InSight

Exit and Growth Strategies for Middle Market Businesses

M&A News from the Food & Beverage Industry

By Terry Fick | Mar 03, 2016

Food & BeverageFood & beverage wholesalers may see labor costs rise in the short term as heavy demand for truck drivers in the US puts pressure on employers to increase salaries. Average annual pay for truckers reached a record $57,000 in 2015, up 17% from the average two years earlier, according to the National Transportation Institute. In that same period, average wages for all US industries rose by less than 4%. The strengthening economy is creating stiff competition for drivers as companies expand their distribution networks to transport higher volumes of products. Trucking industry groups estimate that nearly 50,000 additional drivers are needed just to keep up with demand, The Wall Street Journal reports. Many distributors pass the costs of salary increases along to grocers, retailers, and other customers.

The improving public image of natural saturated fats is helping food manufacturers sell more butter, whole milk, red meat and other full-fat products. US butter sales rose about 15% in 2014 and another 6% in the first three months of 2015, and global sales are increasing at a rate of 2% to 4% per year, according to a recent analysis by Credit Suisse. Meanwhile, sales of whole milk rose 11% in the first six months of this year, compared to a 14% decline in skim milk purchases. Consumers are cutting back on heavily processed foods and trans-fats in favor of foods with more natural ingredients, including items rich in saturated fats such as organic dairy products, grass-fed meats, natural oils, and nuts.

Industry Indicators

  • US retail sales for food services and drinking places, a potential measure of food demand, increased 8.1% in 2015 compared to 2014.
  • US tourism spending for food services and drinking places, an indicator for food distributor revenues, increased 7.7% in the third quarter of 2015 compared to the same period in 2014.

Posted by Terry Fick.

Read the Entire Food & Beverage 1st Quarter Newsletter Here


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