US ice cream companies will expand machinery purchases, as credit conditions loosen over the five years to 2016
Los Angeles, Califronia (PRWEB) November 22, 2011
The Ice Cream Making Machinery industry will grow slowly over the next five years. According to a new report by IBISWorld, the nation’s largest publisher of industry market research, revenue is anticipated to expand at an average annual rate of 1.7% to $54.7 million in the five years to 2016. US-based ice cream manufacturers will begin to replenish machinery to meet heightened consumer demand. Firms that focus on specialized equipment that enhances taste or produces artisan-type ice cream will benefit the most. Further, input prices will experience less volatility over the next five years, enabling many producers to rebuild margins that were lost during the previous five years. Nevertheless, shifts in ice cream production sales to emerging economies will limit the industry's expansion as major producers focus on these countries for revenue growth.
The Ice Cream Making Machinery industry declined over the past five years, with revenue expected to decrease 1.8% per year to $50.2 million in the five years to 2011. The industry's downstream customers, ice cream producers, delayed replacing machines amid tight credit conditions and volatile input prices. Ice cream producers held off on new machinery expenses as the price of milk jumped and producers tried to contain production costs. Many customers still used old machinery to wait out the recession, and some purchased machinery from abroad, which often was sold at a discount to domestically made products. This trend is expected to continue through 2011, as firms continue using existing machinery to produce ice cream amid volatile economic conditions. Because of this trend, industry revenue is anticipated to decline.
High input prices were also a burden for industry firms. According to IBISWorld, the price of steel rose significantly during the past five years, resulting in higher production costs and lower profit margins. In response, many firms cut wages and employment numbers to thwart decreasing profit margins and keep production lines running. However, this strategy was not enough for some firms that domestically produced machines. Many players left the industry or moved operations abroad to control production expenses and access growing emerging economy markets.
According to IBISWorld analyst, Justin Molavi, the next five years will bring some revenue growth, but various negative trends will limit the industry's growth. “US ice cream producers will expand machinery purchases, as credit conditions loosen over the five years to 2016,” says Molavi. Moderating input price volatility will also help industry players grow margins, following rising input prices during the previous five years. Despite this factor, many ice cream producers will concentrate their production abroad to meet demand growth from emerging economies. These ice cream manufacturers will increasingly source their machines from abroad to save on capital and shipping costs. According to IBISWorld’s report on the Ice Cream Making Machinery industry, as a result of these trends, industry revenue is anticipated to increase by an average of 1.7% per year to $54.7 million over the five years to 2016.
For more information, download the full report from IBISWorld on the Ice Cream Making Machinery industry
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