Increased disposable income and health consciousness will boost revenue
Los Angeles, CA (PRWEB) May 24, 2012
Increasingly health-oriented consumers drove demand for ready-to-drink (RTD) smoothie products in the past five years. This led to higher consumer spending on smoothies, which are blended and chilled beverages containing fruit and possibly additives such as honey, syrup, ice, milk, yogurt or ice cream, boosting the Smoothie Production RTD industry. This also led outside competitors, like fast food establishments, to offer more substitutes for industry products such as McDonalds’s Real Fruit Smoothies. A trend toward healthier products, along with a substantial increase in marketing initiatives, resulted in a quick rebound in demand for RTD smoothies after the Great Recession dented disposable income, according to IBISWorld industry analyst Agata Kaczanowska. The low price of RTD smoothies compared to other luxuries also contributed to consumers' willingness to splurge on industry products. Consequently, IBISWorld estimates that Smoothie Production RTD industry revenue will expand at a 1.1% five-year annualized rate, including a 1.3% growth rate in 2012, to $632.5 million in 2012.
Despite increased research and development and marketing costs, which were associated with product innovation and growing competition, the industry's profit margin expanded during the past five years, Kaczanowska said. Two major companies, PepsiCo and The Coca Cola Company, acquired major bottling plants and streamlined operations during the past five years. As a result, the number of industry employees is expected to decline at a 2.6% annualized five-year rate to 1,294 in 2012. More automation of processes and high overall unemployment during the recession also enabled the industry to curb average wages. Consequently, wages as a share of revenue are anticipated to contract from 13.6% in 2007 to 11.5% in 2012. The industry is forecast to benefit from rising US employment and disposable income, which will stimulate sales to consumers on the go. As a result, people who previously had time to make their own smoothies, or simply did it to save money, are expected to spend more on RTD smoothies during the next five years. Disposable income is forecast to rise at a 2.3% annualized pace during this time. Similarly, industry revenue is forecast to increase over the five years to 2017. Companies are also expected to capitalize on faster growth in RTD smoothie markets abroad, however increased regulatory oversight in the beverage sector could potentially hamper industry profitability during the next five years.
Market share concentration in the RTD Smoothie Production industry is high. The top three industry firms – PepsiCo Inc. (Naked Juice), The Coca-Cola Company (Odwalla) and WM Bolthouse Farms Inc. - account for the majority of industry revenue in 2012. Over the past five years to 2012, market share concentration greatly increased, largely due to higher demand for smoothie products, expanded distribution, new product innovations and vertical integration between beverage manufacturers and their bottlers. For example, Naked Juice greatly benefited from the distribution and marketing capabilities of PepsiCo, which acquired Naked in early 2007. As a result of new entrants, IBISWorld estimates market share concentration in the RTD Smoothie Production industry will decline over the five years to 2017. For more information, visit IBISWorld’s Smoothie Production RTD in the US industry report page.
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IBISWorld industry Report Key Topics
Establishments in this industry manufacture and bottle ready-to-drink fruit or vegetable-based beverages. This industry excludes smoothies made in-house by bars and restaurants, as well as smoothie starters.
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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