[Timeline] 9 Defining Moments for the Food Processing Industry

July marks an exciting milestone for Stellar: our 30th anniversary. While we’ve celebrated plenty of remarkable moments over the past three decades, we know we’re not the only ones. Food processing has experienced several turning points of its own, signifying key changes that have molded food manufacturing as we know it today.

Game-changing mergers and acquisitions

Whether it’s plant closures, job creation, facility renovations or “synergy savings” (the savings in operating costs after two complementary companies come together), mergers and acquisitions can impact the food industry in a variety of ways. Here are some of the most noteworthy deals.

2015: Kraft Heinz Company merger creates one of world’s largest food companies

This year, two household names merged to become one of the food industry’s most influential powerhouses. The Kraft Foods Group and H.J. Heinz Co. joined forces to form The Kraft Heinz Company, establishing the third-largest food company in the U.S. and the fifth-largest in the world.

The Kraft Heinz Company began trading on the Nasdaq July 6th under KHC.

2014: Tyson Foods and Hillshire Brands join forces to create prepared foods powerhouse

In August 2014, Tyson Foods Inc. completed its merger with The Hillshire Brands Company, positioning Tyson as the leader in the prepared foods industry. The move is expected to generate more than $500 million in synergy savings by 2017.

When the merger was announced, Tyson CEO Donnie Smith said:

“Part of our strategic growth plan has been to shift toward higher-margin prepared and branded foods. This transaction gives us a portfolio of complementary, proven brands as a new springboard and accomplishes in a short time what would have taken us years to build on our own.”

2013: Chinese take over Smithfield Foods to form global pork enterprise

In 2013, Shuanghi International Holding acquired Smithfield foods for approximately $7 billion, marking the biggest Chinese takeover of a U.S. company to-date. The acquisition of U.S. pork company Smithfield Foods gave the Chinese company a premium U.S. food brand during a time when food scares plagued Chinese consumers’ views of domestic products.

While Shuanghi’s chief executive said the transaction would create a “leading global animal enterprise,” giving access to new pork production technologies, U.S. pork producers were excited to to benefit in terms of increased exports of U.S. pork products.

Now, in 2015, many multinational food and beverage companies are viewing China as a potential growth vehicle thanks to the emergence of the Chinese middle class and the country’s food safety concerns.

1989: $25 billion Nabisco buyout makes history

In 1989, the largest buyout in U.S. history belonged to the food processing industry with Kohlberg Kravis Roberts & Co.’s acquisition RJR Nabisco for $25 billion.

According to a Chicago Tribune article, the sheer magnitude of the deal sent a message to many of America’s largest corporations, signifying “no firm is safe from acquisition.”

The deal caused a frenzy on Wall Street and was highly publicized, documented in the “Barbarians at the Gate” book and movie.

Legislation, regulations impact food processing industry

1990: Americans with Disabilities Act shakes up building design

Over Stellar’s 30 years of life, the Americans with Disabilities Act (ADA) still represents one of the biggest elements we saw impacting building design as a whole. The act completely transformed how facilities were designed and built, ensuring the disabled could access all areas of plants effectively. New building and design standards included the general design requirements for building and site elements, such as:

Parking
Accessible routes
Ramps
Elevators

1990: Process Safety Management (PSM) of Highly Hazardous Chemicals supports safer workplace, world

It was also in 1990 that the Occupational Safety and Health Administration (OSHA) published the proposed standard, “Process Safety Management of Highly Hazardous Chemicals,” to promote worker and workplace safety. The standard established a management program and requirements for the management of hazards associated with processes involving highly hazardous chemicals, putting the microscope on refrigeration facilities.

Food safety benchmarks change

1997: USDA Blue Book moves out, HACCP moves in to establish new sanitary guidelines

Until 1997, the U.S. Department of Agriculture’s (USDA) Blue Book served as sanitary design guidelines for the design of food processing facilities. However, when the USDA decided it no longer wanted to take responsibility for the reviews and approvals of design drawings, companies had to self regulate and create their own control plans.

It was then the U.S. Food and Drug Administration (FDA) published the Hazard Analysis & Critical Control Points (HACCP) principles and application guidelines to assure food safety from harvest to consumption:

Conduct a hazard analysis
Determine critical control points
Establish critical limits
Establish monitoring procedures
Establish corrective actions
Establish record-keeping and documentation procedures
Establish verification procedures

The American Meat Institute’s Food Safety Program

The American Meat Institute, now called the North American Meat Institute, formed an equipment design task force to establish food safety principles specifically for meat and poultry plants. I was a member of the team that created the facility principles in 2004, while AMI updated process equipment principles originally formed in 2002 just last year, specifically addressing listeria concerns.

2004: 11 Principles of Sanitary Facility Design

Distinct hygienic zones established in the facility
Personnel and material flows controlled to reduce hazards
Water accumulation controlled inside the facility
Room temperature and humidity controlled
Room airflow and room air quality controlled
Site elements facilitate sanitary conditions
Building envelope facilitates sanitary conditions
Interior spatial design promotes sanitation
Building components and construction facilitate sanitary conditions
Utility systems designed to prevent contamination
Sanitation integrated into facility design

2014: 10 Principles of Sanitary Design (Process Equipment)

Cleanable to a microbiological level
Made of compatible materials
Accessible for inspection, maintenance, cleaning and sanitation
No product or liquid collection
Hollow area should be hermetically sealed
No niches
Sanitary operational performance
Hygienic design of maintenance enclosures
Hygienic compatibility with other plant systems
Validated cleaning and sanitizing protocols

Finally, food processors have realized that food safety is NOT a competitive advantage—it’s imperative. All food manufacturing companies have to work together to protect consumers against food-related hazards—whether they’re biological, physical or chemical.

While much has happened the shape the food processing industry over the past three decades, we’re eager to witness its continued evolution. What do you think is in store for the next 30 years?

If you’d like to learn more about the evolution of the food processing industry, feel free to email me at foodforthought@stellar.net or connect with me on LinkedIn.