MONTREAL, Dec. 10, 2013 /CNW Telbec/ - Global optimism in the food and
beverage sector is high according to a new report just released by
Grant Thornton International Ltd. This international study with a
Canadian perspective was released this morning by Raymond Chabot Grant
Thornton during a conference organized with the Conseil de la transformation agroalimentaire et des produits de
The new study, A Hunger for Growth: Food and Beverage Looks to the Future, indicates that an improved global economic outlook creates a
favourable climate for the food and beverage sector. The new-found
optimism from producers in the sector is leading 90% of them to expect
revenues to increase in the near term. The vast majority of them also
expect profits to increase, with 25% expecting double-digit growth in
Guy Barthell, Partner in the Strategy and Performance Consulting Group
and agri-food specialist with Raymond Chabot Grant Thornton stated,
"Food and beverage companies are fired up. After a few challenging
years, business leaders are anticipating a period of growth and
increased investment. The focus for investment is on efficiency gains
to ensure that profitability keeps pace with growth and on new product
development in order to cater to changing trends and tastes here in
Quebec, in Canada and, increasingly, in newer markets. Furthermore, a
future free trade agreement with the European Union suggests that new
export avenues could be explored, albeit with a number of challenges
that Quebec producers will need to prepare for."
Because of the geographic and economic proximity to the United States,
and because the American food and beverage industry is re-emerging,
opportunities also abound south of the border for Canadian producers.
Jim Menzies, Grant Thornton's International Food and Beverage leader
and a Partner in the Canadian firm of Grant Thornton LLP, said,
"Consumer tastes and trends here in Canada are quite similar to those
of the U.S., giving Canadian food and beverage manufacturers a unique
opportunity to capitalize on the re-emergence of the U.S. consumer
market. Housing starts are up, consumer loan delinquency rates are back
to normal, and people are starting to spend again in the U.S. The
combination of all of these factors leads to growth opportunities
within the Canadian industry."
With rising optimism comes rising investment. Overall, 64% of Canadian
firms expect that investment in plant and facilities will increase over
the next 12 months. Eighty-three percent of global producers expect
investment in equipment to rise over the next year, with Canada
slightly higher at 90%, and 84% of Canadian producers also plan to
increase their product development investment.
Top drivers of business growth in Canadian food and beverage
Topping the list of key growth drivers is access to a skilled workforce,
being mentioned by 75% of Canadian respondents. Rounding out the top
five are new technology (64%), quality of suppliers (52%), exports
(50%), and new equipment (39%).
Constraints to growth
When asked to rank the top constraints to growth, Canadians ranked the
power of retailers (60%), challenges finding skilled workers (42%) and
government regulations (40%) as the top three.
Power of retailers is higher than global (53%) and U.S. (47%) numbers,
and possibly a reflection of the particularly concentrated Quebec and
Canadian retail environment. Canadians were also more likely to
indicate that finding skilled workers was a top growth constraint
compared with their U.S. counterparts.
Food and beverage trends
Canadian businesses are more likely to seek out new channels (60%) than
those in the U.S. (44%) and are above the global average of 57%; they
are slightly less likely to focus on creating new products than other
markets. Around the world, most manufacturers report that they are
looking at packaging innovations (nearly six in ten companies).
Trends like organic foods seem to play better with manufacturers south
of the border: 54% of U.S. respondents say they will have a positive
impact compared to 39% in Canada. On the other hand, U.S. manufacturers
are more likely to see the negative effects (37%) from the trend
towards healthy/nutritious food and beverages, whereas in Canada, 69%
think it will be positive. This might be reflective of overall
healthier products available to health-conscious Canadian consumers.
When it comes to ethnic food and beverages, the Canadian melting pot
seems to be spicier. In Canada, 53% say ethnic product trends will have
a positive effect, compared with only 36% of U.S. respondents.
Canadian respondents are also more likely to expect positive effects
from premium and luxury food and beverage trends (69%) than global
(60%) or U.S. (57%) respondents, while the U.S. seems to see
private-label brands (50%) more positively than Canadian (31%) and
global (36%) respondents.
Impact of government
The report indicates that the industry is sensitive to the impact of
government actions. A large number of companies in Canada (45%) and the
U.S. (43%) predict that food-labelling regulations will have a negative
effect on their organization—higher than the global average of 38%.
Those in the U.S. are more likely to see government food traceability
regulations having a negative effect (46%) versus 37% in Canada. Twice
as many Canadians surveyed say that nutritional guidelines will have a
positive effect on their organization compared with respondents in the
U.S. (31% vs. 14%).
U.S. respondents are more than twice as likely to expect tax regulations
to have a negative impact (75%) than Canadians (33%), whereas Canadians
are more likely to report positive effects of R&D tax credits (33%)
than in the U.S. (23%).
Food and beverage manufacturers are more likely to turn to social media
platforms like Facebook (49%) and their own website (78%) over
traditional media like print advertising (46%). These numbers are even
stronger in Canada, with 84% using their corporate website, but print
advertising (48%) still wins out over social media (42%) in Canada.
U.S. companies are much more likely to use Twitter (29%) than Canadian
Guy Barthell concludes, "If I had one piece of advice for Quebec food
and beverage manufacturers, it would be this. Given this positive
outlook, plan how you're going to take advantage of it. Learn to
capitalize on consumer trends and focus on innovation in both products
and productivity. Innovation will open the door to opportunity and
export possibilities, especially in an optimistic growth market."
A Hunger for Growth: Food and Beverage Looks to the Future examines the global food and beverage sector - financial position,
trends and constraints - as well as presents forecasts by specialists
around the world. To view the complete study, go to http://www.rcgt.com/en/industries-segments/agri-food/.
About Raymond Chabot Grant Thornton: Founded in 1948, today Raymond Chabot Grant Thornton href="http://www.rcgt.com/en">(www.rcgt.com) is a leader in the fields of assurance, tax, consulting services, and
business recovery & reorganization. Its strength is based on a team of
almost 2,400 people, including some 230 partners in more than 100
offices in Quebec, eastern Ontario and New Brunswick. For the past 30
years, Raymond Chabot Grant Thornton has been a member of Grant
Thornton International Ltd, providing clients with the expertise of the
member and correspondent firms in more than 100 countries.
SOURCE: RAYMOND CHABOT GRANT THORNTON
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