A Taste of Wellness for Savoury and Snacks
Givaudan
Released last week by PricewaterhouseCoopers, the survey is the latest in the group's quarterly Consumer Products Barometer reports, which question top executives in 50 large consumer goods firms.
The latest survey, based on responses received between November 16 2006 and February 9 2007, revealed that 72 percent of executives in these firms were optimistic about the US economy over the next 12 months, up from 64 percent last quarter.
"The fourth quarter reveals an overall upbeat picture in regards to economic optimism, revenue growth and increased spending in the consumer products industry," said John Maxwell, leader of PricewaterhouseCoopers' Retail & Consumer Industry Practice.
"More consumer products companies are planning major new investments than ever before, as the majority of companies are expecting positive revenue growth over the next 12 months," he added.
These investments – planned by over half of the companies surveyed – are primarily expected to be in the fields of information technology and marketing and sales promotion. Executives also cited new product or service introductions, as well as advertising, as two other areas of major investment.
Overall, 84 percent of the firms surveyed said they predicted an average of 6.6 percent revenue growth over the next year. Some 70 percent of executives said they were considering other business initiatives to drive growth, with 38 percent citing mergers and acquisitions as their main focus.
However, over half of the firms said that they had been faced with higher costs during this last quarter, resulting in 32 percent increasing their prices to recover costs.
Indeed, over the past six months, 38 percent of executives surveyed reported raising wholesale prices for their major brands. Among those who did raise prices, the average overall percent increase was 4.2 percent.
Over the next six months, 34 percent of consumer products companies said they expected to raise prices by an average of 3.1 percent.
"The wholesale price increases are consistent with the overall price increases we are seeing in commodity prices and especially the impact of the recent run-up in energy prices," said Maxwell.
"While fewer companies are planning to increase wholesale prices over the next six months, this is definitely something the industry should keep an eye on."
Other challenges or obstacles to growth cited by executives in the latest survey included energy prices and lack of market demand. Firms were also concerned about pressure for increased wages, lack of qualified workers and legislative or regulatory pressures.