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Monday, June 03 2019
Food and Beverage Processing Trends in 2019

By Jay Garner, CEcD, President, Garner Economics LLC

Much is changing in the food and beverage (F&B) processing sector. Yet, much has stayed the same from previous years. What’s changing and why? First, consumer preferences always dictate how food manufacturers create new products, which often times results in new production facilities, or at the very least, a shift in production lines (which is a significant equipment expense). And with millennials and Generation Z consumers driving much of the product changes, expect even more product evolution for healthier, better-for-you foods.

But first, let’s go through the numbers. Nearly two million people across the United States work in the F&B sectors, according to the Bureau of Labor Statistics. Combined from both sectors (food processing and beverage processing), there are about 43,000 companies that are defined as F&B facilities in the United States (this does not include cold storage establishments). California leads the way with nearly 6,500 facilities employing more than 220,000 workers, followed by New York, Texas, Illinois, Florida, Washington, Pennsylvania, Oregon, New Jersey and Michigan rounding out the top 10. Growth in the F&B sector is rising more rapidly in beverages, but with continued changes to a healthier diet, evidence is pointing to new growth in the food sector.  

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 09:52 am   |  Permalink   |  Email
Thursday, May 02 2019
Food and Beverage Processing Trends In 2019: So Much is Changing - So Much Has Stayed the Same

By Jay Garner, CEcD, President, Garner Economics LLC

Much is changing in the food and beverage (F&B) processing sector. Yet, much has stayed the same from previous years. What’s changing and why? First, consumer preferences always dictate how food manufacturers create new products, which often times results in new production facilities, or at the very least, a shift in production lines (which is a significant equipment expense). And with millennials and Generation Z consumers driving much of the product changes, expect even more product evolution for healthier, better-for-you foods.

But first, let’s go through the numbers. Nearly two million people across the United States work in the F&B sectors, according to the Bureau of Labor Statistics. Combined from both sectors (food processing and beverage processing), there are about 43,000 companies that are defined as F&B facilities in the United States (this does not include cold storage establishments). California leads the way with nearly 6,500 facilities employing more than 220,000 workers, followed by New York, Texas, Illinois, Florida, Washington, Pennsylvania, Oregon, New Jersey and Michigan rounding out the top 10. Growth in the F&B sector is rising more rapidly in beverages, but with continued changes to a healthier diet, evidence is pointing to new growth in the food sector.

What’s Not Changed?

  1. Food safety is of paramount importance to the health of consumers, and the financial health of F&B companies. The Food Safety Modernization Act (FSMA) was signed into law in 2011 and gives the FDA authority to regulate the way foods are grown, harvested and processed. The law grants the FDA a number of new powers, including mandatory recall authority. The law was prompted after many reported incidents of foodborne illnesses during the first decade of the 2000’s and was largely crafted by members of the Grocery Manufacturers Association. Tainted food has cost the food industry billions of dollars in recalls, lost sales and legal expenses.
  2. Health and wellness foods. Though this trend began in the first part of the 2000’s, it continues to transform and evolve - significantly. Though all age demographics are causing this, including an aging baby boomer population that is health conscious, the millennial and Generation Z age groups are driving the push. Companies like Hershey and General Foods have announced plans to expand their portfolios to appeal to younger consumers who want healthier snacks. Probiotics are attractive to food companies and are making their way into a variety of foods, not just yogurt. Again, not new since the trend has been around for at least 10 years, but clearly adapting and evolving.
  3. Beverages. Sugar is the devil and conventional sugar soft drinks have been on a downward spiral with sales for several years. There is an  increased and still growing demand for energy drinks and beverages infused with nutraceuticals, e.g. vitamin water, green teas and fruit drinks. This has an impact on product lines and beverage processing facilities as companies either re-tool the lines or build new facilities.
  4. Sustainability first got its legs in the 1990’s with environmental activists as a way for the populous to understand how what we eat, how it’s grown and packaged, have an effect on the environment. Over time and through significant media attention sustainability has garnered over the years, shoppers have been willing to pay more for sustainable practices as a way to feel they are helping the environment. Many large F&B companies, including Walmart, have announced sustainability efforts from processing to packaging. Compostable packaging is getting more shelf space, which means that this packaging sub-sector offers promise for economic development practitioners looking for new target industry opportunities.

What’s New or on the Horizon?

