Rising levels of per capita disposable income and product innovation drive revenue growth in the industry.
New York, NY (PRWEB) April 12, 2015
The Snack Food Production industry processes a variety of snacks, including chips, nuts and nut butter. Popular products include potato chips, roasted nuts and peanut butter, although operators also produce popcorn, pretzels, pork rinds and other snacks. Demand for these products depends on the level of disposable income, since snacks are discretionary items, and consumer sentiment toward snack foods in general. Over the past five years, slow income growth and increasing health consciousness have subdued demand for industry products, limiting annualized revenue growth over the period. However, this includes forecast growth over 2015 due to better incomes and improved export revenue.
About two-thirds of industry revenue is generated from the production of chips, including potato, corn and tortilla chips. “Chips are typically high in sodium and in caloric content; but, to counter negative perceptions about chips among an increasingly health conscious consumer market, operators have been increasingly innovative in their production methods,” IBISWorld Economic Analyst Amal Ahmad says in the updated report. Specifically, baked and multigrain chips are beginning to replace the traditional fried varieties in a lot of markets. Low-sodium, low-calorie and single-portion snacks are also gaining traction among consumers.
The Snack Food Production industry is also benefiting from a small yet growing export market, especially in the United States. The United States boasts a huge market for snacks with strong demand for chips, peanut butter, popcorn and other industry products. Other export markets include Saudi Arabia, an emerging market with high incomes and an insatiable appetite for Western snacks.
Moving forward, the industry is expected to benefit from an improved economy and rising disposable incomes. In addition, negative health perceptions about chips are likely to be mitigated by innovations in the industry and by the positive health perception toward other industry products, such as nuts and seeds. “The industry will also likely benefit from ongoing weakness in the Canadian dollar against the US dollar, making Canadian snacks more affordable to US buyers,” Ahmad says in the updated report. Overall, IBISWorld expects favorable market conditions to spur revenue growth in the five years to 2020. Profit margins are likely to remain high, pulled up by the fat margins of major players, such as PepsiCo.
For more information, visit IBISWorld’s Snack Food Production in Canada industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry primarily produce chips, including potato, corn and tortilla chips. They also process plain, salted or roasted nuts, seeds and nut butters such as peanut butter. However, operators do not produce cookies, crackers, bakery products or cereal and granola bars.
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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