all over again,” he said, adding that this included a name change from Polep Candy & Tobacco Co. to J. Polep Distribution Services. Many of the first employees he brought back worked for free for the first couple months, enabling him to hire about 50 more. And keep growing, steadily, for almost 30 years.
“We went from zero business to almost $1 billion; we’re over $900 million now,” he said, adding that J. Polep currently employs about 630 people, with distribution centers in Chicopee and Woburn, as well as Providence, R.I. and West Haven, Conn. “I’m glad it worked out the way it worked out. It was a lesson learned. We have a good, successful business, and we know that’s because of our employees. They’re loyal. We can’t do it without them.”
Speaking of hardships, much of the company’s recent growth coincided with the Great Recession. Asked whether those years, which impacted so many industries in the Northeast, affected his company, Polep offered a simple “yes … and no” — and for a perhaps surprising reason.
“We didn’t really get hurt too badly by the recession because tobacco items sell better when there are economic issues out there,” he explained.
While it has been a core product for J. Polep since the beginning, tobacco sales have been shaped by a number of different trends.
“There have been a lot of changes in the tobacco business alone. It’s gone way beyond cigarettes, pipe tobacco, and other tobacco products,” Polep said. “The biggest diversification lately has been e-cigarettes. Right now, we sell a lot of e-cigs. A lot.”
At a time when government taxes tobacco heavily and society increasingly frowns on its use — bans in restaurants, workplaces, and a host of other public spaces are simply making it more inconvenient to smoke — e-cigarettes, a smokeless product that uses nicotine vapor, have been widely embraced, particularly by the younger generation.
“Some people are trying to quit smoking, no doubt, and this is a vehicle that helps them achieve that result,” Polep said. “But many people are smoking e-cigs who never smoked cigarettes because it’s an enjoyment for them.”
While cigarettes — which are still J. Polep’s top product — may not be in vogue, healthy and organic food is, and the company is starting to take advantage of that trend.
“We’ve now gotten into about 450 colleges with good, healthy alternatives, all the different food groups,” Polep said. “That’s a very, very successful business — although our slow season for colleges is coming up within the month.”
That’s OK, he added, because convenience-store sales rocket up during the summer, more than making up for summer break on campuses. When the weather turns warmer, he explained, people are out driving more, and more apt to make a quick stop for a soda or a snack. “In the winter, they go to the supermarket, load up, and stick it in the fridge or freezer.”
The college crowd may be a solid market for healthier foods, but stores are following suit, he said. “A lot of convenience stores have taken on the organic and natural products we have for the colleges, and they’ve set up healthy sections. And they’re selling.”
While J. Polep has thrived by staying atop trends and making savvy acquisitions of other companies — about two dozen in the last 30 years — it’s ramping up geographic expansion as well. The most recent moves, into Pennsylvania and New Jersey, represent a significant step for the company, but a necessary one if it expects to grow in ways other than diversification.
“If you think about it, in New England, we’re on a peninsula, so we can’t really go much further — we’ll eventually run into the ocean,” he said with a laugh. “The only way we can grow geographically now is by going south to pick up new business.”
He sees the potential of J. Polep to expand beyond its current territory to become an even bigger presence in the eastern half of the U.S., but any growth will have to be gradual and sustainable. “I think it will take us a little while to be satisfied with Pennsylvania and New Jersey. But we’ve grown tremendously through acquisition over the years, so territory growth makes sense.”
The company will continue to take a multi-pronged approach to growth, especially as the recession fades into the past and competition heats up. “We did have an advantage selling certain types of products during the recession,” Polep said. “But things have gotten better, and our industry is looking for more business, so the competition is fierce.”
J. Polep doesn’t seem primed to make the mistakes of the mid-’80s anytime soon, though — not with the fifth generation so firmly entrenched. Polep’s son, Eric, who was a district manager in Boston, returned to Chicopee to learn more of the business. Meanwhile, daughter Rachael works in human resources, and his son-in-law, Adam Kramer, works in food service. They’re all interested in preserving the 116-year legacy and moving it forward, he told BusinessWest.
“And they can have it, at this point. I’m just doing it for them,” he said, expressing pride that his family has continuously grown what has become one of the nation’s most prominent distribution companies — “except for that hiccup of two years, of course.”
Distributing the Wealth
For now, he says, being president gives him something interesting to do every day until the next generation takes over, and he’s fine with that.
“It’s really simple,” he said when asked what he enjoys most about his role. “It’s something new and different every day. We have 600-plus employees, 80 drivers, 100 sales-type people — they all make business interesting and fun. I never walk into the same situation two days in a row.”
That’s easy to see, with hundreds of different products rolling off the conveyer belts every day and being shipped to thousands of destinations. J. Polep has come a long way indeed from that old, black-and-white photo in the lobby, and that 116-year-old dream of making a living selling candy and cigarettes. n
Joseph Bednar can be reached at email@example.com