Raise your hand if you think the hottest piece of food processing equipment is a milk homogenizer, manufactured in Europe and leased to plants by private investors.
The homogenizer part might be too specific, but dairy processing is today’s growth leader in U.S. food manufacturing. The leasing and import aspects are on the nose, though, according to 2017 Trends in Food Processing Operations, a market research report from PMMI, the Reston, Va., association for packaging and processing technologies.
PMMI’s membership consists of packaging equipment OEMs, but the group’s research is trending toward food and beverage manufacturing for a couple of reasons. Food and beverage companies account for three-fifths of packaging machine purchases, for one.
The other reason is PMMI’s ProFood Tech, a trade show that will have its inaugural run April 4-6 at Chicago’s McCormick Place. The International Dairy Foods Assn. and organizers of the Anuga FoodTec show in Cologne, Germany, are cosponsors of ProFood Tech.
To get a firmer handle on the needs and expectations of food and beverage companies, PMMI combined its own interviews with 40 engineers and operations executives at processing companies with findings from 150 studies and statistical sources, including the U.S. Census Bureau and USDA. The findings will serve as a benchmark for future research projects, according to Jorge Izquiardo, PMMI’s vice president-market development.
Fluid milk sales are treading water, but innovative yogurts, cheeses and other dairy products are driving profitable growth in the dairy category, the study concludes. Dairy also is benefiting from healthy snacking, with snack bar makers and others adding milk protein to polish their products’ nutritional profiles.
PMMI’s report pegs the total value of finished food and beverage products at $935 billion. While the industry usually struggles to achieve 1-2 percent annual growth, sales and profitably have surged in recent years, reflecting the emergence of start-up firms capitalizing on healthier eating and the movement of established companies toward value-added products. According to the PMMI study, finished goods shipments grew 6.9 percent from 2012-2014 while material costs increased 5 percent, meaning both higher more profitable sales.
A growing number of companies are successfully transitioning from sellers of commodities to providers of value-added products. Instead of focusing exclusively on fresh meat and poultry, innovators are enrobing that protein in dough or other coatings. The trend is reflected on the floors of trade shows. Rheon, a Japanese OEM of stress-free dough makeup equipment, has exhibited at IPPE, Atlanta’s meat and poultry show, in recent years, showcasing its encrusting machine.
Today’s equipment buyers are not necessarily food and beverage companies. Since the Great Recession, sales of equipment that was then leased grew more than double the rate of machinery purchased by food companies for their own use, PMMI found. Private investors seeking higher returns in a period of cheap money are driving the leased-equipment surge, Izquiardo says, tapping into interest from cereal makers and other companies in removing machinery from capital expenditure budgets.
Food manufacturers’ need for flexible automation is driving greater use of robotic motion. More than half of the food professionals interviewed predicted greater proliferation in their product SKU counts, which already exceed 100 in four out of five factories.
Robotics growth consistently exceeds forecasts. A 2013 PMMI study estimated 72 percent of manufacturing facilities had robotic machines, almost double the predicted level five years earlier.
Palletizing is the most prevalent application, and the availability of machines that combine case packing and palletizing is making robotic palletizers more common, Izquiardo points out. “It’s relatively easy to (combine case packing and palletizing in a single cell), and it’s affordable even for mid-sized operations.”
The most dynamic growth in robotic applications is upstream, in processing. The trends study estimates 30 percent of food plants now have robotic processing applications.
Whether machine motion is robotic or mechanical, food and beverage companies are demanding machines that are easier to change over and have self-diagnostic capabilities. With the worker skills gap expected to grow, “they want machines with friendly HMIs that make the equipment more intuitive (to operate and maintain) and reduce the need for training,” says Izquiardo. “If you need fewer operators and the training is significantly shorter, that has significant impact on the productivity of the plant.”
The likelihood the machine will be built offshore is growing. The study puts the value of imported processing equipment in 2015 at $1.3 billion. U.S. OEMs exported machinery worth $926 million.
Packaging machinery currently has a similar trade deficit, with imports accounting for 20 percent of sales compared to 15 percent exports of U.S.-built machines. But Izquiardo says foreign exchange rates are the reason: five years ago, a weak dollar resulted in a trade surplus.