Major companies will capitalize on health trends with new products that stimulate growth
Los Angeles, CA (PRWEB) December 31, 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, says IBISWorld industry analyst Nima Samadi. After revenue declined 6.6% to $25.3 billion in 2009, it resumed 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, continues Samadi. Many retailers, such as Jamba Juice, have responded by expanding their healthy options and, therefore, have experienced growth due to the health benefits of their products. Still, the general trend toward healthy eating has hurt the industry's unhealthier segments, such as donut and ice cream shops. Furthermore, in response to weak market conditions, the number of establishments is expected to increase more slowly than in the past, at an annualized rate of 2.8% to 56,041. IBISWorld estimates that in 2012, the top players in the Coffee and Snack Shops industry are Starbucks Corporation and Dunkin’ Brands Inc., which gives them considerable market power in determining industry trends and also creates a formidable barrier for non-franchised players. 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. 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.
To combat slumping sales, major operators like Starbucks and Dunkin' Donuts are anticipated to expand their menus over the next five years and increase their offerings of nontraditional, high-margin menu items like iced coffee drinks, breakfast items and healthy wraps. These additions are expected to aid these companies in their turnaround. Many major chains are also investing in international growth as part of a long-term strategy. Larger players view China, in particular, as a market with huge potential for growth and long-term profitability. Over the five years to 2017, revenue is forecast to grow. 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
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.