Rising health consciousness and a growing core market drove demand for salsa
Los Angeles, CA (PRWEB) January 02, 2013
The $772.0 million Pre-Made Salsa Production industry is benefiting from the increasing popularity of Mexican-style foods from an expansive Hispanic population and a positive reputation among health-conscious consumers. According to the latest data from the US Census, the Hispanic population grew by 43.0% from 2000 to 2010, expanding the industry's core market. “Salsa is made predominantly from fruits and vegetables, which are consistently featured in publicity campaigns that tout healthy eating habits,” says IBISWorld industry analyst Andrew Krabeepetcharat. “A weak dollar during the past five years also made US products relatively cheaper abroad and strengthened industry exports as a result.” Consequently, the industry posted an annualized 2.1% revenue gain during the past five years, despite a slight dip due to low disposable income during the Great Recession. Despite this setback, higher product pricing and increased consumer spending are expected to boost revenue 6.1% in 2012.
Producers are justifying higher pricing by innovating new salsa flavors and packaging, and are strengthening brand awareness through marketing. Attracted by rising demand, new companies are entering the Pre-Made Salsa Production industry and are expected to contribute to the rising number of establishments. During the past five years, the number of locations producing pre-made salsa has increased at an average rate of 1.1% per year to 173 in 2012. However, rising innovation, marketing and start-up costs are eating into the industry's average profit margin. The industry has a moderate degree of market share concentration; most firms are generally small-scale and local salsa producers and sell to smaller markets, such as ethnic grocery stores and farmers' market vendors. “Over the past five years, market share concentration increased as major players, such as PepsiCo Inc. and Campbell Soup Company, expanded domestic manufacturing operations to cut down on transportation costs,” adds Krabeepetcharat. “At the same time, larger companies are improving manufacturing efficiency with automated systems that require a large capital investment, allowing them to sell higher quantities of salsa at a lower cost.”
During the next five years, salsa producers are anticipated to continue cranking up the heat with new flavors, packaging and marketing. Rising consumer spending and easing credit conditions will contribute, respectively, to growth in demand for salsa and to investments in industry expansion. Furthermore, input prices are expected to continue rising and will result in higher product pricing. These factors will contribute to projected revenue growth for the next five years to 2017. For more information, visit IBISWorld’s Pre-Made Salsa Production in the US industry report page.
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IBISWorld industry Report Key Topics
The industry produces pre-made tomato-based Mexican-style dips that are purchased by grocery wholesalers and supermarkets and then sold to consumers and food service outlets. This salsa may be refrigerated or shelf-stable. The industry excludes dairy-based and other dips like hummus and guacamole. The industry also does not include dry mix salsa flavoring or Italian-style sauces.
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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