Food and Beverage Executives Upbeat About 2010

Food and beverage executives predict more profitable times are on the horizon, according to a KPMG Pulse Survey. Nearly three-quarters (72 percent) of respondents reported expectations for improved business in 2010.

The majority (72 percent) of respondents predict stronger revenue and 65 percent foresee improved profitability for next year. Eighty-six percent believed the job market will also show improvement, and 54 percent are confident in job stability.

Sixty percent of respondents believed the industry would recover ahead of other markets. The main drivers were greater consumer spending (46 percent), an improved job market (46 percent) and increased consumer confidence (45 percent). Sixty-five percent believed they were currently in a strong position to take advantage of such improvements.

“These survey results show a cautiously optimistic outlook from industry execs, even as the underlying volatility in the food and beverage sector -- based on companies wrestling with the sting of higher costs, shrinking consumer spending, and working capital constraint -- continues to develop,” said Patrick Dolan, national line of business leader for consumer markets and U.S. sector leader for food, drink and consumer goods at New York-based KPMG, LLP. “With the food and beverage industry in the midst of potentially disruptive change -- led by accelerating technological, social and economic shifts -- the executives surveyed are still upbeat about their future, though much hard work remains.”

Top challenges to such recovery were listed as locating new sources of revenue (58 percent), cost management (52 percent), risk management (49 percent) and adjusting to consumer demand (42 percent).

A majority of executives (63 percent) indicated that they would begin to look toward investment and growth opportunities, but 37 percent will still focus on cost-cutting measures. Forty-eight percent had already reduced headcount and 63 percent cut capital expenditures. About one in five (22 percent) were open to the possibility of further staff reductions, and 82 percent planned IT solutions to further reduce costs.
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