Has everything gone the way we thought it might? Not exactly, but there are always bright spots for the processing industry. Everyone must eat, which makes our industry resilient. Read more from our CEO, Bob Grote.
Here we are, already in Q2 of 2025. Has everything gone the way we thought it might this year? Maybe not exactly, but there are always bright spots for those in the food processing industry.
If there’s one thing people must continue to do, it’s eating, so our industry is resilient. Even when there are shifts in the economy or consumer habits, we can adjust and adapt to meet those changes.
Here are some observations.
1) The economy: There was excitement in the industry toward the end of 2024 regarding the notion that food prices might go down, spurring consumers to spend more. Then inflation ticked back up. People dialed their spending back again.
As consumers cut back, it affects food processors’ sales, which in turn can cause them to make fewer investments in their businesses. The industry as a whole now seems a bit more cautious about what kind of year 2025 will shape up to be.
Although tariffs may impact the price of food, I doubt that food equipment will be targeted directly. Tariffs may further increase the cost of steel, which in turn will raise the cost of the equipment.
Uncertainty is the biggest concern.
2) Inflation influences how consumers approach their dining habits: The dining-at-home movement that gained momentum during the pandemic – also fueled by consumers’ desire to eat more healthfully and their tendency to lead busier lifestyles – continues to grow amid rising prices.
When food prices increase, restaurants have to charge more. Frustrated consumers may decide they’d prefer to eat more of their meals at home.
In a survey, about a third of Americans say they’ve reduced spending on fast food, sit-down restaurants and food delivery, while nearly half say they’re cooking meals at home more.
This is spurring the growth in prepared meals and snacks. The global prepared foods market, valued at $166 billion in 2023, is projected to grow to $305 billion by 2032. Additionally, some chilled and frozen meals provide a more convenient and healthier alternative to fast food.
3) Food safety concerns: There’s been discussion about FDA regulations going by the wayside, with inspectors being dismissed from their posts.
However, the truth is that many companies already self-regulate. Every brand understands the impact of recalls. Trusted companies have never relied on federal food inspectors to enforce food safety guidelines or ensure the safety of their products. They avoid recalls by implementing processes to prevent the spread of bacteria or contaminants.
Processors understand that a recall is not only tragic if people are harmed, but it is also extremely costly to the brand. With 48 million Americans stricken ill from food-borne pathogens a year and the average recall cost estimated to be $10 million, it’s easy to grasp what’s at stake for processors.
>Read more on the impact on processors’ bottom lines from our sister company, PFI.
If anything, the changes taking place will only serve to push brands to follow even tighter guidelines and shore up their existing processes. They see how vital it is to protect consumers, as well as to safeguard their brands.
This means that sanitation is a higher priority than ever in the industry. From an equipment manufacturing perspective, the focus remains on designing machines that are less likely to harbor harmful bacteria while making them easy to clean and sanitize.
4) Trends in healthier eating: The push for health and wellness isn’t going away. This is what consumers have been pushing for, which is why it’s a trend that’s sticking around. We can look at the organic food market as an example. Consumers drove this trend, which has only continued to grow.
People want to eat healthier – they see the benefits – and are driving food processors to make products containing better ingredients. An informed population is demanding more nutritious options. Three in four Americans are resolving to eat healthier and exercise more in 2025, according to a survey of over 1,000 adults of all ages.
Processors will need to respond by developing new ways to produce food that meets consumers’ demands.
5) Workforce shifts lead to increased automation: As processors continue to struggle to find enough workers to fill open roles, equipment manufacturers are stepping up their automation offerings.
When processors need to produce more but can’t rely on human workers, automation can help fill that void. In addition to addressing those gaps, reducing human labor in food production also enhances food safety. The fewer hands that touch a product, the less likely it is to be contaminated.
6) Consolidation of the market: Despite recent tariff policy news, the food processing market —including suppliers, manufacturers, and vendors—is global, and we anticipate continued growth and consolidation through partnerships and acquisitions.
Examples include manufacturing acquisitions, like Siete Foods to Pepsico and LesserEvil to Hershey; and equipment suppliers, like JBT acquiring Marel and our Grote Company Family of Brands with the acquisition of ProFab and SPI in 2024. Benefits of acquisitions like these include additional resources, enhanced convenience, broader opportunities and capabilities, a larger customer base, and the ability to provide local support, among others.
Working with one brand – and sometimes a single contact within that brand – is a trend to watch. If a customer already trusts a brand, it stands to reason that they’d trust it enough to make additional purchases from its broader organization.
The Food Processing Industry Remains Cautiously Optimistic
Though 2025 may not have started as strong as we all expected, it is still poised to be a very good year.
Moving forward while keeping an eye on ever-evolving economic conditions seems like the wisest approach for the rest of the year.