A consumer shift toward healthier fresh produce has kept industry growth low
Los Angeles, CA (PRWEB) December 07, 2012
Consumer appetites for canned fruit and vegetable products shrunk over the five years to 2012. Expensive fruit and vegetable inputs forced Canned Fruit and Vegetable Processing industry firms to raise their prices to maintain profitability, and consumers responded to the price hikes by buying fewer products. “Although per capita disposable income has increased slightly, allowing consumers to afford canned goods more easily, they typically use the increase in spending money to buy fresh produce instead,” says IBISWorld industry analyst Olivia Tang. Canned fruits and vegetables are perceived to be nutritionally inferior, driving down demand from health-conscious consumers. Improvements in transportation and storage technologies also make fresh produce more readily available, intensifying competition. As a result, revenue is estimated to decrease at an average annual rate of 1.1% to $36.6 billion over the five years to 2012.
Because produce suppliers benefit more from selling to the fresh market, they allocate fewer fruits and vegetables to processors. Therefore, prices for inputs to canned products are rising. “To mitigate this expense, firms are looking abroad for lower-priced inputs, allowing some firms to maintain lower prices,” says Tang. “Processors are also depending more on technology for process automation, resulting in operating efficiencies and lower labor costs.” Consequently, the number of employees is anticipated to fall to 68,068 over the five years to 2012. Enterprises employing more than 500 workers only make up a small share of the Canned Fruit and Vegetable Processing industry. Large companies in general are uncommon. The presence of diverse product segments in this industry makes it difficult for any single player to control a large piece of the overall market. The Campbell Soup Company is an exception to this because it operates in the canned soup, sauce and vegetable juice markets. IBISWorld expects concentration to increase over the next five years because larger firms have a greater capacity to capitalize upon expanding logistics and distribution technologies, which makes operations more efficient. This increase will be exacerbated by acquisitions as well as unprofitable operating conditions for smaller firms, driving them out of the industry.
Over the five years to 2017, the healthy eating trend will push consumers to eat more fresh produce rather than canned goods, contributing to the industry's slow decline. Also, economic recovery is forecast to increase disposable income and allow consumers to spend more freely on fresh produce. Additional competition from imports will make survival within the industry as the dollar appreciates slightly, making foreign goods less expensive, and low-cost operators sell products at cheaper prices. Because the industry's products are staples of the American diet, the industry’s anticipated revenue decline will be gradual, allowing products to sell on supermarket shelves for years to come. For more information, visit IBISWorld’s Canned Fruit and Vegetable Processing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies that purchase fruits and vegetables and process them with other ingredients to create a wide variety of food products. Products include canned juices, soups (except seafood), jams, baby food, sauces as well as dehydrated fruits and vegetables. The products are then packaged and sold to the end consumer through supermarkets, grocery stores and restaurants.
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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