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FLEXO Magazine : September 2010
Industry Indicators Survey: Food, Beverage Execs Cautiously Optimistic Anew Industry Pulse survey from KPMG claims that senior executives in the food and beverage industry expect to see revenue and profitability improve this year and next, and also expect their industry to recover ahead of the overall U.S . econo- my. However, the report also projects that economic recovery to be further off than previously hoped—sometime in 2012. The study, conducted in April and May among 61 food and beverage com- pany CEOs and other C-level execu- tives, states that about two-thirds of executives reported improved rev- enue and profitability over a year ago—a marked improvement over last summer ’s survey, when fewer than one-third reported that these measures were up versus the previous year. In addition, 51 percent said they expect to increase employee headcount this year, although by just 1 percent to 3 percent. (Less than one-quarter expect to have to cut headcount, and 26 percent expect no change.) Respondents, on average, project full U.S. economic recovery to be 2.2 years away, whereas in last year’s survey, the average projection was 1.9 years. Asked what factors would most accelerate overall recov- ery, 70 percent cited increased hiring as a result of improved business condi- tions, and 66 percent cited improved consumer confidence. The most pressing immediate concerns for food/beverage busi- nesses are discounts driven by market competition (cited by 46 percent), fol- lowed by recognizing/responding to customer needs/trends (11 percent) and the growth of private labels (11 percent). Factors cited as most likely to hinder the industry ’s recovery include high national unemployment (64 percent), decreased consumer confidence (49 percent), increased government regulation (34 percent) and overcapacity of store space (30 percent). Asked to name the biggest drivers of their companies’ revenue growth over the next one to three years, 89 percent cited product innova- tions and 82 percent cited innovative merchan- dising strategies. Further, in line with last year’s results, nearly two-thirds (61 percent) said that their strategic focus is now on investing for growth. However, 39 percent said they are still focused on cost cutting. Despite their concern about current discounting, 67 percent said that per- ceived value is the most important fac- tor determining where customers will buy, versus just 20 percent citing price. However, the perceived value em- phasis ties into their focus on product innovation as key to driving the sales volume and pricing increases needed for growth. Interestingly, asked what other specific factors or tactics they see as potentially enhancing the recov- ery of the industry, 39 percent cited consumers’ increased mobile use of the Internet, 34 percent cited increased online shopping, and 28 percent cited increased outsourcing of technical/busi- ness procedures. Not surprisingly, given the huge growth potential in emerging markets in contrast to the relative stagnation domestically, 43 percent reported that their companies have already expanded into emerging markets. Among these, the regions most-cited as having been entered were Latin America (25 percent), China (23 percent) and Brazil (18 percent). About 21 percent of survey respondents work for food/beverage companies with annual revenues exceeding $1 billion, 46 percent for companies with revenue in the $250 million to $1 billion range, and 32 percent for companies with revenue under $250 million. Clarion Research Inc. conducted the survey and com- piled the data for KPMG. n • Expectation: full U.S . economic recovery in 2+ years • Improved revenue and profitability over a year ago: 2/3rds of executives. • Growth strategies: Innovative merchandising strate- gies (82 percent). www.flexography.org september 2010 FLEXO 23 FLX_Sept2010_mech.indd 23 9/2/10 12:42 AM