The Food Industry: Food Retailing, Restaurants, and Food Processing

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Hi, I’m Jack Plunkett. Today we’re going to talk about the global food industry, restaurants, food retailing, and food processing and
production. Roughly ten percent of all economic activity in the world is related to food
in one of those niches. Food is also one of the world’s biggest employers. In the
United States, for example, about ten percent of all workers are employed in
the restaurant industry. Another ten percent of all workers are employed in
food processing and manufacturing; and another two to two and a half percent
are employed in agriculture and farming. If you add all that up, you have almost 25
percent of all workers in the United States employed in some aspect of food.
Let’s talk about food retailing for a second. There are roughly forty thousand
supermarkets and food stores in the United States, but those are traditional
stores. There are roughly another forty to fifty thousand nontraditional food
stores. For instance, a great deal of food today is sold in Super Walmart stores. In
fact, Walmart has become America’s biggest food retailer, surpassing giant
supermarket chains like Safeway and Kroger. Although we employ lots of people
in the food industry, in general we don’t pay them very much and that’s pretty
ironic when you stop to think that one of the greatest pleasures in life is
eating good food and it’s absolutely essential to maintaining a life.
Nonetheless, salaries and wages in the food industry tend to be very low. As the
middle class is growing and household incomes are rising throughout the
developing world, American style, European style
restaurants and food retailing are spreading very quickly. In Asia for
instance it’s very common in major cities and even smaller towns to see
convenience stores like Seven Eleven selling lots and lots of carry-out food with great success. American restaurants like
Yum Brands and their K-F-C chicken restaurants are spreading dramatically throughout the
emerging world, particularly in China, where K-F-C has thousands and thousands of
outlets and great success. Also retailing has spread very rapidly in the food
sector from both Europe and the United States into the rest of the world. Walmart for instance now has a very
significant presence in Mexico, where it sells lots and lots of food. The same
with Walmart stores that are developing in other nations. This means that — again as the middle class rises, they’re also slowly but surely getting access to
modern food retailing, modern processed foods so that the amount of
their household income they have to spend on food is slowly but surely declining.
Despite their advantages in scale and scope, many of these giant food
processing and beverages companies are facing huge challenges. That’s largely
because it’s hard for them to keep up with rapidly changing tastes. For
instance, Millennials in particular and many other types of consumers are more
and more focused on the quality and safety of the food industry that they eat. That’s true in the United States; it’s true in Europe; it’s true in Latin America. It’s really true in China where there have been great
concerns and difficulties over processed food safety. Let’s talk about food
technologies for a minute. The computer industry, the Internet, great
database software, and electronic database interchange have had tremendous efficiency effects on the entire food system, enabling much more rapid turnover of inventory, less
out of stock, less wastage, better management of the
entire global food system to the point that it’s now very common in the United
States to be eating strawberries from New Zealand in the winter when they won’t grow in the US, or to see fresh flowers
from Africa show up the next day in supermarket flower departments. Also on
the technology side, farms are becoming much more technically advanced. In fact,
there’s a booming sector called AgTech, or Agricultural Technology. One of the
biggest benefits to AgTech is going to be the application of drones. Drones
combined with remote wireless sensors that can monitor soil conditions and
other activities in the field are going to make much better and much more
efficient use of things like fertilizer and water, more sustainable farming, better
cost structures, and in the end better prices for consumers. What about the future of food overall? In
the forty years from 2010 through 2050, the United Nations figures that total
global food demand will rise by about seventy percent. That’s a near doubling of total demand
for food around the world. Due partly to rising incomes, but also due to the fact
that over the forty-year period of time the world will see a growth in population from about
6.5 billion people to about 10 billion people. So the outlook for demand for
foods of all types by people of all income levels is absolutely tremendous.
How can we possibly serve that growing demand for food? It’s going to take the
application of a lot of advanced technologies. Better seeds, including in
many cases bio-engineered seeds, or at least seeds that have been carefully crafted
so that they produce better nutrition, use less water, use less insecticide, need
less fertilizer, and so on and so forth. Fortunately, precision agriculture and
AgTech will also help a lot in meeting these food goals. It’s very doable. However, the biggest
single challenge in this whole growing need for food is very likely going to be
having enough water. Water is about to be a key problem
throughout the world, in many places already facing near crisis situations in
water. Agriculture is going to have to adopt better technologies and best
practices to make more efficient use of water. If so, we can move the entire food
industry ahead and meet demand for the long term. For more information about
food, agricultural technology, biotech, and other related fields, be sure to see our Plunkett’s industry almanacs on those topics and our industry research centers on Plunkett
Research Online. Thanks, I’m Jack Plunkett.

1 COMMENT

  1. Be sure to see our Food & Beverage Industry page on our plunkettresearch.com website. You'll find a great industry overview and a very useful statistical overview table.

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