SIC 2033
CANNED FRUITS, VEGETABLES, PRESERVES, JAMS, AND JELLIES



This industry includes establishments primarily engaged in canning fruits, vegetables, and fruit and vegetable juices; and in manufacturing ketchup and similar tomato sauces, or natural and imitation preserves, jams, and jellies. Establishments primarily engaged in canning seafood are classified in SIC 2091: Canned and Cured Fish and Seafoods; and those manufacturing canned specialties, such as baby foods and soups, except seafood, are classified in SIC 2032: Canned Specialties.

NAICS Code(s)

311421 (Fruit and Vegetable Canning)

Industry Snapshot

The canned foods industry generated more than $14.5 billion in sales in the late 1990s. The total value of shipments grew from $15.8 billion in 1997 to $17.7 billion in 2000. Canned food processors were the primary market for many of the nation's farmers. By contracting and paying in advance for a large part of the harvest, the industry guaranteed farmers and growers a cash income, helping to absorb the risks of marketing produce on the fresh market.

According to the U.S. Department of Agriculture, tomatoes, sweet corn, snap beans, and green peas were the four most-processed vegetables in the industry. Domestic demand for processed tomato products grew throughout the 1990s, while consumption of canned green peas declined. Production costs of canned goods consisted of payments to farmers, container and label costs, labor, and fuel for transportation. Insurance, rental payments, and machinery costs also contributed to production costs.

Background and Development

Napoleon has been credited with saying, "An army marches on its stomach." Whether he did or not, he knew the importance of supplying his troops with adequate, wholesome food during a successful military campaign. When the governing French Directorate offered a prize in 1795 to the citizen who found a way to keep food fresh during campaigns, Napoleon supported the project. Fourteen years later, in 1810, Emperor Napoleon would award the prize to Nicholas Appert, an obscure French confectioner and chef, whose accomplishment secured his place in history.

Appert theorized that when food is heated in a container with no air in it, the food would keep. He cooked foods in cork-stoppered bottles in boiling water, perfecting his methods. Proof of his success came when Appert's preserved fruits and vegetables were sent around the world on sailing ships and remained edible. Two months after Appert published his procedures, an English merchant, Peter Durand, applied to King George III for a patent for a "Method of Preserving Animal Food, Vegetable Food, or Other Perishable Articles a Long Time from Perishing or Becoming Useless." Durand's use of tin canisters in his process revolutionized food packaging and launched the canning industry as we know it. Captain Edward Perry took tinned foods on his Arctic expeditions in the first quarter of the nineteenth century. Tinned pea soup and beef left behind by his party were recovered and eaten in 1911, and tins of veal and carrots from Perry's 1824 expedition were found to have been safely preserved when they were opened more than 100 years later, in 1939.

Around 1822, tinned foods came to the United States, and the first American patent for tin containers was granted three years later. By the mid-1800s, vegetable processing in steel canisters coated with tin to protect against rust and erosion was becoming widespread, and the words "tin can" and "canning" entered the language. Canning came to mean sterilizing food by heat and sealing it in airtight containers, either metal or glass. Canning activities were undertaken both in food processing plants and in households across the country.

In 1861, canners began adding calcium chloride to the water in which they cooked their closed cans. This enabled canners to use higher temperatures; production time was thus shortened, and production volume increased. The improved technology came just in time for the Civil War, which spurred a demand for canned products. By the time the war was over, production of canned foods had grown six times over, and Americans had learned to trust the quality of the products contained therein.

The importance of canned foods to the military was emphasized during World War II, when two-thirds of the food supplies for the United States and allied forces came in cans. When the Japanese capture of Malaya cut off important sources of tin, conservation of the metal on the home front became critical. At the same time, glass containers, which had previously been used for some foods, were often used in place of tin cans.

