SIC 2099
FOOD PREPARATIONS, NOT ELSEWHERE CLASSIFIED



This classification includes establishments primarily engaged in manufacturing food preparations not classified under another category. It includes manufacturers of items such as syrups, leavening agents, dry mixes (for sauces and gravies), packaged mixes (made from pasta, rice, and potatoes), seasonings and spices, and ready-toeat meals and salads. Also included are manufacturers of miscellaneous food specialties, such as fried Chinese noodles, sorghum, tortillas, honey, marshmallow creme, peanut butter, popcorn, tea, tofu, and vinegar.

Miscellaneous food preparations with separate classifications include: SIC 2091: Canned and Cured Fish and Seafoods ; SIC 2092: Fresh or Frozen Prepared Fish and Seafoods ; SIC 2095: Roasted Coffee ; SIC 2096: Potato Chips and Similar Snacks ; SIC 2097: Manufactured Ice ; and SIC 2098: Macaroni and Spaghetti. Manufacturers of flour mixes are classified in Industry Group 204.

NAICS Code(s)

311423 (Dried and Dehydrated Food Manufacturing)

111998 (All Other Miscellaneous Crop Farming)

311340 (Non-Chocolate Confectionery Manufacturing)

311911 (Roasted Nuts and Peanut Butter Manufacturing)

311991 (Perishable Prepared Food Manufacturing)

311830 (Tortilla Manufacturing)

311920 (Coffee and Tea Manufacturing)

311941 (Mayonnaise, Dressing, and Other Prepared Sauce Manufacturing)

311942 (Spice and Extract Manufacturing)

311999 (All Other Miscellaneous Food Manufacturing)

Industry Snapshot

According to government statistics, the total value of goods shipped by establishments classified in SIC 2099 was projected to total $17 billion by the year 2000. Total establishments in the industry were projected at 1,895 for the year 2000, with 675 of these employing 20 or more people. Statewide, California led the industry.

Vinegar. One of oldest products classified within SIC 2099 is vinegar. Records of vinegar use date back 5,000 years, and some historians estimate it was known as long ago as 10,000 years. During the Civil War, vinegar was used to prevent scurvy, a disease caused by vitamin C deficiency. Throughout vinegar's long history, it has had a wide variety of applications, including use as a preservative and as a cleaning agent.

Vinegar, derived from two French words meaning "sour wine," is a product of fermentation. When natural sugars ferment they produce alcohol, which after under-going further acetic fermentation becomes vinegar. One of the best known types is wine vinegar, but throughout history many other types of vinegar have been produced. These include vinegars made from naturally sweet products like molasses, sorghum, honey, and syrup, and vinegars made from fruits, potatoes, and grains.

Four different methods have evolved to control the fermentation process by which vinegars are made. Under the most labor-intensive method, called the solera system, vinegar is aged in different types of wood, a process that can take decades. Another technique, termed the Orleans method, uses a starter culture in a manner similar to the process by which bakers ferment bread dough in sourdough preparation. The Orleans method is implemented to produce vinegar in wooden barrels and takes up to six months. A faster method, termed the "quick process," involves the aeration of wine along with organic materials to produce vinegar in about a week. The quickest vinegar production, however, occurs in a process called continuous production, which requires holding wine in a pressurized tank under carefully controlled conditions. Air is forced through the liquid to aid the fermentation process. Wine is continually added and finished vinegar taken off the top of the tank. Converting wine into vinegar using this process takes approximately one day.

In the United States, the vinegar industry formed alongside the apple industry. As a result, it is concentrated in areas with large harvests of apples. Cider vinegar is made from apples or apple juice. As the U.S. vinegar industry developed, it offered a variety of products to perform different functions. White vinegar, also called distilled vinegar, is primarily used in home canning and for making pickles, salsa, and relishes. Wine vinegar is an integral ingredient in vinaigrettes. Malt vinegar, a mildly sweet product, complements salads and fish and chips. Rice vinegar, a particularly strong variety, is added to sushi rice. A rich, dark product, balsamic vinegar is used for vinaigrettes and as a condiment. Sherry vinegar, another variety with a strong flavor, is a cooking vinegar. In addition to the types of vinegar produced by using varying sources, infused vinegars are made by adding flavorings such as berries, garlic, or herbs. Increased sales of balsamic vinegar, which were growing at annual rate of 5 percent at the turn of the twenty-first century, boosted overall vinegar sales into the early 2000s. The value of vinegar and cider shipments in 2001 totaled $182 million.

