Many industry operators will expand to provide more value-added services.
New York, NY (PRWEB) August 29, 2014
The Fruit and Vegetable Wholesaling industry experienced sparse revenue growth over the five years to 2014 due to overall economic instability. During the recession, consumers had less disposable income and, consequently, reduced purchases of fresh produce from grocery stores and visited restaurants less frequently. As a result, demand from grocery stores and fast food establishments declined, hindering revenue growth. “After 2010, levels of household disposable income increased, causing consumers to increase purchases of fresh produce from grocery stores and eat out more often,” according to IBISWorld Industry Analyst Zeeshan Haider. Therefore, demand from downstream industries increased, driving revenue growth. Overall, revenue is anticipated to increase at an annualized rate of 0.1% to $10.6 billion over the five years to 2014, including 5.7% decline in 2014.
This industry's profit margin has suffered over the past five years due to tough competition and unpredictable consumption patterns. For example, fruit and vegetable consumption declined in 2010 and 2011 after peaking in 2009, following many years of stable increases. Additionally, the threat of wholesale bypass among retailers has grown, restricting revenue growth and reducing profit margins. “Though retailers and producers have aimed to capture profit from increased food prices, excessive price increases may result in lower demand,” says Haider. Hence, wholesalers are increasingly being left out of the supply chain. Nonetheless, due to improving economic conditions and higher spending, overall profit is expected to increase over the next five-year period.
Over the five years to 2019, IBISWorld expects revenue growth to increase in response to better economic conditions, health concerns and rising food prices. An increase in demand from downstream markets such as restaurants and supermarkets is also expected to aid revenue growth. However, despite increasing revenue, wholesale bypass among retailers is expected to further increase, hampering profit margins and causing wholesalers to merge with larger players or exit the industry altogether. Additionally, many industry operators are expected to expand their businesses and provide more value-added services such as food processing, packaging and cold storage in order to establish their reputations.
For more information, visit IBISWorld’s Fruit and Vegetable Wholesaling in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry wholesales a range of fresh fruit and vegetables to supermarkets, delis, restaurants, cafes and institutions like hospitals and retirement homes. This industry does not include wholesalers of processed fruits and vegetables.
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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