  1. Cannabis. Yes, weed. The Farm Bill of 2018 legalizes the cultivation of hemp, a plant in the cannabis family. Derivatives of hemp such as CBD (cannabinoid), is known as an aid for relaxation, anxiety and pain. It is no longer illegal, but the FDA still prohibits food and beverage products with CBD ingredients from crossing state lines. As soon as that prohibition ends, and it will eventually, there will be a rush for companies to incorporate ingredients of CBD into food products. Marijuana is now legal in 33 states and the District of Columbia. Industry watchers and government lobbyists believe it will receive full federal legalization by 2021. That also depends on elections.
  2. Mergers and acquisitions (M&A) are new and old. During the Great Recession of 2009, many mid to small sized F&B companies were bought out by larger companies, or they went out of business. With the hot economy we are now experiencing, M&A activity is at a feverish pace.  Companies like Conagra, General Mills, Campbell Soup, Coca-Cola, and Nutella have all made recent acquisitions. Those that were sold or acquired include Blue Buffalo Pet Foods, Pinnacle Foods, Snyders/Lance, Costa Coffee, and on and on.  These acquisitions may mean that new product lines are being considered and new locations. Any time there is an M&A, it opens the possible door for a new location for an F&B facility. Economic developers, take note!
  3. Plant-based meat is a new phenomenon. The days of the veggie burger are gone. This new process and science combine aminos, minerals, lipids and water and give it a meat texture and taste. Hamburger chains have latched on to it, including White Castle. Fish is next. New product lines equal new locations. Check out The Beyond Burger by Beyond Meat at your favorite grocer.

What About Cold Storage Facilities (Refrigerated Storage)?
Cold storage units are not technically part of the food and beverage family and have a different NAICS (North American Industry Classification System) code (49312). But cold storage facilities are an integral and necessary part of the F&B supply chain. At the end of 2018, cold storage facilities employed 56,000 people with over 1,600 businesses in the U.S. Wages for this industry are over $2.6bn and annual revenue is in excess of $5.9bn. Is there any wonder why economic developers, communities and electric utility providers don’t have these companies on their radar as a targeted industry sector? A “typical” new cold storage facility investment may have a capital outlay of over $60mm and 50-75 jobs. In a very tight labor market, this type of project is ideal for communities.

Site Selection Requirements: What does all of this mean for your community and economic development professionals working to attract F&B and cold storage facilities to a locality? New trends, processes and products typically mean new opportunities. Often a new product line could mean a new facility, based on an existing facility’s footprint. So, what are the key factors needed in attracting F&B companies?

  • Water and wastewater treatment capacity. Simply put, no water, no project. Water is the most important ingredient in the site selection process for F&B companies. If it’s not used as an ingredient, it is always used for sanitation. Having excess water capacity of 500,000 MGD is a start.
  • Low or competitive energy rates. F&B companies and cold storage facilities are big users of energy. Having competitive electric and gas rates are important.
  • Access to four-lane roads. An interstate location will trump a non-interstate location. Four-lane access roads will always trump two-lane roads. Gas and diesel are big components of energy costs, and accessibility has a direct impact on operating costs.
  • “No product – No Project.” Shovel ready sites are needed for speed to market.  An existing USDA/FDA grade building is a benefit, depending on the size, but hard to find. Eighty-five percent of all new F&B site searches start with a desire to find an existing facility. It’s rare that one is found, so those searches turn into a greenfield project.
  • A workforce within a 45-minute drive time of those key occupations that F&B companies consider necessary is a  benefit. Talent is always important.

These are the essential ingredients that will allow communities to compete effectively in this constantly growing sector.

Food and beverage company executives consider the factors listed below as what’s on their mind most days, and in this order (according to foodprocessing.com, 2016):

  • Food safety
  • Cost control
  • Automation
  • Worker safety
  • Capacity expansion (that’s a direct impact for economic developers)
  • Environmental/sustainability issues
  • Training
  • Sourcing (where is the commodity coming from?)

Understanding what drives these decision makers of food and beverage companies will help economic developers craft the narrative and value proposition for your community. Good hunting!

Sources: Bureau of Labor Statistics; Food Dive; foodprocessing.com; Ibisworld

About the Author:
About Jay Garner: Jay A. Garner, CEcD, CCE is the president and founder of Garner Economics LLC, an economic development and site location consulting firm headquartered in Atlanta, Georgia, with representative offices in North Carolina; Berlin, Germany; and Seoul, Korea. Jay often lectures and provides counsel on creating and implementing proactive global business development strategies and tactics. His firm is also a leader in assisting corporate clients such as Anchor Glass, Academy Sports, Hatfield Quality Meats, Hill’s Pet Foods, Stork Food Systems, Future Pipe Industries, and others in their site selection process.

