The Smoothie Supply Chain - IBISWorld

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WWW.IBISWORLD.COM Special Report August 2012 2 The Smoothie Supply Chain breakfast items. By diversifying its menu, the company hopes to attract customers throughout the day. Companies are also offering organic products, as well as drinks that appeal to consumers with diet restrictions, such as gluten-free or low-sugar beverages. A sweet decline The healthy eating index is projected to decline in the next five years, despite widely reported obesity rates and other nutrition-related diseases. IBISWorld forecasts that the healthy eating index will drop at a 0.2% annualized rate in the five years to 2017. As it turns out, however, a dip in the healthy eating index may correspond to increasing smoothie consumption due their high sugar content. In fact, the Centers for Disease Control and Prevention (CDC), a government health organization, published specific instructions in 2010 for consumers to follow at smoothie establishments, entitled “At the Smoothie Stand.” This advice from the CDC comes at a time when sugar consumption is on the decline in the United States. The percent of daily calories derived from added sugars declined from 1999 to 2008, according to a study published in the American Journal of Clinical Nutrition in 2011, as cited on the CDC website. According to data from the US Department of Agriculture, per capita sugar and sweetener consumption is forecast to continue declining to 132.6 pounds per person in 2012, from about 135.5 pounds per person in 2007. Despite the CDC’s advice for consumers to decrease sugar consumption, the federal government supports the Sugar Processing industry (IBISWorld report 31131) through nonrecourse loans and marketing allotments as part of several programs, including the 2008 Farm Act, the Feedstock Flexibility Program and the Tariff Rate Quota system. IBISWorld estimates that Sugar Processing industry revenue will increase 1.1% annually on average, from $9.0 billion in 2012 to $9.5 billion in 2017. However, the United States has agreed to increase quotas for several countries in Latin America over next 15 years, allowing larger volumes of low-price imports to enter the United States at a low-tier tariff rate. As a result, a larger part of domestic demand will be met from increased imports, pushing down US sugar prices. This is expected to Upstreamindustryrevenue(2012) Industry Revenue ($thousands) Plastic & Resin Manufacturing (polyethylene) 37,844.1 Dairy Product Production (milk and milk-based products) 37,799.3 Cardboard Box & Container Manufacturing (cardboard boxes) 36,899.9 Vitamin & Supplement Manufacturing (all products) 29,245.8 Vegetable Farming (tomatoes, greenhouse crops and other crops) 18,013.1 Fruit & Nut Farming (berries, apples, grapes and other crops) 14,424.6 Sugar Processing (refined sugar) 6,650.2 Wood Pallets & Skids Production (all products) 4,741.9 Polystyrene Foam Manufacturing (consumer and institutional products) 3,401.6 Orange & Citrus Groves (all products) 2,917.9 Soy & Almond Milk Production (soy, almond, coconut and other crops) 1,465.0 SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM Special Report August 2012 3 The Smoothie Supply Chain benefit juice and smoothie bars, which use sugar in their products. Juice and smoothie operators’ bottom lines are expected to benefit from lower input costs and higher demand for industry products. Higher demand will enable stores to boost prices, despite competition. Consequently, profit, as measured by earnings before interest and taxes, is estimated to increase to 3.9% of 2017 revenue, from about 3.0% of 2012 revenue. Suppliers smoothing the way Nonetheless, it takes much more than sugar to make a smoothie. Juice and smoothie bars use inputs from 11 upstream industries. The largest suppliers manufacture polyethylene, milk and milk-based products, cardboard boxes, vitamins and supplements, vegetables, and fruits and nuts. Regulations for juice and smoothie bars influence these upstream manufacturers. For example, the Plastic and Resin Manufacturing industry (IBISWorld report 32521) produces polystyrene (IBISWorld classifies polystyrene under the industry’s polyethylene segment). Most juice and smoothie bar franchises, including major companies Jamba Juice and Smoothie King, use smoothie cups made of this material. The cups help insulate the beverage to keep it cool, and are sturdy enough to hold thick drinks. Some environmental laws have banned the use of polystyrene cups. Such bans force companies to find alternative packaging, which can increase costs or lower customer satisfaction. Such regulation also hampers revenue growth for the Plastic and Resin Manufacturing industry, which is anticipated to rise 3.8% in 2013. During the next five years, the plastic industry’s revenue is expected to rise 8.1% annually on average, from $37.8 billion in 2012 to $44.2 billion in 2017. Stronger industrial production and construction activity, which are not Supply Industries Juice & Smoothie Bars End User Markets Vitamin & Supplement Manufacturing Paper Bag & Diposable Plastic Product Wholesaling Frozen Food Wholesaling Fruit & Vegetable Wholesaling Related Industries Chain Restaurants Coffee & Snack Shops Fast Food Restaurants Households with Incomes More Than $75,000 Households with Incomes Between $50,000 and $75,000 Households with Incomes Less Than $50,000
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The Smoothie Supply Chain - IBISWorld

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