This document provides an overview of the canned food industry including market analysis, competitive landscape, and leading companies. Some key points: - The global canned food market was worth $51.4 billion in 2006 and grew at a CAGR of 2.2% from 2002-2006. Canned fish/seafood and meat products accounted for 42.5% of market value. - The industry has high entry barriers due to capital requirements for processing facilities and brand loyalty of consumers. Rivalry is strong due to market fragmentation and high exit costs. - Major players include Del Monte Foods, ConAgra Foods, and Hormel Foods. Del Monte has global operations and sources from over

1. Industry Structure Analysis
CANNED FOOD INDUSTRY
Team Members:
202 Akriti Agrawal | 215 Divya Bangera
220 Heemanish Midde | 235 Mohit Soni | 257 Vikrant Warudkar
April 2008
Xavier Institute of Management and Research, Mumbai
Mumbai University

2. 1
TABLE OF CONTENTS
1. INTRODUCTION
1.1. Market Analysis 2
1.2. Market Value 2
1.3. Market Volume 3
1.4. Market Segmentation I 3
1.5. Market Segmentation II 3
1.6. Market Share 3
2. COMPETITIVE LANDSCAPE
1.1. Buyer/Supplier power 4
1.2. Economies of scale 4
1.3. Brand loyalty 4
1.4. Access to Raw materials 4
1.5. Availability of substitutes 5
1.6. Entry criteria 5
1.7. Capital expenditure 5
1.8. Exit criteria 6
1.9. Distribution 6
3. LEADING COMPANIES
1.7. Del Monte Foods Company 7
1.8. ConAgra Foods, Inc. 7
1.9. Hormel Foods 8
4. STRUCTURE ANALYSIS
1.1. Entry Barriers 11
1.2. Exit Barriers 11
1.3. Rivalry among Competitors 12
1.4. Bargaining Power of Buyers 12
1.5. Bargaining Power of Suppliers 13
1.6. Threat of Substitutes 13
1.7. Summary Table 14
1.8. Conclusion 14
5. ANNEXURES 15

3. 2
1
INTRODUCTION
The canned food industry will be analyzed taking food processing and canning companies as players and food
retailers as the main buyers. Globally, food retail was fragmented, which means that players can sell to a large
number of relatively small buyers. Key inputs for canned food producers are raw materials such as grains, fruit
and vegetables, and meat and fish. Leading companies in this industry are Del Monte Foods Company,
ConAgra Foods, Inc., and Hormel Foods.
1.1 Market Analysis
The global canned food market generated total revenues of $51.4 billion in 2006, this representing a
compound annual growth rate (CAGR) of 2.2% for the period spanning 2002-2006. In comparison, the
European and Asia-Pacific markets grew with CAGRs of 1.7% and 3.2% over the same period, to reach
respective values of $24.3 billion and $7.3 billion in 2006.
Market volumes increased with a CAGR of 1.7% from 2002 to 2006, to reach a total of 18.2 billion kg in 2006.
The market's volume is expected to rise to 19.8 billion kg by the end of 2011, this representing a CAGR of 1.7%
for the 2006-2011 period. Sales of canned fish/seafood and meat products proved the most lucrative for the
US canned food market in 2006, generating total revenues of $21.8 billion, equivalent to 42.5% of the market's
overall value. In comparison, sales of canned vegetables generated revenues of $13.7 billion in 2006, equating
to 26.6% of the market's aggregate revenues.
The performance of the market is forecast to follow a similar pattern, with an anticipated CAGR of 2.2% for the
five-year period 2006-2011 expected to drive the market to a value of $57.2 billion by the end of 2011.
Comparatively, the European and Asia-Pacific markets will grow with CAGRs of 1.7% and 2.9% respectively
over the same period, to reach respective values of $26.4 billion and $8.4 billion in 2011.
1.2 Market Value
The global canned food market grew by 2.2% in 2006 to reach a value of $50.9 billion.
The compound annual growth rate of the market in the period 2002-2006 was 2.2%. [See annexure 1]
1.3 Market Volume
The global canned food market grew by 1.7% in 2006 to reach a volume of 18.1 billion kg.
The compound annual growth rate of the market volume in the period 2002-2006 was 1.7%. [See annexure 2]
1.4 Market Segmentation I
Sales of canned fish/seafood and meat products account for 42.2% of the global canned food market's value.
Canned vegetables sales generate a further 26.7% of the global market's revenues. [See annexure 3]

