Learn what’s happening in the food processing industry in 2015 and beyond. Stay competitive, and maybe even get ahead of the pack.
How large is the US food processing industry? Well, it has about 21,000 companies and $750 billion in revenue!
To put that in perspective, worldwide processed food sales total about $2 trillion. So, the US accounts for 37.5% of all sales. Other large markets include Western Europe and Asia, with China growing fastest.
How Competitive is the Food Processing Industry?
Population growth is really the biggest driver of food consumption. For the most part, price is the major point of competition.
Large companies control much of this industry, with 50 of them snatching more than half of all available revenue. However, small companies can effectively compete by developing popular products.
What Products do Consumers Buy?
Here’s a quick list:
- Processed meat – 25% of total industry revenue
- Dairy products – 15%
- Edible oils – 9%
- Processed fruit and vegetables – 8%
- Baked goods – 5%
- Snack foods – 4%
- Pet foods – 3%
What the Big Companies Are Doing with Technology
Adept use of technology drives the market leaders’ competitive edge. Their use of technology allows them to quickly adapt to market changes. They can also rapidly prototype, test, and launch new products.
They also make extensive use of automation. Quality control, and formerly labor-intensive processes like canning, baking, freezing, and packaging, are increasingly done by machines. Product sales even get tracked in real-time.
Technology’s also being used to increase safety too. For example, many meat processors use RFID (radio frequency identification) tags to record the entire origin, processing, and distribution paths of their product. Companies also use irradiation techniques to eliminate bacteria on fruits and vegetables using low doses of radiation.
Who Do Food Processors Sell To?
There’s a range of customers:
- Grocery stores
- Warehouse clubs
- Food service distributors
- Vending machine distributors
- Convenience stores
Financial Issues in the Food Processing Industry
Of course, cash flow fluctuates greatly with season. Typically, holiday sales in the second half of the year account for the majority of sales.
Inventories tend to stay low because of fast turnaround. While price volatility can be extreme, leading companies negotiate multi-year contracts with suppliers and use financial hedging instruments to compensate.
The world’s population will continue to grow. And Euromonitor International expects total revenues to hit $2.15 trillion by 2015. The growth in the future remains in healthy and conveniently packaged foods.
What Will You Do?
That’s what’s happening in 2015 and beyond. How will you react?