Canned Fruit and Vegetable Processing in the US Industry Market Research Report Now Available from IBISWorld

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Fruit and vegetable processors flourished in the recession as cash-strapped consumers substituted fresh food with cheaper, premade alternatives. With the economic recovery under way, however, the industry will struggle to stay afloat. Consumers will once again be able to afford fresh fruits and vegetables, which are staying fresher longer due to improvements in transportation and storage technologies. Meanwhile, growing federal regulations will increase operating costs, which smaller operators may not be able to pass on to consumers. For these reasons, industry research firm IBISWorld has added a report on the Canned Fruit and Vegetable Processing in the US industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

A consumer shift toward healthier fresh produce has kept industry growth low

The rise in fresh fruit and vegetable prices and price conscious consumers gave the Canned Fruit and Vegetable Processing industry a slight boost during part of the five-year period to 2012. Higher produce prices during 2007 and 2008 drove consumers to purchase canned goods which increased revenue for the industry. However as fresh vegetable prices declined and the economy slowly recovered from the recession, consumers switched back to fresh produce. Between 2007 and 2012, revenue is expected to decline at an average annual rate of 0.9% to $37.3 billion with revenue decreasing 1.8% in 2012. Despite shifting revenue growth, profit margins are expected to grow from 4.8% of revenue in 2007 to an estimated 5.2% in 2012. According to IBISWorld industry analyst Mary Nanfelt, as smaller firms leave the industry when demand declines, larger companies gain market share and raise the average profit margin for the industry as their significant economies of scale make for wider profit margins.

There are some common threads that influence the Canned Fruit and Vegetable Processing industry as a whole. Unfortunately, most of them point to a gradual, but persistent, decline in revenue and profit. The single largest threat has been competition from fresh produce sellers, which have been able to compete in more markets than ever before, due to improvements in transportation and storage technologies. Additionally, frozen foods and imported products have become increasingly popular, resulting in lower sales and downward pressure on prices. The industry has responded by consolidating market share to benefit from economies of scale, but at the expense of weaker industry players. This has resulted in establishment numbers shrinking at an average annual rate of 1.3% to 948 in the five years to 2012.

The economic recovery is forecast to send the industry back into a slow decline because fresh fruit and vegetables will remain a threat to processors as consumer incomes return to growth. Additional competition from imports will make survival within the industry that much more difficult. The presence of very diverse product segments in this industry makes it extremely difficult for any single player to control a large piece of the overall market. The Campbell Soup Company is an exception to this as it operates in the canned soup, sauce and vegetable juice markets. “With the exception of the soup segment, market share is well dispersed in each of the individual segment with a wide range of brands and offerings competing fiercely for consumer dollars,” said Nanfelt IBISWorld expects concentration to increase over the next five years, as the larger firms have a greater capacity to capitalize upon expanding logistics and distribution technologies. This will likely be exacerbated by smaller firms being driven out of this industry by squeezed margins and fewer opportunities. For more information, visit IBISWorld’s Canned Fruit and Vegetable Processing in the US report in the US industry page.

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Gavin Smith
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