Our overarching view on the US economy is that the recovery will remain slow and erratic, with both
fears of recession and hopes of a boom both likely to be dashed. We are forecasting real private
consumption growth of 2.1% in 2012 and 2.4% in 2013, from 2.2% in 2011. Private consumption has
been responsible for most of real GDP growth since the middle of 2011 (two-thirds of growth in Q311,
and one-half in Q411), but we expect the consumer''s contribution to fade as 2012 progresses due to the
absence of strong wage growth. While overall real consumption is increasing, the main source of the
increase has been durable goods as opposed to nondurable goods such as food. We see this is as a sign
that US consumers are paring back on non-essential, non-durable goods but loading up on more essential
durable goods such as automobiles, for which there has been pent-up demand since the recession began
five years ago. The composition of consumption plays into our long-term view that domestic private
consumption is set to decline as a percentage of GDP, and that the ''Great Recession'' has altered US
consumer habits on a semi-permanent basis.
Headline Industry Data (local currency terms)
2012 per capita food consumption = +1.72%; forecast compound annual growth rate to 2016 =
+2.12%
2012 alcoholic drinks value sales = +3.09%; forecast compound annual growth rate to 2016 =
+3.46%.
2012 soft drink value sales = +2.52%; forecast compound annual growth rate to 2016 = +2.87%.
2012 mass grocery retail sales = +2.60%; forecast compound annual growth rate to 2016 =
+3.56%.
Key Industry Trends And Developments
Activist Investor Pushing For PepsiCo Split: In May 2012, an activist fund named Relational Investors
purchased a US$600mn stake in PepsiCo in the belief that the firm will benefit from spinning off its US
beverage business. The fund, run by Ralph Whitworth, purchased nearly 9mn shares, which represents a
stake of around 0.6% of the soft drink and snack maker. BMI has previously suggested that PepsiCo is
likely benefit from being split into two separate companies and has also suggested that Anheuser-Busch
InBev could be a potential acquirer of the soft drink side''s assets.
Momentum At Walmart Points To Strategy Success: US retail giant Walmart has posted a further uptick
in its US sales growth for the first quarter of 2012. In the three months to April 30, sales at its US division
increased by 5.9% to US$66.3bn, including comparable-stores sales growth of 2.6%. This was ahead of
its own forecasts and represents the fastest rate of growth for three years. The firm has benefited from a
United States Food & Drink Report Q3 2012
© Business Monitor International Ltd Page 8
renewed focus on value while also being boosted by signs of a modest recovery within the consumer
sector.
Key Risks To Outlook
Risks Remain To Downside: The risks to our consumer outlook are mostly to the downside. We expect
private consumption growth to remain subdued, constrained by a weak labour market, elevated savings
rates and stagnant house prices, while government deficit reduction will weigh on economic activity. In
the meantime, the European crisis will continue to pose downside risks to the export sector. Another
downside risk to our outlook is a major domestic policy error, especially on the fiscal side, which could
push the US into recession.
United States Food and Drink Industry 2012
fears of recession and hopes of a boom both likely to be dashed. We are forecasting real private
consumption growth of 2.1% in 2012 and 2.4% in 2013, from 2.2% in 2011. Private consumption has
been responsible for most of real GDP growth since the middle of 2011 (two-thirds of growth in Q311,
and one-half in Q411), but we expect the consumer''s contribution to fade as 2012 progresses due to the
absence of strong wage growth. While overall real consumption is increasing, the main source of the
increase has been durable goods as opposed to nondurable goods such as food. We see this is as a sign
that US consumers are paring back on non-essential, non-durable goods but loading up on more essential
durable goods such as automobiles, for which there has been pent-up demand since the recession began
five years ago. The composition of consumption plays into our long-term view that domestic private
consumption is set to decline as a percentage of GDP, and that the ''Great Recession'' has altered US
consumer habits on a semi-permanent basis.
Headline Industry Data (local currency terms)
2012 per capita food consumption = +1.72%; forecast compound annual growth rate to 2016 =
+2.12%
2012 alcoholic drinks value sales = +3.09%; forecast compound annual growth rate to 2016 =
+3.46%.
2012 soft drink value sales = +2.52%; forecast compound annual growth rate to 2016 = +2.87%.
2012 mass grocery retail sales = +2.60%; forecast compound annual growth rate to 2016 =
+3.56%.
