Food and beverage companies expecting to grow
Executives are optimistic that they will increase their companies' headcounts in the next year, reports the 2005 Survey of U.S. Food & Beverage Companies, conducted by Grant Thornton LLP in conjunction with Food Processing magazine.
15/09/05 In an economy where employment growth is far from inevitable, food and beverage executives are optimistic that they will increase their companies' headcounts in the next year, reports the 2005 Survey of U.S. Food & Beverage Companies, conducted by Grant Thornton LLP in conjunction with Food Processing magazine.
According to the national survey, 64 percent expect their company's employment will increase in both 2005 and 2006 compared to 2004, when only 46 percent felt industry employment would increase in 2005 and 49 percent in 2006.
In addition to headcount growth, the survey also found that food and beverage companies foresee an increase in global expansion, with 82 percent expecting a rise in their company's global expansion plans for U.S. operations. Furthermore, 74 percent of respondents expect the level of mergers, acquisitions and restructuring in the industry to increase in 2005 compared to current levels.
Other findings from the 2005 Survey of U.S. Food & Beverage Companies include:
- 75 percent of food and beverage executives say that successful product development is the area offering the most opportunity for company growth, followed by successful marketing of a product (63 percent) and operating efficiencies (62 percent)
- 63 percent of respondents believed that competition with larger companies is a critical issue to their company. Other critical issues include food safety, with 57 percent, and fuel costs, with 39 percent
- 82 percent see an increase in their company's global expansion plans for U.S. operations, with 56 percent reporting that the weakened U.S. dollar has not had an impact on international business or expansion plans
- 74 percent expect the level of mergers, acquisitions and restructuring in the industry to increase in 2005 compared to current levels
- 77 percent anticipate current health and regulatory concerns to increase their company's costs by more than 5 percent in the next five years
- 81 percent expect commodity prices to increase in the next year
- 78 percent plan to increase product development spending in 2005 versus 2004
- 73 percent see an increased need for capital in the next five years, with only 47 percent foreseeing an increase in the availability of reasonably priced capital during the same time; 50 percent of company's report that they will use private equity as their primary source of capital in the next two years
- 64 percent report that their companies will see the greatest potential for growth in the "better for you" category, which includes better for you products (42%), organic foods (15%), obesity-addressing (5%) and nutraceuticals (2%); ethnic cuisine is also considered an area of opportunity, with 24 percent seeing growth potential in that category
The Grant Thornton 2005 Survey of U.S. Food & Beverage Companies was conducted primarily via e-mail and an online survey web site. Grant Thornton e-mailed approximately 9,000 executives in April and May 2005, consisting of executive-level subscribers to Food Processing magazine and Grant Thornton business relationships. Through mid-May 2005, Grant Thornton received 95 responses.
More than three-fourths (77 percent) of the respondents represent food and beverage companies with gross annual sales revenues of $100 million or less; 15 percent had between $101 million and $500 million in sales revenue and 8 percent had over $501 million. Private companies represented 86 percent of the respondents, with 11 percent public and 3 percent cooperatives.
Grant Thornton LLP is the U.S. member firm of Grant Thornton International, one of the six global accounting, tax and business advisory organizations. Through member firms in 110 countries, including 49 offices in the United States, the partners and employees of Grant Thornton member firms provide personalized attention and the highest quality service to public and private clients around the globe.
