Hungry for More: US Demand for Specialized Products Drives Food and Beverage Industry

This article originally appeared in the June 2026 edition of Expansion Solutions Magazine.

This article explores key trends shaping the Food and Beverage industry, including how activity and specialization vary across regions of the country. It highlights four critical factors influencing market conditions and redefining the role of economic developers, informed not only by national labor market data but also by insights Camoin Associates is getting directly from food and beverage executives who are actively evaluating expansions and relocations in the lead generation process.

As an industry that drives significant economic activity nationwide, economic developers must stay attuned to both structural and cyclical shifts. Understanding how existing companies are navigating these challenges and where new opportunities are emerging will be critical to retaining the existing business mix and guiding strategic investments in line with shifting market dynamics.

Recent Food and Beverage Industry Conditions

Over the last decade, labor market data from Lightcast indicate the Food and Beverage industry has experienced strong growth, with employment increasing by 23% and Gross Regional Product (GRP) expanding by 44%. Notably, this pace of job growth outperformed the overall US economy, which grew by approximately 11% over the same period. Key drivers of employment growth include subsectors like Beverage Manufacturing and Animal Food Manufacturing.

Across the country, regional dynamics vary significantly, with different areas specializing in distinct segments of the industry. States like Texas, Florida, and Georgia remain dominant agriculture hubs, while Midwestern states like Wisconsin continue to serve as legacy production centers. At the same time, a number of mid-sized and emerging markets are gaining traction. Utah has emerged as a fast-growing production hub, Michigan benefits from a diversified manufacturing base, and Connecticut is carving out a niche in specialty food production within the Northeast. Smaller markets, including New Hampshire and South Dakota, have also seen notable growth over the past decade.

Food and Beverage Industry Spotlight: Sioux City

The Sioux City MSA, spanning Iowa, Nebraska, and South Dakota, stands out for both its growth and industry concentration. The region’s strength is driven by animal slaughtering, meat processing, and pet food manufacturing, making it one of the nation’s most concentrated food processing hubs.

Foreign direct investment (FDI) trends further highlight the region’s momentum. The city of Sioux Falls, SD, has attracted notable investment activity, ranking alongside much larger markets such as St. Louis, Houston, and Los Angeles. Over the past decade, Sioux Falls secured seven FDI projects from five companies, generating an estimated 2,000 jobs and approximately $1.4 billion in capital investment.[1]

This growth trajectory continues into 2026. In February, Smithfield Foods, Inc. announced plans to construct a state-of-the-art packaged meats and fresh pork processing facility in Sioux Falls. Located within the 1,000-acre Foundation Park development, the new facility will replace the company’s existing plant and is described by the company as “among the most modern of its kind in the United States …”[2]

What is Driving the Food and Beverage Industry?

While a wide range of forces are shaping investments in the Food and Beverage industry, four key dynamics have an outsized impact on market conditions. These factors also drive how economic developers can position their communities for new investment.

1. Demand Is Stable, but the Product Mix Is Rapidly Evolving

Consumers are increasingly gravitating toward health-focused and functional foods and premium offerings that align with lifestyle and wellness goals. This has led to a loss of market share for traditional categories such as traditional sodas, white bread, and mainstream beer. Growth is concentrating in value-added segments where companies can command higher margins through product differentiation and distinctive branding.

This shift is also influencing product form and distribution. The continued rise of “snackification,” where products are in smaller portions, feature grab-and-go items, or are convenience-oriented products, reflects changing eating habits among consumers who are constantly “on-the-go.” For producers, these trends are driving demand for new processing techniques and packaging formats.[3]

What Camoin Associates Is Hearing from Executives: Many companies have recently emphasized that future growth will not come from volume alone but from processing sophistication and brand-aligned production. Executives consistently point to the need for facilities that can support flexibility for product line changes, specialty SKUs, and innovative packaging rather than single, legacy products.

2. Mounting Margin Pressure Is Driving Operational Decisions

Despite steady demand, profitability across much of the industry remains constrained. Many subsectors operate on thin margins, typically ranging from 2% to 8%, making cost control a central driver of location and investment decisions.[4]

Input volatility is a major factor. Agricultural inputs such as grains, dairy, and sugar have experienced significant price swings, compounded by rising fertilizer costs and ongoing geopolitical instability.[5] In addition to raw materials, companies face persistent pressure from labor costs, shifting immigration policies, and regulatory compliance requirements.

What Camoin Associates Is Hearing from Executives: Margin pressure is shaping nearly every site decision. Executives consistently cite labor availability, logistics efficiency, and existing building readiness as more important than incentive value alone. In particular, companies prefer existing food-grade facilities that reduce upfront capital costs and accelerate time-to-market.

3. Global Competition and Trade Dynamics Are Reshaping Supply Chains

Globalization continues to play a defining role in the Food and Beverage sector, with American producers competing with importers for specialized and globally inspired products.

Imports are prevalent in segments such as seafood and specialty ingredients, often due to limitations in what the United States can produce based on climate or perceived authenticity.

Domestic producers also face price competition from lower-cost international suppliers, especially in labor-intensive segments. At the same time, trade policy uncertainty and tariffs introduce volatility, particularly for perishable imports.[6]

What Camoin Associates Is Hearing from Executives: Canadian manufacturers are particularly keen to site additional operations in the US.