Garner Economics and Primus Builders have partnered to create one of the most extensive site certification initiatives in the economic development and Food & Beverage sector. Their goal is to help communities prepare for the location of F&B projects, which also helps companies in that industry sector (many of whom are our current clients) understand that a community’s site or building has met Primus/Garner's rigorous review requirements. To learn more about the Primus/Garner Food Site Certification designation, see the link at https://garnereconomics.com/services/food-processing-site-certification.

About Garner Economics LLC:
About Garner Economics LLC: We are data driven strategists helping companies, communities and organizations, large and small, urban and rural, achieve success. The firm offers location advisory analysis, analytical research, industry targeting, strategic planning and organizational assessments with a wealth of expertise to companies, communities, and organizations globally.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 11:21 am   |  Permalink   |  Email
Tuesday, November 20 2018
Profiling the Food and Beverage Industry: Trends In Baking And Snack Foods

By Frank Spano, Managing Director and Kyle Johnson, Location Consultant, The Austin Company

The food and beverage industry in the United States has shown positive signs of expansion over the past ten years. Forecasts and growth models indicate this expansion will continue into the future, though possibly at a slower rate. The following factors may assist in explaining this upward trend:

  1. Major plant upgrades at existing operations or replacement of older, outdated facilities. Continued plant upgrades and existing plant expansions may result in more automation and less job growth.
  2. New product innovation based on changing consumer demands.
  3. Continued market entry into the U.S. from smaller and medium-sized European and Asian operations, along with continued growth from established foreign-owned operations located in the U.S.

One notable portion of the food and beverage industry, the baking and snack food industry, shines as an important segment of the U.S. economy with nine percent growth from 2007 to 2017. The following discussion examines this industry over the past ten years and makes general conclusions on its projected growth.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 10:16 am   |  Permalink   |  Email
Tuesday, May 29 2018
Food, Glorious Food!

By Jay Garner, President, Garner Economics LLC & Cyndi Dancy, director of research, Garner Economics LLC

Top Areas for the Food & Beverage Manufacturing Industry
The food and beverage industry remains a generous slice of the nation’s manufacturing sector with steadily increasing employment. Consumers drive trends on what is being produced, how it is packaged, and the industry continues to adapt and thrive. Metro areas with large populations have a foothold on food productions, while other areas have found their specialties driving employment.

More than 1.8 million people across the United States work in food and beverage manufacturing sectors as of June 2017, according to the Bureau of Labor Statistics. These two sectors show continual employment growth since 2010 with strong advancement in the past five years.  

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 01:00 pm   |  Permalink   |  Email
Wednesday, November 29 2017
Looking Beyond the Site for Food and Beverage Expansion: How to Assess the Surrounding Community and Region

By Frank Spano, Managing Director and Susan Riffle, Manager of Communications, the Austin Company

The food and beverage industry is enjoying a healthy growth spurt; the food products sector is among the fastest-growing of U.S. manufacturing, adding 95,000 jobs so far in 2017, representing a seven percent increase over the past five years. The U.S. beverage sector is also growing substantially, adding 66,000 jobs so far in 2017, representing an impressive 39 percent growth over the past five years.1

Along with such growth comes the need for expansion by manufacturers. With that expansion comes new facilities located in new communities and the generation of incremental jobs for those communities. Undoubtedly, the food and beverage industry holds a great deal of promise for regions and municipalities lucky enough to attract them. The competition is fierce, especially since the industry has rigorous criteria when defining site suitability. Site and property criteria determined to be important for the food and beverage sector was explored by Austin Consulting and published in the September/October 2017 edition of Expansion Solutions (http://bit.ly/shovelreadysites). 

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 09:42 am   |  Permalink   |  Email
Thursday, June 01 2017
Change: A Constant in the Food and Beverage Processing Sector

By Jay Garner, President, Garner Economics LLC

One thing is for certain, you can count on change being a dynamic influence in how food and beverage processors operate. Why? Because consumer preferences constantly evolve, and consumers drive food and beverage output.

Food and Beverage Facilities and Jobs by the Numbers
First, let’s look at the statistics of where these companies are located and how many people they employ.

Food processing is defined by the North American Industry Classification System (NAICS) code of 311. Beverage manufacturing is comprised of code 312.  Combined, this sector in 2016 had 41,046 processing facilities, employing 1,748,503 people in the U.S. (BLS).

