Benjamin S. Marks
Stating it
bluntly, The F&B industry is competitive, but before talking about how,
below is a general landscape of the F&B market:
- The US
alcoholic drinks market generated total revenues of $153.9 billion in 2009,
representing a compound annual growth rate (CAGR) of 1.7% for the period
spanning 2005-2009.
- The US baby
food market generated total revenues of $1.3 billion in 2009, representing a
compound annual growth rate (CAGR) of 4.2% for the period spanning 2005-2009.
- The US beer
market generated total revenues of $77.6 billion in 2009, representing a
compound annual growth rate (CAGR) of 0.4% for the period spanning 2005-2009.
- The US bottled
water market generated total revenues of $17.1 billion in 2009, representing a
compound annual growth rate (CAGR) of 4.5% for the period spanning 2005-2009.
- The US
confectionery market generated total revenues of $33.8 billion in 2009,
representing a compound annual growth rate (CAGR) of 2.9% for the period
spanning 2005-2009.
- The US dairy
market generated total revenues of $47.3 billion in 2009, representing a
compound annual growth rate (CAGR) of 5.7% for the period spanning 2005-2009.
- The US frozen
food market generated total revenues of $30.6 billion in 2009, representing a
compound annual growth rate (CAGR) of 3% for the period spanning 2005-2009.
- The US
functional drinks market generated total revenues of $17 billion in 2009,
representing a compound annual growth rate (CAGR) of 16.6% for the period
spanning 2005-2009.
- The US juices
market generated total revenues of $21.4 billion in 2009, representing a
compound annual growth rate (CAGR) of 0.6% for the period spanning 2005-2009.
- The US meat,
fish & poultry market generated total revenues of $40.5 billion in 2009,
representing a compound annual growth rate (CAGR) of 3.1% for the period
spanning 2005-2009.
- The US milk
market generated total revenues of $16.8 billion in 2009, representing a
compound annual growth rate (CAGR) of 1.9% for the period spanning 2005-2009.
- The US potato
chips market generated total revenues of $4.4 billion in 2009, representing a
compound annual growth rate (CAGR) of 4.5% for the period spanning 2005-2009.
- The US savory
snacks market generated total revenues of $18.3 billion in 2009, representing a
compound annual growth rate (CAGR) of 5.3% for the period spanning 2005-2009.
- The US soft
drinks market generated total revenues of $128 billion in 2009, representing a
compound annual growth rate (CAGR) of 2.5% for the period spanning 2005-2009.
- The US spirits
market generated total revenues of $45.7 billion in 2009, representing a
compound annual growth rate (CAGR) of 2.4% for the period spanning 2005-2009.
- The United
States wine market generated total revenues of $27.5 billion in 2009,
representing a compound annual growth rate (CAGR) of 2.7% for the period
spanning 2005-2009.
With growth in a specific part of
this market place, there will be an attraction of companies and investors who
believe they can make money. This is where the competitive landscape comes into
play. The Food and Beverage area is primarily made up of smaller companies.
This makes the market very elastic as many companies are going to be targeting
similar or the same groups of people.
As stated before, this market is a very
competitive one. Even if you are a bigger player in the market like Kraft or
Coke-Cola, you do not run the market. “Nestle, Kraft Foods, Unilever, and
Cargill account for less than 5 percent of the overall value of the Industry.”
That gives an overwhelming majority to the smaller sized companies. This fact
should provide sufficient evidence proving how many players there are in this
market and how competitive it is because these are 4 of the top 20 companies (#
1, 3, 18, 20 in 2010 when the above statistic was done).
Looking
into the competitive landscape, there are numerous smaller companies. However,
What seems to be the major difference between the larger companies and smaller
companies to me is market extension. A bigger the company can sell its goods in
more geographical areas, which allows it to appeal to more consumers vs. a
small company that is stuck competing for fewer consumers because they cannot
fund expansions. This still provides for a competitive market because in every
region there is competition for the consumers, but the larger companies can
compete in more areas. For instance, a coffee shop can compete with Starbucks
just as Starbucks did when it started out, but Starbucks expands globally
allowing it to grab more costumers. Ultimately, there is competitiveness
everywhere, but the larger companies compete with many smaller companies in
different regions of the world.
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