The advent of a wide variety of food package choices in the 1980s led to a decline in the sales of canned food in metal cans. Microwave-safe plastic containers, high-barrier film pouches, and form-fill and seal cups were some of the choices offered to consumers. Furthermore, some advertisers claimed superior freshness for foods packed in glass jars. In 1986 the Can Manufacturers Institute, the National Food Processors Association, and the American Steel Institute formed the Canned Food Information Council (CFIC) to restore canned foods' former level of acceptance and popularity, while disseminating positive information about the nutritional quality and appetizing nature of foods in metal cans.

Regulations. The U.S. Department of Agriculture (USDA) grades canned vegetables on a point system, rating them on such characteristics as texture, size, variety, maturity, taste, odor, and absence of defects. Three more standards were applied to canned foods by the Food and Drug Administration (FDA): Standard of Quality referred to the permitted number of defects or foreign materials; Standard of Fill specified the minimum content for a particular size can or jar; and Standard of Identity regulated what was in the container.

Nutritional Quality of Canned Foods. Because canned foods are heat sterilized in a sealed steel can, there is no need at all for preservatives. As consumer tastes changed, the levels of salt and sugar, which were commonly added for flavor, were reduced to satisfy consumer demand for low-salt and low-sugar products. As for their nutrition, the CFIC reported a National Food Processors Association study conducted for the USDA. Because canned foods are already cooked, home-cooked fresh lima beans, peas, spinach, sweet potatoes, carrots, and squash were compared with frozen vegetables that were boiled or microwaved. Vitamin, mineral, and fiber content were found to be similar and, in some cases, the canned product exceeded even its fresh counterpart in vitamin content. Studies comparing canned fruits to those fresh and frozen yielded similar results. Canning actually protects foods from oxygen that can destroy vitamins A, B, C, D, and carotene. The process can also eliminate up to 99 percent of pesticide residues and destroy the bacteria that leads to spoilage.

Vegetables and Fruits. Most produce destined for canning goes directly from the growing fields to a nearby processing plant. Production methods allow vegetables to be canned within hours of harvest. It is in the plant that vegetables and fruit are chopped, sliced, peeled, or otherwise prepared for packing in cans. Blanching helps to preserve texture and flavor. Once they are in vacuum-packed cans and sealed, they are sent into the retort, or cooker, to be heat-processed. Cooling is the final step before the cans are labeled and prepared for distribution.

Canned vegetables and fruits lost shelf space in grocery stores in the late 1990s, while fresh produce gained popularity. Production of tomatoes, sweet corn, snap beans, and green peas declined 2 percent in 1998, but the tomato industry fared well a year later, harvesting a record crop. The tomato was the second most popular vegetable in the United States and had grown in consumption—the annual use of tomatoes per head in the United States grew almost 30 percent from the late 1970s to the late 1990s. Of the total consumed, about 81 percent was in the form of processed tomato goods, such as sauces, ketchup, salsa, juice, and pastes.

Though canned corn was long the top seller among canned vegetables, U.S. demand declined in the late 1990s, keeping prices of canned sweet corn low. In 1999, acreage of corn destined for canning markets declined 6 percent over 1998 figures. Canned green peas suffered more severely in terms of consumption, and per capita use of green peas in both canned and frozen form dropped 5 percent in the late 1990s as compared to the same period a decade earlier. According to the U.S. Department of Agriculture, consumption of canned green peas in the late 1990s was less than half of what it had been in the early 1970s.

Juices. Traditionally, children have been the nation's juice drinkers. The 1990s, however, brought a decline in adult consumption of alcoholic beverages and a rise in adult juice consumption. Makers of bottled waters, soft drinks, and juices entered into spirited competition for these adult consumers. All-natural juices and cranberry juices enjoyed increased demand in the late 1990s, and manufacturers continued to introduce new products. According to market research firm Information Resources, Inc., sales of 100 percent juice in food, drug, and mass merchant stores increased 9 percent in 1998, while over-all sales of bottled juice products rose 3 percent. Cranberry juice sales were indicative of the trend toward all-natural juices: Information Resources reported that sales of 100 percent cranberry juices for the year ended July 1999 had grown 72 percent over sales from the previous year. Sales of the standard cranberry-cocktail drinks, on the other hand, declined around 1 percent.

