The number of new food processing plants rose sharply in 1995. Profitability from food manufacturing and retailing operations (excluding interest expense) continued to increase, reflecting strong sales, wage and producer price stability, and streamlining of operations. The number of mergers and leveraged buyouts fell. New product introductions, consumer advertising expenditures, common stock prices and the positive U.S. balance of trade in processed food reached new highs. This report analyzes and assesses yearly developments in growth, conduct, performance, and structure of the institutions--food processors, wholesalers, retailers, and foodservice firms--that comprise the Nation's food marketing system. Industry growth includes changes in sales for each of the four sectors, product mix, and external economic factors affecting the food system. Conduct measures firms' competitive behavior, which includes such price and nonprice competition as advertising, promotion, new product introduction, new store formats, price discounting, and menu variety. Performance includes profitability, capital expansion, foreign trade and investment, research and development, capacity use, equity market changes, and productivity. Structure developments include mergers, acquisitions, divestitures and leveraged buyouts, and changes in the number of companies and establishments.
International commerce in processed foods substantially exceeds the value of unprocessed agricultural commodities and is expanding more rapidly. International trade in processed foods has been the most rapidly growing portion of world food and agricultural trade during the past decade. Even more significant, however, are sales from foreign affiliates of food manufacturing, grocery wholesaling and retailing, and food service firms. Foreign affiliation is acquired through foreign direct investment in foreign plants and facilities. U.S. food manufacturers' sales through foreign affiliates were more than quadruple the value of processed food exports from the United States. Foreign food manufacturers' sales through U.S. affiliates were more than double the value of processed food exports to the United States. Patterns of global commerce in processed foods are influenced by public policies addressing transportation, communication, rules for regional and multinational trade, food product and process standards, the environment, and intellectual property.