As inputs become more expensive, producers will use more imports to help lower costs
Los Angeles, CA (PRWEB) April 22, 2013
Fruit and vegetable processors flourished in the recession as cash-strapped consumers substituted fresh food with cheaper, premade alternatives; however, with the economic recovery underway, the industry will struggle to stay afloat. For these reasons, industry research firm IBISWorld has updated a report on the Canned Fruit and Vegetable Processing industry in its growing industry report collection.
The Canned Fruit and Vegetable Processing industry suffered from declines in demand for canned fruit and vegetables during the five years to 2013. “As the price of vegetables increased, industry operators passed costs on to consumers by raising their product prices to maintain profitability,” IBISWorld industry analyst Jeffrey Cohen says. Consumers responded by purchasing fewer products. Although household disposable income increased slightly during the five years to 2013, consumers increased purchases of fresh produce instead of demand for canned fruits and vegetables because canned goods are perceived as less healthful. Also, improvements in transportation and storage technologies made fresh produce more readily available, which increased competition from fresh produce. As a result, revenue is estimated to decrease at an average annual rate of 2.2% to $37.0 billion in the five years to 2013, including a 2.5% decline in 2013.
Because produce suppliers benefit more from selling to the fresh produce market, they allocate fewer fruits and vegetables to industry processors. Therefore, prices for inputs to canned products are rising, causing companies to look abroad for lower-priced inputs. As competition from importing countries increases, demand for industry products will decrease. “To attract more consumers, industry operators introduced products with reduced sugar and sodium contents,” Cohen says. This caused an increase in demand for fruit and vegetable juices, enabling profit for the Canned Fruit and Vegetable Processing industry to expand.
The Canned Fruit and Vegetable Processing industry has a low level of market share concentration. Currently, the industry’s top four companies are Campbell Soup Company, H.J. Heinz Company, Del Monte Foods Company and Kraft Foods Group Inc. Because this industry covers a variety of product segments, it is difficult for a single player to control a large piece of the overall market. Therefore, about three-quarters of industry revenue is generated by small to medium-sized companies.
In the five years to 2018, increases in the prices of fruits and vegetables, and household disposable income will push consumers to purchase more fresh produce rather than processed produce, contributing to the industry's slow decline. Competition from imports is projected to increase as low-cost operators sell products at cheaper prices and as the dollar appreciates slightly, making foreign goods less expensive. As the industry experiences hampered profit margins, the number of enterprises is anticipated to fall in the five years to 2018. Overall, revenue is forecast to decline during the period. Because the industry's products are staples of the American diet, this decline will be gradual. For more information, visit IBISWorld’s Canned Fruit and Vegetable Processing in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry purchase fruits and vegetables and process them with other ingredients to create a wide variety of food products that include canned juices, soups (except seafood), jams, baby food, sauces and dehydrated fruits and vegetables. The final products are then packaged and sold to consumers primarily through supermarkets, grocery stores and restaurants.
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.