Food companies do well in 'most admired' ranking

by Morton Sosland
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Although listings of "The Most" this and the "Number One" that have never been highly regarded by this page as measures of the real world in which food manufacturing is engaged, the way the recent compilation by Fortune magazine modifies its choices of "the world’s most admired companies" is interesting and even instructive. For years, Fortune has made these selections, in partnership with the Hay Group, on the basis of two separate groupings — companies competing in U.S. industries and those in international industries. This year, a single listing has been assembled of the 50 most admired companies in the world, ranking Apple as No. 1, followed by Warren Buffett’s Berkshire Hathaway and then Toyota Motor. Especially enlightening are the categories into which various aspects of food are placed since, even with the overall global listing, the magazine’s editors have found it desirable to consider certain industries as solely American and others as international.

That division between the two groups means that the competition as "most admired" in food production is limited to U.S. food manufacturers, whereas the category of consumer food products, which are made by food production companies, is considered international. If that doesn’t seem odd, then consider how food and drug stores are counted as international, while companies in food services are viewed as engaged in strictly a U.S. industry.

The survey covers 64 industries, of which 25 are considered international and 39 are primarily U.S.-market industries. The revision has resulted in a smaller number of "pure" American companies being included among "the most admired," and a corresponding increase in the number of international companies. For the food industry, this shift is most striking in consumer food products, where three of the six "most admired" companies are based outside of America — Nestle, Groupe Danone and Unilever. The three U.S.-based companies, PepsiCo, General Mills and Kellogg all do have substantial operations beyond the U.S. borders.

In the other international group involving the food industry, food and drug stores, one of the major surprises in the Fortune listing is said to have occurred. The No. 1 company named in this industry is Tesco, the U.K. chain that has just entered the American retail market. In food services, considered here as an American industry, the lead continues to be held by McDonald’s, the food chain that not so incidentally credits most of its recent profit improvement to its presence in more than 100 countries.

While the companies that achieve the most favorable rankings in consumer foods, in food stores and in food services enjoy the same leadership this year as was the case a year ago, major shifts show up in food production. Indeed, a quick rundown of all the 64 separate industries, as well as in the leading global companies, would indicate that the shifts among food processing companies are probably the sharpest of any industry. The new food production leader in 2009 is Archer Daniels Midland, up from No. 5 a year ago; Bunge is No. 2, against No. 1; Chiquita Brands is 3 versus 8, and Seaboard ranks 4, against 7 last year.

In this compilation, executives within each industry are asked by Hay to assess companies in their own industry on nine criteria, from investment value to social responsibility. The highest any food company attained is 8.08 for Nestle, which also ranks near the top for any industry. In the world’s most admired 50 companies, Berkshire Hathaway, with a relative trace of food in Dairy Queen and See’s Candies, ranks No. 2, followed by McDonald’s at 16 and PepsiCo at 21. Nestle, at 38, and General Mills, at 45, are the only food manufacturers among the most admired 50 companies. Considering the huge problems any company faces in being "admired," much less "most admired" in these rocky times, the food industry has much to be proud of in how it ranks in this global race.

This article can also be found in the digital edition of Food Business News, June 9, 2009, starting on Page 9. Click here to search that archive.

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