Baking Mix and Prepared Food Production
Business for Sale Industry Economics
2002 - 2021
2021 - 2027
The Baking Mix and Prepared Food Manufacturing business manufactures a number of items, including perishable foods such as salads, prepared meals, and sandwiches, as well as sweetening syrups, dry and dehydrated components, dessert mixes, flavoring powders, and egg products. Over the five years through 2021, industry operators have faced rising consumer health awareness.
Manufacturers have been driven to create a range of healthier prepared meals to cater to an increasingly health-conscious customer base in order to remain relevant. While these healthier product options are often more expensive to make, they also carry a higher selling price. Throughout the majority of the era, per capita, disposable income rose, which aided in the expansion of industrial revenue.
Consumers are more inclined to buy discretionary items such as dessert mixes and other industrial items when disposable income improves. As a consequence, industry sales climbed by 3.7 percent annually to $35.7 billion in the five years to 2021. Despite interruptions caused by the COVID-19 (coronavirus) pandemic and the ensuing economic slowdown, industry revenue is expected to increase by 1% in 2021 alone. Profitability, on the other hand, has declined during the time owing to increased labor expenditures.
Domestic operators have effectively competed with overseas importers over the last five years by effectively adjusting to consumers’ more health-conscious eating demands. Additionally, health worries over tainted items aided in stifling some import competition. Nevertheless, since imported goods benefit from cheaper input costs, imports increased over time. Research expects that imports will rise by 6.0 percent annually to $4.2 billion in the five years to 2021.
Increased disposable income and stable input costs are predicted to underpin industry revenue growth over the next five years through 2026. On the other hand, rising consumer health awareness is predicted to continue as customers seek out fresh ingredients rather than processed meals. Unless operators are able to further adjust to these preferences, this trend may constrain industry revenue growth.
Consumers, on the other hand, may be more inclined to want industrial goods when the economy recovers from the coronavirus epidemic and employment increases since employees would presumably have less time to prepare meals from scratch. Research forecasts that industry sales will expand at a 2.4 percent annual pace to $40.2 billion by 2026.
The Baking Mix and Prepared Food Production sector are made up of businesses that manufacture a variety of goods, including perishable prepared foods, egg products, flavoring powders, dry and dehydrated goods, dessert mixes, sweetening syrups, and macaroni packed with sauce. The industry has grown in revenue throughout the five years to 2021, boosted by a robust economy most of the time.
Before the COVID-19 (coronavirus) pandemic, consumers enjoyed an increase in full-time work and discretionary cash, which enabled them to buy higher-value-added items such as ready meals. Additionally, customers who work full-time are more inclined to seek out more convenient items, which contributes to industry demand. However, the business has seen increased competition from a health-conscious customer base.
Manufacturers of prepared meals have concentrated their efforts on developing healthier goods in response to evolving health trends. Consumption of egg products and nutritious perishable prepared meals has increased, while demand for industrial items seen as unhealthy has decreased, such as dessert mixes and flavoring powders. As a consequence, industry sales climbed by 3.7 percent on an annualized basis to $35.7 billion in the five years to 2021.
By 2020, the coronavirus pandemic would have created considerable hurdles to the sector, disrupting supply chains and temporarily squeezing downstream demand. While operators are regarded as critical enterprises, the sector has seen a change in downstream demand choices as restaurants have closed or operated at reduced capacity since the epidemic began.
On the other hand, baking mix items have benefited from the coronavirus epidemic, since customers have spent more time baking at home. Finally, downstream demand increased in 2020, boosted by an increase in per capita disposable income as a result of robust federal government support for the economy. Revenues are predicted to grow at a more modest pace of 1.0 percent in 2021.
Consumers in the United States have expanded their intake of foods with health advantages and convenience in recent years. Consumers who are becoming more health aware have shifted away from highly processed foods that include artificial additives and tastes in favor of more natural foods. In response to changing customer preferences and wellness trends, industry operators have worked to improve the quality and variety of goods available, including those that are rich in fiber, gluten-free, and low in fat.
The capacity of industry operators to accurately foresee changes in customer tastes and demand, develop new goods to satisfy those changes, and react to rivals’ product innovation is critical to their success. Organic and regionally produced goods, for example, have grown in favor among ecologically aware millennials. Additionally, operators have been aggressive in mergers and acquisitions to diversify their product portfolios and better reflect rising customer interest in healthier meals.
