Fruit and Vegetable Processing

The US fruit and vegetable processing industry includes about 2,000 companies with combined annual revenue of $40 billion. Large companies include Del Monte, Heinz, and JR Simplot; grower cooperatives such as Diamond Foods and Ocean Spray; and divisions of large food companies such as ConAgra and General Mills. The industry is highly concentrated: the 50 largest companies generate more than 75 percent of revenue.

COMPETITIVE LANDSCAPE

Demand is driven by food consumption, which depends on population growth. The profitability of individual companies depends on efficient operations because products are commodities subject to intense price competition. Companies compete largely based on cost and their ability to distribute the finished product. Large companies have advantages in distribution operations. Small companies can compete effectively in local or regional markets.

PRODUCTS, OPERATIONS & TECHNOLOGY

The major processed crops in the US are tomatoes (solid tomato and tomato paste products); potatoes (French fries, potato chips); and oranges (orange juice). Other important processed products include corn; cucumbers (pickles); beans; grapefruit; apples (apple juice, applesauce); grapes (raisins); strawberries; pineapples; and nuts. The two major types of operation are canning and freezing. Canned goods account for about 60 percent of industry revenue. A typical canning operation has 100 workers and produces annual revenue of $250,000 per worker. Some processing plants have more than 1,000 workers. Freezing operations are similar in size, but produce slightly less revenue per worker, about $180,000.

Raw materials are usually acquired ...