Los Angeles, CA (PRWEB) July 26, 2012
The Syrup and Flavoring Production industry's prospects are inextricably tied to the downstream activities of soda and juice producers (IBISWorld reports 31211a and 31211c). However, according to IBISWorld industry analyst Agata Kaczanowska, “revenue from these downstream producers is declining as health-conscious Americans limit their consumption of such sugary beverages.” Because of the shift away from soda and juice consumption and significant mergers, IBISWorld expects industry revenue to decrease at an annualized rate of 8.5%, including a 1.7% drop in 2012 to $6.4 billion.
Through 2009, The Coca-Cola Company (TCCC) and PepsiCo dominated the Syrup and Flavoring Production industry. As the owners of well-recognized, highly valuable brands, these manufacturers exerted significant influence over downstream soft drink producers, like Coca-Cola Enterprises, eventually purchasing them in 2010. These mergers shifted TCCC and PepsiCo operations to the Soda Production industry, however, so syrup and flavoring producers' revenue plummeted 30.4% in 2010. “Additional mergers are expected to further dent revenue as these two former players integrate with other flavoring producers,” says Kaczanowska. “Yet the mergers benefited industry profitability because these operators had sold syrup and flavoring to the beverage behemoths in large quantities with lower margins.” With the two companies’ departure, The Carbery Group and M&F Worldwide Corporation lead the industry. Regional influences are very significant in the Mid-Atlantic and Great Lakes regions, but also in California and the West region, where establishments have continued to spread during the past five years. However, the Southeast region has experienced a proliferation of regional dominance since investment by syrup and flavoring manufacturers has increased markedly in order to balance supply with strong demand from soft drink makers in that region.
Demand for soda, dampened during the five years to 2012 due to increasing health awareness among consumers as programs like Michelle Obama's "Let's Move" campaign advertise the dangers of high sugar and sweetener consumption. Soda producers have also faced rising competition from energy drinks and ready-to-drink (RTD) tea. Price growth passed on to consumers has propped up industry revenue to some extent, but the change in consumer tastes away from soda and juice has offset this effect. Because revenue relies heavily on downstream demand, the fate of the Syrup and Flavoring Production industry lies in the hands of beverage producers. Syrup and flavoring producers will continue to be challenged by health trends, which are resulting in lower demand for sugary beverages. Evolving technology will likely increase operators' productivity, however; the key opportunities for industry players lie in newer niche areas, such as relaxation drink production. For more information, visit IBISWorld’s Syrup and Flavoring Production in the US industry report page.
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IBISWorld industry Report Key Topics
This industry primarily manufactures flavoring syrup drink concentrates and related products for soda fountains or beverage manufacturers. It excludes companies that generate a majority of revenue from other products such as drink production, powdered concentrates, table syrup, maple syrup, fruit juice and chocolate-, coffee- and dairy-based products.
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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