Week 7: The Food & Beverage Industry Today

The Food & Beverage Industry Today

The food and beverage industry includes all companies that are involved from the processing of raw food through the sales of food and beverages. The food and beverage industry takes up where the agricultural industry ends. Food and beverages includes companies that sell fresh or prepared food and beverages, those that package and market products, and those involved with shipping and distribution.

Before the industrial revolution, most people ate fresh food or items that had been dried, smoked, preserved, or canned. After World War II, food preservatives, food coloring, and artificial sweeteners were invented to make frozen and instant meals more marketable. Food processing allowed foods to have a longer shelf life and be transported to other areas.

In the restaurant industry, companies such as SYSCO (SYSCO, 2019) and US Foods (US Foods, 2019) are well known food distributors, and they serve over a million customers each month. These companies must keep ahead of food and beverage trends in order to provide products that satisfy the ever-changing consumer.

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Source: SYSCO (SYSCO, 2019)

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Source: US Foods (US Foods, 2019)

According to a 2019 report by the Business Research Company, the food and beverage market will reach $9.472 trillion by 2022, which is a forecasted compound annual growth rate of 8.9% (The Business Research Company, 2019). The report lists an increase in population, strong economies, and a rise in disposable incomes as the reasons for the increase.

While the food and beverage industry is growing, Food & Beverage noted that the soft drink industry has played a large part in that growth nationally (Food and Beverage Industry, 2019). Please note, in case you were unaware, that soft drinks are the opposite of hard drinks, i.e., alcoholic beverages.

Soft Drinks Globally

Coca-Cola Industry

Since its trademark in 1944, Coca-Cola has been one of the most popular soft drinks. It is sold throughout the world. People of all ages recognize the Coke brand and the various beverages they sell.

Pepsi Industry

Previously, Pepsi was known as Pepsi-Cola, but in 1961, the name became Pepsi. Pepsi is one of the most popular soft drinks globally. As with Coca-Cola, people of all ages recognize the Pepsi brand and the beverages they sell.

Red Bull Industry

Coming into the global market in only 1987, Red Bull is the most popular energy drink. In 2012, Red Bull sold 5.2 billion cans of its beverage that claims “it gives you wings” (Food and Beverage Industry, 2019).

Top Food & Beverage Companies

Each year, Food Engineering produces an annual report on the top 100 food and beverage companies. This report is based on annual sales; however some companies also have sales considered outside the food and industry category. The chart below lists the top 20 companies.

Rank

Company

2017
Food Sales (millions)

1

Nestle

$78,908

2

PepsiCo, Inc.

$63,525

3

Anheuser-Busch InBev

$56,444

4

JBS

$49,148

5

Tyson Foods

$38,260

6

The Coca-Cola Company

$35,410

7

Mars

$35,000

8

Archer Daniels Midland Company

$34,195

9

Cargill

$30,500

10

Danone

$27,885

11

Kraft Heinz Company

$26,232

12

Mondelez International

$25,896

13

Unilever

$25,363

14

Heineken

$24,733

15

Smithfield Foods/WH Group

$21,303

16

Lactalis

$19,210

17

Suntory

$18,960

18

CHS Inc.

$18,800

19

Asahi Group

$16,963

20

Diageo

$26,630

Source: Food Engineering (2018 Top 100 Food and
Beverage Companies, 2019).

Regulations

According to the Center for Disease Control and Prevention, each year approximately 48 million people become ill from foodborn infections with 128,000 people being hospitalized, and 3,000 people dying (Causes of Food Poisoning, 2019). Because of these, the food and beverage industries are heavily regulated to keep the consumer safe. The United States Department of Agriculture (USDA) Food Safety and Inspection Service (FSIS) oversees meat and poultry processing, and the Food and Drug Administration (FDA) oversees all other food processing companies. For example, chicken is under USDA FSIS, and eggs in the shell are under FDA; however, the USDA controls dehydrated, frozen, and liquid eggs (Goetz, 2010). Federal laws apply to interstate commerce foods, which means those foods sold across state lines. Foods sold only within a state are only required to follow state law. However, because ingredients often cross state lines, most products are considered interstate commerce.

Federal law stipulates that adulterated or misbranded food cannot be sold. Simply put, adulterated food refers to any food that contains ingredients that may be harmful or unsafe for consumption, is rotten, went through an unsanitary packaging process, contains diseased meats, includes unsafe packaging materials, or was irradiated. Misbranded food is food that contains false or misleading advertising, is labelled with the wrong contents, contains imitation products without stating so on the label, has a label without the name and location of the manufacturer, or has a label with the incorrect quantity of the contents.

