Food and beverage market holds its own in economic crisis

Last year’s economic slowdown and supply chain issues, including ingredient availability problems and vendor pricing, had a large affect on the global food and beverage market. In spite of these deterrents, the industry lost only 5.1% of its market value relative to its value one year ago, said Frost &Sullivan Food Industry Analyst Christopher Shanahan. Meanwhile the healthcare industry lost 22.2 % of its value;technology, 30.6%;automotive, 48.4%;and financial services lost 62.2% of its value.

In the North American food and beverage market, Shanahan showed how extreme factors in 2008 both negatively and positively affected the food and beverage industry. Among these factors in early 2008 were: an “exponential increase in commodity and energy prices,” increasing biofuel production, depreciation of the US dollar, increasing demand from emerging markets, squeezed margins and inflated valuations of acquisition targets. End-of-year 2008 saw “exponential decrease in commodity and energy prices,” easing of margin pressures, a more realistic valuation of take-over targets, continued depreciation of the US dollar and restricted R&D and marketing investments.

This year, Shanahan predicted continued, but lower, price inflation rates for energy and other commodities, decreased dependence on biofuels, increased aggressive food pricing strategies to gain market share, continuation of interest in health and wellness and an increased focus on cost-saving strategies among businesses and consumers.