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Rabobank Report: Outlook for Global Beverage Industry in 2013



  Rabobank Report: Outlook for Global Beverage Industry in 2013

   Supply Security a Top Priority in Face of Economic Headwinds, Commodity
                                  Volatility

Business Wire

NEW YORK -- January 29, 2013

Rabobank has published a new research report on the outlook for the global
beverage industry in 2013, forecasting the impact of weaker demand in
developed markets, slower growth in emerging markets, and price and supply
volatility for beverage-related commodities. As a result, the bank says, 2013
will see beverage companies focusing on new sourcing strategies to increase
security of supply.

In the report “Thirsting for Growth,” the bank’s Food & Agribusiness Research
and Advisory team says a major concern for all beverage companies in 2013 is
the outlook for key commodities. Exerting greater control over procurement,
including achieving increased transparency with upstream suppliers, will be a
critically important initiative for many beverage companies in 2013.

Rabobank says that in the past, beverage manufacturers were more concerned
with buying their inputs at the lowest price, but in today’s world of
tightening supply and price volatility, security of supply has emerged as a
key concern for many manufacturers. Increasing complexity within the supply
chain requires greater dependency and alignment between key stakeholders. As a
result, supply chain management and strategic development experts have
initiated “strategic sourcing” of agricommodities.

Ross Colbert, global beverage strategist for Rabobank and lead author of the
report, said, "Strategic sourcing requires beverage companies to re-evaluate
their procurement processes through the lens of global supply and demand, to
better understand the impact of price volatility, security of supply and
related risks. This approach has led global brand owners to develop dedicated
supply chains, where suppliers, processors, distributors and even retailers
are more aligned and operate in a more integrated system."

In the report, Rabobank’s analysts forecast the outlook for three primary
beverage sectors – soft drinks, coffee and tea, and alcoholic beverages.

Rabobank Outlook for Soft Drinks

  * The global soft drinks industry will continue to straddle two different
    worlds: the mature developed markets where growth has stagnated and
    developing markets where previously high growth rates have slowed, but
    still offer the greatest upside
  * Bottled water will continue to lead in volume with a projected growth rate
    of 5.4% in the coming year.
  * Ready-to-drink tea and Asian specialty drinks will be the fastest growing
    soft drink segments with projected growth rates in 2013 of 9% and 14%,
    respectively.
  * Coca-Cola and PepsiCo are set to undergo a new wave of refranchising as
    they look to shift bottling assets to strong franchise partners, allowing
    each giant to focus their efforts on brand building and marketing.

Supply and demand issues are leading to strategic sourcing for fruit juice
companies. These sourcing strategies include juice suppliers increasing
physical control (investing in growers), focusing on market power, and
following adaptive strategies such as ingredient substitution or
reformulation.

Rabobank Outlook for Coffee and Tea

  * Continued growth in global coffee will be driven by three key drivers:
    innovation in single cup brewing (e.g. K-Cups, pods, etc.);
    “premiumization,” with consumers choosing to drink higher quality coffee;
    and increased consumption in the away-from-home channel in developed
    markets, led by Starbucks and McDonald’s.
  * The global tea industry is forecast to face short supply in 2013. Key tea
    producing countries are expected to have a production drop in the range of
    1 to 5% in 2013, while demand is set to grow by 3%. With consumption in
    India and China outpacing domestic production, reduced exports and rising
    prices are expected for both markets

Rabobank Outlook for Alcoholic Beverages

  * Beer is forecast to be one of the slowest growing beverages this year. In
    mature markets, decline is driven by saturation, health trends and
    increases in excise duty
  * Spirit consumption in Western Europe is also expected to wane. Regional
    players and local spirits are likely to be the worst hit with larger,
    international spirits companies, with broader product portfolios better
    positioned to weather the storm
  * The wine industry will face tighter availability of global wine
    inventories, a soft consumer environment, and the need to continue
    developing many emerging markets. Suppliers will have to develop sourcing
    strategies that secure sufficient supply at the right cost and in the
    right place, and that are flexible enough to be relevant when global
    inventories become more readily available.

In light of the current global economic uncertainty, slower growth from BRIC
markets, and cautious consumer spending, the beverage industry will remain
thirsting for growth in 2013. Rising commodity costs will impact all drink
segments and likely force beverage companies to raise prices at a time when
consumers are already under economic pressure. Faced with narrowing margins,
those beverage companies that have a vision and commitment to engage in
strategic sourcing will have a competitive advantage in 2013 and beyond.

The Rabobank report on the outlook for the global beverage industry in 2013 is
available to media upon request.

Social media-ready version of this release:
http://rabobank-food-agribusiness-research.pressdoc.com

Rabobank Group is a global financial services leader providing wholesale and
retail banking, asset management, leasing, real estate services, and renewable
energy project financing. Founded over a century ago, Rabobank is one of the
largest banks in the world, with nearly $1 trillion in assets and operations
in more than 40 countries. In North America, Rabobank is a premier bank to the
food, beverage and agribusiness industry. Rabobank’s Food & Agribusiness
Research and Advisory team is comprised of more than 80 analysts around the
world who provide expert analysis, insight and counsel to Rabobank clients
about trends, issues and developments in all sectors of agriculture.
www.rabobank.com/f&a

Follow us on Twitter: @rabofoodagri

Contact:

Media:
Rabobank Group
Lynne Burns, 212-808-2581
lynne.burns@rabobank.com
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