2014 Food and Beverage Industry Outlook

We've developed a list of five issues we foresee as having an impact on the food and beverage industry in 2014.

By Kevin T. Higgins, Managing Editor, and Dave Fusaro, Editor in Chief

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Here we are at the cusp of another year. The overall food and beverage industry appears to have enjoyed 2013, as financial reports through the first three quarters of the year were stellar at most public companies. But how will 2014 play out?

Success often depends on dealing well with difficult issues and following the trends or, better still, being ahead of the next one. There's no telling how 2014 will unfold, but at this point in time, a handful of issues seem apparent to us – some trends, some challenges, all opportunities.

We scanned all the new year predictions that came our way via press releases in the waning days of 2013 and surveyed our Editorial Advisory Board, regular contributors and others we trust. The following thoughts are the consensus we came up with. We'll see how they hold up as the year progresses.

It's a small globe after all

We've highlighted international opportunities in the past, and that was much of our motivation for choosing Heinz as our 2011 Processor of the Year – "the most global U.S. food company," as our headline put it.

The subject never goes away, but some 2013 events really seemed to stoke that fire. Mondelez International came into its own after its late-2012 spinoff from Kraft Foods. The new name holds many familiar snack brands, Nabisco among them, but there also are many unfamiliar ones: Barni, Bel Vita, Lacta, Lu, Milka, Tuc. This American-based processor and marketer made and sold 80 percent of its products outside the U.S. and Canada.

Our news section carried such headlines as Hershey pays $600M for Shanghai confectioner. And a big, nationally debated news story last year was the purchase of Smithfield Foods, the world's biggest pork company and No. 8 on our Top 100 list, to Chinese meat firm Shuanghui International.

It's not just about companies changing ownership and citizenship status. Finished goods are moving from one country’s port to another’s at an accelerating pace, and a lot of those shipments are stamped Made in the U.S.A.

Through the first 10 months of 2013, $63.3 billion worth of domestically produced food and beverage products went off shore, 26.6 percent more than four years earlier, according to data collected by the Foreign Trade Div. of the U.S. Census Bureau. They were worth about $12 billion more than the food & beverage products imported into the U.S., and the trend is toward even greater contributions from processed foods to the balance of trade.

Imported beer apparently is prized the world over, and in some places that means imported American brews. Beer exports from this country were only $448 million behind imports, compared to a $2 billion beer trade deficit in 2009, primarily because exports more than doubled. And what is likely a first, the value of processed foods exported exceeded the value of agricultural exports.

The growing popularity of American-made food can be found in many categories. Take dairy products, for example. Based on shipments through October 2013, the U.S. Dairy Export Council projected the value of 2013 exports would top an unprecedented $6.6 billion, 30 percent higher than they were in 2012. In terms of total solids -- the 12 percent of raw milk that isn’t water -- 16.3 percent of October’s U.S. production was exported. Put another way, the output of one out of six cows went offshore.

And it wasn’t all dry products. People in Asia, the Middle East and South of the border have developed a taste for American cheese. Shipments topped 25,000 tons for eight consecutive months, beginning in March, with October’s 27,074 tons representing a 42 percent increase over October 2012. Exports of butterfat tripled between June and October, reaching 71,640 tons for the first 10 months. Most of the increased demand came from Saudi Arabia and Iran (No extra charge for the GMO feed, ayatollah). The absence of melamine in American dairy products apparently is attractive to the Chinese, who doubled their purchases in October compared to the year-earlier period.

Shipments of packaged foods also are surging. Kellogg Co., which buys grain by the metric ton and sells it by the ounce, generates a third of its sales in Europe, Latin America and Asia Pacific, and growth in those markets is offsetting declining snack and cereal sales domestically. The boxes of corn flakes sold in Ireland and Istanbul are produced in places like Battle Creek, Mich., and Memphis, with value added by American machines and men (and women).

Trading in another country requires adapting business practices to local sensibilities. Globalization becomes an exercise in best practices, with U.S. food companies often bringing higher standards for food safety and worker protection along with production know-how when they set up shop in a foreign land. It works the other way, as well. Corporate social responsibility (CSR) was a hot button in Europe before it was on the American radar, and virtually all the U.S. multinationals have responded with CSR reports that extol their efforts to reduce waste and the consumption of energy and water in production.

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  • <p>With current global market trends, more and more countries will continue to demand for made in USA food products, especially snacks, fast food, poultry and meat products. It is time Americans should be trained to master Foreign trade regulations so that America companies interested in pursuing opportunities in foreign countries will do so with less bottle necks.</p> <p>Frederick Ebede All Peoples Food New Castle DE, USA</p>


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