Some juice manufacturers came under fire in the late 1980s and early 1990s for misleading product labeling, and concerns regarding safe production of juices persisted throughout the decade. A $2 million fine was levied by the federal government in 1987 on Beech-Nut Nutrition Corporation for selling a mix of sweetened water and chemicals as "apple juice." Investigators estimated that as much as 10 percent of juice sold, most of it orange juice, was adulterated, usually with sugar or watery orange byproducts. Manufacturers cited in cases from 1987 to 1993 were mostly major wholesalers to important producers and grocery chains, not companies familiar to the public.

Jams, Jellies, and Preserves. This category is comprised of several distinct products. Jellies, a mixture of fruit juice, sugar, and pectin, are clear and bright with a tender but firm texture. Jams and preserves are thicker, made by cooking fruit, pectin, and sugar until the texture is almost a puree. In preserves, the fruit chunks are larger. Conserves, similar to jam, mix more than one kind of fruit and perhaps nuts. Marmalade contains citrus fruit rind, most often Seville oranges. Fruit butter is made by stewing fruit, sugar, and spices to a thick, smooth, spreadable consistency. Under federal guidelines, in order for a product to be called a jam or jelly it had to contain 55 percent sugar and be so labeled. Reduced-sugar products that catered to a health-conscious consumer were sweetened with fruit juice and had to be called something other than "jam" or "jelly."

Despite a more weight-conscious population, the jam and jellies category experienced flat growth during the early 1990s. Throughout the 1990s, the category battled innovative breakfast foods that competed with the traditional jam and toast breakfast. The introduction of specialty products in the late 1990s, however, helped to somewhat reinvigorate the slow-growing segment. While the $671.9 million jellies and jams industry declined by 2 percent in terms of sales in 1998, it rose 2 percent in terms of units sold, reported Information Resources. The category experienced the strongest sales in the fall, back-to-school season. New products such as peanut butter and jam mixed together in a jar, jams in squeeze bottles, and packages of peanut butter, jelly, and crackers, were among the new items targeted toward jam consumers.

Spaghetti Sauces. Americans spent more than $2 billion on pasta products in the mid- to late 1990s, and sales of spaghetti sauces kept pace at $2 billion as well. Leaders in the field were Van den Bergh Food Co.'s Ragu, Campbell Soup Co.'s Prego, and ConAgra's Hunt's label. These ranged from traditional, meat- and mushroom-flavored sauces to a no-fat, no-cholesterol line of "light" sauces. In the latter part of the 1990s, Van Den Bergh and Campbell's were embroiled in a three-year legal battle over Campbell's advertisement that claimed its Prego sauce was thicker than Van Den Bergh's Prego Old World Style. In the fall of 1996, a judge ruled in Campbell's favor. At the decade's end, Van Den Bergh, now merged with the Thomas J. Lipton Company to become the Lipton Company (a wholly owned subsidiary of Unilever), planned new packaging, new flavors, and a new aggressive advertising campaign. Also in the late 1990s, companies introduced a host of gourmet pasta sauces, such as alfredo and pesto, to meet demand for Italian cuisine, which was growing increasingly popular.

Salsa. Salsa includes an array of sauces that includes picante, enchilada, taco, and other chili-based sauces. Salsa grew in consumption during the late 1980s and early 1990s, and in 1991 salsa outsold ketchup in retail stores by $40 million. By 1999, however, ketchup was back on top. Nonetheless, the popularity of Mexican-style foods was undeniable, growing stronger through the 1990s. Large manufacturers such as Hormel, Nabisco, Frito-Lay, and PET Inc. all introduced Mexican-style products, and national Mexican food restaurant chains such as Taco Bell and El Torito introduced packaged versions of their products for the retail industry.

