When it comes to discussions about the cold storage industry, states in the Sunbelt region like Texas often take center stage due to their growing population, business-friendly environment, and available land to build on.

However, there’s a quiet revolution brewing in the heartland of the United States – Ohio, Kentucky, and Indiana, which Colliers has collectively dubbed “The Great Plate States.” This trio is rewriting the script by outperforming in terms of major capital investments and emerging as pivotal players in the food and beverage space, which brings with it a greater need within the cold storage sector.

The period from 2020 to 2022 witnessed a significant surge in the food manufacturing industry, primarily driven by a rising appetite for ready-to-eat meals. Companies with historical ties to unprocessed meat products made substantial investments in modern facilities for cooking their own offerings in search of improved profit margins. The heightened demand for frozen foods in the United States accelerated this industry-wide transformation. Although not entirely novel, the COVID-19 lockdowns acted as a catalyst, prompting individuals to prepare their own meals at home and intensifying this shift. The primary reason for this wave of investment focusing mainly on the Midwest region was its strategic positioning as a vital link connecting agricultural and animal production with the established distribution center networks.

While the Sunbelt region grabs headlines, it’s essential to recognize the impressive growth and potential of The Great Plate States in shaping the cold storage landscape.

The Industry’s Investment Surge

Over the last couple of years, the food and beverage industry has witnessed an investment surge that has exceeded expectations. In 2021 and 2022, national investments doubled the previous five-year average, signaling a robust market and heightened interest in the sector.

Colliers Insight

Bret Swango, CFA

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Surprisingly, a quarter of this activity has been concentrated in the unassuming yet dynamic trio of Ohio, Kentucky, and Indiana. The Great Plate States are redefining the investment map by attracting substantial funds and driving significant growth in the food and beverage domain.

Constructed Projects and Manufacturing Leadership

Zooming in on 2021, it becomes evident that The Great Plate States are leaving an indelible mark on the food and beverage industry. These states have witnessed a flurry of new factory announcements and completions, trailing behind only giants like Texas and California. When factory clusters develop, cold storage development follows to service the needs of those factories.

McCormick and Dryers Grand Ice Cream both undertook projects in Indiana in 2021; Kentucky had three, and Ohio had four. The significance of this growth is further underscored by the existing critical mass of food manufacturing facilities within these states. Of the three, Ohio takes the lead with approximately 1,300 food manufacturing facilities, solidifying its status as a manufacturing powerhouse.

Leveraging Labor Expertise

One of the key attributes that will keep propelling The Great Plate States’ rise in the cold storage industry is their well-suited and skilled labor force. These states boast historically higher-than-national-average proportions of their workforce employed in manufacturing. This foundation serves as a springboard for manufacturing expansion and more sophisticated automated distribution operations as found in many of the cutting-edge new cold facilities, providing the necessary expertise and experience required to support the growing demands of the industry.

Looking Ahead

As food manufacturing facilities grow in numbers in The Great Plate States – they will be producing more and more raw ingredients and finished food products. This increase in production will require more cold and frozen storage facilities to be completed to meet the rise in production. The delicate dance of storing these products in controlled environments before they grace the production floor, grocery store aisles, or e-commerce grocery fulfillment centers highlights the pivotal role that cold storage facilities play in the entire food & beverage supply chain.

Read our previous articles on the Cold Storage industry here and here.