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The food and beverage industry is the third-largest contributor to the overall U.S. manufacturing gross domestic product and with more than 21,000 U.S. food products companies providing 1.5 million jobs and average annual combined sales of $1.8 trillion, this powerful industry is a key driver of economic growth. In this post, we'll explore the vital statistics and subindustries of the U.S. food production industry and why sales continue to increase.
According to MNI, publisher and compiler of profiles of the nation's 350,000+ manufacturing companies, The United States is home to 21,972 food production facilities as of July 2024. These facilities provide 1.56 million jobs nationwide--an increase of 2.17% over a year ago. The U.S. food industry has average reported annual sales of $1.8 trillion. International distribution accounts for 18% of those sales.
MNI data shows that while much of the food may be homegrown, the food industry imports 12% of its raw materials. This is in line with manufacturing as a whole, which imports 11% on average. MNI also reports that 10% of food companies are publicly owned.
Women own 2% of food companies, the same as all U.S. manufacturing. Minority ownership stands at 1%, also the same as manufacturing countrywide.
As you might expect, food industry manufacturers tend to locate their companies near where food is harvested. Thus the most significant percentage, 31%, find homes in the Midwest. The West welcomes 26%, the South 25%, and the Northeast 18%. Still, given the mammoth size of the industry and the variety of subindustries, you can find sales and marketing opportunities regardless of your home base.
Food production subindustries are diverse, ranging from meat products to the growing market for healthful oils. All subindustries, including dairy, preserved fruits, grains, bakery, and beverages, share similar challenges.
Meat Products
Despite many challenges, in 2022, U.S. meat and poultry production reached 107.5 billion pounds, a record. Still, many of the largest meatpacking plants in the U.S. face the stumbling blocks of labor shortages and logistical problems. The costs of feed and energy are also on the rise. Diseases such as avian flu are taking their toll. If you offer products or services to address any of these issues, you have a readymade market.
Dairy Products
The United States Department of Agriculture (USDA) expects milk production to be higher in 2023. After setbacks related to the pandemic, the number of cows is increasing. If you sell supplies useful to this subindustry, it's an excellent time to go prospecting.
Preserved Fruits and Vegetables
The demand for processed fruits and vegetables is expected to grow at an annual rate of 5.5%. The growth may be pegged to increased consumer interest in organic products. New labeling reflects this trend, offering an opening for sales of label-related products.
Grain Mill Products
Manufacturing grain mill products involves specialized machinery, storage options, coatings, and lab testing equipment. Check out the grain mill marketplace if your line features any of these items.
Bakery Products
The demographic shift in the U.S. means that the bakery industry is shifting its focus to younger customers. Sales of breads such as tortillas and wraps outstrips of traditional loaves. Interest in specialty diets also impacts demand. If you offer products or services that can aid in adapting to changing preferences, this market could be for you.
Fats and Oils
With consumers' increasing interest in dieting to reduce cardiovascular disease and inflammation, the market for oils perceived to have healthful properties is growing. The market is segmented by the plant origins of oils and into organics and conventionally produced. So far, the higher price of organics makes them a smaller slice of sales. Purchases of oils fell during the pandemic due to restaurant and food service closures, but business is picking up. It's an excellent time to check out your opportunities in the oil fields.
Beverages
The beverage subindustry is showing an increasing interest in sustainability. The other rising tide in this sector is ready-to-drink cocktails. If you sell products or services relating to either leanings, beverages may be your opening.
While each subindustry has its issues, you will find many common concerns in the food manufacturing universe.
The food industry is focusing hard on these five areas:
● Sustainability.
● Plant-based protein.
● Technological advances.
● Demographics.
● Economic shifts.
Except for plant-based protein, these affect all the subindustries regarding changing consumer preferences. They are all facing labor shortages and increased regulation. Food industry manufacturers are employing three strategies to cope with the evolving landscape.
Automation
Robots are picking up the slack as a dwindling or aging-out workforce can no longer accomplish necessary tasks. Machines not only make up for the lack of workers, but they also perform repetitive tasks that cause injury to humans. Since they can be programmed to produce goods to exact standards, they also increase quality.
Innovative Packaging
Many new packing materials are recyclable, biodegradable, or compostable, making them more sustainable. They are also lighter, reducing shipping costs and fuel usage. Packaging methods such as vacuum sealing and modified atmosphere packaging (MAP) are also gaining popularity to manufacture compact products with longer shelf lives.
Labels Listing "Clean" Ingredients
Consumer demand for "clean" ingredients is growing, making these products highly saleable. The term "clean" has no legal definition, but the word implies a comprehensive inclusion of:
● Natural.
● Organic.
● Preservative-free.
● Additive-free.
● Containing a small number of ingredients.
Consumers will pay 78% more for food with a "clean" label, so food processors find it well worth the trouble to sell products that have them.
Offering products that will help the food industry address its labor, technology, packaging, and sustainability pain points will give you entry into an expanding and enduring market.
Plant-Based Products
The demand for plant-based products is growing, with plant-based diets having increased 300% for Americans in the last 15 years. Other emerging trends include alternative proteins, 3D food printing, personalized nutrition, and food robotics.
Growing Threat of Bird Flu
The H5N1 strain of bird flu has significantly affected the U.S. food manufacturing industry. Worker health is a major concern, particularly for migrant workers in agricultural and food processing roles, who face a higher risk of infection. Economically, the federal government has spent nearly $1 billion on containment efforts, while the industry has suffered losses of approximately $3 billion due to additional costs and downtime. The culling of nearly 82 million birds has caused supply chain disruptions and potential price increases.
Powered by the 80-strong research staff of our parent company, MNI, IndustrySelect can give you the tools you need to reach decision-makers in the food industry. With an IndustrySelect subscription, you can view profiles of food companies and their executives. You can also choose company locations that will work best for you and your team. IndustrySelect will even provide you with administrative emails.
Try a free demo and start your food industry prospect pool today.
Editor's Note: This article was originally published in July 2023. It is updated annually with new statistics and trends.
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