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U.S. Department of Commerce Industry Report 

Food Manufacturing NAICS 311 

Industry Definition

The food manufacturing industry (NAICS 311) transforms livestock and 

agricultural products into products for intermediate or final consumption. 

Subsectors in this category include animal food manufacturing (NAICS 3111), 

grain and oilseed milling (NAICS 3112), sugar and confectionary product 

manufacturing (NAICS 3113), fruit and vegetable preserving and specialty food 

manufacturing (NAICS 3114), dairy product manufacturing (NAICS 3115), meat 

product manufacturing (NAICS 3116), seafood product preparation and 

packaging (NAICS 3117), bakeries and tortilla manufacturing (NAICS 3118), and 

other food manufacturing (NAICS 3119). 

Establishments primarily engaged in manufacturing beverages and tobacco are 

classified separately in Subsector 312, Beverage and Tobacco Product 

Manufacturing and are not covered in this chapter. 

Current Economic Indicators

The food manufacturing industry is one of the United States’ largest manufacturing 

sectors, accounting for more than 10 percent of all manufacturing shipments. The 

processed food industry has experienced fairly steady growth over the 1997-2006 period 

but experienced a slight decline from 2005 to 2006. In 2006, the value of food shipments 

was $538 billion, an increase of 27 percent from 1997 shipments of $422 billion (see 

Figure 1).1

 Demand for processed food products tends to be less susceptible to 

fluctuating economic conditions than other industries. 

In 2006, there were 28,000 establishments in food manufacturing. Large multinationals 

are a big presence in the industry but although they account for 36 percent of all the jobs 

in the industry, they represent just over 500 of the 28,000 establishments. Eighty nine 

percent of establishments employ fewer than 100 workers.2

 

According to the Food Institute, there were 99 mergers and acquisitions among food 

processing companies in 2006, up from 94 in 2005, but down from 168 in 2000. 

Acquisitions and mergers have already resulted in consolidation of some of the largest 

companies in the industry. 

 

1

 This chart reflects growth in current dollars, not real dollars and does not account for changes in inflation. 2

 Bureau of Labor Statistics 
2 

Figure 1 

In 2007, the ten largest U.S. companies in this sector according to Food Processing were 

Kraft Foods, Tyson Foods, PepsiCo, Nestle, Anheuser-Busch, General Mills, Dean 

Foods, Smithfield Foods, ConAgra Foods, and Cadbury Schweppes. Kraft Foods, the 

largest in the industry, employs 103,000 employees, has more than 180 manufacturing 

and processing facilities worldwide, and reported net revenues of $37 billion in 2007. 

Kraft also manufactures some of the industry’s leading brands, such as Oreo, Nabisco, 

Oscar Mayer, Philadelphia Cream Cheese, and Maxwell House coffee. 

The industry invests heavily in technology and increased automation and production 

improvements have allowed companies to increase output while relying on fewer 

employees. Employment in the industry declined 5% from 1996 to 2007, decreasing 

from 1.56 million to 1.5 million (see Figure 2). The Bureau of Labor Statistics expects 

overall wage and salary employment in food manufacturing to experience little or no 

change over the 2006-16 period, compared with 11 percent employment growth projected 

for the entire economy.3

Geographically, the largest percentage of workers in the industry is concentrated in 

California, making up 11 percent of the food processing industry workforce in 2005. 

Texas, Illinois, and Pennsylvania employed significant percentages of the food 

processing workforce at 7 percent, 6 percent, and 5 percent respectively with the rest of 

the workforce fairly evenly distributed across the United States. 

 

3

 Bureau of Labor Statistics, U.S. Department of Labor, Career Guide to Industries, 2008-09 Edition, Food 

Manufacturing 
3 

Figure 2 

Source: Bureau of Labor Statistics

The meat industry employed the largest number of workers in 2007 employing 34 percent 

of total industry workers. 

Figure 3 

Industry Employment 2007 (thousands) %

Food Manufacturing 1482 100.0 

 Animal Slaughtering and Processing 507 34

 Bakeries and Tortilla Mfg 278 19

 Fruit & Veg Preserving and specialty 173 12 

 Other Food Products 165 11 

 Dairy Products 129 9

 Sugar and Confectionary 74 5 

 Grain and Oilseed Milling 61 4

 Animal Food 51 3 

Seafood product prep and pkging 44 3 

Source: Bureau of Labor Statistics 
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Nature of the Industry

Processed foods are “value-added” products, referring to the fact that a raw commodity or 

commodities are transformed into a processed product through use of materials, labor, 

and technology. Any product that requires some degree of processing is referred to as a 

processed product, regardless of whether the amount of processing is minor, such as for 

canned fruit, or more complex, such as for snack foods. 

