Strategizing Against Competition
Industry experts cite several factors that food processors should take into account to stay competitive.
• Location: Food Processing magazine lists the top 10 American food processing companies and their headquarters locations as:
1. Tyson Foods, Inc.
2. Kraft Foods, Inc.
3. PepsiCo, Inc.
Purchase, New York
4. Nestlé Food Services North America
5. Anheuser-Busch Companies, Inc.
St. Louis, Missouri
6. Dean Foods Company
7. General Mills, Inc.
8. Smithfield Foods, Inc.
9. ConAgra, Inc.
10. Swift & Co.
In terms of site selection, "You need to be aware of issues that impact your ability to hold costs down and enable you to deliver product in a timely and cost-effective fashion," says Wyvill. These include incoming and outgoing distribution infrastructure, nearness to market and sustainability of the labor pool.
In California, Yates says most processors are in rural areas because 50 to 80 percent of their former locations became urbanized. He lists water, access to energy, access to railroads and highways, and nearness to labor pools as key site selection requirements.
One of the upcoming areas for food processors is Fairfield, California, halfway between San Francisco and Sacramento at the gateway to the Napa Valley. Food industry sources such as Calbee America, Inc., a distributor of healthy snack foods, are choosing to locate in Fairfield because of its easy access to ports and freeways, ample supplies of superior quality water, and available land with room to expand.
• Research and development: Mian Riaz, Ph.D., director of the Food Protein R&D Center at Texas A&M University and a member of the Institute of Food Technology, advises, "Don't sell technology to China. We can produce new ingredients at lower cost with quality assurance and consumer confidence. That should keep us competitive."
• A reality check: Gilpatrick comments, "You need to be more aware of the global landscape today. Many processors are surprised by the volume of foreign competition."
• Dollars and cents: "You have to manage the costs, but don't let cost alone be the deciding factor," says Wyvill.
• Information: Zepponi remarks, "It's all about people and technology. You should be learning from each other."
• Distribution systems: Yates says the keys are to "pursue efficiency and maintain improved quality."
Yates foresees problems for food processors in connection with additional regulatory costs and rising energy costs. "All the independent regulatory agencies are not looking at the collective impact of their regulations on the cost of production." But he remains optimistic. "It will continue to be a challenge, but people in the business are dedicated to finding ways to survive."
Wyvill also weighs in on the optimistic side. "There are some challenges, but the outlook is very bright," he says. "The food industry has a strong position in domestic markets and should sustain it based on population growth. There may be international opportunities as well, where foreign economies are booming."
And Zepponi strikes a similarly positive note: "As long as we as an industry understand how to compete in a global environment and play to those strengths, we'll be alright. We're building for tomorrow."