Cushman & Wakefield -- Food Manufacturing Update

1. JUNE 2016
FOOD
MANUFACTURING
UPDATE
GOOD EATS & MORE TREATS
A FIVE PART SERIES
A Cushman & Wakefield Research Publication

2. Good Eats & More Treats - Food Manufacturing Update
PART 1
The economic impact and geographical diversity
of food manufacturing is quite broad. According
to the latest data from the Bureau of Labor
Statistics, the industry made up more than 1.5
million wage-and-salary jobs in the United States
in 2015, making it a significant employer.
Construction of plants and expansion of facilities
play a major role in providing markets with
employment opportunities and has a direct effect
on commercial real estate.
From 2011-2015, there have been 1,691 food
processing project announcements, of which
1,033 were expansions and 658 were new
projects. Since 2011, there has been a clear
upward trend in both new and expansion
projects, and growth is accelerating. In 2015, we
enjoyed the greatest number of food
manufacturing project announcements of the
past five years with 249 expansion projects and
155 new projects. We expect this trend to
continue and for the 2016 tally of food
manufacturing projects to surpass the prior-year
level.
Over the coming months, Cushman & Wakefield
Industrial will be taking a critical look at several
significant components of Food Manufacturing in
the Americas.
Food safety is job #1 for food and beverage
manufacturers and, with longer supply chains and
more complex food sourcing, that job is
becoming more complicated. January 2016
marked the fifth anniversary of passage of the
Food Safety Modernization Act (FSMA), and with
enforcement of FSMA regulations beginning to
phase in later this year, manufacturers are
focused intently on it. The FSMA is a paradigm
shift for the industry. With the FSMA, the FDA is
moving from the old food safety approach that
reacted to potential harm to a new, preventive
framework that puts greater responsibility on the
food industry to identify potential risks to the
safety of the food supply and counter the
risks before harm occurs. The FSMA isn’t the
only regulation the food industry is
digesting. Regulations related to employee
safety (ergonomics) and sustainability
(reduced emissions and waste,
recycling, and reduced consumption of
water/power) confront the sector. The
need for better food safety practices goes
beyond the regulatory requirements. Regaining
the trust of consumers due to the increase in
food recalls is also a top priority.
Food Manufacturing &
the Changing American Table
Food Safety & Regulations
Food and beverage manufacturers have witnessed profound change in the last decade. Stringent regulations and
evolving food preferences have challenged food manufacturers to prioritize consumer and environmental health;
plant efficiency has become critical to long-term survival as producers pursue both traditional and new, faster
growing, distribution channels; food systems, cold storage facilities, and the transportation infrastructure for
temperature-sensitive commodities have become more complex; and, perhaps most transformative of all,
changing consumption patterns of the young and the old have altered the very nature of
food manufacturing.
Efficient plant production has always been
important, but it is becoming critical to long-
term survival as producers pursue both
traditional and new, faster-growing distribution
channels. Incorporating more technology into
food production and packaging processes is
becoming more widespread. Among the
technologies making their way to the production
line are advanced robotics capable of
automating manual processes; sensors
incorporated into labels; packaging to determine
product freshness; and information systems that
offer solutions to specific pain points (e.g.,
equipment and technology that automate the
report documentation process for traceability
requirements under FSMA). Equipment and
production line operations are also becoming
more complex as the consumer’s palate has
become more discerning. One clear example is
the increasing interest in organic and natural
foods. From a manufacturing standpoint, the
handling is different for these products,
impacting how lines are set up and operated.
For example, if a bakery is gluten free, the
processing is different due to concerns over
ingredient separation and cross contamination.
Cold storage ensures that the food we eat stays
safe, from the point of harvest to our table, and
demand for such storage is on the rise. Over the
past five years, public refrigeration space
increased 2% and private space increased 5.3%.
Alongside the growth in cold storage is increased
demand for transportation infrastructure capable
of handling temperature-sensitive products.
Energy consumption is the name of the game for
cold storage providers considering it comprises a
substantial portion of operating costs. Although
the focus on energy consumption itself isn’t new,
the tools and strategies to achieve it keep
evolving. Another area that is generating interest
is refrigeration compliance. Companies are taking
an active role in developing a refrigeration
strategy, driven in part by new OSHA mandates.
Due to damage to the atmosphere, food
manufacturers must phase out R-22 refrigerants
and move toward natural options such as CO2 by
the year 2020.
Given the highly competitive nature of food
manufacturing, capturing the favor of Millennials
– the fastest-growing consumer segment – may
be the biggest challenge facing food executives.
Given the sheer number of Millennials, as they go
so goes the food industry. Case in point, over the
past decade, consumption of fresh foods grew by
more than 20% and Millennials are a big reason
why. This cohort likes fresh, less-processed food,
which has played out in their preference for fast
casual restaurants that offer freshly prepared
foods. Another group driving change in food and
consumption patterns is the Baby Boomers. This
generational group is aging, retiring, and
developing health ailments, all of which are
typically associated with major changes in
approach to food and beverage consumption.
Plant Efficiency
Cold Storage
The Young & the Old
Over the past
five years, public
refrigeration space
increased 2%
and private space
increased 5.3%.
Construction of plants and
expansion of facilities play
a major role in providing
markets with employment
opportunities and
have a direct effect
on commercial
real estate.

3. Chris B.
Copenhaver
Director Logistics
& Industrial Services
Co-Lead Food
& Beverage Practice
Tel: +1 404 853 5240
chris.copenhaver@cushwake.com
Ken
Reiff, SIOR
Managing Director
Co-Lead Food
& Beverage Practice
Tel: +1 916 617 4241
ken@cushwake.com
Jason
Tolliver
Head of Industrial
Research
Tel: +1 317 639 0549
jason.tolliver@cushwake.com
John
Morris
Head of Logistics
& Industrial Services
Tel: +1 847 720 1321
john.morris@cushwake.com
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