Of the sub sectors that make up the food manufacturing industry, the largest four: meat 

products; other food; dairy products; other food; and grain and fruit and vegetable 

preserving and specialty food manufacturing, made up 68 percent of total industry 

shipment values of $510 billion in 2006. Other sectors included grain and oilseed 

milling, which accounted for 10 percent, bakeries and tortilla manufacturing (10 percent), 

animal food manufacturing (6 percent) sugar and confectionery product manufacturing 

(5%) and seafood products (2 percent). 

Figure 4 

Market Overview and Demand

According to the Department of Labor, average annual food spending per person 

increased 18 percent during 2000 to 2006, from $5,158 to $6,111. Total spending on 

food makes up about 13 percent of a household’s total average annual expenditures. Of 

the $6,111 in food spending, $3,417 was spent on food at home and $2,694 was spent on 
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food away from home. Consumers spent the largest portion of their food at home 

spending ($1,212) on the “other food” category which includes sugar, sweets, fats and 

oils, miscellaneous foods, nonalcoholic beverages, and prepared food (see Figure 5). 

Figure 5 

Most supermarkets now offer prepared meals. There is high demand for convenience 

food and ready to serve products such as snack foods, snack bars, and frozen food that are 

popular with double income households and consumers who are generally short on time. 

The aging U.S. population and rising per capita incomes should cause this trend to 

continue. 

As the U.S. population becomes increasingly ethnically diverse, consumer demand for 

food products also diversifies. The Hispanic population continues to grow rapidly and 

processed food companies are developing new products for this population. Some 

retailers and supermarkets now cater specifically to Hispanic populations. Also, many 

traditionally ethnic food products are crossing over to the mainstream population. 

Other factors affecting demand for processed food in the U.S. market include concern 

about dieting and obesity, allergens, and increased interest in sourcing locally and use of 

quality ingredients.. 

Organic food is another market segment that has grown rapidly (an estimated 20% per 

year through the 1990s according to USDA) due to increased consumer interest in 

healthy products. Organic food can now be found in traditional supermarkets, natural 

food stores, and other retail markets. USDA issued Federal standards for organic food in 
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October 2002. In accord with the standards, a certified organic processed product must 

use at least 95 percent organic ingredients to be labeled or represented as organic. The 

Organic Trade Association reports that sales of organic food were $16.7 billion in 2006, 

making up nearly 3% of total food sales. Sales growth was strongest for organic meat, 

dairy, fruits and vegetables, and bread and grains. The Organic Trade Association 

anticipates growth of 18 percent a year for the organic food industry through 2010. 

Distribution

Retail food sales at warehouse clubs and supercenters has increased steadily since their 

introduction in the 1980’s and have taken away some sales share from traditional 

supermarkets which still sell 58 percent of all retail food. The leading U.S. grocery 

retailers are Walmart and Kroger, while top warehouse clubs include Sam’s Club, 

Costco, and BJs. 

Figure 6 

Technology

Food manufacturers continue to invest in greater automation in manufacturing processes. 

Budgeted spending for plant equipment, upgrades, computers, and automation remains at 

steady levels and manufacturers are adding additional processes to address concerns with 

ensuring food safety. Increased use of automation and innovation in the manufacturing 

process has limited employment in the manufacturing sector to some extent. 
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According to Food Engineering, key issues for plant manufacturers include plant 

technology improvements and automation, consolidation, energy costs and usage, 

consumer demand for healthier and more nutritious products, and continuous 

improvement programs.4

 

Use of radiofrequency ID (RFID) tags is still limited in the food manufacturing industry 

due to its prohibitively high cost. The technology consists of tagging pallets with RFID 

tags to track goods through the supply chain from the factory floor to the store. Although 

it is currently not used on a widescale basis on individual products, it could be headed 

that direction if technology costs drop. Walmart required its top 100 suppliers to have 

RFID technology in place to track pallets in 2005. And according to a 2006 Food 

Engineering Survey, 40 percent of respondents indicated that their companies either had 

initiated or were investing already in RFID-tag initiatives. 

