Major companies will capitalize on health trends with new products that stimulate growth
Los Angeles, CA (PRWEB) October 05, 2012
After surging over the past decade, the Coffee and Snack Shops industry experienced a major slowdown in 2009 due to a struggling economy and, to a lesser extent, changing consumer tastes. Over the five years to 2012, IBISWorld estimates revenue will grow at an average annual rate of 1.2% to $27.8 billion. After revenue declined 6.6% to $25.3 billion from 2008 to 2009, it began its upward climb in 2010 and 2011, with growth of 3.0% and 3.1%, respectively. In 2012, industry revenue is expected to continue its rebound, with an increase of 3.4%.
During the recession, consumers spent less on luxuries like eating out, and they purchased lower-priced items when they did spend. This caused high-priced coffee drinks and other nonessential snacks to lose the battle over people's shrinking budgets. Consumers have also become increasingly health-conscious over the five years to 2012. “Many retailers have responded by expanding their healthy option, and retailers like Jamba Juice have experienced growth due to the health benefits of their products,” says IBISWorld industry analyst Nima Samadi. Still, the general trend toward healthy eating has hurt the industry's unhealthier segments, such as donut and ice cream shops. Over the past five years, industry employment has grown at a muted rate of 0.5% per year to 490,123 employees. Furthermore, in response to weak market conditions, the number of establishments is expected to increase marginally, at an annualized rate of 1.1% to 50,123. To combat slumping sales, major operators like Jamba Juice, Starbucks and Dunkin' Donuts have expanded their menus to offer nontraditional, high-margin menu items like iced coffee drinks, breakfast items and healthy wraps, aiding them in their turnaround. Many major chains are also investing in international growth as part of a long-term strategy. Companies like Starbucks view China, in particular, as a market with huge potential for growth and long-term profitability.
IBISWorld estimates that in 2012, the top four players in the Coffee and Snack Shops industry account for more than 40.0% of the available market share, providing this industry with a medium level of concentration. Given the diversity of snack and beverage styles and industry operations, it is not surprising that nearly 48.0% of establishments are small-business operators with nine or fewer employees. An additional 52.0% of establishments have between 10 and 99 employees. There is also a very small number of extremely large and dominant chain and franchised operators. According to Samadi, over time, the industry's concentration has been increasing. The recent increase in acquisitions indicates that companies are making a concerted effort to increase profitability by claiming larger portions of market share. Between 2007 and 2012, the numbers of establishments and enterprises have both experienced muted growth, which has caused a marginal increase in industry concentration. The level of industry concentration is expected to continue to increase over the five years to 2017. For more information, visit IBISWorld’s Coffee and Snack Shops in the US industry report page.
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IBISWorld industry Report Key Topics
This industry is composed of establishments that prepare or serve specialty snacks and nonalcoholic beverages, including ice cream, frozen yogurt, cookies, donuts, bagels, coffee, juices, smoothies or sodas. Purchases may be consumed on-site, taken out or delivered.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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