This book covers the growth, economic development, and business management of the US commercial food processing industry. Topics include the strategic options of food processors when facing the many distribution channels and sourcing options currently available; new processing and information technologies; the effect of biotechnological developments on the food processing industry, and an analysis of whether the food processing sector has participated in the overall improvement of the US economy.

JOHN M. CONNOR, PhD, is Professor of Agricultural Economics at Purdue University. He has served as head of food manufacturing research in the Economic Research Service of the U.S. Department of Agriculture.<br> <br> M A. SCHIEK, PhD, is Assistant Professor of Agricultural Economics at Purdue University. He is a former cooperative relations specialist and research economist with the New York-New Jersey Milk Market Administrator of the U.S. Department of Agriculture's Agricultural Marketing Service.

Preface

xiii

(2)

Acknowledgments

xv

1 Introduction

1

(7)

Scope and Definitions

3

(3)

Organization

6

(2)

2 Brief History of the Industries

8

(46)

Food Processing Technologies: Ancient and Modern

9

(14)

Meat, Fish, and Eggs

10

(1)

Dairy Products

11

(2)

Grain Milling and Baking

13

(1)

Breakfast Cereals

14

(1)

Pasta

15

(1)

Canning

15

(2)

Freezing

17

(1)

Drying

17

(1)

Sweeteners and Sweets

18

(1)

Vegetable Oils and Margarine

19

(1)

Malt Beverages

20

(1)

Wine

21

(1)

Spirits

21

(1)

Tea, Coffee, and Spices

22

(1)

Snacks

22

(1)

Antebellum America

23

(5)

Late Nineteenth Century Growth

28

(10)

Development of Business Organization

38

(4)

Early Twentieth Century Growth

42

(9)

Summary

51

(3)

3 Processing and the U.S. Food System

54

(11)

Value Added

55

(2)

Employment

57

(3)

Agriculture

60

(1)

Channels of Distribution

60

(4)

Summary

64

(1)

4 Industrial Structure and Business Organization

65

(54)

Size Measures of Industries

66

(8)

International Comparisons

74

(1)

Differences in Value Added

75

(5)

Income Multipliers

80

(3)

Total Number of Plants

83

(2)

Sizes of Plants

85

(1)

Entry and Exit Conditions

86

(5)

Numbers and Sizes of Companies

91

(11)

Sales Concentration

102

(9)

Mergers

111

(4)

Profit Performance

115

(2)

Summary

117

(2)

5 Industry Growth

119

(13)

Aggregate Industry Growth

119

(5)

Household Demand

124

(2)

Other Domestic Demand

126

(3)

Foreign Demand

129

(1)

Summary

130

(2)

6 Geographic Location

132

(85)

The Leading States

134

(4)

Company Locations

138

(4)

Company Headquarters

138

(1)

Technical Research Facilities

139

(3)

Three Types of Food Industries

142

(3)

Supply-Oriented Industries

145

(29)

The Meat Packing Industries

149

(2)

Meat Processing

151

(1)

Poultry and Egg Processing

152

(2)

The Preserved Dairy Products Industries

154

(3)

Canned Fruits and Vegetables

157

(1)

Dried Fruits and Vegetables

158

(2)

Frozen Fruits and Vegetables

160

(1)

Flour Milling

161

(1)

Rice Milling

162

(2)

Wet Corn Milling

164

(1)

Sugar Refining

165

(1)

Vegetable Oils

166

(3)

Animal Fats

169

(1)

Seafood Processing

170

(3)

Coffee Processing

173

(1)

Demand-Oriented Industries

174

(14)

Ice Cream and Fluid Milk

176

(3)

Pickles and Sauces

179

(1)

Bread, Rolls, and Cakes

180

(1)

Cooking Oils and Margarine

181

(2)

Brewing

183

(1)

Soft Drink Bottling

184

(2)

Snacks

186

(2)

The Footloose Industries

188

(21)

Canned Specialties

191

(2)

Frozen Specialties

193

(3)

Breakfast Cereals

196

(1)

Flour Mixes and Doughs

196

(3)

Pet Foods

199

(2)

Cookies and Crackers

201

(3)

Confectionery

204

(1)

Wine and Brandy

204

(1)

Distilled Spirits

204

(2)

Flavorings

206

(1)

Miscellaneous Prepared Foods

206

(3)