4. 3
1.5 Market Segmentation II
Europe was the most lucrative regional market, accounting for 47.7% of the global canned food market's value.
The Americas generate a further 38% of the global market's revenues. [See annexure 4]
1.6 Market Share
DelMonte Foods holds a 6.7% share of the global canned food market's value. ConAgra Foods generates 4.4%
of the global canned food market's revenues. [See annexure 5]

5. 4
2
COMPETITIVE LANDSCAPE
2.1 Buyer/Supplier power
The canned food market is generally high volume-low margin. Fragmented food retailers are the main buyers.
Supplier power was weak, with canned food players able to source their commodity inputs from a large
number of suppliers. The canned food industry will be analyzed taking food processing and canning companies
as players and food retailers as the main buyers. Globally, food retail was fragmented, which means that
players can sell to a large number of relatively small buyers. However, in some important country markets,
mainly in Western Europe, retailer concentration was much higher. For example, in the UK, four supermarket
chains account for approximately 85% of food retail.
2.2 Economies of scale
Major players have strong brands and the scale economies associated with high-volume production facilities;
these mean that there was no more than a moderate threat of new entrants.
2.3 Brand loyalty
Retailers are unlikely to be swayed themselves by brand loyalty, and price sensitivity will be high. However,
these drivers of buyer power will be mitigated where consumers are loyal to particular brands: retailers will
need to stock these products in order to meet their own customers' demand. Food processors rarely integrate
forwards into retail, and vice-versa. Canned food was generally a significant part of a food retailer's business.
2.4 Access to Raw materials
Key inputs for canned food producers are raw materials such as grains, fruit and vegetables, and meat and fish.
There are two main ways for players to obtain these inputs. They may purchase them on the open market, in
which case they have little control over prices, and often use techniques such as hedging to mitigate the
impact of price fluctuations. Alternatively, they may negotiate supply contracts with growers and farmers -
fixed-term contracts with periodically negotiated prices are common. Where growers operate in a fragmented
upstream landscape, large food processing firms may have a strong negotiating position, but supplier power
was boosted by the switching costs to food processors of terminating a fixed-term agreement early. For
example, major US player DelMonte sources much of its vegetable supply from around 700 growers, with one-
year contracts and annually negotiated prices the norm; the company sources fruit from a similar number of
suppliers, with one- to ten year contracts. DelMonte also buys inputs, including flour and sugar, on the open
market.
Leading players must maintain product quality if they are to maintain their brand equity in the long term; their
need to source raw materials of appropriate quality tend to strengthen somewhat the suppliers that can offer
these. Metal cans are also important inputs in this market and, again, some market players enter into long-
term contracts with their supplier, which strengthens supplier power.

