Tva Webinar Target Markets Food Processing & Packaging Shared Version

T E N N E S S E E VA L L E Y A U T H O R I T Y E C O N O M I C D E V E L O P M E N T

The Valley Works Online Learning Series:
Target Markets – Food Processing & Packaging
October 18, 2011

Business Sensitive – not for further distribution without TVA ED Permission

Jeffrey R. Taylor, Target Market Specialist

Business Sensitive – not for further distribution without TVA ED Permission 2

Today’s Goals

• Facts

• Trends

• Challenges

• Competition

• Prepare to Recruit

• Questions


Basic Need

Psychologist Abraham Maslow first introduced his concept of a
hierarchy of needs in his 1943 paper "A Theory of Human Motivation”

Self Actualization
Self
personal growth and fulfillment

Esteem Needs
esteem
achievement, status, responsibility, reputation, etc.

Belongingness and
Belongingness and Love Needs
love needs
family, affection, relationships, work group, etc.

Safety Needs stability, etc.
Safety
protection, security, order,needs
law, limits,

Biological and
Biological and Physiological Needs
physiological needs
basic life needs – air, food, drink, shelter, warmth, sleep, etc.


Food Processing Facts

• U.S. largest producer of processed foods

• Recession-proof

• Immune to global competition


Facts: 10 Largest U.S. Manufacturing Industries –
Based on 2010 Revenue in Millions

1. Petroleum and Coal Products: $1,027,938 (ExxonMobil, Chevron, Conoco)
2. Computers and Other Electronic Products: $581,344 (HP, IBM, Microsoft)
3. Chemicals: $387,326 (P&G, Dow, Dupont)
4. Food: $284,390 (ADM, Kraft, Tyson)
5. Pharmaceuticals: $257,975 (J&J, Pfizer, Abbot)
6. Aerospace & Defense: $250,446 (Boeing, United, Lockheed Martin)
7. Electrical Equipment & Appliances: $245,307 (GE, Emerson, Whirlpool)
8. Machinery: $194,098 (Caterpillar, Deere, Xerox)
9. Motor Vehicles: $150,721 (Ford, Navistar, PACCAR)
10. Beverages: $133,619 (Pepsi, Coke, Dr. Pepper/Snapple)


Some Food Processing & Packaging Companies in the Valley


Food Processing & Packaging: Location Drivers

• Building requirements (well lit, washable walls, floor drains,
climate control, freezer space)

• Quality control:
 Hazard Analysis & Critical Control Points (HACCP)

 General Manufacturing Practice (GMP)

 Isolation (Green Mountain Coffee)

• Proximity to suppliers


Food Processing & Packaging: Location Drivers

• Food related clusters (supplement workforce and suppliers)

• Water volume and water quality

• Wastewater treatment capacity

• Workforce availability


Valley Strengths

• Strong existing industry base

• Reliable, competitively priced power

• Skilled machine operators

• Excellent technology training

• Central U.S. location

• Transportation network

Food Processing: Trends


Food Processing: Organic

• Organic means product grown in a chemical-free environment
• 78% of manufacturers label at least some products as “natural”
(Natural means that product has been made solely from botanical
resources without additives or preservatives)
• Consumers increasingly favor foods that do not contain complicated
additives or preservatives
• U.S. sales of organic food and beverages growth
 1990 = $1 billion
 2010 = $26.7 billion
 Highest growth in 2010 were organic fruits and vegetables up 11.8% over 2009
• Certified organic acreage in the U.S. reached more than 4.8 million
acres in 2008, according to latest data posted by USDA

Food Processing: Organic


Food Processing: Health

• Trend continues for healthy diet and lifestyle growth; new products
include:
 Whole grains
 Antioxidants
 Omega-3 fatty acids
 Probiotics
• Portion-sized snack foods are important for healthy diet
• Value-added convenience foods also important
• Greater demand for “functionally defined” foods. These products
target a certain condition or specific parts of the body, such as
foods to:
 Boost the immune system
 Aid eye, bone health, etc.

