2

THE FOOD AND

AGRIBUSINESS SECTOR IN TENNESSEE

Published February 2015

Prepared by:

THE FOOD AND AGRIBUSINESS INDUSTRY IN TENNESSEE

1

The Volunteer State helps feed the world, leveraging its deep agricultural roots to cultivate a food and agribusiness industry that employs 36,700 workers. The food manufacturing sector in Tennessee numbers more than 1,100 registered processing manufacturers and warehouses, and an additional 145 domestic kitchen permits.

Tennessee houses an impressive menu of well-known food brands, from Bush’s Baked Beans to Jimmy Dean sausage, Little Debbie, Pringles and M&Ms. The state’s reputation for its distinctive Tennessee whiskey carries the Jack Daniels and George Dickel brands – and their reputation for craftsmanship – to markets around the world.

A strong agricultural economy has made the state fertile ground for food and beverage manufacturing. The state’s 76,000 farms generate $3.9 billion in annual cash receipts, and overall, agriculture generates $51.4 billion in economic output in Tennessee.

Major commodities include cattle and calves, soybeans, broilers (poultry), corn, and cotton. Food-related exports from Tennessee totaled $1.59 billion in 2013, up 28 percent since 2010.

The state is a leader in several food manufacturing subsectors, such as sugar and confectionery product manufacturing.

Companies such as Mars Chocolate, Standard Candy, Hershey and others employ 2,500 workers in the industry, placing the state No. 1 in the Southeast and No. 7 in the nation for total industry employment.

Tennessee ranks among the top 10 nationally for employment in several other industries, including distilleries, coffee and tea manufacturing, nonchocolate confectionery

manufacturing, the manufacturing of soft drinks, and other snack food manufacturing.

A number of homegrown food manufacturers have long histories in the Volunteer State. Tennessee is the headquarters for McKee Foods, founded in Chattanooga in 1934, and is one of the nation’s largest snack cake producers by volume.

Tennessee’s Little Debbie company, named for the co-founder’s granddaughter, now has over 160 snack offerings. Bush Bros. & Co., a 106-year-old baked beans producer, is headquartered in Knoxville. Nashville-based Standard Candy Co. has been making the Goo Goo Cluster for more than 100 years.

Tennessee has attracted investment from numerous national and international food manufacturing companies, including Tyson, Perdue, Hillshire Farms, Pringles and Frito-Lay. During the administration of Gov. Bill Haslam, Tennessee has received 50 expansion and recruitment project commitments related to the food and agribusiness sector, totaling 4,000 new jobs and $1.1 billion in company capital investment.

Major project announcements include an expansion by Green Mountain Coffee

Roasters in Knoxville, where it makes single-cup coffee products. In September 2013, Unilever announced a $108.7 million expansion in Covington that, when completed, will be the largest ice cream plant in the world.

Oberto Brands, a Washington state manufacturer of beef jerky products, opened its first production facility east of the Mississippi in Nashville in 2013, a $28.7 million investment. In October 2014, Mars Petcare opened a $110 million Global Innovation Center in Williamson County.

Statewide employment at breweries, wineries and distilleries has increased 85 percent since 2010, with more than 1,000 Tennesseans now employed in those industries. Tennessee’s global reputation for whiskey has helped launch a number of new spirits products and distilleries.

As of August 2013, 14 distilleries were producing traditional Tennessee whiskey, clear spirits like vodka and rum, and even moonshine produced by Ole Smoky Distillery, Popcorn Sutton Distillery and others. Craft brewing is also growing dramatically.

More than 35 craft breweries operate across the state, with an annual economic impact of $445 million.

OVERVIEW

THE FOOD AND AGRIBUSINESS INDUSTRY IN TENNESSEE

2

Industry NAICS Employment (2013) Establishments (2013)

Animal Slaughtering and Processing 3116 11,000 78

Bakeries and Tortilla Manufacturing 3118 5,985 101

Beverage Manufacturing 3121 4,414 92

Fruit and Vegetable Preserving and Specialty Food Manufacturing 3114 4,268 22

Other Food Manufacturing 3119 3,822 41

Sugar and Confectionery Product Manufacturing 3113 2,527 44

Dairy Product Manufacturing 3115 2,193 29

Grain and Oilseed Milling 3112 1,991 21

Animal Food Manufacturing 3111 504 18

Total 36,704 446

Source: EMSI

TENNESSEE FOOD AND BEVERAGE MANUFACTURING

TENNESSEE AGRICULTURE FACTS

$3.9B Annual farm cash receipts in

Tennessee

$51.4BAnnual economic output in

Tennessee related to agriculture,

10.5 percent of the state’s total

economy

76,000 Farms in Tennessee

10.8M Acres of farmland in Tennessee

Sources: USDA, National Agricultural Statistics Service

TN FOOD AND BEVERAGE EXPORT VOLUME

2010 $1,244,676,475

2011 $1,525,597,022 2012

$1,490,596,811

2013 $1,587,223,269

Source: U.S. Census Bureau: Foreign Trade Division

THE FOOD AND AGRIBUSINESS INDUSTRY IN TENNESSEE

3

SOC Code Description Employment (2013) Location Quotient* (2013)