Camoin Associates has had conversations with several that are evaluating US manufacturing or distribution entry on compressed timelines, driven by trade policy uncertainty. In many cases, these companies are expanding into the US to serve US consumers from US facilities, not to export.

4. Technology Is Redefining Production, Distribution, and the Consumer Interface

Technology adoption is accelerating across the Food and Beverage sector, not only in production but across the entire value chain.

AI-driven supply chain management and functions such as smart packaging are becoming standard tools for managing costs and responding to changing consumer expectations. The application of these digital tools is a direct response to margin pressures felt by producers and the need for speed and flexibility.

What Camoin Associates Is Hearing from Executives: Companies increasingly expect communities to support technology-enabled operations, whether through workforce pipelines, utility capacity, or zoning that accommodates advanced processing and cold-chain infrastructure.

Real-World Implications: The Dairy Industry as a Case Study

A recent analysis of the New England dairy sector for the Northeast Dairy Business Innovation Center (NE-DBIC) offers a real-time case study of how broader Food and Beverage trends are reshaping the industry. The takeaway is clear: this is less about decline and more about a fundamental shift in where value is created.

Dairy faces the same pressures seen across the industry—tight margins and a rapidly changing product mix. Traditional fluid milk operates on thin margins, contributing to the loss of smaller farms. At the same time, remaining operations are becoming larger and more productive, reflecting a shift toward scale and efficiency.

Growth is increasingly concentrated in value-added and specialty products such as cheese, yogurt, and organic dairy products, which offer stronger margins and better alignment with consumer preferences. In New England, this has helped stabilize processing activity even as farm-level production declines.

What This Means for Economic Developers

If your community has strengths in any segment of the food and beverage sector, these trends point to a clear set of priorities for remaining competitive in attracting and retaining investment. The communities best positioned to capture this activity are those that focus on the following areas:

• Prioritize food-grade real estate readiness. Demand for existing or conversion-ready FDA- and USDA-compliant facilities far outpaces supply. Communities that can identify and accelerate access to these assets offer a decisive advantage. Based on conversations with business executives, the site readiness factor often outweighs incentive value alone.
• Compete on speed and flexibility. With margins under pressure, other factors like speed-to-market, operational flexibility, and reduced upfront capital costs are valuable assets for companies. Programs and processes that shorten permitting timelines or support workforce onboarding can directly influence location decisions.
• Align infrastructure with advanced processing capabilities. Modern food production facilities require robust infrastructure, particularly reliable water and energy capacity to support activities like cold-chain logistics and technology-enabled operations. Economic developers who can collaborate with utility providers and local jurisdictions to address complex or persistent infrastructure challenges will be viewed as competitive partners.
• Target market-driven investment opportunities. Growth is increasingly driven by serving US consumers from domestic facilities, including near-term interest from Canadian companies responding to trade uncertainty. Outreach efforts should highlight a community’s logistics advantages and proximity to key customer markets. Showcasing the presence of reliable suppliers that support ongoing operations will also stand out in the business location decision-making process.

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About the Authors

Alexandra Tranmer, CEcD, is the Director of Industry and Workforce at Camoin Associates. As a senior project manager, Alex has led complex strategic planning efforts in geographies ranging from bustling urban centers to pastoral tourist destinations, requiring adept stakeholder management and collaboration. She works with clients to balance the competing interests of stakeholders while ultimately helping them develop an ambitious yet achievable plan under their current organizational climate. Alex has an Honors Bachelor of Arts degree and a Master of Science degree in Planning (MScPl) from the University of Toronto in Ontario, Canada. 

Victoria “Tori” Conroy is a Senior Project Manager at Camoin Associates, where she manages a wide variety of client projects, including in-depth target-industry strategies, economic and fiscal impact analyses, real estate market analyses, and the development of TIF/DIF funding districts. Before joining Camoin Associates, Tori worked for several economic development authorities and has experience managing publicly owned industrial properties, building community partnerships to support workforce development, and developing and executing business retention and expansion programs. She has also led and implemented business attraction campaigns nationally and abroad. Tori has a Master of Public Administration degree and a graduate certificate in local government management from Virginia Tech, as well as a B.A. in Political Science from Virginia Commonwealth University.

Bridget Byrnes is an Economic Data and Research Analyst at Camoin Associates. She holds a Bachelor of Arts in Writing from Emerson College and a Master of Public Administration with a concentration in economic development from Murray State University. As an analyst, Bridget leads data-driven research and strategic planning initiatives across housing, industry, and economic and fiscal impact projects. She has guided efforts ranging from housing and market analyses in communities across the Northeast to cluster and workforce analyses that help regions position themselves for long-term competitiveness. Bridget works closely with local leaders to translate complex economic and demographic data into actionable strategies that support inclusive growth and sustainable development.

Endnotes:

[1] fDi Markets, “Trends Report FDI Food and Bev,” January 2015-December 2025.

[2] Greater Sioux Falls Chamber of Commerce, “Smithfield Announces Plans for New Sioux Falls Facility,” February 24, 2026.

[3] IBIS World.

[4] IBIS World.

[5] PBS News, “Farmers Warn of Food Price Spike as War Drives Up Fuel and Fertilizer Costs,” April 6, 2026.

[6] IBIS World.