Food & Beverage Industry Concerned About Impact of “Credit Crisis”

by Sarah Corp

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The Results

Industry insiders are concerned about the impact of the current credit crisis on their companies and the food/beverage industry as a whole. While some believe the credit crisis will have “very little” or “no impact”, most (77%) anticipate “moderate” to “great impact” on their company’s business/operations.

On a macro-level, most (82%) believe that the current economy will have a “direct impact on the overall food and beverage industry”. At the individual company level, insiders express concern with liquidity (daily working capital) and their company’s ability to make purchases; a majority (73%) anticipate increased/ further industry consolidation in response to current economic times.

Insiders expect the ‘foodservice’ segment to be most negatively impacted by current economic conditions, while ‘meat/poultry/seafood’ and ‘retail’ are also expected to struggle.

Additional Comments

Question: What else? Please tell us your thoughts on how current economic conditions will impact your business and the overall food industry.

“Value and careful targeting will be more critical than ever. Consumers are still buying, but they are looking for a deal. We expect this will continue to result in channel-switching (Mass and Club will benefit).”

“Decline in consumer spending and drop in consumer confidence leads to decrease in revenue.”

“The availability of cheap working capital is not allowing us to take advantage of buyingopportunities in this market. We could weather the coming storm much better if we had the raw materials inventory on hand now at current price levels, as opposed to months from now, when we project them to be much higher than current value plus carrying costs.”

“I'm unable to finance payroll and new equipment purchases, so I will be in a mode to layoff and decrease our efficiencies, limiting production and impacting sales negatively.”

“We are scared. Our business is only 2 years old and had been doing fairly well, however, we sell gourmet candy and gift items and that is a luxury, one that most will not purchase now. The items we carry that are fairly inexpensive will be purchased, however it is not enough to sustain us financially and the banks are not lending as they have. Its all a snow ball effect and we are all suffering.”

“I think this is somewhat overblown. There are fears about the upcoming election. The timing of this is too sudden. Curious.”

“Consumers will buy the lowest cost products that meet their expectations and needs, so private label and extreme value format retailers will benefit”

Sarah Corp

Clear Seas Research