20 Most Profitable Food Businesses in the World
In this piece, we will take a look at the 20 most profitable food businesses in the world. If you want to skip our primer of the food industry, profitability, and entrepreneurship in general, then head on over to 5 Most Profitable Food Businesses in the World.
Food is directly tied to human progress. This is because the sole reason humanity was able to progress as a civilization instead of living in hunting and gathering as tribes was that humans were able to settle down in societies to grow their own food and coalesce their resources.
Since then, the world, and the food industry have come quite far. Global caloric consumption has grown as we have been able to drastically increase our food production due to advances in agricultural mechanization. And this will continue to grow in the future as well according to data from the United Nations. According to the UN Food and Agricultural Organization's (FAO) estimates, global caloric consumption will grow from 2,789 kilocalories per person in 2000 to 3,139. kilocalories by 2050 for a 12% growth.
So it's clear that food is here to stay, and the ongoing global population growth provides opportunities for entrepreneurship. Entrepreneurship is the process of setting up a new business to make a profit and take financial risks in the process. It is also the heart of capitalism and economic growth, with the process of disrupting existing industries with new ideas first defined as 'Creative Disruption' by the Austrian economist Joseph Schumpeter as far back as 1946. And since Mr. Schumpeter's time, the food industry has produced some of the biggest and most profitable companies in human history.
One of these, which is a household name is none other than the fast food giant McDonald's Corporation (NYSE:MCD). In its latest fiscal year, McDonald's raked in $6.1 billion in net profit - higher than the foreign reserves of several developing countries. This lends the firm a profit margin of 26% - indicating that it brings 26 cents on a dollar to the coffers of shareholders and investors. But, McDonald's isn't the biggest food company in the world. Instead, that title goes to The Coca-Cola Company (NYSE:KO). Coca-Cola earned $9.5 billion in revenue in the twelve months ending in December 2022, for a profit margin of 22% - just a little lower than McDonald's despite selling different kinds of products.
As a whole though, McDonald's is several times more profitable than the restaurant industry. This is because the restaurant and dining industry has a profit margin of 9% according to estimates from the renowned Professor Aswanth Damodaran of the New York University's Stern School of Business. And, Coca-Cola is also more profitable than the beverages industry, with the soft drink industry having a profit margin of 14.6%.
Just as technology has disrupted a variety of other industries, it is also making its impact on the food industry as well. One such example comes from the food technology unicorn NotCo. This interesting company sits at the heart of the intersection of today's hottest technology scene, artificial intelligence, the push to environmental sustainability, and the food industry. Its platform, Giuseppe, has the potential of becoming the darling of environmental activists and vegetarians since it uses algorithms to first scan the texture and other details of animal based ingredients to find their purely plant based substitutes. NotCo raised $70 million in Series D1 funding in December 2022 to scale up Giuseppe to allow other firms to use it as well. NotCo currently sells its own food products as well, under 'ear catching' titles such as NotChicken, NotMilk, and NotBurger.
NotCo is truly a unicorn since most investor attention in the food entrepreneurship scene goes to different segments of the food chain according to researchers from the University of Hohenheim in Germany. They analyzed investments in start ups in the food value chain between 2013 and 2017 to conclude that packaging, agriculture, and shipping are some areas that received the most funding.
Finally, the food industry is naturally quite resilient in tough macroeconomic environments, and since we're in the midst of one right now, comments from McDonald's executives made during the firm's latest earnings call are worth noting. McDonald's is following an approach called 'intrapreneurship' where big firms apply an entrepreneurial strategy to their affairs:
We’re calling this Accelerating the Organization. In March, we convened our Annual Leadership Summit with top leaders from across the globe. Part of this meeting, we discussed three changes to our ways of working that will enable us to leverage our scale more effectively to meet the needs of our system and customers and unlock significant growth potential. The first is implementing horizontal ways of working. For years, our organization like many others was too siloed, whether that be geographically siloed or functionally siloed, and yet our biggest challenges and opportunities are rarely limited to just one market. They can’t be solved by only one function. They require collaborating across the organization to bring the full breadth of McDonald’s skills and experiences to devise the best system solution that can be scaled globally.