51-9111 Packaging and Filling Machine Operators and Tenders 11,716 1.56

51-3022 Meat, Poultry, and Fish Cutters and Trimmers 3,221 0.98

51-3092 Food Batchmakers 3,055 1.37

53-7064 Packers and Packagers, Hand 17,513 1.27

53-7062 Laborers and Freight, Stock, and Material Movers, Hand 79,130 1.71

51-9198 Helpers-Production Workers 11,267 1.31

51-3093 Food Cooking Machine Operators and Tenders 1,467 2.11

51-1011 First-Line Supervisors of Production and Operating Workers 14,070 1.20

53-7051 Industrial Truck and Tractor Operators 16,330 1.59

51-9199 Production Workers, All Other 10,089 2.36

49-9071 Maintenance and Repair Workers, General 28,765 1.14

51-2092 Team Assemblers 45,968 2.14

51-9061 Inspectors, Testers, Sorters, Samplers and Weighers 12,288 1.29

49-9041 Industrial Machinery Mechanics 6,010 0.96

51-3099 Food Processing Workers, All Other 1,005 1.13

TOP OCCUPATIONS FOR TENNESSEE FOOD AND AGRIBUSINESS(Based on employment)

RECIPE FOR JOBS

Tennessee ranks among the top 10 states nationally in employment for the following industries:

◆ Distilleries

◆ Soybean and Other Oilseed Processing

◆ Coffee and Tea Manufacturing

◆ Nonchocolate Confectionery Manufacturing

◆ Other Snack Food Manufacturing

◆ Confectionery Manufacturing from Purchased Chocolate

◆ Soft Drink Manufacturing

Source: U.S. Bureau of Labor Statistics

41%Total land area in Tennessee

that is farmland, with

cropland accounting for approximately

55 percent of that

* Location Quotient (LQ): Ratio of proportion of an area’s employment in an industry to that of the nation as a whole. LQ is a way of quantifying how concentrated a particular industry, cluster or occupation is in a region as compared to the nation. LQ=1: national average; LQ > 1: industry composes a greater share of the local area employment than the national average (indicating strong concentration or specialization); LQ < 1: industry composes a smaller share of the local area employment than the national average.

THE FOOD AND AGRIBUSINESS INDUSTRY IN TENNESSEE

4

MAJOR TN FOOD AND BEVERAGE EMPLOYERS

1. COCA-COLA BOTTLING CO. Statewide

2. FRITO-LAY INC. Pulaski, Fayetteville

3. GEORGE DICKEL Cascade Hollow

4. GREEN MOUNTAIN COFFEE ROASTERS INC. Knoxville

5. HERSHEY Memphis

6. HILLSHIRE BRANDS Newbern

7. JACK DANIEL’S Lynchburg

8. KELLOGG’S Jackson, Memphis, Rossville

9. MARS, INC. Statewide

10. MCKEE FOODS CORP. Collegedale

11. PERDUE FARMS Monterey

12. PICTSWEET COMPANY Bells

13. PILGRIM'S PRIDE CORP. Chattanooga

14. TYSON FOODS INC. Shelbyville, Goodlettsville

15. UNILEVER Covington

6

128

88

314

14

11

4

13 10

722

15

5

THE FOOD AND AGRIBUSINESS INDUSTRY IN TENNESSEE

5

STRONG REGIONAL CONCENTRATION

Tennessee has strong manufacturing expertise in several sectors of the Food and Agribusiness cluster. The state ranks No. 1 in the Southeast for employment concentration, or location quotient*, in the following industries:

Nonchocolate Confectionery Manufacturing #1

Dry, Condensed and Evaporated Dairy Product Manufacturing #1

Other Snack Food Manufacturing #1

Confectionery Manufacturing from Purchased Chocolate #1

Soft Drink Manufacturing #1

Distilleries #2

Soybean and Other Oilseed Processing #2

Cookie and Cracker Manufacturing #2

Coffee and Tea Manufacturing #2

Source: EMSI

Industry NAICS Employment (2013) Location Quotient* (2013)

Distilleries 312140 760 4.26

Soybean and Other Oilseed Processing 311224 608 3.48

Cookie and Cracker Manufacturing 311821 2,299 3.45

Coffee and Tea Manufacturing 311920 1,129 3.10

Nonchocolate Confectionery Manufacturing 311340 1,073 2.98

Other Snack Food Manufacturing 311919 1,829 2.51

Dry, Condensed and Evaporated Dairy Product Manufacturing 311514 757 2.49

Confectionery Manufacturing from Purchased Chocolate 311352 1,370 2.27

Soft Drink Manufacturing 312111 3,071 2.09

Source: EMSI

TOP INDUSTRIES FOR TENNESSEE FOOD AND AGRIBUSINESS (Based on employment concentration, or location quotient*)