Federal Food Regulations

Because the food and beverage industry is so large, we will not review all of the laws and regulations, but rather, we will review a few of them that you might find interesting.

  • The USDA’s FSIS oversees the slaughter and storage of meat, poultry, and egg products that have been processed. In addition to making sure the food products are safe for consumption, FSIS also ensures that animals were slaughtered humanely (Slaughter Inspection 101, 2013).

  • The FDA’s Food Safety Modernization Act (FSMA) is an effort to keep food, both for humans and animals, safe during all forms of transportation (except by air or ship) from contamination (FSMA Final Rule on Sanitary Transportation of Human and Animal Food, 2018).

  • The Center for Food Safety and Applied Nutrition (CFSAN) is within the FDA. CFSAN oversees food produced in the US, food imported into the US, prescription drugs, cosmetics and makeup, biologics, medical apparatuses, and products that use radiology (Center for Food Safety and Applied Nutrition (CFSAN), 2018).

  • The Center for Veterinary Medicine (CVM) ensures that drugs used for animals are safe and produce the desired effect. If the animal will be raised for human consumption, the CVM also ensures that the drugs are safe for humans (Center for Veterinary Medicine, 2019).

  • The FDA also oversees pet food and pet food product labeling to ensure that the food is safe for consumption and that labeling meets the regulations for stipulating the ingredients, name and location of the manufacturer, and accurate content weight (Pet Food, 2019).

  • The FDA oversees food additives and colors to ensure that they are used properly in food and result in a safe food product. Additives and colors must undergo intense testing before they are allowed to be used in food products (Overview of Food Ingredients, Additives & Color, 2018).

  • The FDA is responsible for monitoring food labeling to ensure that products are safe and labelled correctly. In addition to listing the name and location of the manufacturer, nutritional facts, and the correct weight, companies must follow strict rules about the use of terms, such as organic, and abstain from false claims (Guidance for Industry: Food Labeling Guide, 2018).

Oregon Food Regulations

Once again, this is not a comprehensive list, but rather, these are some examples of the regulations within Oregon.

  • The Oregon Department of Agriculture’s (ODA) mission is to keep consumers save from foodborn diseases. Their work includes monitoring the food industry, enforcing sanitation rules and regulations, and inspections of restaurants and other food establishments (About Food Safety, 2019).

  • ODA also oversees meat licensing which includes the slaughter and processing of all meats to be sold to consumers; meat processed for personal use is exempt as are meat slaughtering classes. ODA upholds the FDA regulations, but FDA also oversees the disposal of slaughter waste (Meat Licensing, 2019).

  • At USDA-inspected slaughter-house facilities in Oregon, each animal will be inspected by a USDA employee both before and after slaughtering. ODA inspects the facilities, but USDA inspects the animals (Gwin, 2016).

  • Oregon’s Public Health Division has adopted the FDA’s 2009 Food Code. This “code” outlines the rules and regulations for handling and serving food. These rules are also used by inspectors (Food Sanitation Rules--Tools for Operators, 2019).

  • Every person who handles or prepares food for public consumption must have an Oregon Food Handlers card (Oregon Food Handlers, 2019).

Federal Beverage Regulations

  • The 21st Amendment to the United States Constitution repealed prohibition, and it established the guidelines to allow each state to monitor the sale, distribution, and importation of alcohol with the state. The Amendment also allowed states to establish statutes about processing of alcohol (The Laws & Regulations About Alcohol, 2019).

  • While alcohol is legal for those over 21 to consume, it is heavily controlled. In fact, there are regulations regarding how alcohol is marketed, and the Federal Alcohol Administration (FAA) is in charge of those regulations. Generally, those rules cover the class or type of product, information about the advertiser, and alcohol content and neutral spirits for distilled beverages. There is also a long list of prohibitions based on the type of alcohol (Rules & Regulations About Marketing Alcohol, 2019).

  • There are taxes on alcohol, and these are overseen by the Alcohol and Tobacco Tax and Trade Bureau (TTB). The TTB is within the Alcohol, Tobacco, and Firearms (ATF) division of the U.S. (Alcohol & Tobacco, 2019).

Oregon Beverage Regulations

  • In Oregon, it is illegal for anyone under 21 to purchase alcohol (except those working with police on enforcement of the law). The government has a monopoly on the sales of bottled distilled beverages, and all alcohol is taxed by the state (Oregon Alcohol Laws: They May be Confusing--Here's Help, 2019).

