The food industry in New Jersey is a vast and complex system that’s not easily understood. From researchers, agricultural producers, food and beverage manufacturers, wholesalers, retailers and foodservice and drinking places, the myriad sectors of the food system have a tremendous impact on not only the state’s economy and job market, but also the very decisions that are made in the Legislature. And, while its impact is felt throughout the state, the industry is not immune to the changes that technological advancements bestow upon nearly every aspect of our lives in today’s digital age.
The gross sales volume generated within the New Jersey food system totaled $126.79 billion in the United States Census Bureau’s most recent 2012 release. An economic impact assessment by Brian J. Schilling and Kevin P. Sullivan showed that the total food system output (sales) increased in New Jersey by approximately $21.42 billion from 2007 to 2012 (an increase of 20.3 percent).
“New Jersey is called the Garden State for a reason,” says NJBIA President and CEO Michele Siekerka. “We have a dynamic, thriving food production industry that runs the gamut from vegetable growing to sophisticated manufacturing operations. Together, they employ thousands of people and produce some of the best known and most delicious foods in the country.”
A report released by NJBIA, called “Food Manufacturing in New Jersey,” shows that the state has 937 food manufacturing establishments that employ more than 30,000 paid workers representing a payroll of $1.3 billion. The biggest food manufacturing county is Bergen, which has 137 establishments employing just shy of 5,000 workers. The next biggest counties are Passaic, Essex, Hudson and Middlesex.
The report finds that New Jersey ranks eighth in the number of establishments and 20th in employment, compared to the rest of the country, with the seven states that have more establishments being much larger geographically and, except for one, all have a significantly higher population.
According to the New Jersey Department of Labor and Workforce Development, in 2012, New Jersey’s farms and food businesses employed 440,885 workers, who earned wages of $10.87 billion. Foodservice and food retail sectors were the largest employers, with 77 percent of the workers in the entire food system.
“We feed almost 9 million New Jersey residents a day, so something that you eat today has likely come from one of our members,” says Linda Doherty, president and CEO of New Jersey Food Council (NJFC), whose organization serves as a voice and advocate for the food distribution industry in the state.
“We’re really the who’s-who of the industry, with members that include supermarkets, independent grocers, bodegas, convenience stores, food wholesalers, food brokers, food manufacturers, food processors and startup companies,” Doherty says.
One of the roles of the NJFC is to stay on top of new trends in the various sectors of the food industry in order to better understand the types of challenges its members have to deal with, as well as be aware of the new opportunities for growth that arise.
“The e-commerce platform is an amazing transformation of the shopping habits of the consumer. It is impacting brick-and-mortar retail. … With the press of a button, you can order your food or groceries. It’s really revolutionizing customer spending,” Doherty says.
While all companies are unique in the ways that they handle utilizing an e-commerce platform for their business, the challenge comes when determining how to balance implementing a digital component to your business while still holding onto the brick-and-mortar customers.
“One of our strategic imperatives is to increase engagement and drive sales through digital and e-commerce,” says Camden-based Campbell Soup Company spokesman Thomas Hushen. “US consumers spent more than $59 billion on groceries in 2014. Only a fraction of that was spent online. Today, Campbell’s online sales are less than 1 percent of total sales. We have plans to make this a more meaningful percentage of total sales in the future.”
The company understands the importance of staying ahead of the curve in terms of consumer trends, and intends on focusing more attention on the e-commerce market beginning now and into the future.
“We continue to shift our marketing efforts to digital and mobile platforms to connect with the next generation of consumers,” Hushen says. “In fiscal 2016, 35 percent of our advertising dollars was spent on digital, compared to 19 percent in fiscal 2015. We expect digital and mobile to account for between 35 and 45 percent of our total advertising spend moving forward.”
Change – in this case a change in consumer spending habits – leads to uncertainty, which creates challenges for companies when creating a business that must forecast several years into the future.
Amazon, for example, is currently beta testing its Amazon Go experience, which allows customers to walk into a grocery store, grab the items that they want, and simply walk out of the store without the hassle of waiting in line to check out. The company utilizes a technology that detects when products are taken from the shelf and out of the store, so once you leave, your Amazon account automatically gets charged.
