Consumers, Retailers Changing Equipment Landscape

According to IRI, only four have had sustained growth over the last four years (2000 to 2004), with refrigerated meat and poultry demonstrating significant and sustained growth over the last four years. The frozen prepared vegetable category has also sustained significant growth in both three- and four-year averages. This value-added category grew 27 percent in 2002. Seven categories show a decline in total pounds in the IRI data. The shrinking market size categories (four-year averages) included frozen side dishes (-8.1 percent) and two pasta categories; refrigerated pasta (-5.3 percent) and frozen pasta (-4.4 percent). The rice category overall is down slightly (-1.1 percent) in total. Other research indicates that the value-added rice category is actually growing but this is more than offset by shrinkage in “plain” rice.

In fact, the USDA forecasts that total rice usage will grow at an average of 1.74 percent per year for the next 10 years. According to the USA Rice Federation (Arlington, Va.), domestic rice usage in the United States is estimated at 80 million cwt (hundredweight) per year, with the processed food industry us 20 million cwt, or 25 percent.

Rice usage in the process food industry has grown by an average of 3.4 percent annually over the last four years. Furthermore, the Rice Federation predicts that process food use of rice will grow by nearly twice the rate of total rice, over 3 percent per year.

Pouch-Processing Upswing

The survey also developed data on a growing trend in the food processing equipment marketplace – pouch processing. The survey showed that 25 percent of the reported usage of atmospheric water or steam processing equipment by multiple facility operators was in the pouch-processing areas; hold hot and cool, pasteurizing or cooling.

Pouch-processing operations were tied with basic cook/ cool processing as the predominate use of atmospheric water or steam equipment for the leading food processors surveyed. The use of pouches in the food processing industry, serving both the consumer and institutional markets, is expected to grow. The Freedonia Group, a research firm based in Cleveland, Ohio, estimates that the food pouch market itself will grow at 5 to 6 percent per annum for the next six years. This is nearly double the projected growth rate of total food shipments over the same timeframe.

Innovations Mirrors Consumer Trends

It is important for equipment manufacturers in the food processing industry to fully understand the market motivators of their customers. Innovation in food processing equipment is fundamental to the food manufacturer’s ability to control costs, improve food quality, and meet the changing food tastes of the consumer.

The accounting firm Grant Thornton LLP (Houston, Texas) sponsored their first survey of the food and beverage industry in 2005. More than 120 companies participated with 27 percent being listed as “processors.” The survey also included distributors, manufacturers and retailers.

The respondents indicated the food categories they expect to grow over the next several years. These consumer trends will drive the new product development launches of the major food manufacturers and their processing operations. The innovative food processing equipment manufacturers will provide solutions that help manufacturing customers better meet these needs.

Better-for-you products will dominate the new product landscape in grocery. Whether it is whole grain breads, chips with reduced trans-fat or good-for- you chocolate, food equipment manufacturers have an opportunity to participate by helping t customers better meet these needs.

Equipment-Selection Criteria

The Lyco Trends Survey attempted to gain insight into the criteria used by food processors in their eventual equipment selection and the key decision-making factors they use.

The survey provided 10 factors related to food equipment manufacturing companies and their products. The respondents were asked to rate the factors on a five-point scale from “not important to “most important.” The number one factor regarding the selection of food processing equipment was “fulfillment of specification.” It had a top-two-box mention by over 92 percent of the respondents. That means nearly the entire field of respondents rated that attribute as either the highest or second-highest in the survey. Two other important factors mentioned by the respondents were “parts availability” and “installation support” with top-two-box mentions of 75 percent and 63 percent respectively. Food processing equipment manufactures must come to market prepared to meet specifications and provide the parts and installation services required by their customers.