  • The oversight for Oregon’s alcohol laws fall under the Oregon Liquor Control Commission. There are special rules for minors regarding using fake ID, possessing, and consuming alcohol. Providing alcohol to a minor is a misdemeanor. Facilities that serve alcohol must control areas where alcohol can be consumed, and violations are criminal in nature (Eckhart, 2014).

  • Any person who mixes, serves, or sells alcohol is required to have a service permit. Managers of those who mix, serve, or sell alcohol must also have a service permit (Service Permit FAQs, 2019).

Looking Into the Future

As mentioned at the start of this section, the food and beverage industries have changed a lot over the years as consumer preferences have changed. Consider bread for an example. Bread has been a food staple for centuries, and it was originally made at home from many types of flour. The first purchased breads were whole loaves, and then with production and innovation, one could purchase sliced bread, which was made from bleached wheat flour. Additives were added to extend the shelf life. In the stores now, there are many types of bread and bread products made from all types of grains. There are gluten (wheat) free breads, organic breads, and artisan breads that harken back to some of the early forms of bread. The trend, according to a 2019 Facebook report, is “innovating bread” to meet the current food and nutritional needs (The 2019 Topics & Trends Report from Facebook IQ, 2019).

From Artem Beliaikin on Flickr.jpg
Source: Artem Beliaikin on Flickr

Below are some other changes that can be anticipated in the near future.

  • Increased transparency on where the food ingredients originate. Consumers read product labels and want a short list of ingredients that they recognize and can pronounce. They want natural products rather than chemicals (Olayanju, 2019).

  • Increased desire for tasty, functional foods. Consumers are focused on exotic flavors, gut health, physical appearance, and environmental-friendly packaging (Singer & Jones, 2019).

  • A “foodie revolution” in search of new, bold flavors. The term “foodie” has been around a while, but now it is filtering into mainstream, and more people are seeking ethic or cultural tastes (Nielsen, 2019).

  • More foods that are “plant forward.” These consumers want about 70% of their food to come from plants rather than from animals, and that includes dairy (Olayanju, 2019).

  • Healthier food products. These “healthier” options would be items that are organic, are not genetically modified, use natural sweeteners, and do not contain added chemicals or unnatural preservatives (Olayanju, 2019).

  • Product innovation and differentiation in order to stand out. With so many markets available for consumers, companies will be looking for ways to stand above their competitors. Expect to see trendy or season flavors and packaging (Singer & Jones, 2019).

  • Healthy snacks for active lifestyles. The snack market is growing, but today’s consumers want healthy options without added sugars and chemicals (Nielsen, 2019).

  • Healthy food products that promote longevity. In addition to being healthy, consumers are wanting foods that will help with anti-aging, boost metabolism, prevent osteoporosis, improve their immune systems, and so on (Nielsen, 2019).

For More Information

References

2018 Top 100 Food and Beverage Companies. (2019, October 27). Retrieved from Food Engineering: https://www.foodengineeringmag.com/2018-top-100-food-beverage-companies

About Food Safety. (2019, November 2). Retrieved from Oregon Department of Agriculture: https://www.oregon.gov/ODA/programs/FoodSafety/Pages/AboutFoodSafety.aspx

Alcohol & Tobacco. (2019, November 2). Retrieved from Alcohol, Tobacco, and Firearms: atf.gov/alcohol-tobacco

Causes of Food Poisoning. (2019, October 23). Retrieved from Centers for Disease Control and Prevention: https://www.cdc.gov/foodsafety/foodborne-germs.html

Center for Food Safety and Applied Nutrition (CFSAN). (2018, September 19). Retrieved from Food and Drug Administration: https://www.fda.gov/about-fda/office-foods-and-veterinary-medicine/center-food-safety-and-applied-nutrition-cfsan

Center for Veterinary Medicine. (2019, October 3). Retrieved from Food and Drug Administration: https://www.fda.gov/about-fda/office-foods-and-veterinary-medicine/center-veterinary-medicine

Eckhart, J. (2014, February). Oregon's Alcohol Laws and Minors. Retrieved from Oregon Liquor Control Commission: https://www.oregon.gov/olcc/docs/publications/oregons_alcohol_laws_and_minors.pdf

Food and Beverage Industry. (2019, October 27). Retrieved from F & B Food Beverage: https://fandbfood.com/food-and-beverage-industry/

Food Sanitation Rules--Tools for Operators. (2019, November 2). Retrieved from Oregon Health Authority: https://www.oregon.gov/oha/PH/HEALTHYENVIRONMENTS/FOODSAFETY/Pages/FoodCode.aspx

