The global food and beverage (F&B) sector, which comprises farming, food production, distribution, retail and catering, was valued at $5.7 trillion USD in 2008. The industry is one of the major contributors to growth of all economies and has historically witnessed consistent growth. The industry is expected to increase at a CAGR of 3.5 percent to $7 trillion USD by 2014

  The food industry is a complex, global collective of diverse businesses that supply much of the food energy consumed by the world population. Only subsistence farmers, those who survive on what they grow, can be considered outside of the scope of the modern food industry.   The food industry includes:
  • Regulation: local, regional, national and international rules and regulations for food production and sale, including food quality and food safety, and industry lobbying activities
  • Education: academic, vocational, consultancy
  • Research and development: food technology
  • Financial services insurance, credit
  • Manufacturing: agrichemicals, seed, farm machinery and supplies, agricultural construction, etc.
  • Agriculture: raising of crops and livestock, seafood
  • Food processing: preparation of fresh products for market, manufacture of prepared food products
  • Marketing: promotion of generic products (e.g. milk board), new products, public opinion, through advertising, packaging, public relations, et
  • Wholesale and distribution: warehousing, transportation, logistics
  • Retailing
 

Overview

 

Definitions

  It is challenging to find an inclusive way to cover all aspects of food production and sale. The Food Standards Agency, a government body in India describes it thus:  
“…the whole food industry – from farming and food production, packaging and distribution, to retail and catering.”
The Economic Research Service of the USDA uses the term food system to describe the same thing:  
“The U.S. food system is a complex network of farmers and the industries that link to them. Those links include makers of farm equipment and chemicals as well as firms that provide services to agribusinesses, such as providers of transportation and financial services. The system also includes the food marketing industries that link farms to consumers, and which include food and fiber processors, wholesalers, retailers, and foodservice establishments.”
   

Agriculture

  Agriculture is the process of producing food, feeding products, fiber and other desired products by the cultivation of certain plants and the raising of domesticated animals (livestock). The practice of agriculture is also known as “farming”. Scientists, inventors and others devoted to improving farming methods and implements are also said to be engaged in agriculture. More people in the world are involved in agriculture as their primary economic activity than in any other, yet it only accounts for twenty percent of the world’s Gross Domestic Product (GDP).  

Food processing

  Food processing includes the methods and techniques used to transform raw ingredients into food for human consumption. Food processing takes clean, harvested or slaughtered and butchered components and uses them to produce marketable food products. There are several different ways in which food can be produced.   One Off Production: This method is used when customers make an order for something to be made to their own specifications, for example a wedding cake. The making of One Off Products could take days depending on how intricate the design is and also the ability of the chef involved.   Batch Production: This method is used when the size of the market for a product is not clear, and where there is a range within a product line. A certain number of the same goods will be produced to make up a batch or run, for example a bakery may bake a limited number of specific baked good. This method involves estimating the number of customers that will want to buy that product.   Mass production: This method is used when there is a mass market for a large number of identical products, for example chocolate bars, ready meals and canned food. The product passes from one stage of production to another along a production line.   Just In Time: This method of production is mainly used in restaurants, sandwich delicatessens, pizzerias, and sushi bars. All the components of the product are available in-house and the customer chooses what they want in their product. It is then prepared with fresh ingredients in front of the buyer.  

Wholesale and distribution

  A vast global transportation network is required by the food industry in order to connect its numerous parts. These include suppliers, manufacturers, warehousing, retailers and the end consumers. There are also companies that add vitamins, minerals, and other required necessities during processing to make up for those lost during preparation. Wholesale markets for fresh food products have tended to decline in importance in OECD countries. This also occurred in Latin America and some Asian countries as a result of the growth of supermarkets, which procure directly from farmers or through preferred suppliers, rather than going through markets.   The constant and uninterrupted flow of product from distribution centers to store locations is a critical link in food industry operations. Distribution centers run more efficiently, throughput can be increased, costs can be lowered, and manpower better utilized if the proper steps are taken when setting up a material handling system in a warehouse. [3]

Retail

With populations around the world concentrating in urban areas,[4] food buying is increasingly removed from all aspects of food production. This is a relatively recent development, having taken place mainly over the last 50 years. The supermarket is the defining retail element of the food industry. There, tens of thousands of products are gathered in one location, in continuous, year-round supply. Restaurants, cafes, bakeries and mobile trucks also provide opportunities for consumers to purchase food.   Food preparation is another area where the change in recent decades has been dramatic. Today, two food industry sectors are in apparent competition for the retail food dollar. The grocery industry sells fresh and largely raw products for consumers to use as ingredients in home cooking. The food service industry by contrast offers prepared food, either as finished products, or as partially prepared components for final “assembly”.  

Food industry technologies

  Modern food production is defined by sophisticated technologies. These include many areas. Agricultural machinery, originally led by the tractor, has practically eliminated human labor in many areas of production. Biotechnology is driving much change, in areas as diverse as agrochemicals, plant breeding and food processing. Many other types of technology are also involved, to the point where it is hard to find an area that does not have a direct impact on the food industry. Computer technology is also a central force, with computer networks and specialized software providing the support infrastructure to allow global movement of the myriad components involved.  

Marketing

  As consumers grow increasingly removed from food production, the role of product creation, advertising, and publicity become the primary vehicles for information about food. With processed food as the dominant category, marketers have almost infinite possibilities in product creation.  

Media

  A key tool for FMCG marketing managers targeting the supermarket industry includes national magazine titles like The Grocer in the U.K., Checkout in Ireland, Progressive Grocer in the U.S., and Private Label Europe for the European Union.  

Labour and education

  Until the last 100 years, agriculture was labor intensive. Farming was a common occupation and millions of people were involved in food production. Farmers, largely trained from generation to generation, carried on the family business. That situation has changed dramatically today. In North America, only a few decades ago over 50% of the population were farm families. Now, that figure is around 1-2%, and about 80% of the population lives in cities. The food industry as a complex whole requires an incredibly wide range of skills. Several hundred occupation types exist within the food industry.