US food execs expect 2011 boost

Posted by Daniel Palmer on 20th August 2009

Senior executives in the food and beverage industry are hopeful of improved revenue and profitability in 2010 but believe strong growth will not be seen until 2011 and beyond, according to a recent survey conducted by advisory firm KPMG.The survey, which focused on the food and beverage industry specifically, discovered 72 per cent of respondents expect business conditions to improve in 2010, with 72 per cent also anticipating stronger revenue and 65 per cent expecting improved profitability. However, 48 per cent of the food and beverage executives believe the economy could take as long as 2011 or later to substantially recover.

Overall, 86 per cent of food and beverage executives see an improving jobs picture in their sector in 2010, with 54 per cent saying it would be stable and 32 per cent forecasting it to be better than 2009. Nearly half (48%) admitted to already initiating headcount reductions but only 22 per cent were contemplating further such actions.

“These survey results show a cautiously optimistic outlook from industry execs, even as the underlying volatility in the food and beverage sector – based on companies wrestling with the sting of higher costs, shrinking consumer spending, and working capital constraint – continues to develop,” Patrick Dolan, the leader of KPMG’s US Food, Drink and Consumer Goods division, advised. “With the food and beverage industry in the midst of potentially disruptive change – led by accelerating technological, social, and economic shifts–the executives surveyed are still upbeat about their future, though much hard work remains.”

The KPMG survey also asked food and beverage executives to indicate if their strategic focus was now on investing for growth or cutting costs. Almost two-thirds (63%) chose the investment option, but 37 per cent said they were still focused on cost cutting.

The biggest challenges to recovery most frequently cited were: finding new sources of revenue growth (58%); managing/cutting costs (52%); managing risk (49%); and adjusting to changing customer demand (42%).Set for recovery
Three out of every five respondents reported a belief that the food and beverage industry would fully recover ahead of the economy at large, with 65 per cent confident their business was well-poised to take advantage of an economic recovery.

“Current industry business models are under intense pressure but our experience with food and beverage companies finds that those that translate customer understanding into value and cost-effective innovation, and that succeed in gaining a single view of their liquidity position, their underlying supply chain, and the alignment between performance and risk can better withstand the system shocks created by market volatility,” Mr Dolan concluded.