In other words, they need to be solved horizontally. With Accelerating the Organization, we’re now structured to work much more seamlessly in a horizontal fashion to solve these problems once and then scale solutions across markets, for example, is our app offering a seamless and personalized user experience. We’re continuing to increase our speed of service. Those are opportunities across every single market and require the expertise of multiple functions. To support our ambition, to scale innovations with greater agility and collaborate more effectively, our second key shift is adopting One McDonalds Way to standardize the common processes we use to drive consistency and enable speed. We’re an innovative entrepreneurial organization, but once a part of our system somewhere has solved a problem or developed a novel idea, we need to stop the work elsewhere.
We don’t need every market to invent its own light bulbs, so to speak.
With these details in mind, let's take a look at some of the most profitable food businesses in the world. For more businesses, you can check out 10 Most Profitable Businesses to Start from Home.
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Our Methodology
To compile our list of the world's most profitable food businesses, we cast a wide net and consulted seven (1,2,3,4,5,6,7) sources to compile an initial list of 40+ highly profitable food business ideas. Then, each time a business appeared on a list, it was awarded a single point, and the food businesses were ranked accordingly. After this, the profit margins of these businesses were gathered through different sources, and attention was paid to entries with more than one point with others included as a last resort. The final list of the most profitable food businesses is as follows.
20 Most Profitable Food Businesses in the World
20. Grocery Stores
Profit Margin Estimate: 2%
Grocery stores are some of the most common establishments that you're likely to find. They range from super giants such as Wallmart Inc. (NYSE:WMT) to small mom and pop stores.
19. Café
Profit Margin Estimate: 2.5%
A café is a popular establishment for people looking to enjoy their lunch break, meet up with friends, or simply get outside the house to maybe get some work done in a different environment.
18. Fine Dining
Profit Margin Estimate: 4%
Fine dining establishments are a step above fast food restaurants and cafes. They often have a long waiting list and revolve around creating an ambiance filled environment to eat food alongside specialized delicacies.
17. Food Truck
Profit Margin Estimate: 5.5%
A food truck is the opposite of fine dining. You can catch them anywhere, and a great advantage of them is that they can be moved around to accommodate areas with high demand such as festivals and rallies.
16. Baked Goods
Profit Margin Estimate: 5.5%
Baked goods are some of the most scrumptious treats that anyone can enjoy. Whether it's a cake, a doughnut, or biscuits, plenty of demand is always there for all kinds of products.
15. Alcoholic Beverages
Profit Margin Estimate: 5.76%
Alcoholic beverages cover drinks such as wine, spirits, and beer. They are often located in regions with suitable climatic and agricultural conditions, such as California.
14. Candy Stores
Profit Margin Estimate: 6.5%
Candy stores are naturally one of the most popular destinations for children.
13. Organic Food
Profit Margin Estimate: 6.5%
The health worries of eating artificial foods or food grown with the help of additives have led to a growth in the demand for completely naturally grown products that are free from artificial additives.
12. Fast Food
Profit Margin Estimate: 6.5%
Fast food is for people on the go who need to eat fast and get back to their jobs or other commitments. Some of the biggest food companies in the world are fast food companies.
11. Catering
Profit Margin Estimate: 7%
Catering is a management intense business that requires close contact with the customer and strict control over the workforce to ensure a healthy brand image.
10. Tea Brand
Profit Margin Estimate: 7.5%
While most people prefer coffee as their go to hot beverage, tea is quite popular among health conscious users and those that want to go caffeine free.
9. Ice Cream Shop
Profit Margin Estimate: 11%
An ice cream shop is really self explanatory. It'll do well in the summers, and all year around if kids were to have their way.
8. Fruit Juice
Profit Margin Estimate: 14%
Another growing trend, particularly among young people, is fruit juice due to its health benefit and a myriad of different tastes and flavors.
7. Baby Food
Profit Margin Estimate: 14%
Baby food allows babies to have the necessary set of nutrients for growth and development in a convenient package.
6. Pizza
Profit Margin Estimate: 15%
While originally from Italy, Pizza is now a global phenomenon.
Click to continue reading and see 5 Most Profitable Food Businesses in the World.
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Disclosure: None. 20 Most Profitable Food Businesses in the World is originally published on Insider Monkey.
