Beef and Pork Wholesaling
Business for Sale Industry Economics
$91,398,000,000
Revenue
8.43%
Projected CAGR
2003 - 2021
Historical
2021 - 2027
Projection
3.43%
CAGR
$2,559,000,000
Profit
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Summary
The Beef and Pork Wholesaling industry has experienced favorable conditions over the five years to 2021.
The industry, which serves as the middleman between beef and pork producers and retailers, is expected to perform well as both consumer spending and consumption of beef and pork rises.
Prices of key inputs, such as corn and diesel, have risen during the five-year period, increasing operating costs.
Although operators have dealt with recent studies linking beef and pork consumption to heart disease and shifting consumers’ tastes, the industry has shown resilience as operations have expanded.
Revenue has been on a steady growth during the five-year period. However, the restrictions placed on the economy as a whole due to the COVID-19 (coronavirus) pandemic led to a decrease of 0.9% in 2020.
This contraction in revenue was offset by the increase in per capita disposable income as a result of enhanced employment benefits and stimulus checks.
As the economy begins to reopen in 2021 and the easing of restrictions occurs, consumer spending is expected to increase due to pent-up demand.
Consequently, research estimates industry revenue to increase at an annualized rate of 2.4% to $91.4 billion over the five years to 2021, with a 2.0% growth in 2021 alone due to the expected economic rebound.
Performance
The Beef and Pork Wholesaling industry comprises businesses that buy beef, pork and other red meat products from upstream cattle and hog industries (such as slaughterhouses and processors) and then resell these products to a variety of downstream markets.
Over the five years to 2021, the industry has exhibited marginal enterprise growth, as various major processors began to undertake wholesaling operations while few new players entered the industry due to high barriers to entry.
Nonetheless, downstream demand for beef and pork increased during the period as US households have experienced a rise in disposable income and consumer spending during the five-year period.
This was in part due to increased government assistance in the form of enhanced unemployment payments, worker benefits and stimulus checks, which occurred in the second half of the period in an effort to curtail the hampering economic effects of the COVID-19 (coronavirus) pandemic in 2020.
An increase in per capita consumption of beef and pork and a rise in both per capita disposable income and consumer spending due to previously repressed demand has led to an increase in industry revenue over the five years to 2021.
Outlook
The Beef and Pork Wholesaling industry is projected to increase over the five years to 2026. Additionally, the presence of manufacturers’ sales branches and offices (MSBOs) in this industry are expected to grow. These operators will likely continue to generate demand from downstream retailers because they can charge lower prices.
Due to economies of scale, these companies will likely excel despite decreasing prices of red meat. Nevertheless, industry growth is anticipated to continue as the economy normalizes after the COVID-19 (coronavirus) pandemic.
As vaccines become more widespread and social events in the form of indoor dining become an accepted activity in the US once more, industry operators are expected to reap the benefits.
An increase in the consumption of industry products from hospitals, military, schools and leisure activities such as resorts is expected to have a positive impact on the industry’s performance.
The possibility of future economic stimulus packages will likely result in a rise in disposable income and consumer spending, ultimately resulting in a possible increase in demand for industry products.
As a result, industry revenue is estimated to increase an annualized 1.3% to $97.7 billion over the five years to 2026.
Industry
Operators in this industry wholesale beef, pork and other red meat products. There are two types of wholesalers that execute the industry’s activities. One type is merchant wholesalers, which include independent wholesaling operations.
The other includes manufacturers’ sales branches and offices, which represent the wholesale division of vertically integrated meat processors. Canned and packaged frozen goods are excluded from this industry, as are poultry and seafood products.
Investment
The industry of beef and pork wholesaling has low capital intensity. In 2021, for every $1.00 spent on labor, businesses will average invest $0.13 in capital. The procurement, storage, and distribution of industry products are all examples of capital expenditures.
These duties entail minimum product change, but they also include marketing efforts, preparation, and inspection, as well as sending orders to clients.
Because these jobs are often labor-intensive, the business relies significantly on labor rather than capital products, which explains the industry’s low capital intensity.
The COVID-19 (coronavirus) pandemic, which began in 2020, adds to this industry’s capital expenditures by requiring additional personal protective equipment and other safety-related costs.
Since meat is perishable, the capital expenses for this time-sensitive business are high. Climate-control systems are especially critical in warehouses and delivery trucks, necessitating capital investments in cooling and refrigerating equipment, computerized inventory management, and transportation vehicles.
Subsequently, the sector is increasingly relying on new technologies to increase operational efficiencies and save costs whereby employment growth has stalled.
Despite the growing use of automated inventory control, processing orders, checking for abnormalities, moving items, and offering specialized customer service still need a significant amount of personnel.
Volatility
Over the five years leading up to 2021, the Beef and Pork Wholesaling industry saw low-to-moderate revenue volatility. Revenue volatility averaged 2.9 percent throughout this time period, with highs of 7.4 percent in 2016 and lows of 0.9 percent in 2020.
Because beef and pork are staples in the ordinary American diet, demand is consistent, although prices fluctuate somewhat. As a result, unless there is a significant rise in price, changes in consumption habits are largely impacted.
Economic conditions, feasible agricultural conditions, healthy animals, red meat pricing, and structural changes within the wholesaling sector all influence the industry’s performance. Demand for this industry’s products has been particularly variable because to the COVID-19 (coronavirus) pandemic.
Upstream suppliers and downstream purchasers have experienced major economic interruptions as a result of the issuing and subsequent easing of restrictions on indoor eating, transportation, stay-at-home orders, and the closure of non-essential enterprises.
Despite this, revenue is predicted to grow 2.0 percent in 2021 as supply chain bottlenecks are addressed and economic activity picks up. In recent years, the sector has been affected by new health concerns regarding the consumption of red meat, as well as the rising popularity of plant-based or faux meat products.