A recent trend in the United States and Canada has been the closure of aging, outdated food-processing plants in favor of consolidating efforts at more modern plants with high-tech robotics and automation, or even building new, custom plants in areas such as Bellingham that are better suited for manufacturing and shipping.
In 2018, for example, Dr. Oetker closed its plant in Grand Falls, New Brunswick, and Campbell’s closed up shop in Toronto. Dean Foods recently announced the closure of seven plants, with that work being redistributed to other plants the company operates.
One of the reasons attributed to the closure of plants in the U.S. and Canada is the recent growth in popularity of private-label food brands. These brands, often known as “store brands,” include Great Value (Wal-Mart), Signature Select (Safeway), Private Selection (Kroger) and, well, a good many of the products sold at Trader Joes. One survey of American women showed that 93 percent of them peruse these private-label brands to save money, and younger generations are turning to them away from major labels in pursuit of organic, multicultural foods.
Shifts in consumer mindsets, whether toward food that’s less expensive or that’s organic, leads to upheaval in the food-processing sector. “We’re seeing more consolidation in food processing around the globe because consumers in the Western world are looking for something different, organic and local,” said one recent article in the Independent.
A 2018 report from Nielsen concurs, arguing that Millennials in particular “are very value conscious, they do a lot more product investigation before buying, and they will buy private-label brands if they think they are as good as multinational brands.”
The report also shows that, while they are focused on quality, 71 percent of shoppers in North America still purchase private-label foods to save money.
Attendant to this consumer mindset is the rapid growth that’s expected in the e-commerce realm, as more and more consumers purchase groceries over the Internet for delivery to their homes.
“By 2025, the share of online grocery spending could reach 20 percent, representing $100 billion in annual consumer sales,” according to Nielsen. “That is the equivalent of approximately 3,900 grocery stores.”
Many companies looking to embrace these shifts in forward-thinking ways are looking for new build-to-suit options that would allow them to construct food-processing plants or food storage-and-delivery warehouses in ways that keep overhead low while taking advantage of new technology.
A 2018 report from CBRE argues that this trend is driving massive shifts toward cold storage facilities. “As e-commerce expands further into the grocery business, the resulting growth of the food supply chain and demand for new, climate-controlled warehouse space could very well be the new opportunity that investors and developers have been seeking,” one CBRE real estate expert told RE Journals.
Up to 35 million square feet of cold storage space — much of it in Washington state — could move from retail properties, such as at grocery stores, to industrial space, the report predicted. Washington already is second in the nation in industrial cold storage food space, with 217 million cubic feet.
The Bellingham Cold Storage facilities in Bellingham offer prime spaces for build-to-suit food-processing plants and grocery cold storage facilities. And given the location — near Interstate 5 and the Salish Sea waterfront, between ports in Vancouver, Canada, and Seattle — they also provide quick and easy access to worldwide shipping channels via truck, train or ship.