Zorn: "Captain, the Ferengi would be very interested in a base like this."
Picard: "Fine. I hope they find you as tasty as they did their past associates."
So, cannibalistic as in willing to dine upon another intelligent species. Which is stretching the usually meaning of the term somewhat, but is how it is used fairly commonly in science fiction. Picard was suggesting that the people of Deneb Four would be literally eaten by the then mysterious Ferengi.
It's possible that Picard alrady knew this to be a false rumor and was employing the alligation as a negotiation ploy
For the Ferengi to have been a credible " villain," they would have had to have been shown to be a actual threat to the Federation, in some fashion. Occasionally they would have had to win. They never did. Quark would sometimes "beat" Sisko and Odo, his little side business venture would succede. The Romulans in Data's Day handed Picard his hat and kicked him to the curb. The (pre-Dominion) Cardassina war "killed millions."
There could have been dialog of Ferengi victories, even if they never won against the hero ship Enterprise. Federation allies and members, becoming Ferengi allies or client states. The Federation being deprived of resources, having to deal with the Ferengi. The Ferengi causing political problem too.
It wouldn't have had to have been combat and warfare. There are other ways to fight, ways the Ferengi might have been better skilled at than the Federation.