Despite improved demand for discretionary appliances, escalating imports will hurt sales
Los Angeles, CA (PRWEB) March 13, 2013
The Food Processor and Blender Manufacturing industry has been shredded to pieces during the recession. Because food processor and blender purchases are mostly discretionary, significant declines in consumer confidence and disposable income have caused demand to fall considerably. Also, consumers often purchase industry products when they move to new homes, but low existing home sales have further reduced sales on top of low confidence. IBISWorld estimates that revenue has declined at an average annual rate of 3.6% to $490.7 million during the five years to 2013, including a 2.9% decline in 2013. In addition to falling demand, rising import penetration of cheap Chinese goods has also adversely affected the industry. Imports have grown an annualized 3.7% since 2008. Chinese imports in particular have increased aggressively over the same period. “Low prices have enabled this increase,” says IBISWorld industry analyst Nima Samadi. “Because China has lenient labor laws and cheap wage requirements, Chinese manufacturers can produce goods at lower costs and pass down the savings to domestic buyers through lower prices.” This trend has triggered intense price competition within the industry, placing significant pressure on US manufacturers. In order to remain competitive and promote sales, US firms have been forced to lower their markups. Consequently, profit margins have declined from 2008 to 2013.
With falling margins, industry players have attempted to find relief by offshoring or outsourcing much of their production facilities overseas to low-cost countries. The total number of establishments has decreased as a result, at an average annual rate of 3.2% to about 28 facilities. Market share concentration in the Food Processor and Blender Manufacturing industry is low to medium; major players include Whirlpool Corporation, K-Tec Inc., Conair Corporation and Vitamix. While some well-recognized blender and food processor manufacturers and brands appear to have a significant share of the market, the domestic industry actually has low concentration. “Many of these widely recognized players either utilize third-party manufacturers overseas for their production, or they have plants located in low labor-cost countries to take advantage of low wage and overhead costs,” adds Samadi. In return, very few firms actually produce their goods in the United States, accounting for low participation.
Industry demand will likely experience a temporary boost in 2013 because of continued economic recovery. However, imports will continue to capture most of this increase in demand in the long run. In addition, rising and volatile input costs (plastic and steel prices in particular) will continue to hinder industry profitability. As such, IBISWorld forecasts a rather gloomy outlook, with revenue projected to decrease over the five years to 2018. For more information, visit IBISWorld’s Food Processor and Blender Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures electric- and motor-driven appliances used in food preparation. More specifically, companies in the industry manufacture blenders, food processors, stand mixers and a variety of other small appliances (e.g. ice crushers) used in slicing, chopping, grinding, shredding, pureeing, crushing and mixing food items.
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.