TENNESSEE FOOD AND BEVERAGE INDUSTRY

36,700Tennesseans employed in food and beverage

manufacturing

1,100Registered processing manufacturers and

warehouses

7Tennessee ranks among the top 10 states in

the nation for employment in seven food and

beverage manufacturing industries

85%Growth in employment at Tennessee

breweries, wineries and distilleries since 2010

Sources: U.S. Bureau of Labor Statistics,

Tennessee Dept. of Agriculture

* Location Quotient (LQ): Ratio of proportion of an area’s employment in an industry to that of the nation as a whole. LQ is a way of quantifying how concentrated a particular industry, cluster or occupation is in a region as compared to the nation. LQ=1: national average; LQ > 1: industry composes a greater share of the local area employment than the national average (indicating strong concentration or specialization); LQ < 1: industry composes a smaller share of the local area employment than the national average.

THE FOOD AND AGRIBUSINESS INDUSTRY IN TENNESSEE

6

TOP MARKETS FOR FOOD AND AGRICULTURE EXPORTS FROM TENNESSEE

CANADA $273,952,562

UNITED KINGDOM $125,492,597

FRANCE $109,503,348

GERMANY $83,030,979

MEXICO $78,628,226

JAPAN $76,911,033

AUSTRALIA $70,322,141

PHILIPPINES $39,950,008

CHINA $36,053,212

BELGIUM $33,932,267

Company Name Primary City Corporate Employment

McKee Foods Corporation Collegedale 6,000

Mars Petcare U.S., Inc. Franklin 2,671

Mayfield Dairy Farms, LLC Athens 1,700

The Pictsweet Company Bells 1,200

ACH Food Companies, Inc. Cordova 842

Bush Brothers & Company Knoxville 650

Unaka Corporation Greeneville 600

Standard Functional Food Group Nashville 580

Charms Company Covington 300

Chattanooga Bakery, Inc. Chattanooga 275

HEADQUARTERS AND CORPORATE-WIDE EMPLOYMENT

THE FOOD AND AGRIBUSINESS INDUSTRY IN TENNESSEE

7

RESEARCH, EDUCATION FLAVOR TENNESSEE’S AGRICULTURE AND FOOD INDUSTRY

Tennessee offers a wealth of higher education resources that support its agriculture and food industry. The Department of Food Science and Technology at the University of Tennessee includes a strong research component with major emphasis in microbiological food safety and food biopolymer chemistry. Allied to these areas are food quality enhancement and sensory evaluation.

The Food Science and Technology Department has awarded 240 Food Science degrees over the last 10 years and has seen a 71 percent increase in degrees awarded since 2010. A University of Tennessee report estimates that graduates with a bachelor’s degree in Food Science have a median salary of $65,000. In addition, there were 90 degrees awarded at Tennessee institutions in Foods, Nutrition and Wellness Studies in 2013.

FOOD AND BEVERAGE EXPORTS ON THE MENU

$700MBeverage exports from Tennessee

in 2013

No. 1 Tennessee’s rank among all states

for whiskey exports. Tennessee’s

whiskey exports are more than

double any other state.

$274MExports of food and agriculture

products in 2013 from Tennessee

to Canada, the state’s top market

Source: U.S. Census Bureau: Foreign Trade Division

THE FOOD AND AGRIBUSINESS INDUSTRY IN TENNESSEE

8

Company New Job Commitments Capital Investment ($) County Date

Blues City Brewery LLC 500 41,000,000 Shelby April 2011

Unilever Best Foods 428 108,640,000 Tipton September 2013

Green Mountain Coffee Roasters Inc. 312 5,130,000 Knox June 2012

Oberto Brands 310 28,700,000 Davidson November 2012

Tyson Fresh Meats Inc. 219 11,650,000 Davidson August 2013

Great Lakes Cheese Co. Inc. 204 100,000,000 Coffee October 2013

Taylor Farms Tennessee Inc. 170 5,900,000 Rutherford July 2013

Tyson Fresh Meats Inc. 157 15,544,244 Davidson May 2014

Williams Sausage Co. 150 3,000,000 Obion March 2013

Mars Petcare 144 86,550,000 Williamson June 2012

Jack Daniel’s 94 141,700,000 Moore August 2013

HEALTHY GROWTHDuring Gov. Bill Haslam’s administration, the Tennessee Department of Economic and Community Development has received 50 project commitments to create 4,000 new jobs with capital investment of $1.1 billion in the Food and Agribusiness sector. (Q1 2011-Q3 2014)