NEW YORK – U.S. demand for food safety products will increase 6.5% per year to $3.2 billion in 2012, according to researcher The Freedonia Group, Inc., Cleveland, Ohio.
The increase should be significant to foodservice distributors not only because they stock perishable food products and must maintain their integrity but also because they daily interface with the nation’s commercial and non-commercial eating establishments who demand on them for the latest information and technology.
As ID learned from recent distributor observations, food safety remains a No.1 concern along the supply chain. Consequently, Freedonia analyst Pauline Tung told ID that they will be influenced by the increased concerns regarding food safety.
“One way distributors can address these concerns is through the use of smart labels and tags, which provide traceability throughout the distribution chain, as well as provide a record of environmental conditions during food transport. In particular, RFID tags are expected to play a larger role in providing traceability and supply chain management in the future,” Tung said.
Tung believes that strong gains in food safety product demand will be seen in foodservice establishments, where disinfection products will benefit from increased emphasis on sanitation and employee hygiene, especially following highly publicized food contamination incidents such as the E. coli outbreak at Taco Bell restaurants in late 2006.
The Freedonia study, released earlier this month, found that strong gains will result from increased spending on food safety initiatives, as consumer and industry concerns rise following several well-publicized foodborne illness outbreaks, nationwide food product recalls and the discovery of contaminants in a variety of imported food products.
The adoption of new rules and regulations to ensure the safety of the food supply will also boost demand, the researcher said. Disinfection and diagnostic products are expected to provide the best overall opportunities. However, Freedonia pointed out, the fastest growth will be in smart labels and tags due to improvements to the traceability infrastructure in companies and advances in technology, while more moderate growth in preservatives will restrain aggregate gains.
According to the study, disinfection products will continue to account for the largest portion of demand. Disinfectants and sanitation chemicals are used at all levels of food production, processing, preparation, service and sale, reflecting their inexpensive nature, effectiveness and ease of use. Disinfection equipment will see more rapid gains, boosted by the increasing popularity of relatively new technologies such as ultraviolet and ozone disinfection.
These technologies offer many advantages, including environmental friendliness, reduction of losses due to spoilage and increased shelf life. Ozone and ultraviolet disinfection preserves food properties such as texture, taste and color, which tend to be altered when using traditional pasteurization equipment to sterilize food and beverages through the application of heat.
Diagnostic products will also see strong opportunities, Freedonia said. In particular, rapid diagnostic testing tools will continue to gain market share over conventional products as they allow companies to increase testing frequency and reduce inventory hold times. Diagnostic testing tools for pathogens will remain the most important category, especially following several foodborne outbreaks related to pathogens, such as the Salmonella contaminated peanut butter that sickened more than 400 people across the country in 2006 and 2007. Tests for residues and allergens will also post strong growth, boosted by consumer concerns regarding the presence of pesticides and drugs (e.g., antibiotics) in food, and FDA regulations, such as new allergen labeling requirements.
Smart labels and tags will experience double-digit annual growth due to rising demand for the added security and efficiency they can provide. Growth in software and tracking systems will not match that of smart labels and tags, since many software programs are already capable of integrating with RFID-based systems and providing the traceability information required by companies. Demand for preservatives will advance at a below-average rate, due to market maturity, the growing popularity of organic food, and new pasteurization and packaging technologies, such as high-pressure post-packaging pasteurization, that minimize the need for preservatives.
Freedonia indicated that food processing plants will continue to represent the largest market for food safety products. Meat and seafood processing are particularly prone to contamination, and high profile outbreaks and recalls, including the recall of over 143 million lbs. of ground beef in February 2008, will put pressure on meat and seafood processing companies to invest in food safety products. Among the other markets, the strongest gains will be seen in foodservice establishments, where disinfection products will benefit from increased emphasis on sanitation and employee hygiene, the researcher said.
Due to the diverse nature of food safety products, a large number of companies compete in the marketplace, and no one company operates in all market sectors, Freedonia concluded. In 2007, the top six companies – Ecolab, JohnsonDiversey, 3M, Becton Dickinson, Bio-Rad Laboratories and SPX Corp. – together supplied only 20% of the market. Freedonia said Ecolab and JohnsonDiversey are leaders in the disinfectants and sanitizers market, while SPX is a leader in disinfection equipment. 3M, Becton Dickinson and Bio-Rad Laboratories are major diagnostic product suppliers.
Analyzing labels and tags, along with providing product identification and basic nutrition information delivery, Freedonia said they have long served as fundamental tools in food safety by affording users with some indication of how long food will remain unspoiled (i.e., safe to eat). More recently, the researcher continued, additional information has been added to food product labels to alert consumers of the presence of potentially dangerous allergens or trace contaminants (e.g., mercury in fish).
Despite these food safety benefits, Freedonia said these labels and tags are not being considered food safety products, as their primary role is still centered around product identification and marketing. In a similar way, labels used in restaurants and other foodservice establishments to identify food containers are not considered food safety products because they are regarded as providing basic identification information with no immediate food safety benefit.
Freedonia observed that smart labels and tags, in contrast, do not have a marketing or product-naming function. In some cases smart labels and tags directly interact with the food or environment to provide food safety related information. Additionally, bar codes and radio frequency identification (RFID) chips are used in distribution operations to provide traceability information, an increasingly important food safety issue. However, like conventional paper and plastic labels, bar codes and RFID tags used as basic labels on individual products are not included.
Smart labels and tags accounted for about 7% of the food safety products market in 2007, making it the fourth largest product category, Freedonia said. Demand for smart labels and tags will advance 10.1% annually to $260 million in 2012, driven by the rapid adoption of new smart label technology in food packaging.
To a smaller extent, demand will by supported by the National Animal Identification System (NAIS) program, implementation of which has been much slower than anticipated.
Freedonia expects growth in RFID tags to be strong, as large cattle and pig farms look to speed animal transfer and processing at feed lots and slaughterhouses. Bar code tag and label advances will be restrained due to a mature market, and eventual loss of market share to RFID tags in the longer term.
While technology is pushing the boundaries and opening new opportunities for food safety products, Freedonia said that nowhere is this truer than in smart labels and tags. Many of the applications that smart labels and tags enable would not be feasible if the technology did not exist.
For example, the researcher noted, smart labels that report product exposure to adversely high temperatures during transport and storage are providing information that simply was not previously available to either the retailer or consumer. From a food safety standpoint, smart labels and tags are considered important if they provide traceability, or some indication of a condition change that would affect the safety of the food.
Traceability has become an important issue for both the government and for the food and beverage and foodservice industries, the researcher pointed out. From a government perspective, being able to rapidly track down the source of an infectious agent is a public health issue, allowing the government to contain active outbreaks and prevent future ones. Freedonia said new regulations require food and beverage companies to keep records that identify both what raw materials went into a specific food product and where the raw material was from, and to whom the food product was shipped, for a period of two years.
Freedonia recognizes that the food and beverage industry is looking for the most effective way of complying with these regulations, and the use of bar code and RFID tags is expected to help automate the process, reducing the overall financial impact of compliance.
For the food and beverage and foodservice industries traceability allows companies to minimize risk by sourcing raw materials from suppliers that are both known to be reliable and to have high-quality products, the study found. To be fully effective, traceability must be implemented all the way from the farm to the store or restaurant. Already bar codes and RFID tags are used at the farm to track either individual animals, or in the case of poultry, flocks. The majority of usage, however, is in distribution and storage to track product movement and inventory levels.