Food processing industry analysis reveals that developing competitive strategies is crucial for many developing economies. Food processing or agri-processing is defined here as post-harvest activities involved in the transformation, preservation and preparation of agricultural production for intermediary or final consumption in the form of food and beverage.
The global processed food and beverages industry is dominated by a handful of multinational corporations. Among the leaders are Unilever, Cadbury Schweppes, High. J. Heinz, Kraft Foods Group, Mendelez International (formerly part of Kraft Foods, Inc.), General Mills and Nestlé. Unilever, for example, estimates that 150 million people per day purchase its products, ranging from Knorr soups to SlimFast diet meals, in 150 nations around the globe. According to Plunkett Research estimates, U.S. food production of all types from animal processing to packaged foods manufacturing (but not including the agricultural sector) will total about $881.6 billion in 2014, employing 1.679 million. This includes foods manufactured for export but does not include tobacco products. Nearly 1 million additional people are employed in wholesale food distribution, plus nearly 3 million in food and beverage stores.
The entire food industry, from growing to processing to retailing, is an extremely competitive field where profit margins are typically so low that it is often challenging to maintain profitability. The processed food industry worldwide has been hindered by high energy costs and changing consumer tastes. High feed costs have been extremely damaging to poultry and livestock firms.
While the processed food category includes a diverse array of prepared and packaged products, all of them benefit from a common trend: rapid growth in global demand. Euromonitor, a market research firm, estimates that the retail value of packaged food (a proxy category for high-value food products) will increase by US $316 billion over the next five years to US $2.6 trillion. One challenge is to translate this expansion in food retail into export opportunities. Another challenge is steep competition from other principal suppliers.
US $216 Trillion Industry by 2020
The European Union (EU) is the world’s leading processed food exporter, with roughly twice the exports of the United States. EU exports of processed food products reached $91 billion in 2012, growing 28 per cent over five years. Like those from the United States, EU processed food shipments are highly diversified geographically and categorically. US market share has decreased marginally in the past decade because of top-tier competition, not only from the European Union but from other emerging suppliers like Thailand and China. During this time, U.S. exporters have still managed to tap global demand and expand exports by 143 per cent.