Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Bloomberg Intelligence: US Consumer Goods Outlook 2015

Slow sales growth is projected throughout the consumer goods industry in 2015, attributed mainly to shifting consumer preferences and weakening macroeconomic conditions abroad. M&A and product innovation will be key for companies to offset the pressures impacting sales.

Bloomberg Intelligence: US Consumer Goods Outlook 2015

  1. 1. Bloomberg Intelligence Consumer Goods Outlook
  2. 2. Let’s examine some intriguing trends expected for 2015 in the consumer goods sector:
  3. 3. Packaged Foods
  4. 4. North American Outlook Weak With More Innovation Needed North American packaged food sales may rise about 1% annually through 2019, according to Euromonitor data. Snack bars and chocolate candy touting convenience and natural ingredients may lead the group with 2% to 4% growth yearly. Such gains may mitigate declines for gum (down 2%), which is losing flavor with young adults due to artificial ingredients, and pasta (down 0.5%). Product innovation highlighting protein and simple ingredients remains high.
  5. 5. Food Spending May Stay Stagnant Even as U.S.Confidence Improves U.S. packaged food spending may not benefit from a further strengthening in consumer confidence, based on little spending growth since 2010 amid a general increase in confidence. Weak population growth -- projected to rise less than 1% in 2015 -- and recent packaged food price increases taken by producers to mitigate commodity inflation, are potential spending roadblocks.
  6. 6. U.S. Food Maker’s Sales at Risk From Slow Economies Abroad Many U.S.- based multinational packaged-food companies such as General Mills and Kellogg have cited softening macroeconomic conditions in the Asia-Pacific region, Europe and Latin America as factors for weak operating performance in those markets. GDP growth in Europe, Brazil and China has slowed since 2011, with consensus estimates calling for a weaker performance in 2015. This could potentially affect future profitability for food manufacturers.
  7. 7. Improving U.S.Unemployment Rate May Stimulate Higher Food Sales Improvements in labor markets such as the U.S. may support consumers’ disposable-income growth, boosting North American packaged food sales. Better economic conditions may help premium-priced branded good sales the most, given their higher price elasticity than generic brands. The U.S. unemployment rate has declined steadily from its peak in October 2009, yet still remains above pre-recession levels.
  8. 8. Beverages
  9. 9. Global Beverage Sales May Increase 2% to 3% Annually to 2018 Slow sales growth is projected through 2018 for the largest beverage categories, according to Euromonitor data. Beer, the largest segment, may generate 2.6% compound annual sales growth during the period vs. 1.3% during the past 10 years, supported by growing demand among Asia-Pacific consumers. Spirits may grow by 2.9% annually, and wine by 2.6%. Carbonates may advance by only 1.2%, reflecting weak performance in mature North American and Europe markets.
  10. 10. Beverage Margins May Be Bolstered by Manageable Costs: Bull Case Key beverage costs may be stable going into 2015. Corn and related sweetener prices have eased since 2012 due to favorable global corn supply conditions, and orange juice futures prices have declined since mid-2014 on slack consumer demand. Elevated prices for milk and producers may offset some of those benefits to producers. In a Bull Case, stable input prices may support producer margins. PepsiCo estimates low-single-digit cost increases in 2014.
  11. 11. Beverage Spending May Stay Flat Even Amid Higher U.S.Confidence Spending on U.S. non-alcoholic beverages may not benefit from a further strengthening in consumer confidence. Non-alcoholic beverage spending has changed little since the end of the last recession, while consumer confidence has almost doubled. Slow population growth, projected to rise less than 1% in 2015, and tepid consumer demand for sugary drinks may depress sales of carbonated beverages.
  12. 12. Wine Sales Outpace Beer and Spirits to Spur Home Alcohol Sales Steadily rising spending on alcoholic beverages for home consumption may support industry sales growth for the near term. U.S. spending on alcoholic beverages for at-home consumption in the third quarter rose 0.7% to $123 billion from a year earlier, which followed a 3.1% gain in the second quarter – its largest increase in six quarters. Spending in establishments outside the home advanced 5% in the third quarter, led by wine, which outpaced growth of both beer and spirits.
  13. 13. Tobacco
  14. 14. Still Hot: Tobacco Sales Led by Cigarettes May Grow 6% a Year Global tobacco sales may increase 6.4% annually through 2018, according to Euromonitor data. Cigarettes, which account for more than 90% of tobacco industry sales, are expected to outpace the rest of the industry with 6.6% annual growth. Tobacco sales in the Asia-Pacific region could increase the fastest (13%), followed by eastern Europe (4.3%). The Pan-Europe region has a smoking rate of about 30%, the highest in the world.
  15. 15. High-Smoking Regions’ Rising Consumer Confidence Aids Tobacco Rising consumer confidence in high-smoking regions may aid tobacco sales in the near term. Consumer confidence has rebounded significantly in the European Union since early 2013 amid improving macroeconomic conditions. In Indonesia, where 36% of the 253 million residents smoke, confidence has risen steadily in recent years. Philip Morris is the market leader in the Pan-Europe region and second to China National Tobacco in the Asia-Pacific region.
  16. 16. E-Cigarette Vaporizer Sales May Rise Eight-Fold to $39 Billion The size of the global retail e-cigarette and personal vaporizer market is projected to soar more than eight-fold to $39.2 billion in 2018, up from $4.8 billion in 2013, according to e-cig producer Kimree and research firm Frost & Sullivan. Industry growth will be driven by increasing consumer product acceptance, the entry of tobacco companies with significant financial resources for marketing, and ongoing electronic cigarette product innovation, they say.
  17. 17. Tobacco Spending Drops on U.S.Awareness of Risks,Price Hikes Price hikes, increased awareness of the health risks of cigarette smoking and the growing popularity of competing e-cigarettes and vaporizers may be collectively depressing demand for conventional tobacco cigarettes in the U.S. Improving consumer confidence and disposable income haven’t been enough to spark increases in tobacco spending. U.S. spending has declined steadily in 2014, by about 3.8% to $84 billion through Oct. 31.
  18. 18. Bloomberg Intelligence offers valuable industry and company data, interactive charting and written analysis with government and credit insights from a team of independent experts, giving trading and investment professionals deep insight into where crucial industries stand today and where they may be heading next.

×