For instance, B&G Foods Inc. purchased the Green Giant brand in 2015, and Back to Nature Foods Company LLC bought the Back to Nature Foods trademark in 2017. Overall, the industry’s income has risen as the number of operators actively catering to healthy dietary trends has risen.
However, recalls of products and allegations of food-borne diseases have heightened worries about the safety of processed foods. Many customers have shifted away from processed foods in favor of fresh and raw ingredients to prepare at home. Additionally, consumers’ worries about diabetes, heart disease, and obesity have prompted them to decrease their intake of traditional confections and imitation cheese products, such as packaged macaroni and cheese.
Additionally, imports of spices and other items are particularly prone to contamination, increasing demand for operator-manufactured industrial items. Nonetheless, since imported goods sometimes benefit from cheaper salaries, imports increased over the era. Research expects that imports will rise by 6.0 percent annually to $4.2 billion in the five years to 2021.
In recent years, producers of packaged and prepared foods, baking mixes, and egg products have benefited from increased demand for handy food items. Due to increased employment during the majority of the era, US consumers had less free time, increasing demand for fast, easy-to-prepare meals. As a result, demand for microwaveable foods, single-serve items, and other handy food items has increased.
While makers of these items have been forced to create new goods to meet increased demand for better, more nutritious food, the sector has also seen the entry of new producers specializing in healthy prepared meals. For example, Revolution Foods Inc. manufactures all-natural, nutritious meal packages for children. As small, specialty manufacturers specializing in all-natural food joined the business, the number of operators rose, increasing at an annualized rate of 3.6 percent to 1,623 firms during the five years to 2021.
As customers’ preference for numerous cuisines and tastes increased, downstream markets wanted more diversified products, leading to a decline in demand for locally created industrial items in international markets. Over the five years to 2021, the value of exports increased at an annualized pace of 1.3 percent to $5.9 billion. Exports to Canada, a major commercial partner of the United States, have decreased, while exports to South Korea have soared.
Overall, exports to Mexico were stable, despite a minor decline in the middle of the decade. As customers grow more environmentally sensitive, industry operators have devised environmental sustainability plans. For instance, large operators have tried to cut greenhouse gas emissions by installing energy-efficient equipment and developing novel methods for waste reduction, reuse, and recycling. Additionally, operators have moved closer to downstream consumers to reduce the time required for industrial goods to be delivered.
Rising commodity, energy, and other input prices have the potential to severely influence operating expenses, especially those associated with product manufacturing, transportation, and distribution. Changes in commodity prices, in particular, may result in retail pricing volatility and significant price rivalry among industry firms, affecting consumer buying and trade patterns.
However, prominent manufacturers in this business often have a sufficient market share and brand recognition to pass on some of the cost increases associated with input price volatility via increased product pricing when required. Nevertheless, since not all operators were able to fully offset the impact of cost increases, industry earnings fell over time.
Simultaneously, wage prices have grown as a result of the rising demand for highly trained workers, limiting total cost reductions. As a consequence, the industry’s average profit margin, defined as profits before interest and taxes, is predicted to fall to 5.8 percent of sales in 2021, down from 6.4 percent in 2016. Due to the continuous need for skilled personnel, employment in the business has risen at an annualized rate of 3.7 percent to 95,198 persons during the five years to 2021.
Revenue for the Baking Mix and Prepared Food Production business is predicted to expand at a slower pace in the future. As the economy recovers from the COVID-19 (coronavirus) pandemic, per capita disposable income is expected to grow at an annualized rate of 2.1 percent during the next five years to 2026, accompanied by an increase in employment.
Consumers are expected to want more prepared meals as disposable income increases, which are normally more costly to make but also carry a higher ticket price for buyers. Additionally, when consumers work longer hours and have less time to cook meals at home, job growth may result in a rise in demand.
While the sector’s income is predicted to expand, rising health awareness is anticipated to diminish demand for some industrial items; nonetheless, effective product innovation may help sustain the business. Research forecasts that industry sales will increase at an annualized pace of 2.4 percent to $40.2 billion by 2026.
As the economy recovers from the coronavirus epidemic, the sector is likely to profit from growing disposable income and employment. Demand for prepared meals is expected to increase as more people return to work and lead busy lifestyles. Additionally, as disposable income increases, customers are likely to increase their restaurant visits, boosting the demand for flavorings, egg products, and other commodities used to produce menu items.