Food Processing: Ethnic

• It’s been said that “all food is ethnic food”
• According to Mintel, there are a variety of outlets where consumers
are learning more about foods that aren’t common to their ethnic
background:
 26% of ethnic food-lovers say they were introduced to the cuisine by
TV programs, newspapers or magazines featuring cuisine from other
countries
 23% tried the items after reading cookbook recipes that included ethnic
dishes
 18% said they grew to like ethnic fare after traveling abroad
 25% were introduced to a new ethnic cuisine because of living in a
culturally diverse neighborhood

Food Processing: Local and Artisan

• Swiftly becoming a lifestyle is a return to “old world”
shopping: visiting the butcher, baker, farmers markets
• More locally raised meats and produce, farm shares and
communally supported agriculture (CSA)
• Popular food network shows are highlighting the talent of
highly skilled and focused chefs, i.e., unusual ice cream
and popsicle flavors, specialty bacon, small batch
cheeses, gourmet junk foods, etc.


Food Processing: Packaging

• Recent survey indicated that 72% of U.S. consumers are willing to
pay more for improved food and beverage packaging that
guarantees taste, freshness and safety
• Advanced packaging includes:
 Advanced films to prevent spoilage
 Use of biodegradable and edible packaging materials
• “Active packaging” interacts chemically with the food inside to
safeguard against product degradation from exposure to oxygen
or moisture
 Benefit: you do not need to add preservatives to the food
 Current uses include produce, bakery items, fresh pasta and meats

Food Processing: Challenges

• Water volume

• Water quality

• Wastewater treatment capacity

• Environmental (especially meat-related)


Food Processing: Water Supply

• Receive water from various locations
 Groundwater (aquifers)
 Surface water (lakes and rivers)
 Conservation and the sea through desalination

• Purified, disinfected through chlorination or fluoridation

• Sent to reservoirs where stored for use


Food Processing: Water Quality

• Physical, chemical and biological characteristics of water
• Measure of water condition relative to requirements of
biotic species and/or any human need or purpose

• Vital role to food manufacturing to ensure food quality
and efficient production

• Should not produce smells or flavors that would affect
the final food product

• Drinking water quality has a microbiological and a
physicochemical dimension

Food Processing: Aquifer

• Aquifer – a wet, underground layer of water-bearing
permeable rock or unconsolidated materials (gravel, sand or
silt) from which groundwater can be usefully extracted using a
water well


Food Processing: Competition

• South and Southeast (SEC more than football)

• Similarities:
 Climate

 Workforce

 Suppliers

 Transportation

 Proximity to customers


Project Passport: Green Mountain Coffee

• Traditional Drivers:
 Transportation
 Building Characteristics

• Not Traditional Drivers:
 Sustainability
 Culture
 Arts
 Isolation


Project Green: Tanimura & Antle

• Driver: Eastern U.S. location
 Greenhouse and hydroponic process
 Larger number of consumers

• Driver: Climate and weather
 Elevation about sea level
 Number of sunny days versus cloudy days
 Relative humidity levels year round


Active Projects in the Valley

• Legend and Leaders – $27M, 285 jobs
Drivers: transportation and distribution
• Project White Wave – $20M, 100 jobs
Drivers: transportation and distribution
• Project Fishbowl – $19M, 90 Jobs
Drivers: transportation, distribution, arts, culture, music
outdoor activities and sustainability


Food Processing: Prepare to Recruit

• Showcase available specialized buildings and good sites

• Improve water volume/quality

• Showcase or improve wastewater treatment capacity

• Utilize related industry clusters for workforce and
suppliers

• Highlight or improve specialized workforce training

• Inventory community sustainable assets and green-
focused industries

Food Processing: Prepare to Recruit

• Build a spec building (consider LEED certification)

• Specs:
 50,000 square feet expandable (flexibility to expand twice)
 24-foot ceiling height
 Unfinished floor


Your Community

Based on trends and facts, do you think that the food
processing sector is a compatible target for your area?

• Yes

• No


Food Processing & Packaging

Questions


T E N N E S S E E VA L L E Y A U T H O R I T Y E C O N O M I C D E V E L O P M E N T

Put the TVA Economic Development team to work for you!

Contact: Jeffery R. Taylor, Target Market Specialist
615-289-4667 / jrtaylor@tva.gov

Business Sensitive – not for further distribution without TVA ED Permission

Tva Webinar Target Markets Food Processing & Packaging Shared Version

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