A shift in consumer habits is not limited to how they buy, but also includes what they buy. An increased emphasis by Millennials to eat healthily has many food companies catering to new dietary desires of the consumer.
Campbell Soup Company recently launched a new healthy soup line called Well Yes!, which contains ingredients like kale, quinoa, barley, beans, sweet potatoes and whole grains. The soups use meat with no antibiotics and contain no artificial colors, flavors, ingredients or modified starches.
“Our goal is to bring real, affordable and deliciously crafted soup to the soup aisle with the introduction of Well Yes!,” says Sophie Arsenlis, director of marketing, soup strategy at Campbell Soup Company. “We thought differently about the creation of this soup, from flavor combinations, to our package design to the types of ingredients we sourced. With the Well Yes! brand, we are saying ‘yes’ to real food and well-being by only using ingredients that consumers know and trust.”
“Another of our strategic imperatives is to continue to diversify our portfolio in the health and well-being space with fresh, organic, healthful foods that are within arm’s reach of consumers.” Hushen adds. “Health and well-being means different things to different people, and food companies like Campbell must meet a variety of needs for our consumers.”
In addition to adapting to inevitable technological and consumer changes in the industry, food companies in New Jersey are lobbying in Trenton for change that will ensure their businesses have a stable and successful future.
One such change is a reform to the state’s current liquor license policy, which NJFC says is outdated.
“Currently, a supermarket can only own two liquor licenses,” Doherty says. “We’d like to see a more modernized liquor licensing system. Even Pennsylvania, which has one of the most antiquated liquor laws in the country, recently upgraded and refreshed theirs – New Jersey is just so outdated.”
Doherty references a 2011 Monmouth University study which showed that residents who regularly purchase alcohol want the convenience of purchasing it in a supermarket. “We need reform, and the marketplace is demanding it.”
Aligning with its larger focus on improving sustainability and waste management, the NJFC is “taking a progressive approach to the issue of bag fees based on the success of members in Montgomery County, Maryland.”
NJFC supports current legislation for a program that provides for a five-cent fee on disposable plastic and paper bags, with some exemptions for smaller retailers and government funded nutrition program recipients.
“Traditionally, we have been opposed to any types of fees for bags, but members in other states have seen the benefits and savings when customers bring in reusable bags – in addition to the sustainability benefits,” Doherty says.
In keeping up with the continually evolving industry, many companies are excited about future development projects that will supplement and grow their own business.
The Rutgers Food Innovation Center (Rutgers FIC), located in Bridgeton, serves as a catalyst for economic development in the state and the surrounding region. It has been recognized globally, nationally and throughout New Jersey for the effectiveness of its economic development programs.
“The Rutgers FIC has created a food industry cluster that services food and agribusiness entrepreneurs throughout the entire state and region,” says Lou Cooperhouse, executive director of the Rutgers Food Innovation Centers. “It supports these companies with extensive programs in training and workforce development; customized and comprehensive business and technical mentoring services; and USDA- and FDA-inspected facilities that enable design, development, analysis, commercialization and manufacture of value-added food products for sale to retail and foodservice markets.”
The Cumberland County Improvement Authority plans to bring a $9-million, 27,000-square-foot Food Commercialization Center to Bridgeton in the fourth quarter of 2017, and will work closely with the Rutgers FIC on the project.
“A number of our clients and our graduates at the Food Innovation Center routinely require between 2,000 to 3,000 square feet of space to meet their growing commercialization needs,” Cooperhouse says. “In addition, we have a number of domestic and international companies we work with that are looking immediately for this amount of space as they launch their business to serve the US marketplace.”
Cooperhouse is excited about the potential of the new facility, and states that tenants of the new center also will have an opportunity to access the business consulting and technical mentoring services of the Rutgers FIC.
“Food manufacturing is just one of several manufacturing sectors that carry on New Jersey’s tradition of production and innovation,” says NJBIA’s Siekerka. “Anyone who thinks that manufacturing is a dying industry in New Jersey should take a good look at the amazing companies we have here and how they compete in a global economy every day.”