Packaged Food Industry to Reach US$2.4 Trillion in Retail Sales in 2014
Market research company Euromonitor International released today new global packaged food data showing 3.6% growth in value sales over 2013 to reach US$2.4 trillion in 2014.
“Both 2013 and 2014 have so far delivered some of the highest growth rates in retail value terms in the last decade,” said Lamine Lahouasnia, Head of Global Packaged Food. “This marks a departure from the historically volume-driven nature of the packaged food industry.”
Key findings from Euromonitor International’s 2015 Packaged Food research:
-- Record all-time high for both sweet and savoury snacks and confectionery sales with the categories valued at US$125 billion and US$198 billion in 2014, respectively. -- Another strong year of growth for global dairy reaching US$550 billion in 2019, of which half will be generated from only eight countries: China, US, Brazil, Russia, France, Japan, Germany and the UK. -- The cost of cocoa is likely to see a 10% increase by the end of 2014 with Hershey, Mars and other players announcing a price increase of 8%. With a number of commodities rising in price, the key question for many in the food industry is how to pass these increased costs to the consumer and protect profit margins. -- Less is now more in the packaged food industry. With consumers eating less in some markets, several brands are charging more for less. For example, companies have launched 'thins' - lighter and thinner versions of their original products that sell for considerably more per kilogram than their counterparts.
Over the next five years, the fastest growing category in packaged food will be baby food, with 7.8% compound annual growth rate to 2019. Supported by emerging regions, where the global financial crisis has not had a severe impact on economic growth and birth rates are still relatively high, the category sees China at the forefront despite its one child policy.
According to Euromonitor’s Head of Packaged Food, Lamine Lahouasnia, “Acquisitions this year were geared towards arming food companies with greater natural and organic credentials that align with their corporate social responsibility initiatives and product portfolios. General Mills’s very recent acquisition of organic food firm, Annie’s, is an example of this trend but it is by no means an exception. 2014 also saw Hain Celestial acquire Rudi’s organic bakery and WhiteWave Foods purchase of Earthbound Organic. The drive to absorb these smaller organic organisations is caused not so much because of the growth of the organic category, but more because of the requirement for companies engaged in the food industry to align their CSR communications with their product portfolio.”
In 2014, pressure on the food industry from a variety of activist groups and media resulted in a lot of bad publicity. This led to greater possibility of regulation, which along with the backdrop of rising commodity prices, greater political instability, emerging market slowdowns and Russian import bans, represents one of the major threats for the future of the food industry.