Food for Thought

The U.S. food processing industry has recently undergone a wave of changes due to consolidation and budget cuts. Participants are now focusing on efficient multi-product production lines as opposed to huge manufacturing facilities. This implies continuing opportunities for vendors of water and wastewater treatment equipment, particularly in the repair and replacement sector.

New analysis from Frost & Sullivan, "U.S. Markets for Water & Wastewater Treatment in the Food & Beverage Industry—an End-User Study," revealed that revenue in this market totaled $248.2 million in 2004 and projects to grow to $373.6 million by 2010.

The food and beverage industry uses large volumes of water as it is a convenient, clean, and a relatively inexpensive resource, both as a component of many products, and for conducting cleanups and other production needs. Furthermore, the industry is seeing regulations and legislative compliance drive technology updates in water treatment equipment.

"In a bid to exploit existing distribution systems and labor markets, food processors are looking at expanding current plants rather than building new sites," noted Frost & Sullivan Program Manager and Senior Industry Analyst Matthew Barker. "With growing plant extensions and newer environmental legislation, the replacement market is seeing demands for improved upgrades and greater process efficiencies."

Customer satisfaction is one of the key determinants of the end users’ eventual purchase decision of water and wastewater treatment equipment. Blends of supply elements such as product quality, reliability and technological superiority determine satisfaction levels.

There is also a growing emphasis on customized services including product training, delivery time, and after-sales service. In this respect, some suppliers have succeeded in developing a competitive advantage while others need to immediately address critical issues to retain customer loyalty.

Since effluent treatment is seen as a non-value-added process, price sensitivity is another issue. Although many in the food industry feel that prices are generally high throughout the market, they are willing to pay higher costs if the quality of the product is able to match the price.

"With increasing saturation, competition in the water and wastewater treatment market is intensifying," noted Barker." Due to the large number of suppliers, there is relatively less market awareness, and on an average, any one supplier is recognized by less than half of the customers."

Nevertheless, the market has ample potential for even small participants to operate as local specialists. When respondents were asked whether they would consider a new entrant to the market, around 75.5 percent replied that they would consider such as situation.

Overall, the water and wastewater treatment market appears to be moving towards a mature stage but suppliers can gain a competitive edge through customized services such as informative communication and technological development as well as maintenance servicing. Specific technology interests lie in newer technologies such as ultraviolet (UV) disnifection, membranes, and lower-cost sludge treatment technologies.
U.S. Markets for Water & Wastewater Treatment in the Food & Beverage Industry - An End-User Study, part of the Environmental subscription, evaluates the market opportunities and industry challenges faced by water and wastewater treatment suppliers as well as their strengths and weaknesses within the food segment. It also profiles the emerging role of the service markets and the direction of future investments.


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