Issues Affecting the Industry

Rising Commodity Prices: A dramatic jump in food commodity prices worldwide has had 

an impact on the industry, which uses commodities such as grains and vegetable oils as 

inputs to many of its products. Rising food commodity prices particularly impact small 

producers. For example, small bakeries and bagel companies are often unable to absorb 

the big price increases of inputs such as wheat and flour and must ultimately raise the 

final prices of their products whereas larger producers are better able to absorb 

commodity price increases. A number of factors have contributed to this run up in prices, 

including slowing production, rapid growth in demand, increased demand for biofuels 

feedstocks, and adverse weather conditions which have affected crop yields.5

 

Food Safety: In the last year, concerns over food safety have increased as the industry has 

been hit by several high profile and large scale recalls, as well as faced questions 

regarding the quality of inputs from suppliers in foreign countries. Government and 

industry have responded to try to address the issue. The Food and Drug Administration 

which regulates about 80 percent of the nation’s food products, issued a Food Protection 

Plan in 2007 to safeguard the nation’s food supply against unintentional and deliberate 

contamination. The plan focuses on risk based interventions and rapid response when 

problems are identified. The food industry also responded by pressing for more funding 

of FDA and issuing best practices guidance to its industry members on securing supply 

chains. The Grocery Manufacturers Association created its own food safety website for 

the industry. It also created an action plan for its members designed to protect consumers 

from unsafe imported products by calling on the industry to adopt four “pillars” of food 

safety. The approach focuses on prevention and a stronger public-private partnership to 

address food safety issues. Walmart has taken the step to become the first U.S. grocery 

chain to require its food suppliers to certify compliance with internationally recognized 

private Global Food Safety Initiative Standards. Internationally, food safety has become 

 

4

 “State of Food Manufacturing, The Continuous Quest for Improvement,” by Kevin Higgins, Food 

Engineering, September 2, 2006 5

 “Global Agricultural Supply and Demand: Factors Con tributing to the Recent Increase in Food 

Commodity Prices,”by Ronald Trostle, USDA ERS Report No. (WRS-0801) May 2008 
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a top issue as well. For example, the Asia Pacific Economic Cooperation Forum 

(APEC), created a Food Safety Forum in 2007 to address food safety issues among its 

members. 

Energy Costs /Corporate Responsibility/Environmental Sustainability: Higher energy 

costs are causing concern among manufacturers in the industry who are increasingly 

looking for ways to conserve energy in manufacturing processes to reduce costs. 

Concerns about the environment and sustainability are also having an impact on 

producers. Many are increasing their recycling efforts and redesigning packaging to 

lessen the impact on the environment. 

World Market and Trends

The U.S. processed food industry is a major participant in the global economy, active in 

both exporting and foreign direct investment. More than a third of the world’s top 50 

food and beverage processing firms are headquartered in the United States (19 out of 50 

in 2004 according to Food Engineering). Major foreign competitors were Nestle 

(Switzerland), Unilever (England), Groupe Danone (France), Diageo (England), Kirin 

Brewery (Japan), SABMiller (South Africa), Cadbury Schweppes (England), Heineken 

(Netherlands), and Asahi Breweries (Japan). 

In 2007, the U.S. processed food industry exported $38.7 billion of product and imported 

$34.7 billion. This marked the second year of a trade surplus for the industry after being 

in a deficit for the prior two years (see Figure 7). 

Figure 7 

2000 2001 2002 2003 2004 2005 2006 2007 

25 26.5 25.2 26.8 25.9 28.8 32.2 38.7 

18.9 19.6 21.1 23.8 27.7 29.8 31.8 34.7 

6.1 6.9 4.1 3 -1.8 -1 0.4 4 
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Imports 

In 2007, five countries accounted for 52 percent of U.S. imports of processed food 

products: Canada (27%), Mexico (8%), China (7%), Australia (5%), and New Zealand 

(5%). Increased demand for processed food imports has occurred as the population has 

grown and become more diverse, and as a result of rising incomes. Imports are also 

important to supply seasonal fresh fruits and vegetables when domestic production is 

low. 

Figure 8 

U.S. Trade Patterns in Food Manufacturing (NAICS 311) in 2007 

(millions of dollars; percent) 

Imports 

Region Value Share, %

NAFTA 12,323 35 

EU 25 5,630 16 

Latin America 7,251 21 

Other Asia 4,845 14 

Japan/Chinese Economic Area 3,050 9

Rest of World 1,621 5 

Total 34,720 100 

Top 5 Countries Value Share of Total, %

Canada 9,484 27 

Mexico 2,839 8 

China 2,489 7 

Australia 1,709 5 

Italy 1,603 5 

Fruit and vegetable preserves and specialty foods made up the largest share of the $34.6 

billion in overall processed food imports in 2007 (19%). This was followed by Meat 

products and meat packaging products (17%), grain and oilseed milling products (15%), 

miscellaneous foods (14%), and sugar and confectionery products (13%). 
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Figure 9 

Exports 

Processed food exports have grown steadily since a slight downturn in 2004. In 2007, 

five foreign countries accounted for 61 percent of U.S. processed food exports: Canada 

(23%), Mexico (18%), Japan (10%), China (6%), and Korea (4%). 