Key Industry Trends And Developments
Activist Investor Pushing For PepsiCo Split: In May 2012, an activist fund named Relational Investors
purchased a US$600mn stake in PepsiCo in the belief that the firm will benefit from spinning off its US
beverage business. The fund, run by Ralph Whitworth, purchased nearly 9mn shares, which represents a
stake of around 0.6% of the soft drink and snack maker. BMI has previously suggested that PepsiCo is
likely benefit from being split into two separate companies and has also suggested that Anheuser-Busch
InBev could be a potential acquirer of the soft drink side''s assets.
Momentum At Walmart Points To Strategy Success: US retail giant Walmart has posted a further uptick
in its US sales growth for the first quarter of 2012. In the three months to April 30, sales at its US division
increased by 5.9% to US$66.3bn, including comparable-stores sales growth of 2.6%. This was ahead of
its own forecasts and represents the fastest rate of growth for three years. The firm has benefited from a
United States Food & Drink Report Q3 2012
© Business Monitor International Ltd Page 8
renewed focus on value while also being boosted by signs of a modest recovery within the consumer
sector.
Key Risks To Outlook
Risks Remain To Downside: The risks to our consumer outlook are mostly to the downside. We expect
private consumption growth to remain subdued, constrained by a weak labour market, elevated savings
rates and stagnant house prices, while government deficit reduction will weigh on economic activity. In
the meantime, the European crisis will continue to pose downside risks to the export sector. Another
downside risk to our outlook is a major domestic policy error, especially on the fiscal side, which could
push the US into recession.
United States Food and Drink Industry 2012
Published: August
2012 No. of Pages: 128 Price: US $ 1175
Table of Contents
BMI Industry View 7
SWOT Analysis 9
US Food Industry SWOT 9
US Drinks Industry SWOT 10
US Mass Grocery Retail Industry SWOT . 11
Business Environment . 12
BMI’s Core Global Industry Views 12
Table: Core Views 20
Macroeconomic Outlook . 21
Table: GDP By Expenditure 24
Industry Forecast Scenario 25
Consumer Outlook 25
Food 27
Food Consumption 27
Table: Food Consumption Indicators – Historical Data & Forecasts 28
Confectionery . 28
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts . 29
Canned Food . 30
Table: Canned Food Value/Volume Sales – Historical Data & Forecasts 31
Dairy . 31
Table: Dairy Production, Consumption & Trade . 32
Drink . 36
Alcoholic Drinks 36
Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts . 36
Beer 37
Spirits 38
Wine 38
Soft Drinks 40
Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts 41
Hot Drinks 43
Table: Hot Drinks Value/Volume Sales – Historical Data & Forecasts. 44
Trade . 45
Table: Food & Drink Trade Indicators 45
Mass Grocery Retail 47
Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts . 48
Table: Sales Breakdown By Retail Format Type 49
Food . 50
Key Industry Trends And Developments 50
United Biscuits Snack Unit May Not Be Good Fit For Kellogg 50
Heinz''s Emerging Markets Numbers Strong In 2011/2012 . 52
Emerging Markets Hold The Key 52
Interest In Organic Foods Remains Strong 53
Dairy Market Of Interest To Pepsi . 53
International Snack Expansion For PepsiCo Followed By Others . 54
United States Food & Drink Report Q3 2012
© Business Monitor International Ltd Page 4
Yum! Brands To Expand Beyond China 56
Sara Lee Split To Streamline Business 58
Private Labels Gain Shelf Space, Driving Consolidation 59
Targeting Of Hispanic Community A Key Growth Area 61
Market Overview . 62
Food Consumption 62
Confectionery . 62
Canned Food . 63
Agriculture 63
Drink . 65
Key Industry Trends And Developments 65
Activist Investor Pushing For PepsiCo Split . 65
Pernod Ricard Moving On From Havana Club Battle . 66
Craft Beer Continues To Outperform; Signs Of Life In Mainstream Segment . 67
Beam Outperformance Reflected In Increased Valuation . 68
Coke Linked To Monster Acquisition, But Price Could Be Stumbling Block 69