Legislation. In the first half of the 1990s, the Nutritional Labeling Education Act (NLEA) mandated sweeping changes in labeling, with the emphasis more on the relationship between nutrition and chronic disease than on vitamin/mineral content. Intended to reduce consumer confusion and end the chaos of individual manufacturers' label definitions, the act called for standardized serving sizes (reference amounts) and established rules for health claims and relating them to U.S. Recommended Daily Intakes (RDIs) and U.S. Recommended Daily Allowances (RDAs) for vitamin/mineral percentages. Because this legislation called for dramatic changes in the packaging for canned foods, some manufacturers complained that meeting the requirements of the NLEA legislation would substantially increase their production costs.

Current Conditions

Cost-conscious consumers and strong competition took a toll in the food industry overall in the 1990s. The canning industry faced continued competition from the fresh and frozen food industries. Some canners focused on the so-called value-added segment, such as asparagus, specialty corn, glass jar mushrooms, and tomatoes, to boost sales. Recognizing and serving regional preferences, along with the sale of larger-sized packaging, were two other marketing tactics used by the canning industry.

By the late 1990s, innovation was the trend among canned goods manufacturers. Because the shelf space dedicated to canned goods in supermarkets was shrinking, companies attempted to create demand by offering innovative products, such as convenience items—products that demanded little preparation on the part of the consumer. Private-label brands increased in popularity as well, and, at the turn of the century, private-label canned vegetables enjoyed a U.S. market share of about 44 percent, while private-label canned fruits had a share of about 40 percent.

Due to increased levels of automation, as well as streamlining and cost cutting efforts by industry leaders, the total number of employees in the fruit and vegetable canning industry declined in the late 1990s. Although the number of employees grew from 58,769 in 1999 to 61,047 in 2000, the number remained considerably lower than in the mid-1990s.

Industry Leaders

A number of large canners of fruits and vegetables fought for market share in the late 1990s. Among the leaders were H.J. Heinz Company, Del Monte Foods Company, Campbell Soup Company, and Ocean Spray Cranberries, Inc. Heinz, with 1999 sales of $9.3 billion, had a diverse product line of more than 5,700 items. The top manufacturer of private-label soup, Heinz was also the leader of the ketchup segment. The company struggled in the late 1990s, however, and Heinz suffered from flat sales and declining market share in the ketchup arena. In 1998, Heinz ketchup's market share dropped to a low of 44 percent. Ketchup, which accounted for 11 percent of total company revenues, was Heinz's crown jewel. To ignite sales, Heinz launched an aggressive marketing campaign and introduced new products and new packaging. By late 1999, Heinz's share of the ketchup market had increased to more than 50 percent.

Del Monte was the largest producer and distributor of canned fruit and vegetables in the United States, but the company suffered from financial problems during the 1990s. In the late 1990s, however, the company sought to revitalize sales and its image, and the company embarked on a strategy of growth through acquisitions, new product launches, and hard-hitting marketing and advertising. In addition, Del Monte went public in 1999. In 1997 Del Monte's share of the canned fruit segment was an impressive 42 percent. Its share of the canned vegetable industry was about 20 percent. The company then acquired Contadina from Nestle in 1997, greatly adding to its offerings in the canned tomato and pasta sauce categories. Del Monte reported 1999 sales of $1.5 billion, up nearly 15 percent from 1998. Its net income increased 180 percent.

Campbell Soup was the leader of the domestic soup market, holding a share of 75 percent. The company was also the maker of Prego spaghetti sauces and Pace salsa products. Despite its command of the soup segment, Campbell's suffered from sluggish sales in the late 1990s. To stimulate sales, the company attempted to diversify its product line, introducing such new soup items as ready-to-serve soups in resealable plastic containers and soups in individual-sized microwave cans. Despite this aggressive marketing, Campbell's sales for fiscal 1999 reached $6.4 billion, a drop of 4 percent from 1998 sales.

