More foreign-owned food companies add `Made in USA' label. A way around import restrictions and quotas
Boston — Looking for foreign foods in the supermarket used to mean going to the ``specialty'' section or the ``foreign foods'' aisle. Now, a shopper in a grocery store can find foreign foods on nearly every shelf: oysters from Korea; cereal from Switzerland; cookies from England, Denmark, and Belgium; cheeses and sardines from half a dozen countries; and such imported staples as orange juice from Brazil and beef from Australia and Argentina.
Once a cornucopia of home-grown groceries, the American supermarket is fast becoming an international foods fair.
Like the auto, apparel, and electronics industries, the food industry has gone global. And the United States, which used to be a leading supplier of food - Carl Sandburg, after all, called Chicago the ``hog butcher for the world'' - has become a net consumer.
From 1982 to 1987, US imports of processed foods rose 33 percent, from $9.6 billion to $14.3 billion, according to Department of Commerce estimates. During those years, US exports of processed foods also rose, from $11.1 billion to $12.3 billion, but not fast enough to keep up with imports. Since 1984, the US has been running a processed food deficit.
While the rise in imports has been dramatic, so has the growth of foreign food companies setting up shop in the US or establishing joint ventures with American companies. Between 1982 and 1986, foreign food investments in the US nearly doubled, from $6.8 billion to $11.7 billion, outstripping US food investments abroad, according to the Bureau of Economic Analysis.
The reasons for processing food here, rather than importing, are many. One of the obvious ones is to get around import restrictions and quotas. Cesare Fiorucci SPA, Italy's largest meat manufacturer, opened a plant in Richmond, Va., last year to break into the US market.
``We saw the market for gourmet food was growing,'' recalls Claudio Colmignoli, president of the subsidiary. ``We could see all the supermarket chains putting up deli counters. At the same time, there was a ban on imports of meat products from Italy because of a swine disease. Economically, it makes sense to produce here. There is very good raw material here in the States, and the labor force is a little less expensive than in Italy.''
Since their debut in July, the company's prosciutto hams, genoa salami, and other specialty meats have been selling well in the US. Having plants in the US, Mr. Colmignoli figures, protects him from fluctuations in the dollar. The Fiorucci meats produced in the US aren't affected by exchange rates or import quotas, and if the dollar rises, Colmignoli says, he can import Fiorucci products from the parent company (the pork ban has recently been lifted) and sell them alongside his own.
When US sales of its Blue Saga cream cheese rose faster than its ability to get import licenses, Tholstrup Cheese Denmark A/S opened a plant in Muskegon, Mich., in 1986 to bypass restrictions. The company is now planning to expand production at the plant, says Jens Bang Pedersen, head of Tholstrup Cheese USA. ``It's obvious when the dollar is falling it makes sense for us to look into manufacturing our cheese products we currently have produced in Europe and imported. That cost is going up and up, and at a certain level it pays for us to make it in the United States.''
In some cases the lower dollar makes it economical for the transplanted company to export its products back to the parent country. Stauffer-Meiji Inc., a joint venture of a regional American bakery and a Japanese confectionery, has been producing its Slim Stix in York, Pa., since the spring of 1986. Marketing manager Byard Ebling says a new trade agreement is expected to lower Japan's import duty on the chocolate-covered cracker sticks, making them cheaper than the Slim Stix produced in Japan.
The growing American appetite for imported foods, and the success of these transplanted companies, has not pleased some in the US food industry. Gordon McGovern, chief executive officer of the Campbell Soup Company, claims foreign firms such as Thomas J. Lipton Inc. of Great Britain and Nissin Foods Corporation of Japan have grabbed 25 percent of the dry soup business. ``I think that's a pretty important thing to look at, in the light of automobiles, VCRs, and television sets - what's happened to penetration of American markets by people bringing in a quality and a value that we've been thinking we couldn't do,'' he says. To make Campbell's products more competitive, he has been making ``massive, massive'' changes - instituting quality circles, cutting layers of management, upscaling products, and trying consumer-oriented packaging innovations.
Not everyone shares McGovern's worries. Bob Messenger, contributing editor of Prepared Foods magazine, feels the impact of foreign food manufacturers has been ``more psychological than real. ... I don't think foreign companies are going to have as easy a time making big strikes against the US food industry as they did in steel and auto,'' he says. ``In steel and auto, they were able to focus on one market and score big. In food, it's too segmented. There are too many demographics that any international conglomerate would have to learn - six or seven different groupings of population, from the elderly to the yuppies, the teenagers, the young working mothers.''
Mr. Messenger even sees ways American companies could gain by competing with foreign manufacturers, particularly the Japanese. ``By their example, we learn patience, we learn how to negotiate. That's a missing value in our system. Most of the people in our industry are anchored to the bottom line. The Japanese are willing to invest and to wait.''
Charles E. Morris, Midwest editor of Food Engineering magazine, is less concerned about competition in the processing plant than he is about competition on the farm. ``We are still a net exporter of agricultural food products, but just very marginally,'' he says. ``All the family farm problems we've seen here in recent years are directly attributable to subsidized exports of agricultural products by foreign producers.
``They can't produce cheaper than we can, no way. But in Europe they subsidize the farmer to overproduce to begin with, and then they subsidize the export of that overproduction.''