Fast-Growing Coconut Water Category Attracts Further Investment . 71
Growing US Demand Prompts Round Of Investment In Irish Whiskey 72
Bouyant Wine Demand Despite Weak Economic Backdrop 73
US Cider Brand Acquired By Irish C&C . 74
Starbucks Expanding Into Alcoholic Drinks 75
Focus On Energy Drinks . 77
Market Overview . 78
Alcoholic Drinks 78
Soft Drinks 79
Hot Drinks 80
Mass Grocery Retail 82
Key Industry Trends And Developments 82
Momentum At Walmart Points To Strategy Success 82
7-Eleven Expansion Plans Highlight Dynamism Of Convenience Sector . 83
Discount Stores Still Showing Momentum Despite Economic Improvement 84
Kroger Reports Sales Growth 85
Market Overview . 86
Main Players 86
Table: MGR Market Structure – Number Of Outlets 88
Table: MGR Market Structure – Sales By Format (US$bn) 89
Table: Average Annual Sales Value By Format , 2011 (US$mn) . 89
Competitive Landscape 90
Key Players . 93
Table: Key Players – Food Sector . 93
Table: Key Players – Drink Sector. 94
Table: Key Players – Mass Grocery Retail Sector 95
Company Profiles 96
Food 96
Kraft 96
Kellogg Company . 99
General Mills . 101
Tyson Foods . 103
United States Food & Drink Report Q3 2012
© Business Monitor International Ltd Page 5
The Hershey Company 105
Drink . 107
The Coca-Cola Company 107
PepsiCo 109
Anheuser-Busch InBev 112
MillerCoors . 114
Mass Grocery Retail 116
Walmart Stores 116
Demographic Outlook 118
Table: The United States'' Population By Age Group, 1990-2020 (''000) 119
Table: The United States'' Population By Age Group, 1990-2020 (% of total) . 120
Table: The United States'' Key Population Ratios, 1990-2020 121
Table: The United States'' Rural And Urban Population, 1990-2020 121
Risk/Reward Ratings Methodology 122
BMI Food & Drink Industry Glossary . 124
Food & Drink 124
Mass Grocery Retail 124
BMI Food & Drink Forecasting And Sources 125
How We Generate Our Industry Forecasts . 125
Sources 126Table: Core Views
Table: GDP By Expenditure
Table: Food Consumption Indicators – Historical Data & Forecasts
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts
Table: Canned Food Value/Volume Sales – Historical Data & Forecasts
Table: Dairy Production Consumption & Trade
Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts
Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts
Table: Hot Drinks Value/Volume Sales – Historical Data & Forecasts
Table: Food & Drink Trade Indicators
Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts
Table: Sales Breakdown By Retail Format Type
Table: MGR Market Structure – Number Of Outlets
Table: MGR Market Structure – Sales By Format (US$bn)
Table: Average Annual Sales Value By Format (US$mn)
Table: Key Players – Food Sector
Table: Key Players – Drink Sector
Table: Key Players – Mass Grocery Retail Sector
Table: The United States'' Population By Age Group ('')
Table: The United States'' Population By Age Group (% of total)
Table: The United States'' Key Population Ratios
Table: The United States'' Rural And Urban Population
SWOT Analysis 9
US Food Industry SWOT 9
US Drinks Industry SWOT 10
US Mass Grocery Retail Industry SWOT . 11
Business Environment . 12
BMI’s Core Global Industry Views 12
Table: Core Views 20
Macroeconomic Outlook . 21
Table: GDP By Expenditure 24
Industry Forecast Scenario 25
Consumer Outlook 25
Food 27
Food Consumption 27
Table: Food Consumption Indicators – Historical Data & Forecasts 28
Confectionery . 28
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts . 29
Canned Food . 30
Table: Canned Food Value/Volume Sales – Historical Data & Forecasts 31
Dairy . 31
Table: Dairy Production, Consumption & Trade . 32
Drink . 36
Alcoholic Drinks 36
Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts . 36
Beer 37
Spirits 38
Wine 38
Soft Drinks 40
Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts 41
Hot Drinks 43
Table: Hot Drinks Value/Volume Sales – Historical Data & Forecasts. 44
Trade . 45
Table: Food & Drink Trade Indicators 45
Mass Grocery Retail 47
Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts . 48
Table: Sales Breakdown By Retail Format Type 49
Food . 50
Key Industry Trends And Developments 50