6. 5
2.5 Availability of substitutes
Substitutes are available for any one raw material in the sense that, if the price of one kind of vegetable rises, a
manufacturer could buy less of it and more of a cheaper one - provided, of course, its contracts with suppliers
are due for renewal. Overall, supplier power was weak.
From the point of view of consumers, the main substitutes for canned foods are frozen and dried products as
these offer similar benefits of convenience and extended storage lifetimes. Retailers, aiming to meet consumer
demand, will tend to stock both kinds of substitute. Dried products are less of a threat, as fewer foods can be
successfully dried than canned; frozen foods have the disadvantage (from a retailer's perspective) of requiring
more costly storage in freezers. However, few consumers will want to rely completely on canned products for
their non-perishable food needs and the threat of substitutes was assessed as strong.
2.6 Entry criteria
Some food product markets can be successfully entered on a small scale. For example, it is possible to enter
the bakery business as an independent, with artisanal production and a single integrated retail outlet, perhaps
appealing to customers by emphasizing the freshness and quality of bread baked on the premises. However,
the canned food business was difficult to enter in such a low-key manner. The majority of canned foods are
mass-market items, appealing to consumers mainly on the grounds of convenience and low price. Especially
where retailers are strong buyers, the per-can margins for manufacturers are not likely to be all that high. Also,
canning is inherently an industrial process that is very difficult to perform as a craft process.
2.7 Capital expenditure
These factors point to the need for considerable initial capital expenditure, in order to establish canning plants
offering scale economies that will offset the low margins expected. This raises the barriers to entry to the
global market.
Incumbents have strong brands. This was always a barrier to new entrants in markets where consumers
ultimately drive demand. It was particularly important in the canned food market because there was no way
for a consumer to assess the quality of a canned product from an unknown manufacturer before purchase
(other kinds of food can be checked visually, or perhaps even by smell and touch). Access to distribution
channels may be difficult.
Shelf space was a vital but finite resource and retailers will need to be persuaded to allocate it to a new
player's canned food, especially in highly competitive food retail markets. In some regions, access to suppliers
may also be non-trivial. Even where there was no shortage of small-scale growers, for example, it may be
difficult to set up reliable supply chains, especially for perishable raw materials in countries with poor
transport infrastructure. Furthermore, global market revenues have grown rather unexcitingly in recent years
making it less attractive to new players. Overall, there was a moderate likelihood of new entrants.
The global market was fragmented despite the presence of multinationals like Heinz and DelMonte. This
boosts rivalry. Retailers can switch between different manufacturers products quite easily, although the brand
loyalty of consumers exerts a pull-through on retailers and makes it difficult for them to abandon completely
the more expensive branded products for private-label alternatives. It was notable that the largest players in
this market own the majority of their factories (although they lease a few facilities): outsourcing was less
prominent in this business than in some other consumer markets.
2.8 Exit criteria
In consequence, exit barriers are high, since leaving the canned food market would require divestment of
substantial - and often quite specialized - assets. Fixed costs are also likely to be high and automated processes
mean that production can be ramped up when necessary. These factors tend to intensify rivalry. Some leading

7. 6
players have diversified into other food businesses, which reduces rivalry by making them less reliant on
canned food sales. However, market growth had been no more than modest in recent years, which boosts
rivalry, as players strive to retain their share of the revenues. Overall, there was a strong degree of rivalry in
this market.
High exit costs and a relatively large number of competitors are just two factors driving the strong rivalry that
characterizes this market.
2.9 Distribution
Supermarkets and hypermarkets form the leading distribution channel, with 69% of the global market by
value. Independent retailers account for a further 15.9% of the market's value. [See annexure 6]

