Boston, MA -- (ReleaseWire) -- 01/28/2014 -- We remain positive on the growth trajectory for the US economy over the next several years, as we believe that many structural factors are aligning for a period of sustained growth, underpinning our forecast for real GDP growth to average 2.4% per year from 2013-2018, up from 0.8% per year from 2008-2012. The labour market recovery, while well under way, has further to go, meaning that modest increases in job creation will prove to be a boon to spending over the medium term. Consumer deleveraging continues, meaning that a future upswing in credit will also accelerate private consumption. All these will benefit food & drink consumption growth, but we are not yet convinced that the industry will see growth recovering to levels seen before the crisis. This will favour growth in lower value segments of the food and drink sector (canned and beer) as well as convenience and discount stores over normal retail stores in 2014.
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Headline Industry Forecasts (local currency)
- 2014 per capita food consumption = +2.0%; five-year compound annual growth rate (CAGR) to 2017 = +2.6%.
- 2014 alcoholic drinks value sales = +3.6%; CAGR to 2017 = +3.6%.
- 2014 soft drink value sales = +3.1%; CAGR to 2017 = +2.9%.
- 2014 mass grocery retail sales = +2.9%; CAGR to 2017 = +2.8 %.
Key Industry Trends And Developments
ADM To Face Challenges Amid Acquisition Collapse: Australian authorities recently rejected US-based Archer Daniels Midland (ADM)'s bid for Australian grain trader GrainCorp, dealing a blow to ADM's efforts to diversify away from its focus on the US corn and soybean industries. ADM, which already owns 19.9% of GrainCorp, was seeking to acquire the remaining 80.1%. Currently, ADM receives 52.0% of its revenues from these industries, and it was particularly vulnerable to the US drought in 2012. The company is also highly exposed to mature markets, where we see little potential for growth to pick up in the medium term. In order to increase its geographic diversification in recent years, ADM has already acquired stakes in Wilmar International, which operates in oilseeds in Asia, and Toepfer, a German grain and oilseed trader operating in Australia. However, the purchase of GrainCorp would have increased ADM's market share in the wheat and barley markets, as GrainCorp controls most of the grain storage and export facilities in eastern Australia.
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