Massachusetts-based Ocean Spray Cranberries remained the leading producer of canned and bottled juices in North America. A cooperative of 900 cranberry and citrus growers in the United States and Canada, Ocean Spray posted sales of about $1.5 billion in fiscal 1998. Due to the increased popularity of cranberry drinks, Ocean Spray enjoyed strong sales and commanded about 75 percent of the cranberry market. The company introduced a number of new beverages in the late 1990s, including blended drinks that combined cranberry with such fruits as tangerines and apples. Perhaps the company's greatest innovation in the late 1990s was its introduction of 100 percent juice drinks, which Ocean Spray launched in 1998 under the name Wellfleet Farms. The company began selling the juice under its own Ocean Spray name in 1999, and sales grew. Despite the success of Ocean Spray's 100 percent juice drinks, the market leader was Northland Farms Inc., which had a share of 34.5 percent in 1999. Northland was recognized as being the company responsible for reinvigorating the then-sluggish 100 percent juice category.

America and the World

The United States exported $25 billion worth of processed food in the mid-1990s. Canned fruits and vegetables were among the top five industries in foreign trade. Heinz, for instance, received about half of its total sales from overseas operations in the late 1990s. In the burgeoning processed tomato segment, exports enjoyed growing sales. Exports of sauces rose 2 percent in 1999, ketchup was up 4 percent, and whole peeled tomato goods increased 14 percent. Tomato juice exports also rose slightly, but exports of tomato paste declined. Canada was the largest market for U.S. tomato product exports. Japan and Mexico also imported U.S. tomato products; exports to Mexico, in fact, rose 24 percent in 1999. Canned sweet corn was also a major U.S. export, but in 1999 export volume declined 1 percent compared to 1998 figures. Exports to Japan, Taiwan, and Germany declined, but exports to the Netherlands, Norway, and South Korea increased.

Research and Technology

The 1990s saw the installation of new retort systems at a number of plants. Some automated systems were flexible enough to process food in glass jars, flexible pouches, plastic tubs, or irregular shapes. In batch retorting, a single operator can handle a system that automatically stacks cans in trays, conveys them into the retort, removes them after sterilization and cooling, and carries them back to a destacker.

Packaging Advances. The 1990s also saw the development of new, upscale cans to rival glass containers in style and sophistication. Not unlike the innovative changes in plastic packaging that had marked the 1980s, the new cans were designed to enhance the containers' appeal and convenience to consumers. Campbell, for example, launched Cianto pasta sauce in the United Kingdom in a Quantum can. Produced by the Foodcan Group of Carnaud Metalbox (CMB), the distinctive, vertically fluted can with labeling graphics lithographed directly onto the metal won a 1992 Worldstar Award from the World Packaging Organization. CMB has also licensed the technology for its Ferrolite can to North American can makers. The Ferruled can, a plastic-laminated, micro-waveable, recyclable, fully retortable steel can, was another Worldstar winner for CMB.

Further Reading

"52nd Annual Consumer Expenditures Study." Supermarket News, September 1999.

"Annual Report on American Industry" Forbes, 13 January 1997.

Barron, Kelly. "Breathing New Life into a Tired Old Brand." Forbes, 30 November 1998.

Buss, Dale. "Cranberry Juice is Sweet." Supermarket News, 15 November 1999.

"Canned Goods." Supermarket Business, September 1996.

"Del Monte Cooking up Pasta Sauce." Advertising Age, March 1996.

"Del Monte to Be Purchased by Texas Pacific Group." The New York Times, 1 March 1997.

Howell, Debbie. "All-Natural Juice Products Squeeze Into the Lead." Discount Store News, 22 March 1999.

Murray, Barbara. "Jammin' With Jellies." Supermarket News, 30 August 1999.

"New Labels for Ketchup's Real Fans." The New York Times, 12 June 1996.

Pollack, Judann. "Prego Prevails in Battle Over Comparative Ad." Advertising Age, 16 September 1996.

"Unilever's New Lipton Recasts, Repackages Ragu." Brand-week, 13 January 1997.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .



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