8. 7
3
LEADING COMPANIES
3.1 Del Monte Foods Company
Del Monte was a branded food producer. The company presently has nearly 26 brands that provide a range of
food products, including: canned fruits and vegetables, sauces, soup, packaged tuna, baby foods, and pet
foods and snacks. The company had two main operations; consumer products, and pet products. In 2006, Del
Monte operated 15 production facilities and 11 distribution centers in the United States, Additionally; Del
Monte had operating facilities and distribution centers in American Samoa, Ecuador and Venezuela. The
company sells products under the Del Monte, S&W, SunFresh, Fruit Naturals, Orchard Select, Contadina,
College Inn and Nature's Goodness brand names, as well as private label products, in the consumer products
segment. This segment includes products such as: packaged spinach, carrots and potatoes; packaged fruits,
including peaches, pears, fruit cocktail/mixed fruits and apricots; packaged tomato products, including stewed,
crushed, diced, chunky tomatoes; broth products; and packaged infant feeding products.
The company uses a direct sales force as well as independent food brokers to sell its products to its customers
in different channels. It presently owns 22 US patents covering food production and preservation methods,
methods for manufacturing cans and ends, methods for sealing cans, animal foods and food processing
equipment.
3.2 ConAgra Foods, Inc.
ConAgra Foods (ConAgra) is a packaged foods company serving grocery retailers, restaurants and other
foodservice establishments, as well as food processors. The company was highly focused on the sale of
branded and value-added consumer products. The company owns consumer brands such as Healthy Choice
and Chef Boyardee.
The company operates four primary business divisions: consumer foods, food and ingredients, trading and
merchandising, and international foods. The consumer foods division offers branded, private label and
customized food products to various retail and foodservice channels. Its products include a variety of
categories (meals, entrees, condiments, sides, snacks and desserts) across frozen, refrigerated and shelf-stable
temperature classes.
This division had 44 manufacturing facilities in Arkansas, California, Georgia, Illinois, Indiana, Iowa,
Massachusetts, Michigan, Minnesota, Missouri, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas,
and Wisconsin; and one manufacturing facility in Arroyo Dulce, Argentina. Its key brands include Chef
Boyardee, Marie Callender's, Healthy Choice, Orville Redenbacher, Slim Jim, Hebrew National and Kid Cuisine
among others.
The food and ingredients division includes commercially branded foods and ingredients, which are sold
principally to foodservice, food manufacturing and industrial customers. This division's primary products
include specialty potato products, milled grain ingredients, dehydrated vegetables and seasonings, blends and
flavors, which are sold under brand names such as ConAgra Mills, Lamb Weston, Gilroy Foods, and Spicetec to
food processors.
This division operates 51 domestic production facilities (including two 50% owned facilities) in Alabama,
California, Colorado, Florida, Georgia, Idaho, Illinois, Iowa, Minnesota, Nebraska, New Jersey, New Mexico,
Nevada, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Utah, Washington, and Wisconsin; one
international production facility in Puerto Rico; one manufacturing facilities in Canada (three of which 50%

9. 8
owned); one manufacturing facilities in the UK (five of which 50% owned) and three manufacturing facilities in
the Netherlands (50% owned).
The trading and merchandising division operates under the company's subsidiary ConAgra Trade Group. It
includes sourcing, merchandising, trading, marketing and distribution of agricultural and energy commodities.
It had 73 domestic production facilities (including two 45% owned facilities) in Colorado, Delaware, Idaho,
Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Montana, Nebraska, New Mexico, North
Dakota, Ohio, Oklahoma, Texas, Washington, and Wisconsin. The company's international foods division
includes branded food products, which are sold principally through retail channels in North America, Europe
and Asia. The division's products include a range of categories (meals, entrees, condiments, sides, snacks and
desserts) across frozen, refrigerated and shelf stable temperature classes. Its key brands include Orville
Redenbacher's, Act II, Snack Pack, Chef Boyardee, Hunt's, and Pam. It operates four manufacturing facilities in
Canada, Mexico and the UK.
3.3 Hormel Foods
Hormel Foods (Hormel) is a manufacturer, processor and marketer of meat and food products in the US and in
other countries through its subsidiaries. Products manufactured by the company include hams, bacon,
sausages, franks, canned luncheon meats, stews, chilies, hash, meat spreads, shelf-stable microwaveable
entrees, salsas and frozen processed foods. These products are sold to retail, foodservice and wholesale
customers under the company's patents and trademarks.
Hormel Foods sells products in all 50 states of the US, in addition to serving Australia, China, Spain, Canada,
Japan, Korea, Mexico, the Philippines and Vietnam. The company's manufacturing facilities are located in
Austin, Minnesota; Algona, Knoxville, and Osceola, Iowa; Atlanta, Georgia; Aurora and Rochelle, Illinois; Beloit,
Wisconsin; Fremont, Nebraska; Stockton, California; and Wichita, Kansas.
The Fremont plant also had a pork slaughtering operation that provides the company with additional raw
material through its pork slaughtering operation. Jennie-O Turkey Store, a wholly owned subsidiary based in
Willmar, Minnesota, was the nation's number one producer of whole and processed turkey products sold to
retail and foodservice outlets.
The company markets its products internationally through a wholly owned subsidiary Hormel Food
International Corporation (HFIC).
Products manufactured by the corporation include hams, bacon, sausages, franks, canned luncheon meats,
stews, chilies, hash, meat spreads, shelf-stable microwaveable entrees, salsas and frozen processed foods.
These selections are sold to retail, foodservice and wholesale operations under many well-established
trademarks that include Always Tender, Black Label, Carapelli, Cure81, Curemaster, Di Lusso, Dinty Moore,
Dubuque, Fast n Easy, Herdez, Homeland, Hormel, House of Tsang, Jennie-o Turkey Store, Kids's Kitchen,
Layout, Light & Llean, Little Sizzlers, Mary Kitchen, Old Smokehouse, Patak's, Peloponnese, Range brand, Rosa
Grande, Sandwich Maker, Spam and Wranglers.
The company reports its business in five segments: grocery products, refrigerated foods, Jennie-O Turkey
Store, specialty foods and others. The grocery products segment consists primarily of the processing,
marketing, and sale of shelf stable food products sold predominantly in the retail market. This segment also
includes the operations of Arriba Foods. Arriba Foods manufactures and distributes Mexican flour tortillas,
corn tortillas, salsas, seasonings, and tortilla chips for retail markets and the food service industry. These
products are marketed under the Manny's, Gringo Pete's, and Mexican Accent brands.
The refrigerated foods segment includes the meat products and foodservice business units. This segment
consists primarily of the processing, marketing, and sale of branded and unbranded pork products for the
retail, food service, and fresh customer markets. This segment also includes the Precept Foods operation, a
51% owned joint venture with Cargill Meat Solutions Corporation, which offers fresh, case ready, branded pork