Over the next five years, consumers are also likely to stimulate demand for industrial egg products. For instance, the popularity of lean protein is expected to boost sales of refrigerated liquid and dry eggs. Increased demand for more nutritious and healthy foods will almost certainly provide possibilities for more specialized operators. As a result, during the five years to 2026, the number of industry operators is predicted to grow at an annualized rate of 1.7 percent to 1,766 firms.
While the sector is anticipated to gain from rising local demand for convenience foods, it may also face more overseas competition as concerns about contamination decrease. While demand for industrial items is expected to increase throughout the forecast period, Research anticipates that imports would account for 10.7 percent of local demand in 2026, down from 12.4 percent in 2021.
Additionally, Research forecasts that imports would decrease by an annualized 1.0 percent to $4.0 billion in the five years to 2026. Exports are expected to grow at a 1.7 percent yearly pace to $6.4 billion over the same period. Numerous domestic operators have significant brand awareness, which contributes to increased worldwide demand for US-made products. Additionally, brand awareness contributes to the development of client trust and loyalty.
While industry input costs are unpredictable, many critical inputs are expected to grow in price throughout the projection period. For example, during the five years to 2026, the price of sugar is predicted to grow at an annualized rate of 0.5 percent. Additionally, greater minimum wage pay, higher-skilled personnel, and increasing staff specialization are likely to boost labor expenses in the business.
As a result, industry salaries are expected to grow at a 2.5 percent yearly pace to $5.2 billion during the five years to 2026. Additionally, employment in the sector is expected to grow at an annualized pace of 2.2 percent to 106,129 people over the same time. While some operators may pass on these expenses via increased product pricing, others will almost certainly have to absorb them and make do with lower profit margins.
Due to the industry’s involvement in the food production sector, it is subject to rigorous state and federal restrictions. Compliance with changing laws, rules, and associated interpretations may have a negative impact on the profitability of industry operators. For example, Washington and Massachusetts will likely mandate cage-free chickens to produce eggs and egg products by 2022 and 2023, respectively, after California’s enforcement of such rules in 2020.
These rules are likely to have an effect on egg supply and drive up prices. To offset the impact and retain profitability, industry operators are expected to raise the scope of operations or pass on the price burden to downstream purchasers. Additionally, the increased price of egg products may alter consumption patterns and drive customers to seek out less costly protein sources.
This business produces perishable prepared goods such as sandwiches, dinners, and peeled or chopped vegetables. Operators in this industry manufacture dessert mixes, flavoring powders, and processed eggs using dry and dehydrated materials. The Baking Mix and Prepared Food Production business has reached an advanced degree of development.
Industry value added (IVA), which quantifies an industry’s contribution to the entire economy, is expected to grow at an annualized rate of 3.2 percent during the next decade, from 2016 to 2026. On the other hand, GDP is predicted to expand at an annualized rate of 1.9 percent for the same time.
IVA growth that exceeds GDP growth is often indicative of an industry in the growth stage of its life cycle. The industry, on the other hand, is maturing owing to widespread market acceptance and saturation, as well as modest expansion in the number of industry operators.
The processed egg and prepared food industries are continually growing, as customers find new methods to mix these ingredients into culinary products, increasing the industry’s IVA. Additionally, industry producers profit from the widespread market acceptability of the majority of industry items, which is indicative of a mature industry.
Industry items such as pre-mixed sweets and packed pasta with sauce have been on the market for decades and are mainstays in the meals of many Americans. Additionally, operators have launched more healthful, flexible, and handy items deliberately in response to a healthy diet, diverse tastes, and a busy lifestyle. However, decreased demand for some processed foods often regarded as unhealthy has harmed the industry’s success.
Additionally, this sector has had modest growth in terms of the number of operators; over the next decade, the number of companies is forecast to expand at an annualized rate of 2.7 percent, while the number of workers is forecast to expand at 3.0 percent annualized pace. This is most likely owing to the low entry barriers in established product groups.
New entrants can struggle to compete with big operations that benefit from brand recognition and economies of scale. Smaller companies, on the other hand, may carve out specialized markets in local areas by providing distinct product offers.
Finally, this business has a low rate of product innovation, since the bulk of changes have occurred via product reformulations and repackaging. Producers are anticipated to concentrate their efforts in the future on expanding current markets, such as the home market for fresh-packed meals.