The industry benefited from cash-strapped consumers who reached for its products during the recession
Los Angeles, CA (PRWEB) September 03, 2012
The effects of the recession – namely, declining per capita disposable income – did little to hurt the Prepared Soups Production industry. In fact, demand for the industry's products experienced a relatively strong boost in 2008 and 2009 as American consumers shied away from eating at restaurants. As a result, industry revenue grew 1.6% and 1.7% during the respective recessionary years. This climb has resulted in revenue increasing at a five-year average annual rate of 1.0% to $4.7 billion by the end of 2012, according to IBISWorld industry analyst Nikoleta Panteva. Still, the long-term trend for soup makers has been decline. As consumers regain their purchasing power, they are expected to return to restaurants, limiting the industry's opportunities. In 2012, Revenue will grow only 0.5%. Profit (earnings before interest and tax) has also remained constrained due to the ever-increasing price of vegetables, which represent a key input in soup. Furthermore, during the recession, consumers opted for value-priced soups, suppressing the industry's profit margins even further. While profitability has turned around, it is not anticipated to make any significant gains as the price of inputs increases and consumer demand diminishes.
The Prepared Soups Production industry has also contracted over the past five years, further signaling its decline, Panteva says. Large companies, like major players the Campbell Soup Company and General Mills, benefit from vertical integration and well-established brands while small soup producers have suffered from the mounting internal and external competition. Nevertheless, those that focus on health-conscious, organic or diet-friendly options are set to fare significantly better than their less specialized competitors.
As the economy chugs into recovery, the Prepared Soup Production industry is set to continue its decline. Consumers, armed with deeper pockets, will be more likely to visit restaurants than to consume prepared soups for lunch, hurting the industry's performance. Over the five years to 2017, industry revenue is forecast to decline. The one bright spot for the industry will remain the niche market, where operators can specialize in higher-value health-conscious soup options that will mount in demand over the outlook period. The Prepared Soups Production industry has a moderate level of concentration with the top four firms accounting for more than half of its total revenue in 2012. Although these companies typically rely on acquisitions and mergers to expand their dominance within the market, they have not completed any major acquisitions relating to soup production during the past five years. As a result, their share of the market has stayed relatively constant from 2007 to 2012. However, the number of firms has been declining during the five years to 2012 because the majority of companies in this industry are smaller, private label brands that are unable to compete with major brands such as Campbell's Soup Company. Small firms that are able to find a place in the market typically serve niche markets. Consequently, such players generate a much smaller proportion of revenue. For more information, visit IBISWorld’s Prepared Soups Production in the US industr y report page.
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IBISWorld industry Report Key Topics
This industry purchases vegetables and processes them with other ingredients to create prepared soups. The soup segment consists of dry canned soups, wet soups, broth and bouillon cubes. The products are then packaged and sold to supermarkets, grocery stores and restaurants.
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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