10. 9
and beef products. Clougherty Packing (Farmer John), a pork processor, was included as an operating segment
within Refrigerated Foods. The meat products business unit includes the operations for Lloyd's Barbecue.
The specialty foods segment includes the Diamond Crystal brands, Century Foods International, and Hormel
Specialty products operating units. This segment consists of the packaging and sale of various sugar and sugar
substitute products, salt and pepper products, dessert mixes, gelatin products, and private label canned meats
to retail and foodservice customers. This segment also includes the processing, marketing, and sale of
nutritional food products and supplements to hospitals, nursing homes, and other marketers of nutritional
products. Diamond Crystal Brands includes the results of operations for Hormel Health Labs and Mark-Lynn
Foods. Hormel Health Labs offers a full line of specialized food products for the healthcare industry and Mark-
Lynn manufactures and distributes food products including salt and pepper packets, ketchup, mustard, sauces
and salad dressings, creamers, sugar packets, jellies, desserts, and drink mixes.
Others include the Dan's Prize and Hormel Foods International operating units. These businesses produce,
market, and sell beef products and manufacture, market, and sell company products internationally. This
segment also includes various miscellaneous corporate sales.

11. 10
4
STRUCTURE ANALYSIS
Based on the above data, we can analyze the industry as follows:
1. Entry Barriers
Attractiveness
Parameter
1 2 3 4 5
Remarks
Economies of
Scale
√
Established canning plants required as high volumes, low
margin industry
Market Share:
Del Monte 6.7%
Con Agra 4.4%
Homel Foods 2.3%
Product
Differentiation
√ Brand loyalty high, consumers unsure of quality
Brand Identity √
For consumers quality of new manufacture was
unknown and there was the need to smell and touch.
Hence retailers are brand conscious
Switching Costs √ As brand loyalty of end consumers high
Access to
Distribution
Channels
√ Retailers are not swayed by brand loyalty
Capital
Requirements
√ Since the industry is vertically integrated
Access to
Technology
√
Skills-based, which is an intangible asset not easily
available
Access to Raw
Materials
√ Can purchase directly from open market even farmers
Average 3 Moderately Attractive
2. Exit Barriers
Attractiveness
Parameters
1 2 3 4 5
Remarks
Asset
Specialization
√ Non-fungible assets
Cost of Exit √ High exit costs
Average 2 Not attractive

