Expenditure on food and beverages fell during the recession, reducing industry revenue
Los Angeles, CA (PRWEB) January 01, 2013
Companies operating in the Carbon Dioxide Production industry make carbon dioxide and sell it to downstream industries in either gas or solid forms. According to IBISWorld industry analyst David Yang, “the largest market for both varieties is the food and beverage manufacturing sector. Food producers use carbon dioxide as a food additive to propel certain processes or as dry ice to cool products, while beverage manufacturers use the compound to carbonate soft drinks.” During the five years to 2012, demand from this sector slowed due to weak consumer demand in light of declining per capita disposable income. Consequently, industry revenue has fallen at an estimated annualized rate of 0.4% from 2007 to 2012, totaling $628.1 million.
At the same time, demand from other major downstream customers also dwindled during the recession. The construction sector, for example, uses compressed carbon dioxide in pressurized power tools, while oil drillers use it to maximize the amount of petroleum that can be extracted from a single source. Both of these markets suffered in 2009, when almost all economic activity in the United States slowed. Carbon Dioxide Production industry revenue plunged 5.1% during the year. “During this period of low demand, large firms were able to charge lower prices while remaining profitable, allowing them to attract more customers,” says Yang. “Major players further benefited from superior distribution infrastructure, which allowed for long-distance transport of carbon dioxide across the country. This allowed larger firms to easily expand into new markets.” Major companies in include Praxair Inc., Air Products and Chemicals Inc. and Airgas Inc.
Rising costs have also plagued industry operators. The price of electric power, which is a necessary component in carbon dioxide extraction, has increased at an annualized rate of 2.1% through the five years to 2012. Coupled with falling revenue, this trend cut into industry profit margins (measured as earnings before interest and tax). In an effort to cut costs, industry players have reduced their employment and wages. Employment has declined at an average of 0.7% per year, while total wages have fallen at an average of 0.5% per year over the past five years.
IBISWorld projects a turnaround for the Carbon Dioxide Production industry over the five years to 2017, supported by mounting activity in downstream industries. With more money to spend on food and drinks, consumers will spur downstream demand from the respective manufacturers. Construction will also climb out of its recessionary slump, albeit slowly, to prop up industry revenue growth through 2017. Reduced reliance on US oil may sever some revenue streams for the industry, though; similarly, shifting consumer preferences away from carbonated soft drinks may also limit industry revenue growth over the period. For more information, visit IBISWorld’s Carbon Dioxide Production in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures carbon dioxide in compressed and solid forms. Firms then supply the carbon dioxide to a diverse range of customers, including industrial, medical and specialized users.
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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