Tofu. A product with a long history, tofu is a white, gelatinous substance made from soybean curd. It bears a slight resemblance to cream cheese but has a softer texture that has sometimes been described as "squishy." Although tofu by itself is considered bland, when cooked in a recipe it picks up flavors from other ingredients. To make tofu, manufacturers begin by soaking soybeans for 12 to 18 hours. After soaking, the beans are mashed and strained. The retained juice solidifies, is cut into portions, and packaged for sale.

Originating in China approximately 1,000 years ago, tofu has been a staple in Oriental cooking for centuries. Tofu began gaining popularity in the United States following World War II when returning servicemen, accustomed to eating it abroad, began eating tofu at home.

Sales of tofu experienced rapid growth in the early 1990s. Because it is a good protein source naturally low in saturated fat and with no cholesterol, its popularity was increasing particularly among vegetarians and health-conscious consumers. Tofu also benefited from a growing interest in ethnic cooking. The tofu expansion could be attributed in part to improvements in packaging technology, giving products a longer shelf life. Most tofu is sold in packages of water and has a short shelf life of only about 10 days. In 1990 one producer, Mori-Nu, reported the development of innovative packaging enabling its product to have a 10-month shelf life without refrigeration.

Tofu sales in 2002 grew 2.8 percent to $250 million. Soy foods which contain tofu, such as veggie burgers, posted total sales of $3.6 billion, thanks to double-digit annual growth beginning in 1992. To entice more customers to try tofu, manufacturers began developing new products such as seasoned tofu and marinated, precooked tofu.

Tea. Another food product with historic ties to China is tea. Tea was originally made from the dried, processed leaves of an Asian shrub. One of the oldest companies in the U.S. tea industry was founded by Sir Thomas Lipton, a Scotsman, who began importing tea into the United States in 1890. The first instant tea was marketed by the Nestle Beverage Company in 1948.

Sales of tea products experienced growth the United States during the 1990s. According to Information Resources Inc. of Chicago, sales of loose teas and tea in bags grew 1 percent to $640 million; ready-to-drink teas sold in the United States increased 1.8 percent to $421 million in 1995. The market is no longer relegated to a simple hot drink served with lemon and honey; it has married tea—black, green, or herbal—to all sorts of flavor permutations.

Herbal teas in supermarkets passed the $100 million sales mark in 1991. The top three companies in herbal tea sales were Celestial Seasonings, Inc. with 49.1 percent of the market (and with a new line of herbal "remedy" teas in 1995), Lipton with 23.1 percent, and Bigelow with 14.6 percent. In 1992 enough herbal tea was sold in the United States to brew 58 million gallons. Sales represented a 5 percent increase over the previous year. According to a report in Brandweek, one of every eight cups of tea consumed in the United States is either decaffeinated or herbal, and approximately 80 percent is consumed as iced tea.

Product expansions in the tea category, according to Prepared Foods are attributable to the introduction of green teas and chai. Green teas purportedly provide healing benefits, which is why numerous companies now provide green tea products, including John Wagner & Sons and AFC. Chai is a rich, milky tea-based drink often used as part of Indian ceremonial meals and tastes of vanilla, honey, and spices. Oregon Chai introduced its chai liquid concentrates to consumers in 1995.

Tea-juice hybrids increased in popularity through 1995, with a great number of product introductions that year—and not only from Snapple. Nestle added numerous products to its Nestea line in 1995, including an instant Lemonade Tea, and Suntea Style mix, and several fruit-flavored beverage mixes. Snapple Cider Tea—a combination of black tea and apple cider that may be served hot or cold—was introduced by The Quaker Oats Company. (Snapple was sold to Triarc Companies in 1997.)

Growth continued into the early 2000s. Total tea sales in the United States reached five billion dollars in 2002, compared to two billion dollars in 1990. According to an August 2003 issue of Brand Packaging , "The growing number of brands proliferating shelves in grocery and natural foods stores mirror this trend." Along with Lipton, Red Rose, and Nestea, popular brands in the early 2000s included Tazo Tea and Republic of Tea.

Peanut Butter. One product native to the Americas is peanut butter. While not indigenous to North America, peanuts were grown by South Americans at least 1,000 years ago. Although the circumstances of their introduction to North America are unknown, historians believe peanuts were grown by early European settlers, who used them as food for hogs. George Washington Carver is credited with developing more than 300 uses for peanuts and helping establish them as an important crop. Improvements made between the 1930s and the 1990s helped peanut farmers experience a fivefold increase in per acre yields. During the early 1990s, most U.S. peanut production came from Georgia. Other leading peanut cultivation states were Alabama, Texas, North Carolina, and Virginia.

