Commercial Canning

What Does the Future Hold?

CARLOS CAMPBELL
Fresh fruits and vegeta-
bles may be only a memory
to future generations. Are
we to become a nation of
processed food eaters: can-
ned, frozen, or some new
yet untried process? Will
canning survive the fast-
moving attack of frozen
foods?
This article gives some
answers.
S
OME PEOPLE have been burying the canning industry for
more than twenty years. Each time a new food process is
introduced, it receives special attention, solely because it is new,
whereas commercial canning, because it is more than a hundred
years old and less glamorous, is assumed to be decadent.
The facts are that a greater volume of food is being marketed
through canning than through any other processed form. Even
more significant is the fact that the volume of commercially canned
food is increasing even more rapidly than our population. Also,
the increase in the volume of canned during the last twenty years
has exceeded that of its nearest competitor, frozen foods.
Many who are familiar with these historical facts ask, "But
what of the future?"
The year 1975 is thirteen years from now. No one can see that
far into the future except by using mirrors. A study of the vari-
ous factors that have contributed to the success of the canning
industry over the years might provide some insight into the fu-
ture. In many respects there have been more significant changes
in the canning industry during the last fifteen or twenty years
than during all the previous history of the industry. These
changes refiect themselves in adjustments in all phases of the
industryproduction, sales, and distribution. Even the character
of competition within the industry and with food products out-
side of the industry has required significant adjustments.
Those who have not studied the factors influencing: these
changes frequently ask whether the canning industry is losing
ground. Is it fading out of the picture? Will there be a canning
industry in 1975?
They point to the fact that since the end of World War II the
number of operating canning factories has decreased in many
areas. They also point with alarm to the attempt on the part of
distributors to crowd canned foods off the retail shelves. They
point to the rapid increase in consumption of other processed foods.
All of these facts either reflect or are the result of the increased
competition for the consumer's food . dollar. No one, however,
should start writing, the canning industry's obituarycertainly
not until all the factors that infiuence the progress of the canning
industry have been studied.
Food: Big Business
The potential market for food in this country is very large in-
deed. As a matter of fact, the consuming public spends more
money for food than for any other one product. Food is the
largest business in the United States; and the $70 billion annual
44
Commercial Canning What Does the Future Hold? 45
food bill is by far the largest, except for the tax-
payer's bills to support government.
This national food bill covers, of course, not only
the farmer's cost of producing the food, but the
cost of processing,, transporting, distributing, and
serving in hotels, restaurants, etc. Commercially
canned food is only a small part of this total. Less
than 10 per cent of this $70 biUion is paid for
canned food.
The future expansion of the canning industry
depends in part on the industry's ability to in-
crease this percentage. But even if that percent-
age is not increased, the prospect for expansion in
the sale of canned foods is very promising, because
of the prospective increase during the next fifteen
years in the number of mouths to feed.
An analysis of the recent past may reveal the
pattern for the future. For the most part this
study must be confined to fruits and vegetables,
since the data needed for this type of analysis are
not available for the nonseasonal canned food items.
Furthermore, the production, marketing, and proc-
essing of seasonal food crops, which in the case of
fruits and vegetables are highly perishable, present
a wholly different set of problems than those for
nonseasonal canned foods.
Canned Vegetable Consumption Increases
The producers of fruits and vegetables have in
many respects been quite fortunate, in that most
of the educational activities in the field of nutrition
and health have been directed toward an increased
consumption of fruits and vegetables.
Colleges and universities and government agen-
cies have for some years been preaching the ad-
vantages to be derived from eating more fruits and
vegetables. The rapid changes that have taken
place in our population from a more active physical
life to one of riding instead of walking, and one of
allowing machines to do the work, have been
stressed as the need for a change in the diet. Nu-
trition experts advocate a diet that includes more
fruits and vegetables, to improve general health.
Since 1989, vegetable production has increased
faster than the population. While that increase
is important, of greatest significance to the canning
industry is the fact that the increase in canned
vegetables was much greater than the increase of
vegetables for the fresh market. In fact, canned
vegetables during this 20-year period more than
doubled, while fresh vegetables barely kept pace
with the population increase.^ The volume of fro-
zen vegetables was not significant until the latter
half of this period.
A more recent comparison is even more mean-
ingful as a criterion of future trends. During the
TABLE 1
PER CAPITA CONSUMPTION OP VEGETABLES*
Marketing form
Fresh
Canned
Frozen
Total
Average
lbs.
120.4
72.6
6.6
199.6
Average
1957-59
lbs.
102.1
82.3
15.2
199.6
Change during
10 years
lbs.
-18. 3
+ 9.7
+ B.6
"Consumption Trends and Patterns for Vegetables"
Agricultural Handbook No. 215, Economic Research
Service, U.S. Department of Agriculture.
* These consumption figures were taken from U.S.