United Biscuits Snack Unit May Not Be Good Fit For Kellogg 50
Heinz''s Emerging Markets Numbers Strong In 2011/2012 . 52
Emerging Markets Hold The Key 52
Interest In Organic Foods Remains Strong 53
Dairy Market Of Interest To Pepsi . 53
International Snack Expansion For PepsiCo Followed By Others . 54
United States Food & Drink Report Q3 2012
© Business Monitor International Ltd Page 4
Yum! Brands To Expand Beyond China 56
Sara Lee Split To Streamline Business 58
Private Labels Gain Shelf Space, Driving Consolidation 59
Targeting Of Hispanic Community A Key Growth Area 61
Market Overview . 62
Food Consumption 62
Confectionery . 62
Canned Food . 63
Agriculture 63
Drink . 65
Key Industry Trends And Developments 65
Activist Investor Pushing For PepsiCo Split . 65
Pernod Ricard Moving On From Havana Club Battle . 66
Craft Beer Continues To Outperform; Signs Of Life In Mainstream Segment . 67
Beam Outperformance Reflected In Increased Valuation . 68
Coke Linked To Monster Acquisition, But Price Could Be Stumbling Block 69
Fast-Growing Coconut Water Category Attracts Further Investment . 71
Growing US Demand Prompts Round Of Investment In Irish Whiskey 72
Bouyant Wine Demand Despite Weak Economic Backdrop 73
US Cider Brand Acquired By Irish C&C . 74
Starbucks Expanding Into Alcoholic Drinks 75
Focus On Energy Drinks . 77
Market Overview . 78
Alcoholic Drinks 78
Soft Drinks 79
Hot Drinks 80
Mass Grocery Retail 82
Key Industry Trends And Developments 82
Momentum At Walmart Points To Strategy Success 82
7-Eleven Expansion Plans Highlight Dynamism Of Convenience Sector . 83
Discount Stores Still Showing Momentum Despite Economic Improvement 84
Kroger Reports Sales Growth 85
Market Overview . 86
Main Players 86
Table: MGR Market Structure – Number Of Outlets 88
Table: MGR Market Structure – Sales By Format (US$bn) 89
Table: Average Annual Sales Value By Format , 2011 (US$mn) . 89
Competitive Landscape 90
Key Players . 93
Table: Key Players – Food Sector . 93
Table: Key Players – Drink Sector. 94
Table: Key Players – Mass Grocery Retail Sector 95
Company Profiles 96
Food 96
Kraft 96
Kellogg Company . 99
General Mills . 101
Tyson Foods . 103
United States Food & Drink Report Q3 2012
© Business Monitor International Ltd Page 5
The Hershey Company 105
Drink . 107
The Coca-Cola Company 107
PepsiCo 109
Anheuser-Busch InBev 112
MillerCoors . 114
Mass Grocery Retail 116
Walmart Stores 116
Demographic Outlook 118
Table: The United States'' Population By Age Group, 1990-2020 (''000) 119
Table: The United States'' Population By Age Group, 1990-2020 (% of total) . 120
Table: The United States'' Key Population Ratios, 1990-2020 121
Table: The United States'' Rural And Urban Population, 1990-2020 121
Risk/Reward Ratings Methodology 122
BMI Food & Drink Industry Glossary . 124
Food & Drink 124
Mass Grocery Retail 124
BMI Food & Drink Forecasting And Sources 125
How We Generate Our Industry Forecasts . 125
Sources 126Table: Core Views
Table: GDP By Expenditure
Table: Food Consumption Indicators – Historical Data & Forecasts
Table: Confectionery Value/Volume Sales – Historical Data & Forecasts
Table: Canned Food Value/Volume Sales – Historical Data & Forecasts
Table: Dairy Production Consumption & Trade
Table: Alcoholic Drinks Value/Volume Sales – Historical Data & Forecasts
Table: Soft Drinks Value/Volume Sales – Historical Data & Forecasts
Table: Hot Drinks Value/Volume Sales – Historical Data & Forecasts
Table: Food & Drink Trade Indicators
Table: Mass Grocery Retail Sales By Format – Historical Data & Forecasts
Table: Sales Breakdown By Retail Format Type
Table: MGR Market Structure – Number Of Outlets
Table: MGR Market Structure – Sales By Format (US$bn)
Table: Average Annual Sales Value By Format (US$mn)
Table: Key Players – Food Sector
Table: Key Players – Drink Sector
Table: Key Players – Mass Grocery Retail Sector
Table: The United States'' Population By Age Group ('')
Table: The United States'' Population By Age Group (% of total)
Table: The United States'' Key Population Ratios
Table: The United States'' Rural And Urban Population
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