Cushman & Wakefield’sIndustrial Research team, New York, launched a 5-part update on food manufacturing in the Americas.
The first installment of “Good Eats & More Treats: Food Manufacturing and the Changing American Table” takes a critical look at several significant components of this vital industry, which is a significant employer and a major user of industrial space.
“Food and beverage manufacturers have witnessed profound change in the last decade,” says Jason Tolliver, head of industrial research, Americas. “Our study focuses on these shifts, as well as the resulting challenges and solutions.”
The study explores:
Food safety and regulation. Food safety is job No. 1 for food and beverage manufacturers, and with longer supply chains and more complex food sourcing, that job is becoming more complicated. January marked the fifth anniversary of passage of the Food Safety Modernization Act (FSMA), and with enforcement of FSMA regulations beginning to phase in later this year, manufacturers are more focused than ever. And, FSMA isn’t the only regulation the food industry is digesting. Regulations related to employee safety (ergonomics) and sustainability (reduced emissions and waste, recycling and reduced consumption of water/power) confront the sector. The need for better food safety practices goes beyond the regulatory requirements. Regaining the trust of consumers due to the increase in food recalls is also a top priority.
Plant efficiency. Efficient plant production has always been important, but it is becoming critical to long-term survival, as producers pursue both traditional and new, faster-growing distribution channels. Incorporating more technology into food production and packaging processes is becoming more widespread. Among the technologies making their way to the production line are advanced robotics capable of automating manual processes, sensors incorporated into labels, packaging to determine product freshness and information systems that offer solutions to specific pain points (e.g. equipment and technology that automate the report documentation process for traceability requirements under FSMA). Equipment and production line operations are also becoming more complex, as the consumer’s palate has become more discerning. One clear example is the increasing interest in organic and natural foods. From a manufacturing standpoint, the handling is different for these products, impacting how lines are set up and operated. For example, if a production facility is gluten free, the processing is different due to concerns over ingredient separation and cross contamination.
Cold storage. Over the past five years, public refrigeration space increased 2% and private space increased 5.3%. Alongside the growth in cold storage is increased demand for transportation infrastructure capable of handling temperature-sensitive products. Energy consumption is the name of the game for cold storage providers, considering it comprises a substantial portion of operating costs. Although the focus on energy consumption itself isn’t new, the tools and strategies to achieve it keep evolving. Another area that is generating interest is refrigeration compliance. Companies are taking an active role in developing a refrigeration strategy, driven in part by new OSHA mandates. Due to damage to the atmosphere, food manufacturers must phase out R-22 refrigerants and move toward natural options such as CO2 by the year 2020.
The young and the old. Given the highly competitive nature of food manufacturing, capturing the favor of Millennials – the fastest-growing consumer segment – may be the biggest challenge facing food executives today. Case in point, over the past decade, consumption of fresh foods grew by more than 20%, and Millennials are a big reason why. This cohort likes fresh, less-processed food, which has played out in their preference for fast casual restaurants that offer freshly prepared foods. Another group driving change in food and consumption patterns is the Baby Boomers. This generational group is aging, retiring and developing health ailments, all of which are typically associated with major changes in approach to food and beverage consumption.
“The economic impact and geographical diversity of food manufacturing is broad,” says Tolliver. “Changes to the food continuum impact employment, processing plant site location, distribution and ultimately what we put on our tables.”
In the period of 2011-2015, 1,691 food processing projects were announced, of which 1,033 were expansions and 658 were new projects.
“There has been a clear upward trend in both new and expansion projects, and growth is accelerating,” Tolliver adds. “In 2015, we witnessed the greatest number of food manufacturing project announcements in the past five years. We expect this trend to continue.”
