Price growth will be slowed by lower global demand for industrial equipment and machinery
Los Angeles, CA (PRWEB) February 12, 2014
Industrial beverage processing machinery has a buyer power score of 3.0 out of 5, which indicates that buyers and sellers have roughly equal negotiating power. Buyer power is strengthened by low price volatility for industrial beverage machines and low market share concentration among suppliers. However, buyer power is weakened by the high production specialization and switching costs. Recent price growth has weakened buyer power. The rising costs of key inputs, such as steel and aluminum, have pressured suppliers to increase price to maintain profit. However, lower demand for beverage processing machinery because of slow economic recovery from the Great Recession prevented drastic price changes. While price growth will continue to hamper buyer power in the three years to 2016, it will not have such a strong negative effect. According to IBISWorld procurement analyst Donna Khuu, “slowed price growth will be due to further drops in demand and the slow price growth of key inputs, namely steel, crude oil and wages.”
Moreover, buyer power is strengthened by the market's fragmentation. Suppliers have little ability to inflate prices because they face a high level of competition and no supplier serves a large enough portion of the market. “As such, suppliers must price competitively to differentiate products to buyers,” says Khuu. Additionally, suppliers are financially stable, which means the risk of service disruption is low and buyers are more likely to benefit from long-term partnerships with suppliers.
Although market concentration is low, other aspects of market structure weaken buyer power. Beverage processing machines commonly have applications that are individually tailored. Buyers pay a premium for custom products because there are no comparable substitutes. Additionally, high switching costs make it difficult to opt for a lower priced supplier because it would be very costly to acquire them. Buyers would be unable to effectively leverage switching to a new supplier in a negotiation. However, buyers can leverage negotiations by bundling products together, providing a larger initial investment and purchasing maintenance and repair. The top four vendors in the market are IDEX, Gea Group Aktiengesellschaft, Pentair Ltd., and SPX Corporation.
For more information, visit IBISWorld’s Industrial Beverage Processing Machinery procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of industrial beverage processing machinery. Suppliers are primarily manufacturers, but can include wholesalers. Buyers are industrial beverage producers such as bottled water, juice and coffee and tea producers. Industrial beverage processing machinery includes machinery such as coffee brewing equipment, juice extractors, beverage sterilizers, mixers, chillers and tanks. This report does not cover refrigeration and freezer equipment, ice making machines, ice cream making machinery, dairy production equipment, beverage packaging machinery and food cooking and preparation machinery.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement 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.