Key input prices are anticipated to rise, putting further pressure on suppliers to increase price to protect profit margins
Los Angeles, CA (PRWEB) September 25, 2014
Industrial beverage processing machinery has a buyer power score of 2.4 out of 5, which indicates that suppliers have more negotiating power than buyers. 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 high switching costs.
The average price for industrial beverage processing machinery has been increasing during the three years to 2014 due to the economic recovery in the wake of the recession. “As the economy rebounded, the number of businesses and corporate profit increased, which fueled demand for beverage processing machinery among new and existing customers,” according to IBISWorld business research analyst, Jeffrey Cohen. These strengthening demand trends encouraged suppliers to push up product prices.
Despite rising prices, buyer power is strengthened by falling supplier operating costs, which stemmed from declining steel and aluminum prices (key inputs in the production of several types of beverage processing machines). These lower input costs kept manufacturers from increasing their prices as much as they may have otherwise. Buyer power is also aided by the market's fragmentation. “Suppliers cannot raise prices too rapidly because they face a high level of competition and no supplier serves a large enough portion of the market,” says Cohen. As such, suppliers must price competitively to differentiate products to buyers. 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.
Nonetheless, other aspects of the market's 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 for buyers to change suppliers if they are unsatisfied with their current provider; therefore, buyers cannot easily leverage switching to a new supplier in negotiations. However, buyers can negotiate by bundling products together to lower per-unit costs. Major vendors include 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 wholesalers are also included within the scope of this report. Buyers are industrial beverage producers of bottled water, juice, coffee and tea. Industrial beverage processing machinery includes 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
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.