Department of Agriculture reports and are on the
fresh equivalent basis.
ten years ending with 1959, total vegetable con-
sumption increased from 29 billion pounds to over
35 billion, barely keeping pace with the population
increase. The consumption of fresh vegetables fell
behind population, almost the same in 1959 as 1949.
Processed vegetables, however, increased during
this same decade from 11.7 to 17.6 billion pounds.
This was the period of greatest increase for frozen
vegetables; yet of the 5.9 billion pound increase
for all processed vegetables, less than 2 billion
pounds was accounted for by frozen vegetables. The
increase for canned vegetables amounted to over
4 billion, more than double the frozen increase.
The increase was frozen, 30 per cent and canned,
70 per cent.
Adjustment for population changes shows that
the last 10 years brought no significant change in
the per capita consumption of vegetables. There
was, however, a significant shift in the form in
which vegetables were eaten. Fresh vegetables
proved to be less popular, resulting in a decline
during the 10-year period, from 120.4 pounds aver-
age for the 3-year base period 1947-1949, to 102.1
pounds average for 1957-1959. See Table 1.
Canned vegetable consumption increased from
72.6 to 82.3 pounds during this 10-year period,
while frozen vegetable consumption was increasing
from 6.6 to 15.2 pounds. Thus, the 18 pounds loss
for fresh vegetables was made up by an increase
of 9.7 pounds for canned plus 8.6 pounds for frozen.
Fruit Consumption Patterns Mixed
Fruit consumption for the forty years ending
about 1950 increased at a rate faster than the
population.
The increase from 1950 to 1960, however, did
not keep pace with population. About one-half of
ABOUT THE AUTHOR. Carlos Camp-
bell is Economic Counsel for ihe Can-
ning Industry, and prior to his retire-
ment September I, 1961, he was Execu-
tive Vice President of the National
Canners Association. He served that
Association for twenty-seven years.
Previous to his service with the NCA,
Mr. Campbell taught economics at the
Universities of Illinois and Arkansas.
46 Journal of Marketing, April, 1962
P E R
TABLE 2
CAPITA CONSUMPTION OF FRUITS"
Average
Non-citrtis frmts 19U 7-Ji- 9
lbs.
Fresh
Canned
Frozen
Dried
Total
Citrus
Fresh
Canned
Frozen
Total
77.4
27.3
3.1
14.8
122.6
54.8
32.6
2.4
89.8
Average
1957-59
lbs.
65.6
34.0
4.4
11.5
115.5
33.9
18.3
30.5
82.7
Change during
10 years
lbs.
- 11. 8
-f- 6.7
+ 1.3
- 3.3
- 7.1
- 20.9
14.3
4-28.1
7.1
* The table is based on data reported in the August,
1961, issue of "The Fruit Situation," Economic Re-
search Service, U.S. Department of Agriculture. All
fibres are on the basis of fresh equivalent.
the fruit crop is now being marketed in the proc-
essed form. As recently as 1950, only 40 per cent
was processed, and 60 per cent of the crop was
marketed fresh. A large part of this change was
due to the rapid rise in orange juice concentrate.^
Kecent consumption trends might be more mean-
ingful if averages rather than individual years are
compared. It will be observed from Table 2 that
total per capita consumption of both citrus and non-
citrus declined from 1947-1949 to 1957-1959. The
decline was reflected principally in fresh market-
ing. In the case of citrus, canned also declined
appreciably.
These citrus losses, however, were made up in
large part by significant gains in frozen orange
juice. Most of these gains were registered during
the first few years of the decade. During the last
seven or eight years the marketing, pattern was
fairly well stabilized at about 40 per cent each for
fresh and frozen, and 20 per cent canned.
Processing Economies Stimulate Sales
One reason why canned fruit and vegetables con-
sumption has made a more favorable showing than
the fresh is because of the economies effected in
production and marketing. Also, competition has
made it possible for consumers to obtain canned
fruits and vegetables more economically than in
any other form.
It is often said that because of the high level of
income today the housewife is less concerned about
saving money. That statement is not correct.
While it is true there is considerably more money
available for the purchase of food, and that the
consumer is thus better able to buy what she wants
and is inclined to purchase better grades and su-
perior quality, it does not follow that she is no
longer interested in spending her food allowance
carefully.
Prices of fresh fruits and vegetables at retail,
largely because of heavy labor cost, have increased
considerably since World War 11. During the 10
years ending with 1959, that increase was fairly
uniform and steady, reaching a peak in 1958 when
the Bureau of Labor Statistics Index stood at 132.5
of the 1947-1949 base.
Canned fruit and vegetable prices increased also,
but to a much lesser degree, with the result that
the index of 1958 was only 110.8. If wage rates
continue to advance and transportation and han-
dling costs increase, the competitive advantage of
canned over fresh fruits and vegetables will tend
to be accentuated. The commercial canning plant,
being located at or near the farm where the raw
fruit or vegetable is grown, makes possible the
elimination of the inedible portion and thus reduces
the transportation and handling costs to consuming
centers.