Retail sales of food products increased relatively quickly in many developing and lowermiddle income countries through the late 1990s and demand in Asian markets is expected 

to increase significantly into the near future. As developing countries experience income 

increases, demand for processed food grows, especially for higher valued food products 

such as meat. In developed countries, increased demand comes for convenience and 

specialty food products. 
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Figure 10 

U.S. Trade Patterns in Food Manufacturing (NAICS 311) in 2007 

Exports 

Region Value ($millions) Share, %

NAFTA 15,819 41 

Japan/Chinese Economic Area 7,656 20 

Rest of World 5,021 13 

Other Asia 3,964 10 

Latin America 3,579 9 

EU 25 2,707 7 

Total 38,746 100 

Top 5 Countries Value Share, %

Canada 8,900 23 

Mexico 6,919 18 

Japan 3,835 10 

China 2,312 6 

Korea 1,503 4 

Source: U.S. Department of Commerce, Bureau of the Census 

Meat products and meat packaging products made up the largest share of the $38.7 

billion in overall processed food exports in 2007 (33%). This was followed by grain and 

oilseed milling products (22%), miscellaneous foods (14%), and fruit and vegetable 

preserves and specialty foods (10%). 

Figure 11 
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According to the U.S. Department of Agriculture, processed food exports with good sales 

potential in the top five largest export countries are the following: 

Canada: Beverages (cocktail mixes, flat water), dry grocery (icing products, 

baking mixes, tortilla shells), frozen foods (fruit, pizza, yogurt), perishables 

(prepared salads, sausages), prepared foods. 

Mexico: Poultry, meat, dairy, fresh vegetables, processed fruit and vegetables, 

breakfast cereals and mixes, processed meat, wine and beer. 

Japan: Pork, beef, cheese, snack food (excluding nuts), frozen vegetables, fruit 

juice, berries, tree nuts, wine, pet food, cakes, waffles, pie, salmon 

China: Nuts and dried fruits, seafood, poultry, red meat, frozen vegetables, infant 

formula, baby food, dairy products, fresh fruit (cherries, pears), Mexican food 

Korea: Beef, pork, poultry, citrus, chocolate, whey, wine, fish and seafood, bread, 

cakes, pastry, nuts 

Trade Policy

The U.S. processed food industry still faces relatively high foreign tariffs on many of its 

products and also on some of its inputs, such as sugar. 

The North American Free Trade Agreement (NAFTA) eliminated most Mexican and 

Canadian tariffs on U.S. processed food exports, which were as high as 20% on such 

products as chocolate and preserved meats before NAFTA took effect. U.S. firms now 

have a price advantage over competitors who have to pay an average tariff of 24% in 

Mexico’s market. Sectors that have particularly benefited include milk and cream 

products, breakfast cereals, prepared meats, and processed fruits and vegetables. 

NAFTA had an influential role in increasing exports and imports between Mexico, 

Canada, and the U.S. NAFTA has allowed processed food firms increased operational 

flexibility regarding how to meet “just in time” delivery requirements of customers, 

particularly along border regions of NAFTA countries. Also, NAFTA investment 

provisions that guarantee equal treatment for foreign and domestic investors have proven 

beneficial and have resulted in increased U.S. direct investment in Mexico and Canada’s 

processed food industry. 

Pending free trade agreements could be beneficial in bringing down high tariffs in the 

industry. For example, in Korea, the average current tariff for products such as sauces 

and condiments is 8 percent. However, they have also been subjected to arbitrary annual 

adjustment tariffs as high as 45 percent. Under the Korea Free Trade Agreement, these 

tariffs would be eliminated within 5 to 10 years. 
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The U.S. processed food industry still faces nontariff barriers in many markets that act to 

restrict trade in processed food. These include issues such as onerous certification, 

registration, and labeling requirements, differing food standards, shelf-life requirements, 

intellectual property right protection, and customs procedures. 

Industry Shows and Trade Events

All Candy Expo 

May 

http://www.allcandyexpo.com/

All Things Organic 

April 

http://www.organicexpo.com/08/public/enter.aspx

Fancy Food Show 

June and January 

http://www.specialtyfood.com/do/fancyFoodShow/LocationsAndDates

Food Marketing Institute (FMI) Leadership Education Forum and FMI Show 

May 

http://www.fmi.org/events/

Institute of Food Technologists (IFT) Annual Meeting and Food Expo 

June/July 

http://www.am-fe.ift.org/cms/

National Restaurant Association Show 

May 

http://www.restaurant.org/events/

Last updated June 2008