12. 11
3. Rivalry among Competitors
Attractiveness
Parameter
1 2 3 4 5
Remarks
No. of
Competitors
√
Del Monte, ConAgra, Hormel are the three major players
in the market
Industry Growth √ CAGR 2.2 % from 2002 to 2006
Fixed Costs √ Asset Specialization
Differentiation √ Brand loyalty high, consumers unsure of quality
Switching Costs √ As brand loyalty of end consumers high
Strategic Stakes √ Leading players are diversified
Average 3 Not Attractive
4. Bargaining Power of Buyers
Attractiveness
Parameter
1 2 3 4 5
Remarks
No. of Buyers √ Large number of fragmented retailers
Substitutes √ Substitutes not easily accepted due to brand loyalty
Switching Costs √ As brand loyalty of end consumers high
Buyers’ threat of
Backward
Integration
√ Capital requirement was too high for retailers
Supplier’s threat
of Forward
Integration
√ As industry is vertically integrated
Average 4 Moderately Attractive

13. 12
5. Bargaining Power of Suppliers
Attractiveness
Parameter
1 2 3 4 5
Remarks
No. of Suppliers √ Large number of suppliers
Substitutes √ Substitutes for raw material easily available
Switching Costs √ Substitutes for raw material easily available
Buyers’ threat of
Backward
Integration
√
Less probability as primarily agro-products require a
completely different skill-set
Supplier’s threat
of Forward
Integration
√ Farmers cannot setup manufacturing firms
Industry’s
importance to
Supplier
√ Suppliers supply to many different customers
Average 3.5 Fairly attractive
6. Threat of Substitutes
Attractiveness
Parameter
1 2 3 4 5
Remarks
Availability of
close substitutes
√ Substitutes are available ( fresh raw mat., meat etc)
Switching Costs √ Can switch to fresh food
Substitute’s
price/value
√ Substitute value for money was high
Average 2 Not Attractive

14. 13
Summary Table
Parameter Attractiveness
Entry Barriers 3 Moderately attractive
Exit Barriers 2 Not attractive
Rivalry Among Competitors 3 Moderately attractive
Bargaining power of Buyers 4 Very attractive
Bargaining Power of Suppliers 3.5 Attractive
Threat of Substitutes 2 Not attractive
Average 3 Moderately Attractive
Conclusion
The canned food market is generally high volume-low margin. Food retailers are the main buyers and generally
wield strong buyer power, especially if they are large chains. Supplier power was weak, with canned food
players able to source their commodity inputs from a large number of suppliers. Major players have strong
brands and the scale economies associated with high-volume production facilities; these mean that there was
no more than a moderate threat of new entrants. High exit costs and a relatively large number of competitors
are just two factors driving the strong rivalry that characterizes this market.

15. 14
ANNEXURES
Annexure 1
Market Value: $ billion, 2002-2006
Global Canned Food Market Value: $ billion, 2002-2006
(Source : Datamonitor)
Annexure 2
Global Canned Food Market Volume: Kg billion, 2002-2006
(Source : Datamonitor)

16. 15
Annexure 3
Global Canned Food Market Segmentation I: % Share, by value, 2006
(Source : Datamonitor)
Annexure 4
Global Canned Food Market Segmentation II: %Share, by value, 2006
(Source : Datamonitor)

17. 16
Annexure 5
Global Canned Food Market Share: %Share, by value, 2006
(Source : Datamonitor)
Annexure 6
Global Canned Food Distribution: %Share, by value, 2006
(Source: Datamonitor)

18. 17
Annexure 7
Global Canned Food Market Value Forecast: $ billion, 2006-2011
(Source : Datamonitor)
Annexure 8
Global Canned Food Market Volume Forecast: Kg billion, 2006 - 2011
(Source : Datamonitor)
*****