Los Angeles, CA (PRWEB) November 28, 2013
Over the past five years, the Dairy Product Production industry has benefited from the increasing popularity of yogurt and cheese products in the United States and abroad, which has offset declining fluid milk consumption. In addition, dairy producers have largely been able to pass along raw milk costs to consumers, which increased in the five years to 2013. While demand for some industry products increased over the past five years, an exception to this trend occurred in 2009, when industry revenue experienced a drop. This decline was due to an overall reduction in consumer spending, as a result of the recession, falling raw milk prices and a decrease in global demand. Overall, industry revenue is expected to grow over the five years to 2013.
According to IBISWorld Industry Analyst Antal Neville, “The Dairy Product Production industry has a low level of market share concentration.” A diverse range of private and public companies, dairy cooperatives and multinational food corporations undertake dairy production. Also, the industry produces a wide array of products, such as milk, cheese and yogurt, thus making overall industry revenue relatively large compared with other food industries. Dairy producers may focus their operations on one particular commodity, such as cheese or butter, or diversify their activities to make a range of dairy products. For example, Kraft focuses its dairy production on cheese.
Dairy product wholesalers and retailers have consolidated during the past five years in an effort to compete more effectively for national supply contracts from dairy producers, which cut costs related to purchasing dairy products. Increased concentration in downstream markets required producers to supply vendors on a national scale, and maintaining competitive prices became important for securing national sales contracts. However, rising feed costs caused raw milk input costs to surge, forcing producers to raise prices. Buyers are willing to pay higher prices to a certain extent therefore, to achieve lower per-unit costs and function on a national scale, many dairy producers have merged. Consequently, the number of enterprises is expected to fall in the five years to 2013.
Over the next five years, “rising household disposable income stemming from the economic recovery is expected to boost dairy product demand and industry revenue,” says Neville. Additionally, continuing the trend over recent years, producers are anticipated to introduce innovative products that cater to changing consumer tastes. Nevertheless, rising feed costs will increase the price of milk, hampering profit expansion, while competition from overseas dairy producers will temper revenue growth. Overall, the industry is forecast to grow moderately in the five years to 2018.
For more information, visit IBISWorld’s Dairy Product Production in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Dairy Product Production industry mainly manufacture dairy products such as pasteurized milk, cream, butter, yogurt, cheese, and dry, condensed and evaporated milk. The industry also manufactures substitute dairy products made from soybeans and other nondairy ingredients. Producers of dairy products such as ice cream and frozen yogurt are excluded from this industry (IBISWorld report 31152).
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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