Probably more important factors in reducing
cost are the rapid strides made in mechanizing the
canning industry and thus increasing the produc-
tivity of labor. During the period 1950-1959 pro-
ductivity in the canning, industry increased at an
average rate of 5 per cent a year. It is not likely
that the adaptation of machines to the commercial
canning process can continue indefinitely to in-
crease productivity at this rate. For the industry
as a whole, however, some increase in productivity
may be expected because of shifts of production
from less efiicient to more efficient producers.
Other Factors Affecting Co^nsumption
A few other factors that will have some effect
on future developments are worth mentioning. In
addition to the influence of the increase in indi-
vidual income, canned food sales are benefited by
the broader base of consumer purchasing power.
Twenty years ago, there was a fairly large seg-
ment of the population that had to squeeze the food
dollar to find money for other necessities. Today
there is a smaller percentage of the population
whose income is so low that it is impossible to pur-
chase adequate food. This factor, while important
in contributing, to the increase in the per capita
purchases of all food during the past twenty years
(mostly in terms of quality, not quantity), is not
expected to exert a comparable increase in per
capita food purchases in the foreseeable future.
A U.S. Department of Agriculture household food
consumption survey revealed that per capita pur-
chases of canned vegetables was fairly uniform for
all income groups except for the very lowest.^
Oddly enough, approximately the same pattern
2 "The Fruit Situation," (August, 1961), Economic
Research Service, U.S. Department of Agriculture.
Household Food Consumption Survey, 1955, U.S.
Department of Agriculture: Report No. 1 (Decem-
ber, 1956), and Report No. 6 March, 1957).
Commercial Canning What Does the Future Hold?
47
characterized the purchase of fresh vegetables.
Frozen vegetable purchases, however, were confined
largely to the higher income brackets.
Another factor is the shift in population from
rural to urban districts. Thus, a larger percentage
of today's population is buying food, and a smaller
percentage is depending upon food raised on their
own farms. Furthermore, since a larger percent-
age of women are now employed, the demand for
food in prepared form is stronger.
It is estimated that during the next fifteen years
the percentage of the population under 15 years of
age and over 65 will increase twice as fast as the
total population. Recent surveys show that the
younger generation is consuming more canned
foods per capita, and when they set up their own
households, they are buying and using more canned
fruits and vegetables than their parents.*
There were 16 million persons over 65 (less than
9 per cent of the total population) in 1959; but
by 1975 it is expected that there will be about 22
million in this older group, roughly 10 per cent
of the estimated total population in 1975. Some
nutritionists say that one of the sad plights of older
people is that they do not eat properly because of
incomes that are inadequate and also because of
lack of facilities for proper food preparation.
Canned food fills this need better than other proc-
cessed foods.
A few years ago at a hearing before a Subcom-
mittee on Agricultural Policy of the Joint Eco-
nomic Committee, one of the senior analysts of
the Department of Agriculture made a number of
economic projections, which bear on the subject
of this discussion.5 He estimated that our popula-
tion would reach a total of 215 to 240 million by
* Household Food Consumption Survey, 1955, U.S.
Department of Agriculture: Report No. 14, (Octo-
ber, 1959).
5 Rex F. Daly, "Prospective Demands for Food and
Fiber"; paper presented at Committee hearing No-
vember 22, 1957.
1975, an increase of 25 to 35 per cent over 1959.
Disposable income per person was projected to be
40 per cent above 1959 by 1975, in terms of 1947-
1949 dollars. A combination of these two factors
population and income^he concluded would prob-
ably result in an increase in demand for food of
about 40 per cent above 1959.
Since it does not seem likely that the downward
trend in per capita consumption of fresh fruits and
vegetables will be arrested, these projections would
tend to support the conclusion that the per capita
consumption of processed fruits and vegetables
would continue to increase.
If the projected increase in per capita disposable
income is accompanied by the characteristic shift
in the distribution pattern of family incomes, sales
of frozen fruits and vegetables would be benefited
relatively more than canned. Should this result in
a smaller percentage increase for canned, it would
not follow that the total volume increase for canned
would be smaller.
This is because the current per capita consump-
tion (citrus excepted) is much larger for canned
than for frozen (canned, 116.3 pounds, and frozen,
19.6 pounds). Citrus is not included in these fig-
ures, because its sales do not react in the same way
as other frozen foods to this change in the distribu-
tion pattern. It is expected, however, that an in-
creasing percentage of the citrus crop will be mar-
keted in the frozen form.
Both fresh and canned citrus may suffer some
more, the latter, however, not enough to offset an-
ticipated gains in consumption of non-citrus fruits
in the canned form.
It may be concluded therefore, that there is a
fair probability that consumption of canned fruits
will keep pace with population growth, and that
consumption of vegetables may continue to rise
somewhat faster. If such increases are realized,
marketing of canned fruits and vegetables in the
United States might increase as much as 35 per
cent by 1975.