Approximately half of the peanuts eaten in the United States are consumed in the form of peanut butter. Consumer Reports calculated that on any given day peanut butter is consumed by one out of every six Americans. Although peanut butter is considered a good source of protein, dietary fiber, and B vitamins, it contains a high percentage of fat. To make peanut butter, manufacturers remove peanut skins and grind the nuts into a thick, pasty substance. Frequently, hydrogenated vegetable oil is added as a stabilizer, and salt and sugar are added to improve flavor. Chunky varieties, containing pieces of peanuts, were also developed.

One of the problems associated with peanut butter is the presence of aflatoxin. Aflatoxin is a carcinogenic poison produced by aspergillus flavus, a mold that grows on peanuts when they are not properly stored. Aflatoxin problems first appeared in the 1960s and led U.S. officials to establish limits on the amount of the substance allowable in peanut products. A 1990 Consumer Reports study noted that some peanut butter exceeded allowable levels of aflatoxin.

During the early 1990s, the top U.S. peanut butter brands—Jif, Skippy, and Peter Pan—accounted for twothirds of all peanut butter sales. Specialty and health food stores offered "natural" peanut butters that lacked sweeteners and stabilizers and some featured "grind your own" peanut butter options.

In 1993 industry watchers noted a decline in peanut butter sales. The drop was attributed to calorie-consciousness. Consumers also turned away from name brands in favor of private labels. According to a September 1993 report in the Wall Street Journal, peanut butter sales declined 12.2 percent during the 13-week period ending July 4, 1993. Chunky peanut butter sales fell the most, declining 15.7 percent, while creamy sales dropped 10.9 percent.

Consumption of peanut butter in the early 2000s totaled nearly six pounds per year per U.S. household. According to Research Alert , 92 percent of U.S. residents eat peanut butter. The popularity of high-protein diets in the early 2000s boosted sales of peanut butter, which was once again viewed as a healthy snack.

Spices. According to the U.S. Department of Agriculture, the average U.S. spice consumption was an estimated 815 million pounds between 1990 and 1994, compared with 541 million for the period between 1980 and 1984. Per capita consumption rose a point from the prior decade. Domestic production increased to meet the demand.

Total sales of spices, domestic and imported, in the United States were about two billion dollars in 1994, double that of the prior decade, and compared to sales of between $400 and $450 million in the mid-1970s. Dehydrated garlic and onions accounted for about two-thirds of national spice production in 1994, with cayenne or red peppers representing an estimated 30 percent, and mustard seed and various herbs accounting for the balance.

Sales continued unabated into the early 2000s. "Easy-to-use blends, rubs, and marinades are stirring up

SIC 2099 Food Preparations, Not Elsewhere Classified

a lot of interest, but old-fashioned standbys, including bay leaves, cinnamon, coriander, sesame seeds, turmeric, wasabi, and vanilla, have been rediscovered as Americans embrace the 'new world' of regional ethnic cuisine, such as Thai, Vietnamese, and Moroccan cooking," according to Richard Turcsik in the August 2003 issue of Progressive Grocer .

An estimated 60 percent of spices sold in the United States are to add flavor to the food processing and food service industries. Population growth (particularly census figures noting increased Asian and Hispanic populations), increased popularity of ethnic foods and prepared meals, and increased consumption of food outside the home can be attributed to the continued growth in spice sales. Major spice users include fast-food outlets such as KFC and McDonald's, which not only spice their foods, but also provide prepackaged condiments to customers. The value of spice industry shipments grew from $4.72 billion in 2000 to $4.85 billion in 2001, according to the U.S. Census Bureau.

Industry Leaders

A leader within the tea segment is the Thomas J. Lipton Company, a wholly owned subsidiary of Unilever PLC, which posted sales of $48 billion in 2003. Lipton, headquartered in Englewood Cliffs, New Jersey, held a 27 percent share of the North American black tea market as of 2003.

Lipton, a pioneer in the development of naturally decaffeinated teas, was founded in 1915 by Sir Thomas Lipton, who had been selling his teas in the United States since 1890. In 1992 Lipton reported that its Suffolk, Virginia, production facility blended more than 36 million pounds of tea. Lipton's tea products include tea bags, instant iced tea, and ready-to-drink iced tea. In 1991 the company established the Pepsi Lipton Tea Partnership, a venture undertaken to bring together expertise from Lipton's tea producers and Pepsi's bottling and distribution system. In addition to tea products, Lipton also marketed Lipton Soup Mixes, Recipe Secrets, Lipton Side Dishes, and Cup-a-Soup. The company's Lawry's division offers spice and seasoning blends, sauces, and Mexican food products.

