Tva Webinar Target Markets Food Processing & Packaging Shared Version

T E N N E S S E E VA L L E Y A U T H O R I T Y E C O N O M I C D E V E L O P M E N T

The Valley Works Online Learning Series:

Target Markets – Food Processing & Packaging

October 18, 2011

Business Sensitive – not for further distribution without TVA ED Permission

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Jeffrey R. Taylor, Target Market Specialist


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• Facts

• Trends

• Challenges

• Competition

• Prepare to Recruit

• Questions

Today’s Goals


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Psychologist Abraham Maslow first introduced his concept of a

hierarchy of needs in his 1943 paper "A Theory of Human Motivation”

Basic Need

Self

esteem

Belongingness and love needs

Safety needs

Biological and physiological needs

Self Actualizationpersonal growth and fulfillment

Esteem Needsachievement, status, responsibility, reputation, etc.

Belongingness and Love Needsfamily, affection, relationships, work group, etc.

Biological and Physiological Needsbasic life needs – air, food, drink, shelter, warmth, sleep, etc.

Safety Needsprotection, security, order, law, limits, stability, etc.


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• U.S. largest producer of processed foods

• Recession-proof

• Immune to global competition

Food Processing Facts


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1. Petroleum and Coal Products: $1,027,938 (ExxonMobil, Chevron, Conoco)

2. Computers and Other Electronic Products: $581,344 (HP, IBM, Microsoft)

3. Chemicals: $387,326 (P&G, Dow, Dupont)

4. Food: $284,390 (ADM, Kraft, Tyson)

5. Pharmaceuticals: $257,975 (J&J, Pfizer, Abbot)

6. Aerospace & Defense: $250,446 (Boeing, United, Lockheed Martin)

7. Electrical Equipment & Appliances: $245,307 (GE, Emerson, Whirlpool)

8. Machinery: $194,098 (Caterpillar, Deere, Xerox)

9. Motor Vehicles: $150,721 (Ford, Navistar, PACCAR)

10. Beverages: $133,619 (Pepsi, Coke, Dr. Pepper/Snapple)

Facts: 10 Largest U.S. Manufacturing Industries –

Based on 2010 Revenue in Millions


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Some Food Processing & Packaging Companies in the Valley


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• Building requirements (well lit, washable walls, floor drains,

climate control, freezer space)

• Quality control:

Hazard Analysis & Critical Control Points (HACCP)

General Manufacturing Practice (GMP)

Isolation (Green Mountain Coffee)

• Proximity to suppliers

Food Processing & Packaging: Location Drivers


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• Food related clusters (supplement workforce and suppliers)

• Water volume and water quality

• Wastewater treatment capacity

• Workforce availability

Food Processing & Packaging: Location Drivers


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• Strong existing industry base

• Reliable, competitively priced power

• Skilled machine operators

• Excellent technology training

• Central U.S. location

• Transportation network

Valley Strengths


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Food Processing: Trends


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• Organic means product grown in a chemical-free environment

• 78% of manufacturers label at least some products as “natural”

(Natural means that product has been made solely from botanical

resources without additives or preservatives)

• Consumers increasingly favor foods that do not contain complicated

additives or preservatives

• U.S. sales of organic food and beverages growth

1990 = $1 billion

2010 = $26.7 billion

Highest growth in 2010 were organic fruits and vegetables up 11.8% over 2009

• Certified organic acreage in the U.S. reached more than 4.8 million

acres in 2008, according to latest data posted by USDA

Food Processing: Organic


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Food Processing: Organic


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• Trend continues for healthy diet and lifestyle growth; new products

include:

Whole grains

Antioxidants

Omega-3 fatty acids

Probiotics

• Portion-sized snack foods are important for healthy diet

• Value-added convenience foods also important

• Greater demand for “functionally defined” foods. These products

target a certain condition or specific parts of the body, such as

foods to:

Boost the immune system

Aid eye, bone health, etc.

