Food Makers Expect Revenue, Profitability to Improve

A spring survey of the food and beverage industry found its leaders more optimistic about economic recovery.

July 19, 2010

DENVER - Senior-level managers in the food and drink industry predict profits will advance in 2010 and 2011, with further expectations that their companies will regain revenues ahead of the overall U.S. economic recovery, Marketing Daily reports. But the executives don??t project economic turnaround until 2012.

A KPMG April-May survey of food and beverage firm CEOs and other high-level personnel found that around two-thirds of the executives said profitability and revenue had increased when compared to a year ago. This marks a significant improvement over last year??s summer survey (2009), which found less than a third said those measures were up over the previous year (2008).

Additionally, just over half (51 percent) expressed expectations to add employees this year, although at a low rate of 1 percent to 3 percent. Barely less than a quarter said they would have to downsize workers, and 26 percent said no personnel changes were expected.

The executives on average estimated a full U.S. recovery from the recession would be 2.2 years in the future, while last year??s survey respondents predicted a 1.9 year recovery timeframe.

"The findings validated that industry trends are more positive. But given the lack of real improvement in the unemployment scenario, it's not surprising that these executives now expect overall economic recovery to take longer ?" some projecting even beyond 2012," said Patrick Dolan, KPMG LLP national line of business leader and consumer markets/U.S. sector leader for food, drink and consumer goods.

For the food and beverage industry, concerns include discounts necessitated by fierce competition, figuring out/meeting consumer needs or trends and the explosion of private label products. "Food and beverage companies have continued to invest in innovation through the recession, recognizing that this is their key to growth," said Dolan. "But it??s significant that many ?" probably most ?" are also still focused on cost-cutting to one degree or another, which seems prudent."

Advertisement
Advertisement
Advertisement