FSMA Final Rule on Sanitary Transportation of Human and Animal Food. (2018, September 12). Retrieved from Food and Drug Administration: https://www.fda.gov/food/food-safety-modernization-act-fsma/fsma-final-rule-sanitary-transportation-human-and-animal-food

Goetz, G. (2010, December 16). Who Inspects What? A Food Safety Scramble. Retrieved from Food Safety News: https://www.foodsafetynews.com/2010/12/who-inspects-what-a-food-safety-scramble/

Guidance for Industry: Food Labeling Guide. (2018, September 16). Retrieved from Food and Drug Administration: https://www.fda.gov/regulatory-information/search-fda-guidance-documents/guidance-industry-food-labeling-guide

Gwin, L. (2016, December). Meat and Poultry Processing Regulations in Oregon: Short Guide. Retrieved from Oregon State University Extension Service: https://extension.oregonstate.edu/animals-livestock/poultry-rabbits/meat-poultry-processing-regulations-oregon-short-guide

Meat Licensing. (2019, November 2). Retrieved from Oregon Department of Agriculture: https://www.oregon.gov/ODA/programs/FoodSafety/FSLicensing/Pages/Meat.aspx

Nielsen, B. (2019, January 2). Top 5 Food & Beverage Industry Trends for 2019. Retrieved from Grande Custom Ingredients Group: https://www.grandecig.com/blog/top-3-food-beverage-industry-trends-for-2018

Olayanju, J. B. (2019, February 16). Top Trends Driving Change in the Food Industry. Retrieved from Forbes: https://www.forbes.com/sites/juliabolayanju/2019/02/16/top-trends-driving-change-in-the-food-industry/#7a7991c36063

Oregon Alcohol Laws: They May be Confusing--Here's Help. (2019, November 2). Retrieved from Alcohol Problems and Solutions: https://www.alcoholproblemsandsolutions.org/oregon-alcohol-laws-may-confusing/

Oregon Food Handlers. (2019, November 2). Retrieved from Oregon Food Handlers: https://www.orfoodhandlers.com/eMain.aspx

Overview of Food Ingredients, Additives & Color. (2018, February 6). Retrieved from Food and Drug Administration: https://www.fda.gov/food/food-ingredients-packaging/overview-food-ingredients-additives-colors

Pet Food. (2019, June 4). Retrieved from Food and Drug Administration: https://www.fda.gov/animal-veterinary/animal-food-feeds/pet-food

Rules & Regulations About Marketing Alcohol. (2019, November 2). Retrieved from Alcohol.org: https://www.alcohol.org/laws/marketing-to-the-public/

Service Permit FAQs. (2019, November 2). Retrieved from Oregon Liquor Control Commission: https://www.oregon.gov/olcc/Pages/service-permit-faqs.aspx

Singer, C., & Jones, C. (2019, January 7). Top 2019 trends for food and beverage industry businesses. Retrieved from RSM US LLP: https://rsmus.com/what-we-do/industries/consumer-products/food-and-beverage/top-trends-for-food-and-beverage-industry-businesses.html

Slaughter Inspection 101. (2013, August 9). Retrieved from United States Department of Agriculture: https://www.fsis.usda.gov/wps/portal/fsis/topics/food-safety-education/get-answers/food-safety-fact-sheets/production-and-inspection/slaughter-inspection-101/slaughter-inspection-101

SYSCO. (2019, October 27). Retrieved from SYSCO: https://www.sysco.com/

The 2019 Topics & Trends Report from Facebook IQ. (2019, November 2). Retrieved from Facebook IQ: https://scontent-lax3-1.xx.fbcdn.net/v/t39.8562-6/48606515_2199769090237778_5979666736092282880_n.pdf/2019_annual_topics_and_trends_report_first_inline_link.pdf?_nc_cat=111&_nc_oc=AQk7r_aPFhPbt-Q2wKfjPANYE8zhI7Zsnyh_jaMkInn9pFiWgNetw30sBU6e42rrfmA&_nc_ht=

The Business Research Company. (2019). Food and Beverages Global Market Report. Philadelphia, PA: The Business Research Company.

The Laws & Regulations About Alcohol. (2019, November 2). Retrieved from Alcohol.org: alcohol.org/laws/

US Foods. (2019, October 27). Retrieved from US Foods: https://www.usfoods.com/

 

1280px-CC-BY-SA_icon.svg.png  Source: Velda Arnaud, Blue Mountain Community College, Pendleton, Oregon