Another major participant in this market segment is Nestle USA, Inc., which has 15 food and beverage companies. Products of the Nestle Beverage Company include Nestea, Carnation hot cocoa, and Nestle Quik, while the Nestle Refrigerated Food Company produces Contadina refrigerated pizza kits and sauces. Other major Nestle divisions include Nestle Food Company, Nestle Frozen Food Company, and Nestle Brands Foodservice. In 2003 the Nestle organization reported net sales of $70.8 billion and a staff of 253,000. Nestle USA Inc., which is the segment of the corporation that manufactures products including chocolate, frozen dinners under the Stouffer's brand, ice cream and chocolate milk, posted sales in excess of $11 billion and employed a staff of 22,000 in 2003.

At the helm of the spice segment is McCormick & Company, Inc., founded in 1889 and—according to company literature—the largest spice company in the world. Its product line, sold in the United States on the East Coast under the McCormick label and on the West Coast under the Schilling label, features a wide variety of spices from 18 areas around the world. The company's other primary business involves plastic bottle and tube manufacturing.

McCormick/Schilling had a 45 percent share in the U.S. retail spice market at the turn of the twenty-first century. The firm continued working to bolster its market share via new product releases and acquisitions, such as the 2003 purchase of the Zatarain's brand for $180 million. McCormick's industrial and food service divisions provide flavors, seasonings, and specialty food products to more than 80 of the top 100 food manufacturers in the United States as well as to many major restaurant chains. In addition to the United States, McCormick sells products globally. In the retail spice market, Burns Philip holds the second largest market share at 12 percent.

Sensient Technologies Corp., formerly known as Universal Foods Corporation, is an international company involved in manufacturing and marketing a wide variety of food products, including flavors and colors, dehydrated vegetables, frozen French fried potatoes, and yeast products. The company posted sales of $987 million in 2003. Sensient's yeast products were marketed under the Red Star label until 2001, when the firm sold its Red Star assets to France-based Lesaffre for $122 million.

During the early 2000s, general industry leaders included Northfield, Illinois-based Kraft Foods Inc. with 2003 sales of $31 billion. Kraft Foods paid $18.9 billion for RJR Nabisco Corp. in 2000. Other leading players were Eden Prairie, Minnesota-based SUPERVALU Inc., with 2003 sales of $19.1 billion; Wyeth, formerly known as American Home Products Corporation, with 2003 sales of $15.8 billion; and Abbott Laboratories with 2003 sales of $19.6 billion. Kellogg Company and General Mills, Inc. are among the other leading companies in this industry segment whose brand names are immediately recognizable to American consumers; these companies follow closely behind industry leaders in annual sales amounts. In 2003 Kellogg had sales of $8.8 billion and General Mills had sales of $10.5 billion.

Kellogg maintained its philanthropic visibility in the industry after the Y2K crisis at the turn of the millennium failed to materialize. The company partnered with America's Second Harvest (a hunger relief organization) to sponsor a month long food drive beginning in mid–January 2000. The drive encouraged people to donate unused stockpiled Y2K food for the hungry or underprivileged. Kellogg had participated in initiatives to fight hunger for over 20 years. In 1999 the company donated 19 million pounds of food to the food bank of America's Second Harvest. The company includes the W. K. Kellogg Foundation, one of the largest private charities in the world. Kellogg had sales in over 180 worldwide countries during the early 2000s. The firm added cookie and cracker maker Keebler Foods to its list of assets in 2001.

Workforce

According to the latest figures available from the U.S. Department of Commerce, industry employment is concentrated in California, Illinois, Texas, and New York. The majority of employees (more than 10 percent) work as hand packers and packagers, followed closely by cannery workers. The average establishment in the industry has 49 employees, maintains a payroll of more than $1.5 billion, and pays nearly $13 per hour.

Further Reading

"Americans Overwhelmingly Prefer Creamy Peanut Butter." Research Alert, 20 September 2002.

"America's Second Harvest and Kellogg's Announce National Millennium Food Drive: 'Y Go 2 Waste'," 3 January 2000. Available from http://www.prnewswire.com .

Bosco, Maryellen. "Oiling Sales." Supermarket News, 15 April 1996.

Cruz, Sherri. "It's Squishy, Bland and Healthy—But Can Tofu Entice?" Los Angeles Business Journal, 27 October 2003.

"Tea Time." Brand Packaging, August 2003.

Turcsik, Richard. "Spicing It Up." Progressive Grocer, 1 August 2003.

U.S. Census Bureau. "Value of Shipment for Product Classes: 2001 and Earlier Years." December 2002. Available from http://www.census.gov/prod/2003pubs/m01as-2.pdf .



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