Consumers, Retailers Changing Equipment Landscape

Here, primary research has been tied to the trends and purchase behavior of food processors to relevant secondary-research. This integrated view provides the equipment manufacturers with key insights into the requirements of their markets and customers.

The food processing industry is constantly changing, as many food manufacturers are developing new products to meet the changing taste, texture, health and wellness considerations of consumers. At the same time, quality and price competition is intense between food manufacturers, who have to compete first for retail customers and ultimately the consumer.

Food equipment manufacturers strive to produce innovations that help their processing customers better meet the needs of their markets. The marketing and product innovation activities of food processing equipment manufacturers, therefore, are focused on meeting the future needs of their customers.

Limited information exists on the trends driving the food processing industry. By contrast, there is a significant amount of information available on food trends of consumers and in the grocery channel through huge data collection vehicles and organizations, including Wal-Mart’s Retail Link, IRI – Information Resources, AC Nielsen and GMA Surveys. Food companies merge information generated by these sources to drive new-product innovation.

Lyco Manufacturing (Columbus, Wis.), a food processing equipment manufacturer, commissioned the “Trends in Food Processing & Equipment Survey” in late 2005 to better understand the needs of food processing companies using a 20-question survey developed and fielded by Dechert-Hampe & Co., a Northbrook, Ill.-based sales and marketing firm.

The survey, conducted in September 2005, targeted senior manufacturing operations management in food processing. Questions included respondent profiles, processing trends and the equipment purchase process. Participants in the survey were provided with a detailed summary report of findings and conclusions for their participation. More than 40 companies participated in the study.

Survey details about their operations included an average of 6.3 manufacturing lines per plant with 77 percent of the responding companies reported using continuous-water or steam cooking in their plants. Another 63 percent reported continuous cooling processes within their operations. Processing operations included (in order of prominence) cook/cool, blanching, pouch processing and hydration.

Twelve Categories Surveyed

A dozen process food categories were surveyed for anticipated growth over the next two years. With the exception of canned vegetables, the survey respondents projected growth in each of the categories. Average annual growth was projected at a modest 1.7 percent. However, six product categories had projected growth rates at 50 to 80 percent greater than the average. Those categories are value-added poultry, food in trays, value-added meats, hot filled sauce in pouches, prepared rice and soup pouches.

Projected growth rates of the processed food categories surveyed varied significantly across the 40 companies responding. Worthy of note are the percent of responding companies that project growth rates of more than 6 percent for several of the “hottest” categories.

More than 20 percent of the respondents believe that the processed food in trays and prepared rice categories will grow by over 6 percent over the next two years. Processing food in pouches is also a high growth area deemed by nearly 20 percent of the survey respondents as both hot filled soups and sauces were noted in the survey. The food processors in the survey service both the grocery and food service channels.

In addition, more than 50 percent of the respondents projected that prepared rice, food in trays and value-added chicken will grow by over 3 percent over the next two years. Consumers and food service customers alike continue to demand products that are packaged for convenience and/or closer to ready-for-consumption.

Further research was completed on specific food categories by Lyco Manufacturing to supplement the survey. Using grocery data from Information Resources (IRI), 11 food categories were selected and shown here in order of total market size – pasta, frozen plain vegetables, rice, frozen meat, refrigerated meat/poultry, canned meat, frozen appetizers, frozen pasta, frozen side dishes, frozen prepared vegetables and refrigerated pasta.