Returning demand and higher product prices are expanding revenue and profit
Los Angeles, CA (PRWEB) July 20, 2012
Despite an early dip in demand due to restricted disposable income and corporate profit, Coffee Creamer Production industry revenue expanded during the past five years. According to IBISWorld industry analyst Justin Waterman, although many companies and individuals temporarily downgraded their coffee creamer by buying a private-label product or using less of it daily, the demand for coffee creamer bounced back quickly because it is a relatively low-cost product. Additionally, the price of coffee creamer rose during the past five years as companies marked up products to account for rising input costs. Higher prices also offset the slight decline in coffee consumption. As a result, industry revenue is estimated to grow at a 1.6% annualized rate to $3.0 billion during the five years to 2012, including a 1.0% increase in 2012 alone.
Apart from boosting product prices to account for rising input costs, industry firms invested in their production facilities, continues Waterman. By automating more functions and upgrading to newer monitoring and tracking technologies, companies reduced manufacturing waste, as well as their reliance on labor. Although employment is expected to rise at a 1.5% five-year annualized rate to 2,831 people in 2012, wages fell from 5.8% of revenue in 2007 to 5.4% in 2012. Wages are forecast to continue declining to 4.7% of 2017 revenue as long-term investments in manufacturing facilities enable companies to manufacture more units per employee. The Coffee Creamer Production industry’s major players are Dean Foods Company, Nestle SA and TreeHouse Foods. It is difficult for smaller industry operators to gain significant market share because, not only are barriers to entry somewhat high, larger firms have firm supply contracts in place.
During the next five years, the industry is projected to benefit from rising disposable income and corporate profit, which will boost demand for more expensive products. This is expected to contribute to profit and revenue expansion for the Coffee Creamer Production industry; revenue is forecast to grow at a 1.7% annualized rate to $3.3 billion over the five years to 2017. However, rising input prices are expected to continue posing a challenge to industry operators. A public focus on health due to an obesity epidemic, which is stimulating a decline in sugar and sweetener consumption, may also hamper the industry because the primary ingredient of coffee creamer is often sugar, high fructose corn syrup or an alternative sweetener. The industry is expected to continue innovating new products to appeal to consumers with specific dietary restrictions. For more information, visit IBISWorld’s Coffee Creamer Production in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
[PASTE INDUSTRY DEFINITION]
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.