California leads the U.S. with the most facilities and employment, primarily because of its strong farming output in the Central Valley.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 07:38 am   |  Permalink   |  Email
Tuesday, November 22 2016
Setting the Table for Successful Food Manufacturing Plant Location: Logistics are Key

By Frank Spano, Managing Director and Susan Riffle, Manager of Communications, The Austin Company

Economic change affects all industries, but some are more recession-resistant than others. The food industry is a good example of that. Consumer habits may change due to the economy: restaurants are more popular during times of prosperity, home cooking is more appropriate when times are lean. In either case, the food industry is fueled by consistent consumer demand, although the nature of that demand is, more than ever, constantly in flux.

During May of 2015, the Bureau of Labor Statistics placed employment in the food processing sector at slightly under 1.5-million workers. Annual payroll during this period was approximately $57.5-billion dollars.

If these figures aren’t enough testament to the sector’s overall health, the industry itself proves to be very optimistic. According to the 2016 annual U.S. Food & Beverage Industry Study, released in June by WeiserMazars LLP, most food and beverage companies anticipate a significant increase in sales this year. Survey participants — drawn from over 200 companies across the food and beverage industry — are confident that sales will increase 14 percent compared to 2015, and project net profits will rise by 10 percent.1  That optimism has proven not unfounded: the latest industry figures from CSI Market cited net income in the food processing industry in the second quarter of 2016 as having improved by 53.95 percent over 2015, with quarter-over-quarter net income growth well above the manufacturing industry average.2

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 11:00 am   |  Permalink   |  Email
Monday, May 23 2016
Food Processing Today: Organics (and Beer) Win!

Have there been any changes in food processing lately? Yes there has, big time!

Let’s look at my morning so far. After my walk, I prepared some green juice for my wife and me using our Breville juicer, as I do every day that I’m not traveling.

It makes about 12 ounces of delicious green juice that will absorb into your cells and become “life force energy” within about 15 minutes. It makes you feel energized and ready for the day!

I next had a bowl of cereal. I had recently bought some new gluten free multigrain Cheerios and low sugar Grape Nuts. I chose the Grape Nuts today and added some organic raspberries and blackberries followed by organic hemp milk. Delicious and healthy!

I started to think about shopping for these breakfast items. We recently shopped at:

  • Costco – they now post many green signs and the signs mean organic items.
  • Sprouts – a new lower priced supermarket similar to Whole Foods with a gigantic organics produce section. They started here in Phoenix and are expanding east, now in Nashville and Atlanta.
Posted by: Nicole@ExpansionSolutionsMagazine.com AT 10:41 am   |  Permalink   |  Email
Monday, November 30 2015
Determining if an Existing Building is Compatible for a Food Processing Operation

By Frank Spano, Managing Director and Susan Riffle, Communications Specialist of Austin Consulting

Food processors planning to expand or construct new processing facilities do so for a variety of reasons, including:

  • Increasing market share
  • Penetrating new geographic areas
  • Replacing outdated, inefficient operations
  • Introducing new product lines

Once the decision is made to construct a facility, the company must determine the geography where operating costs are minimized for the new operation. Important considerations include labor and utility costs and availability, taxation policies, community characteristics, and potential assistance programs at the state and local level.

Considering an Existing Building
Real estate, by nature, is equally important. Manufacturing operations, including food processers, are continually trying to overcome high start-up costs in new plant construction. Food processors are concerned with speed of entry to market and will explore opportunities to reduce time and transportation costs. One important variable to consider is utilizing an existing building versus constructing a new facility on a greenfield site.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 10:11 am   |  Permalink   |  Email
Wednesday, May 20 2015
Site Selection Trends and Factors in the Food Processing Industry

By Jay Garner, CEcD, CCE, FM, HLM,
President, Garner Economics, LLC

If there is such a thing as a recession-proof industry, the Food and Beverage (F&B) Industry is it. During good times and bad times, people eat and drink. Whether the economy is experiencing unprecedented growth or recession, folks continue to consume food and drink products.  Some eat to live, while others live to eat. Some eat in, while others eat out. Today, the F&B Industry continues to expand and to evolve in order to meet the ever-changing demands of consumers.

In the United States 30,135 companies are defined as F&B process manufacturers (up by more than 1,500 companies since 2010). These businesses employ more than 1.4 million employees. However, a 47,000 decrease in employees since 2010 demonstrates how innovative manufacturing processes and automation can mean fewer jobs.

Posted by: Nicole@ExpansionSolutionsMagazine.com AT 11:18 am   |  Permalink   |  Email
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