Food Industry, Food Sector, Food Trade

By: EconomyWatch   Date: 30 June 2010

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Food is an essential part of our lives, which is why the way it is grown, processed and transported is worth understanding and improving. Broadly, the food industry comprises a complex network of activities pertaining to the supply, consumption, and catering of food products and services across the world. Finished food products and partially prepared ‘instant’ food packets are also a part of the food industry. The food industry employs a massive number of skilled and unskilled workers. In 2006 alone, the food industry accounted for over 1.5 million jobs in the US and 4 million jobs in Europe. However, the food industry excludes subsistence farmers who use their produce for self consumption.

Components of Food Sector

The food industry is highly diverse and comprises several important components. Each component adds distinct value to the whole food chain by improving sustainability and producing better products.

The varied activities of the food sector are classified as follows:

  • Agriculture activities for growing crops, raising livestock and sea food.


    • Food processing of fresh products into canned and packed goods, including frozen foods.


    • Research and development on food technology.


    • Manufacturing fertilizers, farm machinery and hybrid seeds to facilitate agricultural production.


    • Regulation on food production and distribution to ensure quality and safety.


    • Financial services including insurance and credit to facilitate food production and distribution.


    • Marketing, packaging, advertising and distribution (wholesale and retail).

    History of Food Trade

    The food trade has existed for centuries. For instance, Asia witnessed thriving trade in tea and silk in its ancient era. In the Middle East, the spice trade began way back in 2000 BC.

    In 1953, the US food industry was revolutionized by Swanson’s presentation of the first ‘TV dinner.’

    Some of the milestones of the food trade industry are:

  • 19th century: Sterilization, pasteurization (the first canned food factory was inaugurated in England in 1813)


  • 20th century:

    • 1940s Frozen foods

    1960s Freeze-dried, pressure-cooked foods

    1980s Microwave foods

    1990s Induction foods

    Demand and Supply Drivers of Food Industry

    A number of factors heighten the demand in the global food industry such as the population levels, wealth distribution, health awareness (organic food) and types of varied lifestyles. The food supply drivers include the quality of the supply chain, level of competition in the industry and the composition of the target consumers.

    Food Industry: Major Players

    The global food processing and beverage industry is dominated by a cluster of highly powerful multinational corporations. Some big names are ConAgra, Krafts Foods, Cadbury, General Mills, H.J. Heinz, Nestlé and Unilever. Top fast food franchises across the world include McDonalds, Pizza Hut, KFC and Dominoes Pizza. The US food industry generated revenue that totaled to $126 billion in 2008. Major frozen food manufacturers are ConAgra Foods and the Schwan Food Company. In 2007, the total revenue from the frozen food industry was about $100 billion.

    Major players in the UK include Unilever, Compass, Tesco and Schweppes. They launched an initiative called ‘Plough to Plate’ to reconnect farmers to consumers and vice versa. Tesco’s prompt and impressive record of 5% reduction in energy consumption took place due to initiatives like the use of bakery extract controls and reflex energy saving lamps. Similar initiatives are required for energy savings, fiscal incentives and market incentives.

    Rising prices in agricultural commodities have forced food makers to hike prices. The current challenge for the food industry is to accomplish economic success with a focus to improve energy savings and ensure social as well as environmental performance.


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