Expected Future Growth

209

(3)

Summary

212

(5)

7 Input Utilization

217

(20)

Materials

219

(4)

Energy

223

(1)

Labor

223

(1)

Plant and Equipment

224

(1)

Assets

225

(1)

Business Services

226

(1)

Price Changes of Inputs

227

(2)

Price Changes of Outputs

229

(5)

Summary

234

(3)

8 Input Procurement Strategies

237

(27)

Managing Input Price Risk

240

(10)

Price Risk from Changes in Market Conditions

241

(6)

Getting Suppliers' Best Price

247

(3)

Managing Quantity Risk

250

(4)

Managing Input Quality

254

(4)

Input Services

258

(4)

Summary

262

(2)

9 Household Demand for Food

264

(39)

Forces Driving Demand

266

(13)

Population Change

270

(1)

Income and Wealth

270

(3)

Relative Prices

273

(1)

Other Demographic Characteristics

274

(2)

Preferences and Attitudes

276

(3)

Food Consumption

279

(7)

Consumer Purchasing Patterns

286

(11)

Convenience Sells

286

(2)

Foodservice Stimulates Growth

288

(1)

New Product Launches Stimulate Demand

289

(1)

Demographic Changes

289

(3)

Diet/Low-Calorie Foods

292

(1)

Preserve, but Preserve Freshness

292

(3)

Snack Foods

295

(1)

Healthy/Natural Foods

295

(2)

International Food Expenditure Trends

297

(4)

Summary

301

(2)

10 Distribution Channels for Food

303

(39)

The Role of Middlemen in the Food Distribution System

305

(5)

Structure of the Food Distribution System

310

(3)

Grocery Wholesaling

313

(5)

Food Store Retailing

318

(1)

Food Stores versus Foodservice

319

(1)

Structure of Food Store Retailing

320

(1)

History of Food Retailing

321

(3)

Recent Trends

324

(10)

Concentration

324

(2)

New Supermarket Formats

326

(2)

Competition from Nonfood Stores

328

(2)

New Service Offerings

330

(1)

Private Label

331

(1)

New Technology and Business Practices

332

(2)

Foodservice

334

(2)

History of Food Service

336

(4)

Summary

340

(2)

11 Product and Promotion Strategies

342

(27)

Product Strategies

342

(16)

Cost Advantage in Food Processing

344

(2)

Differentiation in Food Processing

346

(1)

Manufacturer's Brand Versus Private Label

347

(5)

Differentiation through Product Quality

352

(3)

Focus Strategies in Food Processing

355

(3)

Promotion Strategies

358

(10)

Advertising

359

(7)

Sales Promotion

366

(2)

Summary

368

(1)

12 Technological Change

369

(27)

Resources Devoted to R&D

370

(7)

Invention and Innovation

377

(3)

Productivity Growth in Food Processing

380

(6)

New Product Introductions

386

(4)

Issues Affecting Future Technological Change

390

(4)

Dollars for Research

390

(2)

Consumer Acceptance

392

(2)

Summary

394

(2)

13 The Globalization of Food Processing

396

(46)

Relative Size of the U.S. Food Processing Industry

396

(3)

Imports and Exports of Processed Food Products

399

(3)

International Trade Across Processed Foods

402

(8)

International Direct Investment

410

(8)

International Investment Across the Food Industries

418

(5)

Linkages Between Foreign Investment and Trade

423

(3)

International Marketing Strategy

426

(1)

Going International

426

(1)

Mode of Entry and Means of Servicing Foreign Markets

427

(6)

Exporting

428

(2)

Licensing

430

(1)

Direct Investment

430

(3)

Evolution of the Global Firm

433

(4)

Opportunities for Smaller Firms

437

(1)

Future Directions in International Food Marketing

438

(2)

Summary

440

(2)

14 The Futures of Food Processing

442

(11)

Continuing Trends

442

(4)

Some Questionable Trends

446

(5)

The British Model

447

(2)

The Wal-Mart Model

449

(1)

A Different Store and Product for Every Taste

450

(1)

A Final Word

451

(2)

Appendix A

453

(74)

Appendix B

527

(104)

Appendix C: Glossary of Terms

631

(6)

Appendix D: Industry Descriptions

637

(10)

Bibliography

647

(12)

Index

659

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Food Processing An Industrial Powerhouse in Transition

9780471155157

0471155152

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