Food Processing: Health


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• It’s been said that “all food is ethnic food”

• According to Mintel, there are a variety of outlets where consumers

are learning more about foods that aren’t common to their ethnic

background:

26% of ethnic food-lovers say they were introduced to the cuisine by

TV programs, newspapers or magazines featuring cuisine from other

countries

23% tried the items after reading cookbook recipes that included ethnic

dishes

18% said they grew to like ethnic fare after traveling abroad

25% were introduced to a new ethnic cuisine because of living in a

culturally diverse neighborhood

Food Processing: Ethnic


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• Swiftly becoming a lifestyle is a return to “old world”

shopping: visiting the butcher, baker, farmers markets

• More locally raised meats and produce, farm shares and

communally supported agriculture (CSA)

• Popular food network shows are highlighting the talent of

highly skilled and focused chefs, i.e., unusual ice cream

and popsicle flavors, specialty bacon, small batch

cheeses, gourmet junk foods, etc.

Food Processing: Local and Artisan


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• Recent survey indicated that 72% of U.S. consumers are willing to

pay more for improved food and beverage packaging that

guarantees taste, freshness and safety

• Advanced packaging includes:

Advanced films to prevent spoilage

Use of biodegradable and edible packaging materials

• “Active packaging” interacts chemically with the food inside to

safeguard against product degradation from exposure to oxygen

or moisture

Benefit: you do not need to add preservatives to the food

Current uses include produce, bakery items, fresh pasta and meats

Food Processing: Packaging


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• Water volume

• Water quality

• Wastewater treatment capacity

• Environmental (especially meat-related)

Food Processing: Challenges


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• Receive water from various locations

Groundwater (aquifers)

Surface water (lakes and rivers)

Conservation and the sea through desalination

• Purified, disinfected through chlorination or fluoridation

• Sent to reservoirs where stored for use

Food Processing: Water Supply


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• Physical, chemical and biological characteristics of water

• Measure of water condition relative to requirements of

biotic species and/or any human need or purpose

• Vital role to food manufacturing to ensure food quality

and efficient production

• Should not produce smells or flavors that would affect

the final food product

• Drinking water quality has a microbiological and a

physicochemical dimension

Food Processing: Water Quality


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• Aquifer – a wet, underground layer of water-bearing

permeable rock or unconsolidated materials (gravel, sand or

silt) from which groundwater can be usefully extracted using a

water well

Food Processing: Aquifer


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• South and Southeast (SEC more than football)

• Similarities:

Climate

Workforce

Suppliers

Transportation

Proximity to customers

Food Processing: Competition


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• Traditional Drivers:

Transportation

Building Characteristics

• Not Traditional Drivers:

Sustainability

Culture

Arts

Isolation

Project Passport: Green Mountain Coffee


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• Driver: Eastern U.S. location

Greenhouse and hydroponic process

Larger number of consumers

• Driver: Climate and weather

Elevation about sea level

Number of sunny days versus cloudy days

Relative humidity levels year round

Project Green: Tanimura & Antle


http://www.taproduce.com/index.php

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• Legend and Leaders – $27M, 285 jobs

Drivers: transportation and distribution

• Project White Wave – $20M, 100 jobs

Drivers: transportation and distribution

• Project Fishbowl – $19M, 90 Jobs

Drivers: transportation, distribution, arts, culture, music

outdoor activities and sustainability

Active Projects in the Valley


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• Showcase available specialized buildings and good sites

• Improve water volume/quality

• Showcase or improve wastewater treatment capacity

• Utilize related industry clusters for workforce and

suppliers

• Highlight or improve specialized workforce training

• Inventory community sustainable assets and green-

focused industries

Food Processing: Prepare to Recruit


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• Build a spec building (consider LEED certification)

• Specs:

50,000 square feet expandable (flexibility to expand twice)

24-foot ceiling height

Unfinished floor

Food Processing: Prepare to Recruit


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Based on trends and facts, do you think that the food

processing sector is a compatible target for your area?

• Yes

• No

Your Community


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Questions

Food Processing & Packaging


T E N N E S S E E VA L L E Y A U T H O R I T Y E C O N O M I C D E V E L O P M E N T

Put the TVA Economic Development team to work for you!

Contact: Jeffery R. Taylor, Target Market Specialist

615-289-4667 / [email protected]


Tva Webinar Target Markets Food Processing & Packaging Shared Version

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